Abstract
The state of Nebraska is headed toward a crisis with regard to the financing of agriculture and industry. In the area of agriculture, farm consolidation will continue and there will be further substitution of capital for labor. New technology and increased acres per farm will make present equipment obsolete, and production costs will increase as chemical technology is applied to land that is now operated inefficiently. The Farm Credit Administration has projected that by 1980 farmers' debts may double from $50 billion to $100 billion. Although this rise will be partially offset by an increase in the value of farmers' assets, debt as a percentage of assets will continue to increase. The increase in assets is primarily a reflection of the growth in the size of farms in Nebraska, and the problem arises from the fact that the banks that finance these farms have not matched this growth.|The problem faced by industry in Nebraska is not quite the same as that of agriculture. Many Nebraska communities have been attempting to attract new industry to their areas, and many have had to face the fact that not: every rural region can make the transition from an agriculturally based economy to that of an industrial economy. One of the primary means of industrial production is capital, since an industrialized economy is one which relies more heavily on capital than labor. The problem to be dealt with in this paper is whether the needs of tomorrow's sophisticated agricultural and industrial borrowers can be met adequately without developing new techniques for solving loan problems and for pulling outside funds into the many capital-deficit areas of Nebraska. If these techniques are not successfully developed and applied, banking will lose its share of the expanding economy.