U.S. Farmers During the Great Depression

Let’s Talk Rusty Iron: U.S. farmers faced high farm mortgages and big debts even before the Great Depression began

| November 2011

The Great Depression that caused so much trouble in the world during the 1930s ended only with the boom caused by World War II. For American farmers however, the downturn began shortly after World War I ended, continuing mostly unabated for two decades. 

During the Great War, agricultural production was way down in the European countries where the fighting was taking place, demand for food was high and prices paid for grain rose dramatically. In 1913, U.S. farmers harvested more than 50 million acres of wheat (with an average yield of 15.2 bushels per acre), and got $0.79.9 per bushel for the crop. At the peak in 1919, 75.7 million acres were harvested with a somewhat diminished yield of 12.8 bushels per acre, but the high price of $2.14.9 per bushel.

All during the war, Food Administrator Herbert Hoover exhorted farmers in this country to increase production. As the prices realized for their products rose, farmers began to borrow money to buy more acres and new machinery, especially farm tractors since labor costs were sky high. Farm mortgages doubled between 1910 and 1920, from $3.3 billion to $6.7 billion ($74.4 billion today). Then after the war, as a recovering Europe and Russia began to feed themselves (and, in the case of Russia, even finding grain to export), the bottom dropped out. In 1921, the price of wheat dropped to $0.92.6 per bushel, and heavily indebted farmers couldn’t make the payments on all those new acres and tractors.

As a result, during the “Roaring Twenties” farmers weren’t doing much roaring, but credit was still easy and they limped along, falling further and further behind the rest of the country. Even though grain prices were low because of world over-production, American farmers had to keep planting large acreages in the hope of getting enough cash to pay off debts. Wheat prices bobbed along at a few cents over a dollar for most of the 1920s. Some farmers survived. Those who didn’t had to sell out and become tenant farmers or find work in town. 

Farm foreclosures

Then, in October 1929, the whole financial house of cards that was the U.S. economy collapsed, triggered by the stock market crash. Although then President Hoover dubbed the disaster a “Depression,” as that seemed to him to sound better than the term “Panic” that had been used in the past, that’s what occurred: panic. The banks looked shaky and depositors wanted their money, making them shakier still, and in time many were forced to close. Factories and businesses got rid of large numbers of employees or closed down altogether.
The malaise spread across much of the industrialized world, and soon there was no money to buy the farmer’s products or anything else. Desperate bankers called in their loans, but farmers had no money to pay them and foreclosures and bankruptcy sales became daily events.

These sales sometimes brought out the best in neighbors, as in a 1931 bank foreclosure auction for the property of a family in Madison County, Neb. Some 150 neighboring farmers showed up and when the auctioneer tried to get a bid on the first piece of machinery, someone bid 5 cents. The farmers crowding around the auctioneer prevented anyone else from bidding on that item and the auctioneer had no choice but to hammer it sold. This process continued throughout the sale, resulting in a grand total of $5.35, which the bank was expected to accept as full payment for the debt.

6/26/2014 2:22:47 PM

I realize now why they call it The Great Depression. Those where some harsh time, I feel so lucky that I wasn't born in those times. This should show us how important the financial sector can be in a country. There is some great financial information on http://bail-2-go.com/bail-process/, hopefully people will learn to educate themselves about that and hopefully the history taught us something.