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 project.
 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 improbable
 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 obligations
 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 correspondingly
 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