222 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
His creditor, the local banker, refrains from foreclosing. He is an 
admirer of Charlie Dawes and the famous Plan, and generously 
contents himself with all there is to get. 
TV 
The simplest and most popular proposal for the relief of the 
overburdened farmer is the raising of prices of farm products, 
either through cooperative activities or through political action. 
Dump abroad any surplus above domestic consumption at a fair 
price. Let us assume away the practical obstacles to such a pro- 
ject. They are serious, but it is by no means certain that they 
could not be surmounted if the nation became convinced that they 
offered permanent relief. How would the raising of prices affect 
the situation? 
No one would deny that a substantial advance in the price of 
farm products would strengthen the position of those who now 
own mortgaged farms. A twenty-five per cent advance in prices 
would increase the farmer’s income at least a billion and a half 
in the average year. If it were applied chiefly to debt payments 
it should extinguish the farmers’ indemnity in seven or eight 
years. 
But a twenty-five per cent advance in prices, if it promised 
stability, would be followed straightway by a rise in land values. 
Farms would change hands rapidly, as they did in the boom 
period at the close of the war, and every change would involve an 
addition to the volume of farm debt. It is not in the least improb- 
able that at the end of ten years the farmers’ indemnity would 
stand at twenty billions, instead of ten. Thus, while the capacity 
of the farms to pay would have increased, the burden of obliga- 
tions would have increased considerably. 
At present the prices of farm products are too low to yield a fair 
return on the farmer’s labor together with normal interest on the 
capital represented by the value of his land. If much of that 
capital is borrowed under mortgage, the difficulty of meeting 
interest charges is almost insuperable. Two dollar wheat and one 
dollar corn, with prices of meat and dairy products correspond- 
ingly advanced would ease off the present situation. But if land 
values rose and the volume of debt increased, we should soon hear 
a clamorous demand for three dollar wheat and dollar and a half 
corn. Any plan of price control that accepts capital values as a