On an average, every farm changes hands at least three times in a century. Every farm, therefore, must be acquired by purchase, inheritance or gift at more or less irregular intervals. In the neighborhood in which the author was born, there is not a farm but has changed hands since he can remember. In many cases the farm is now in the possession of a son; in some instances in that of a grandson of the owner as known by the writer in his boyhood days. In this particular community the acquirement of a farm by a person not related to the former owner has occurred in relatively few instances.
As a rule, when the farm has been acquired by a son, the latter has operated the farm as tenant or partner for a period previous to his ownership and during lifetime of the father. In some instances the son has boarded with the parents or the parents with the son and his wife; or, in the case of a daughter, with the daughter and son-in-law.
Where there are several heirs, as is apt to be the case, the son operating the farm is required to purchase or rent the interest of the other heirs, unless the farm is large enough to be divided, which is less seldom the case than is popularly supposed. Thus, if there are 200 acres of land worth $50 an acre, and five heirs, the young farmer may inherit $2,000, and be required to assume the remaining $8,000 as an obligation. He may borrow this money at the bank, placing a mortgage upon the farm, thus settling with the other heirs at once. Or he may pay the other heirs rent on their share of the farm. In any case he will, if successful, gradually cancel his obligation and become owner of the farm. That no heir is willing to assume this responsibility is the most common reason for a farm changing from one family to another, and the disruption of community interests.
The customary, or normal, method of acquiring land has been and still is a combination of tenancy, inheritance and mortgage. Without some tenant system and without the farm mortgage, it would be impossible for the average young man to acquire a farm. That men are constantly advancing from farm tenant to landowner is shown by statistics giving the percentage of tenants by ages. The majority of farmers under 30 are renters. Most farmers over 45 are owners of farm land. Thus in Illinois, in 1900, approximately 75% of the farmers under 25 years of age rented their farms, while less than 20% of the farmers over 55 years of age were tenants.
The question for the young man to consider is not what effect the tenant system has upon the welfare of the nation or what political ills may be connected with farm mortgages, but how to make use of these necessary and beneficent agencies for the acquirement of a farm. A system of tenancy which leads to absent landlordism and a permanent tenant class is thoroughly vicious, while a practice which enables a man to become, within a reasonable period, a land-owning farmer is a thoroughly approvable and, indeed, necessary method of acquiring land.
As already indicated, most young men will need in some form or other to employ more capital than they possess when they start farming. They must, therefore, determine what is the best form of obtaining the necessary capital, viz.: whether to borrow the money on a farm mortgage, or whether to use the capital someone else has invested in a farm by paying him rent for it. The conditions of tenancy in this country are often not the most fortunate, yet the young man of character may well find, for a time, at least, it would be best for him to rent a farm and invest his own capital in the necessary machinery and live stock to conduct it properly.
Much will depend on the character of the arrangement which may be made. Usually more favorable terms can be secured from landlords owning large numbers of farms than from the owner of one or two farms. The large landowner is content with a moderate income from each farm, because in the aggregate his income is sufficient for his needs, while the retired farmer who must live off the proceeds of a single farm is apt to drive a hard bargain and may not be over particular concerning the maintenance of said farm. The writer knows a farmer who owns a good farm purchased from the proceeds of a rented farm. He continues to live on the rented farm and rents his own, because, it is said, his landlord is willing to make him more favorable terms than he makes to his tenant.
The more capable the tenant the more favorable the terms he may exact. Certain tenants are in demand and can have their choice of farms. A prosperous-looking man was pointed out recently as an example of a tenant capable of buying a farm in one of the most highly developed counties in the United States. It was stated that as a renter he could have his choice of any farm in the county, but that he did not have a dollar invested in farm land. Possibly he invests his surplus earnings in stocks and bonds.
It is not the present purpose to determine the relative merits of the different systems of land tenure, but to try to be helpful to the beginners by discussing the usual practices in order that he may know whether the arrangement he is considering is customary and whether it is likely to prove satisfactory.
Every third farm in the United States is rented under one of three methods: