It was hard for farmers at the time. The Great Depression in the United States began for American farmers after World War I, despite the fact that the majority of the country had been relatively prosperous during the 1920s. The American farmer spent much of the Roaring ’20s in a debt cycle caused by plummeting agricultural prices and the necessity to buy expensive machinery. Many American farmers were pessimistic about the future of their hardscrabble existences after the stock market crash of 1929.
To support farmers, the first major New Deal project was to raise farm prices to a level comparable to the years of 1909-14. This is the goal of the
How did many farmers get into debt in the 1920s Explain how World War 1 and crop prices affected farmers during this time period?
Describe the impact of the First World War and rising crop prices on farmers during this period. Farmers had to boost harvest yields and purchase more expensive equipment and acreage because of the strong demand for food during World War I. The result was that farmers were unable to sell their large surpluses and were therefore unable to meet their loan obligations.
What caused farmers into debt life on the farm?
In the late 1800s, why did so many farmers end up in debt? Because of rising expenditures, they took out loans against the value of their farms.
What were the main problems facing farmers in the 1920s?
The agricultural economy of the 1920s remained in a long-term downturn, despite numerous congressional efforts to alleviate it. At a time when American farmers were heavily in debt, large surpluses were followed by dropping prices.
Why did US farmers lose money during the 1920s?
From $22 billion in farm income in 1919 to $13 billion in 1929, this was a significant decrease. 3 million families earned less than the national average because of overproduction and underconsumption of agricultural products. Farmers relied on loans from banks to stay afloat. In 1929, they had accumulated a debt of $2 billion, which was quite burdensome.
How did many farmers get into debt in the 1920s quizlet?
Demand for grains plummeted following World War II, putting farmers in a bind. Deep-seated issues generated economic instability, from the overproduction of struggling farmers to the underconsumption of low-wage industrial workers.
How many farmers were there in 1920?
In 1920, there were 3,925,090 farms in the United States that were run by their owners. 37.2 percent of these farms, or 1,461,306, were listed as mortgaged, compared to 33.2 percent in 1910.
Why did many farmers go into debt in the late eighteen hundreds?
The post-Civil War decades were notable for the frequency with which farmers in the United States voiced their displeasure with their situation. There was a lot of political upheaval during this time period. Farmers’ precise worries varied, but they were all centered around the fact that they believed their political and economic situation was deteriorating.
Farm unrest was defined by farmers’ efforts to unite for mutual benefit. In order to protest their dwindling fortunes, farmers created cooperatives, interest organizations, and political parties. To answer farmers’ complaints about railroads and their desire for more commercial cooperation, the Grange or Patrons of Husbandry was created in the 1860s. In the 1870s, the largely agrarian Greenback Party emerged. As a result, the cost of credit for farmers was reduced as a result of this policy. In the 1880s, the Farmers’ Alliance was founded. As a result, it pushed the government on behalf of a wide range of business and banking regulations. A group of disgruntled farmers formed the People’s or Populist Party in the 1890s in an attempt to overthrow the Republican and Democratic parties’ hold on power.
There was widespread discontent among farmers across the country, but it was most concentrated in the northern prairie and Plains regions. Due to a string of droughts between 1870 and 1900, grain farmers in the Midwest faced increasing price competition from growers outside the region. Racism stifled the uprising of Southern farmers as well. For fear of damaging the system of social control that kept blacks inferior to whites, many white farmers were reluctant to join the onslaught against established politics and business (Goodwyn, 1978).
The Debate about the Causes of Farm Unrest
For a long time, the root reasons of farm discontent were the subject of heated dispute. It was impossible to square farmers’ concerns with evidence concerning agricultural terms of tradethe prices farmers received for their produce, especially when compared to the costs of other goods and services farmers purchased, such as transportation or loans. In contrast, there appears to be a degree of agreement. We should first take a look at the concerns of farmers to get a better sense of where this consensus is coming from. As to why they were so enraged, Why were they so frightened by this?
