Farming, Risk, and the Long Run of History
One of the little games I play with myself is seeing if I can tie different parts of my life together in ways that are illuminating, to me at any rate. And so here’s a rumination that brings together my last post about puzzles about family farming and a recent flying visit to the part of southwest England where I grew up.
By chance, I ended up driving along the ten-mile route to school. Every morning I used to sit perched in the front seat on the upper level of a double decker bus looking out at the farmland.
Then three miles from school, the bus swayed round a corner and over the park wall I could see the glorious cedars of Lebanon in the grounds of Wilton House, the country seat of the Earl of Pembroke. He collected the rent from all those farms, some of them in the hands of my family.
Wilton House. Wikimedia
Another sharp turn around the park wall, and I looked down on the General Headquarters of the Southern Command of the British Army, sentries guarding the chain link fences. Behind it stretched Salisbury Plain, at 480 square miles the largest military training ground in the world, in World War I.
Erskine Barracks, HQ Southern Command, during recent demolition. David Faherty
Another mile, and as the bus sailed over the railway bridge on the edge of town, ahead of me was the spire of the Cathedral was framed by trees. On rainy days, our primary school played in the Cloisters. And well into the 1950s, the Ecclesiastical Commissioners still collected tithe (not a literal tenth) from farmers, whether or not they were members of the Church of England.
Salisbury Cathedral
Looking back, I realize that what I was absorbing was a crash course in the economy of the pre-industrial world: the three great quasi-corporate powers–the landed aristocracy, the military and the church–all depending on the rents from land.
Receipt from the Ecclesiastical Commissioners for rent and tithe from my great uncle by marriage. 367 pounds for six months in 1920, roughly 16,000 pounds today, or $48,000 a year.
The fine houses, the bejeweled clothes, the embroidered vestments, were all bought with rents that came from the sale of wheat, cattle, milk, and wool. What else was there except a limited quantity of higher rents from mineral sources or city land, a few high risk commercial ventures, a limited amount of manufacturing, or the spoils of war? To a large extent, as this example of Prince Charles suggests, farming still works this way in England.
Of course, figuring out rents was the bread and butter of the classical economists. At one stage in my academic career was responsible for introducing students to Smith, Malthus, Ricardo et al. But talking about land, labor and capital never came home to me personally in the way that the connection between harvest and van Dyke paintings on the wall of a country house did.
As D.R.W.Griffith pointed out in a comment on my last post puzzling over the survival of the family farm:
Farming is a risky business and farming commodities tends to be low margin. Both are aspects that push corporations away and obviously make niche small market farming attractive to real farmers.
The corporate thinking is that production, unless its highly technical and high margin, is better left to the actual farmer, who knows what he is doing, has a vested interest in making it work and is prepared to put in the hours and hard work for the small margins in the hope that next year is the bonanza year.
Or, put another way, through most of history the great cultural institutions, the monarchy and aristocracy, the military, and the church depended for their income on activities that contemporary corporations spurn as being too risky to contemplate. After all, farming was just as risky a business in the past, perhaps more so. And why they depended on large estates to cushion their own risk.
Or, put yet another way, there really wasn’t much surplus to play with in the past. Economic historians such as Deirdre McClosky, Gregory Clark, Joel Mokyr are still trying to get a grip on how the world escaped this trap, how we industrialized and created prosperity for whole populations.
Rachel,
Thats fascinating – I’d not thought about the prevalence of that land ownership/rent model. In the New World there was what would have been a novel system where land ownership was predominantly in the hands of the farmers themselves – particularly due to the homesteading opportunities created by the governments of the US and Canada. The migration to cities has taken us back to a model where farmers largely rent from a hereditary owner population which typically has no role other than to collect rents through a land management company. It is a lower risk way for farmers to expand because they are not trapped in big mortgages when commodity prices drop.
The problem with this system is that it is typically an annual, cash-rent arrangement meaning that the farmer has no guarantee that he/she will be getting to farm that particular piece of ground next year. Many of the optimal farming methods from a sustainability point of view (minimal tillage, cover crops, controlled wheel traffic…) do pay for them selves in yield potential and yield stability, but only in the medium to long term. I wish there was a way for the absentee land owning class to understand that they could increase the value of their asset and benefit the environment by structuring leases to provide the incentives for the farmer to pursue those sorts of soil quality strategies.
Thanks for the comment, Steve. Several follow ups. First, I’d been going to put in a paragraph about just how unusual the US and Canadian homesteading pattern was. That, along with inexpensive land, made the farming very competitive internationally by the end of the nineteenth century because it did not have to support these layers of non-working owners. And of course big estates were common in the US south, Argentina, Australia and other places opening up to modern farming in the nineteenth century.
Second, one of the differences now is that the short term rents typical of the US were not the pattern in Britain. Leases were long, renewed every fifteen or twenty years, and in our part of England many farming families had rented for a century or more so that hey had incentives for maintaining soil fertility, putting in drainage or irrigation systems, etc. So the upside of the British system is that the landowners provide much of the capital (including some for farm buildings though not for machinery etc), and the farmers act as entrepreneurs.
Third, this is now changing as a lot of landowners think they can make more money by putting in salaried managers.
Fourth, I’ve often wondered if this is one reason for the very different attitude to religion in the two countries. I can only think of a couple of farmers in England I knew who had any use for organized religion whereas it seems to be the norm in the US. I think that there was great resentment at the ability of the Church of England to keep extracting tithes.
I found your post very interesting. Study of the works of Adam Smith, McClosky and Mokyar was very much a part of my professional training. You mention how the finery of the country houses came from sale of agricultural products. I would be less polite and say that the affluence of the aristocracy world-wide was based on the exploitation of the peasantry. Have you had occasion to look up “Peasants versus City-Dwellers: Taxation and the Burden of Economic Development” by Raaj K. Sah and Joseph E. Stiglitz (Oxford University Press, 1992) which connects discussion of the past with the present.
Hello Rama, Many thanks for the comment (and delighted to find your interesting book and web site). I have put the Sah and Stiglitz on my list to consult as soon as I get to a university library. I think England before and during the Industrial Revolution is an interesting twist on the exploitation of the peasantry because you have this middle layer of large tenant farmers who farm hundreds or thousands of acres. They in turn employed at miserable wages a large number of landless farm workers. What it meant was that there was the tenant farmers undertook land improvement, investment, etc making the agriculture much more efficient (I believe). I think I am brewing up another post on this and the role of the land agent on the big estates in the Industrial Revolution.
I just came across this very funny video cross linked from one of the farming blogs I looked at the other day. I just sent the link to some of my city friends with the subject line: If you want to know where your food comes from.
http://www.thefarmersdaughterusa.com/2015/01/farmer-nice-by-iowa-farm-bureau.html
It is a great video. I especially like the emphasis on the fact that farming is not just about food but about lots of other things.