estimate includes not merely the value of the land itself but also the permanent equipment-e.g., farmhouses, cottages and buildings-let with the farms.

3. Tenants' capital.-In addition to rent and value of land the Ministry has also obtained from the Crop Reporters estimates of the average amount of tenants' capital per acre on holdings of different types and sizes in England and Wales, tenants' capital being defined as including the value of live and dead stock at the rates current about the end of 1925, tenant right valuation at Michaelmas or other date at which farms usually change hands and the amount of cash in hand required to meet necessary outgoings.

ESTIMATED AMOUNT OF TENANTS' CAPITAL REQUIRED PER ACRE (EXCLUSIVE OF ROUGH GRAZINGS) ON HOLDINGS OF DIFFERENT TYPES AND SIZES IN ENGLAND AND WALES.

Slightly more capital is estimated to be required on a holding that is mainly pasture than on one which is mainly arable, and the amount of capital per acre in all cases is naturally greater on the small-sized holdings than on the large. There is a great deal of variation in the case of fruit and vegetable holdings and although the average only works out at £37 per acre, the capital is estimated in the different divisions at figures ranging from £20 to £80 per acre. Poultry holdings show a similar diversity; the average over the whole country is estimated at £66 per acre.

On the basis of the above estimates the farm capital represented by the value of the live and dead stock, the tenant-right valuation and other working capital, exclusive of that required in respect of rough grazings, amounted to rather less than £360 millions in the whole of England and Wales.

Stock on Rough Grazings.-Reference was made under the heading of rent to the numbers of stock on rough grazing land and these figures may be used to calculate the average tenants' capital required on rough grazing land. These rough grazings are usually occupied by farmers who cultivate other holdings in addition, and the live stock consequently represents practically the whole of the tenants' capital employed. The estimated total number of cattle and sheep grazed according to the returns of rough grazings is 240,000 and 2,700,000 respectively, and at current prices the total value of the live stock may be estimated at about £7,500,000, or £1 10s. per acre.

The total amount of tenants' capital required is therefore, in round figures, about £365 millions in the whole of England and Wales.

CHAPTER XI.-AGRICULTURAL PRICES.

Statistical records of the prices of the principal farm products have been collected by the Ministry of Agriculture since 1904. Earlier records of wholesale food prices back to 1846 were compiled by Sauerbeck, and have been continued by the Statist, while statistics collected by Jevons covered the period 1785 to 1865. Other records of wholesale food prices have been prepared by the Board of Trade and by the Economist. There is thus a fairly complete record of the movement of agricultural prices up to 1904, and a more detailed record thereafter. Index numbers based on the prices collected by the Ministry have been worked out for the years since 1906; the average prices in the three years 1911-13 have been taken as a base and corresponding prices in other years are expressed as percentages above or below the prices ruling in the base years.*

The fifty-five years which have elapsed since 1870 may be divided into five periods-namely, 1870-1896, 1896-1914, 1914– 1920, 1920-1923 and 1923-1925 each of which was characterised by distinct price movements. In the first (1870-1896) prices were falling, subject to an interruption between 1886 and 1891, and farming suffered a prolonged depression; in the second (1896-1914) prices were rising slowly, accompanied by a gradual revival of agriculture; in the third (1914-1920) prices were rising very fast and agriculture experienced a short period of great prosperity; in the fourth (1920-1923) prices were falling

*In order to prevent misconception it may be well to explain here that these index numbers are based on the average of the weekly prices of the principal articles sold off the farm as ascertained by the Ministry's Market Reporters and published in the Agricultural Market Report. In most cases the prices used in the calculations are those for second quality, which is taken as a fair indication of the average of all qualities. The prices used are market prices, without any deductions for carriage or other costs of marketing, as it is not until the supplies are at the market that they are on an equal footing, and it is only from this starting point that the price movement can be compared with the pre-war position. The actual prices, on which the annual index numbers for the years 1906-24 are based, are given in Table 36 of Part III of the Agricultural Statistics, 1924, and for 1925 in the corresponding Report for that year.

In calculating the general index numbers for all commodities a suitable allowance is made for their relative importance. For instance, more weight is given to livestock and milk than to corn, because, on the average, livestock and milk bulk more largely in the farmers' receipts than corn. The weights applied to each commodity are given in Table 37 of Part III of the Agricultural Statistics, 1924. Individual farmers or groups of farmers will naturally be affected in different degrees according to the crops or livestock which they produce. The general index number is a measure only of the general change in price level, and not of changes in gross receipts of farmers, as these are affected by the changes in the output of different years as well as in prices.

very rapidly accompanied by acute depression; and in the fifth (1923-1925) prices were comparatively steady. These price changes were due mainly, though not wholly, to causes external to agriculture that is to say, causes which brought about changes in the general level of the prices of all commodities; or, in other words, they were due more to changes in the purchasing power of money than to changes in conditions of supply and demand in respect of agricultural produce.

*

The average fall in wholesale prices (all commodities included in Sauerbeck's index number) between 1871-1875 and 1894-1898 was 40 per cent. The corresponding fall of certain agricultural produce is given below:

Of these commodities wheat was the only one to fall in price more than all commodities a fact which was undoubtedly accounted for by the increased production of wheat in the newer countries of the world, the development of transport facilities abroad and the reduction in ocean freight rates. In its reaction upon agricultural production this prolonged period of declining prices was the most disastrous that had been experienced since that which followed the Napoleonic wars. The depression was, however, mainly in arable farming, as is indicated by the relatively greater fall in cereal prices. Stock farming suffered to a considerably less degree.

In the second period the average rise in general commodity prices was 33 per cent. between 1894-98 and 1910-14. The corresponding rise of certain agricultural commodities was :

* The changes in the general level of Agricultural prices owing to monetary causes is discussed in the Report of the Committee on Stabilisation of Agricultural Prices published by the Ministry of Agriculture. Economic Series No. 2, price ls. 6d.

x 28832

F 3

The comparatively small rise in barley prices was accounted for partly, if not mainly, by a decline in the quantity used for brewing. It was accompanied by a fall in the area under barley, which appears to have been one of the chief factors in the general decline of the arable acreage which occurred during this period, notwithstanding that prices were rising. On the other hand, the relatively small increase in the price of potatoes did not result in any diminution in the acreage under this crop. Generally, however, the period was one of gradual recovery from the depression of the previous two decades.

From the point of view of the effect on production since the last Census was taken, the most important price movements are those which have occurred in the three periods beginning with 1914. The six years 1914 to 1920 experienced the sharpest rise in agricultural prices for which there are statistical records,* the rise being almost identical with the general movement of commodity prices (see Diagram VII). This movement coincided with a period of great prosperity in which a substantial increase in food production was secured. Two factors arising out of the rapid upward movement of prices contributed to this prosperity. The first was the interval of time covered by most agricultural operations, so that between the time when the farmer laid out his money in certain of the costs of production and the time when the crops or products were sold in the market, the general level of prices had risen. The second was that certain costs of production did not advance so rapidly as did the prices of agricultural commodities. For example, wages, though they increased very considerably between 1914 and 1920,† always lagged behind the rise in agricultural prices.

Statistics are not available of the movement of rents during this period, but no general advance of rents took place during the early years of the war, and it is believed that the total average rise in rents was very small in comparison with the rise in agricultural prices. On the other hand, the area of agricultural land sold increased during the period, particularly towards 1920, and the price paid was usually higher than it would have been if valued on the basis of the rent paid prior to 1914.

The remaining items in the cost of production which it is possible to measure to some extent statistically are feeding stuffs and fertilisers, the prices of which can be compared by means of index numbers with the prices of agricultural products.

The prices of imported feeding stuffs rose more rapidly during the period 1914-1920 than did agricultural prices owing to the

* See Table 37 in Part III of Agricultural Statistics, 1924, which shows the index numbers of the prices of agricultural commodities since 1906.

Statistics of wages so far as they are available are given in Table 30 in the Appendix. As explained in the footnote to this Table the hours of work from 1917 onwards were less than in 1914.