The Complaints of Farmers
There is little debate about the farmers’ grievances (Buck, 1913; Hicks, 1931). Farmers’ falling wages and tense business ties were the main topics of discussion. They reported that as a result of dropping farm prices, their earnings were also decreasing. In general, they blamed the low costs on over-production. Second, farmers claimed that grain elevators and railroads with monopolies were charging them extortionate fees for their services. The farmers’ response to the monopolistic problem was to have the government regulate the market. To top it off, there was a perception that credit and money were scarce. Because of monopoly lenders and a lack of money supply, farmers thought interest rates were excessively high and deflation was inevitable. Farmers had to pay back loans with dollars that were worth much more than those they had borrowed because of a declining price level. There were demands from farmers for interest rate ceilings, public bodies to resolve foreclosure processes, and the U.S. Treasury to raise the money supply by free-coining silver. On top of all of this, farmers complained that big business and money lenders had political influence over them. These interests exerted disproportionate influence over state and federal policymaking. In brief, farmers believed that a gang of greedy railroads, creditors, and industrialists was undermining their economic and political interests.
The Puzzle of Farm Unrest
The grievances of farmers have been rigorously tested by economic historians. All of the claims have been found to be at odds with the evidence that has been gathered regarding the conditions of the deal.
Farmer complaints concerning prices should be taken into consideration first. During this time, farm prices and the prices of most other items fell. There’s no evidence that farm revenues were likewise declining. In the first place, actual prices (farm prices compared to the overall price level) are a better indicator of the value farmers received for their work. If you look at post-Civil War actual prices, you’ll see an almost horizontal trend (North, 1974). While real agricultural prices may have dropped, farmers were not necessarily worse off (Fogel and Rutner, 1972). Incomes may have been protected from decreasing real prices if farm productivity had risen enough. Although direct evidence of farmers’ incomes is sparse, estimates indicate that farm revenues were not declining (Bowman, 1965). There was no general agricultural downturn in the 1870s or the 1890s, although there were moments of misery in Iowa and Illinois and Kansas and Nebraska. A look at pay and rental statistics suggests that the West was opened too slowly to settlement (Fogel and Rutner, 1972).
As for mortgage debt and rates, have a look at what farmers have to say about that, as well. On the frontier, it’s true that interest rates were higher than those in the Northeast, averaging two to three percentage points more. Frontier farmers were understandably upset about having to pay so much in interest on their loans. Although lenders may have been legitimate in charging high interest rates, they may not have been the only ones. A combination of the region’s drought susceptibility and the financial insecurity of many settlers necessitated higher-than-average loan risk compensation (Bogue, 1955). There was a tendency for borrowers to fail on their loans, leaving only a fraction of their land as collateral. The exploitation hypothesis is called into doubt by this story. There was also insufficient evidence to support the monopoly hypothesis when the assertions of farmers were submitted to rigorous statistical examination (Eichengreen, 1984). High interest rates may have been a compensation for the inherent hazards of lending to frontier farmers in the frontier mortgage market. Finally, farmers may have exaggerated the impact of deflation on borrowers, which may not have been as severe as they claimed. The typical mortgage duration was fewer than five years, showing that lenders and borrowers were able to foresee price increases (North, 1974).
Finally, bear in mind the grievances of farmers against railroads. Among them, these look to be the most credible. But for a long time, the vast majority of historians rejected farmers’ complaints because they assumed the real cost of delivering their produce to market was continuously decreasing due to railroad sector efficiency gains. Rail shipping productivity gains, however, did not inevitably lead to reduced rates for farmers and consequently greater farm gate prices, as shown by Robert Higgs (1970). Between 1865 and 1900, real rates (railroad rates compared to the prices farmers received for their output) fluctuated greatly. Over the course of the entire era, rail fares remained relatively stable compared to farm prices. Farmer-friendly trade conditions began to emerge in the 1890s. Before 1880, Aldrich (1985) found a declining tendency in railroad rates and then either no trend or an increase in the following years.
The Causes of Farm Unrest
Farmer grievances are frequently unsubstantiated or, in some cases, contradicted by the available facts, raising doubts about the root reasons of agricultural unrest. What or who, other than railroads and creditors’ monopoly power, is to blame for the plight of farmers?
The majority of economic historians today argue that post-Civil War agricultural agitation was a reflection of the increasing dangers and uncertainties of farming. As an economic factor, uncertainty or risk diminishes wellbeing. Nowadays, farmers can lessen their vulnerability to environmental and economic uncertainties for little or no cost by using advanced production technologies and agricultural futures markets The cost of avoiding risk was substantially higher in the late 1800s. As a result, farmers lost money due to increased risk and uncertainty. Farmers on the border appear to have been particularly vulnerable to these uncertainties and risks.
Where did the danger come from? First, following the Civil War, agriculture had become increasingly commercialized (Mayhew, 1972). In the past, farmers were able to support themselves without the help of creditors, merchants, or railroads. Many farmers did not want the commitments, sacrifices, and hazards associated with these connections. A secondary issue was that grain markets throughout the world were becoming increasingly interconnected, resulting in increased competition and higher price volatility in areas formerly dominated by US producers (North, 1974). Third, the semi-arid region of the United States was now home to agriculture. Farmers in Kansas, Nebraska, and the Dakotas had to deal with conditions that were both unfamiliar and detrimental to their crops. Many Plains farmers faced economic difficulty due to recurring but unpredictable droughts. Prices for agricultural products around the world have become more responsive, further aggravating their condition (North, 1974). Farmers suffering from reduced harvests due to the drought could no longer rely on rising domestic prices for their crops.
According to a growing body of studies, mounting risks and uncertainties in American agriculture are to blame for consumer dissatisfaction. Starting with the fact that, between 1866 and 1909, there were considerable relationships between various indicators of economic risk and uncertainty and the distribution of disturbance in fourteen northern states (McGuire, 1981; 1982). Agriculture-related instability in the northern states was intimately linked to the wide range of farm prices, yields, and incomes. A second factor contributing to the unrest was the large number of agricultural foreclosures in certain of the states (Stock, 1986). Having a neighbor whose farm was repossessed by creditors gave the average frontier farmer cause for concern about his own financial prospects. Third, in the 1890s, populist unrest in Kansas coincided with unanticipated fluctuations in crop prices, resulting in lost earnings and lower incomes for farmers and their families (DeCanio, 1980). For the record, high interest rates were not a sign of monopoly, but rather compensation for the greater risks of frontier lending, as had already been mentioned (Eichengreen, 1984).
The Historical Significance of Farm Unrest
Economic growth in the United States was severely harmed by farm unrest. Moreover, it ushered in a long-term institutional transformation (Hughes, 1991; Libecap, 1992).
In the 1870s, the transformation began. State legislatures in the Midwest enacted a series of laws to regulate railways, grain elevators, and warehouse prices and procedures in response to farmer concerns. At the end of the day, “Since they reversed a long-standing trend of declining government regulation of the private sector, “Grange” legislation were a significant moment in history. Court judgements supporting the government’s regulatory powers were also spurred by these cases (Hughes, 1991). With its decision in Munn v. Illinois (1877) reaffirming that government has the ability to regulate commerce in any way it sees fit (as opposed to just interstate commerce) “the public interest is a factor.”
At the federal level, farmers also sought redress for their complaints. In Wabash, St. Louis, and Pacific Railway v. Illinois, the Supreme Court of the United States declared that only the federal government has the authority to regulate interstate commerce. Consequently, many issues of importance to farmers could not be regulated by the governments. When Congress enacted the Interstate Commerce Act in 1887, long-distance rail shipping was handed over to the Interstate Commerce Commission for regulation. Sherman Antitrust Act of 1890, which barred monopolies and some conspiracies as well as barriers of commerce, was a direct follow-up to this legislation. Prominent Chicago meat packers were accused of conspiring to keep cattle prices artificially low by Midwestern cattle ranchers (Libecap, 1992). Federal participation in private economic activity began to rise with the passage of both statutes (Hughes, 1991; Ulen, 1987).
Even though certain agrarian suggestions were ignored by Congress and the state legislatures, they had a long-term impact (Hicks, 1931). During the Progressive Era, for example, several demands of the Alliance and the Populist, such as the progressive income tax and the direct election of U.S. Senators, became law.
There is disagreement among historians concerning the impact of the farm movements of the late nineteenth century. Depending on who you ask (Hicks, 1931), some people see their contributions to the creation of American institutions favourably, while others don’t (Hughes, 1991). Many people agree that they had a significant impact. Farmer-led political and legal events in the late 1800s shaped considerable institutional transformation in the United States throughout the last century (Hughes, 1991).
The Sources of Cooperation in the Farm Protest Movement
Farmers in the 19th century were extremely effective at forming unions and gaining greater economic and political influence by working together. However, the sources of collaboration in promoting agrarian interests are a part of farm discontent that has generally been disregarded by scholars. Individuals should have been encouraged not to contribute to the collective production of public goodsthose goods for which it is either impossible or prohibitively expensive to exclude others from enjoyingin large lobbying or interest groups like the Grange and the Farmers’ Alliance, according to Olson (1965). In order to reap the benefits of a lobbying group without incurring any of the expenditures, a self-interested farmer would not join.
Most farm interest groups, however, were able to limit free-riding because of their political clout. Between 1885 and 1890, the Dakota Farmers’ Alliance used this strategy, according to Stewart (2006). First and foremost, the Dakota Farmers’ Alliance offered its members with valued goods and services that were unavailable to the general public, generating economic incentives for membership. Cooperative marketing and the sharing of agricultural productivity-enhancing knowledge were examples of these goods and services. As a federation of township chapters, the Dakota Farmers’ Alliance was able to monitor and penalize free riders. Those who were members of the Alliance were able to persuade others to join them in townships. Immigrants from Germany and Norway were far more likely than others to join the Dakota Farmers’ Alliance, and their likelihood of joining was increasing as the population percentage of their nativity group increased. Economic theory suggests that social norms can be used to elicit collaboration in collective action in countries like Germany and Norway.
References
Mark Aldrich is an author. “The Populist Uprising and Railroad Rates.” Agricultural History 41: 835-52, 1985.
Money at Interest: The Middle Border Farm Mortgage, by Allan G. Bogue. Cornell University Press, Ithaca, New York, 1955.
I’m talking about John Bowman “1860-1900: An Economic Study of Farm Values and Farm Land Income in the Midwest 317-352 in Yale Economic Essays, 5th edition, 1965.
Agricultural Organization and Its Political, Economic, and Social Manifestations, 1870-1880: A Study of the Granger Movement Harvard University Press, Cambridge, Massachusetts, 1913.
“DeCanio,” Stephen J “Agriculture’s Economic Losses Due to Forecasting Error.” Journal of Political Economy, vol. 88, no. 2, pp. 234-57, 1980.
Barron’s Barry Eichengreen “Populist Interest Rates on Mortgages.” The American Economic Review74 (1984): 9951015, p.
robert wesley fogel and jack leonard rutner “federal land policy efficiency effects, 1850-1900: a preliminary report.” An edited volume titled “The Dimensions of Quantitative Research in History” by Wayne O. Aydelotte, Allan G. Bogue, and Robert W. Fogel is available. New Jersey: Princeton University Press, 1972. p.
Lawrence Goodwyn, thank you for your time.
A Brief History of the Agrarian Revolt in the United States: The Populist Moment. New York: Oxford University Press, 1978
A History of the Farmers’ Alliance and the People’s Party by John D. Hicks The University of Minnesota Press published the book in 1931 in Minneapolis.
Robert Higgs was a theoretical particle physicist “Riding the Rails and the Populist Revolt. In Agricultural History 44 (1970): 291-97.
An Economic History of Government Controls from Colonial Times to the Present: The Government Habit Redux. University Press of Princeton, 1991, Princeton, New Jersey.
There’s a good chance that Libecap, Gary D “The Origins of Meat Inspection and Antitrust in the Chicago Packers.”
Journal of Economic Inquiry 30 (1992): 242-62
Anne Mayhew. “An Analysis of the Farm Protest Movement in America, 1870-1900: A Reappraisal of the Causes Articles 464475 in Journal of Economic History number 32 (1972).
Robert A. McGuire “New Evidence on the Economic Causes of Agrarian Unrest in the Late 19th Century.”
From 835 through 852 in the Journal of Economic History 41 (1981).
Robert A. McGuire “Economic Causes of Late-Nineteenth-Century Agrarian Unrest: Reply.” Journal of Economic History 42 (1981): 697-99.
Doug North, A New Economic History of Growth and Welfare in American History. Prentice-Hall, 1974, Englewood Cliffs, N.J.
Mancur Olson. The Theory of Groups and the Logic of Collective Action. Harvard University Press, 1965, Cambridge, MA.
I’d like to introduce you to James I. Stewart “Membership in Farm Interest Groups, Collective Action, and Free-riding Working Paper, Reed College, Year 2006 Reed’s Stewart J.
In this case, the author is James H. Stock “Midwestern agrarian unrest and mortgage foreclosures, 1865-1920.”
The Journal of Economic History, volume 44, number 1, pages 89-105, published in 1983.
Thomas C. Ulen “The ICC from 1887 to 1920: The Market for Regulation.” 80: 306-10. American Economic Review.
James Stewart’s citation is: “Unrest on the Land in the United States, 1865-1900”. the Robert Whaples-edited EH.Net Encyclopedia Tuesday, the 10th of February, in the year of our American farm unrest from 1865 to 1900 had an economic impact on the United States, according to an encyclopedia entry at the following URL:
Why did many farmers go into debt?
In the late 1800s, why did so many farmers end up in debt? It was because of this that they took out loans for new business ventures. Their crops needed to be more diverse, so they took out loans to do so. For the purpose of transporting their goods, they took out loans to build highways.
What percentage of farmers are in debt?
Farm real estate debt is predicted to rise by 4.5 percent in nominal terms and 0.7 percent in inflation-adjusted dollars in 2021, reaching a total of $301.7 billion. For the year 2021, 66.4 percent of overall farming debt is estimated to be accounted for by farming real estate debt. Non-real estate debt on farms is predicted to fall by 0.1 percent in nominal terms to $152.4 billion in 2021. According to the latest projections, the non-real estate inflation-adjusted debt has fallen by 9.8% since 2014.
Why did farmers overproduction in the 1920s?
There were several advantages to living in industrial towns and cities during the 1920s. People could now purchase a wider range of products thanks to the widespread usage of assembly lines in the production of various goods. People were able to acquire washing machines, vacuum cleaners, cars, and radios as a result of this newfound riches in these industrial communities.
However, many farmers in the United States were unable to afford these new products. It was because of ‘Mass Production’ that they were affected.
Prior to the introduction of mass production agricultural techniques into farming, everything was done by hand and labored upon. As many as a thousand workers were needed to produce and harvest crops for this endeavor. When farmers began using modern machinery like combine harvesters and tractors, they were able to produce more food with a smaller workforce. Unemployment rose, and farm workers’ earnings fell, as a result. The South and the Mid-West were particularly hard hit by the storm.
The emergence of mass production had a negative impact on farmers as well. The price of farmers’ crops decreased as they produced more using their new machinery. This was a result of overproducing food, which resulted in a surplus. Overproduction was the term used to describe this excess of food. Prices for farm products fell further because farmers couldn’t sell their goods, forcing many of them to take out loans from banks or re-mortgage their land in order to stay afloat and avoid bankruptcy.
The introduction of Prohibition exacerbated this predicament. Whisky or ‘Moon Shine’ was once made from wheat when the price was too low. Because of prohibition, they could not do this. Wheat prices were at an all-time low in 1929. We could have saved money by burning the wheat rather than transporting it to market!
Farming in America: An Illustrated History. 1920s agricultural developments that had an impact on American history.
What did farmers do in the 1920s?
Take a trip back in time to rural York County, Nebraska, in the center of the Great Plains in the 1920s. People living in the town and those living on the farm had vastly different social, economic, and cultural experiences. There was no indoor plumbing, refrigeration or electricity in rural Nebraska in the 1920s, unlike the modern conveniences enjoyed by city inhabitants. Farmers in York County, New York, were far removed from the gangland crime, flapper styles, dance marathons, and Jazz Age splendor of the 1920s. Nonetheless, they had been exposed to these lifestyles in the cinema.
During the 1920s, farmers transitioned from horse-drawn plows to steel-wheeled tractors, from outhouses to indoor plumbing, and from praying for rain to regulated irrigation through the usage of this website.
Learn about the daily lives of children and adults as they journey through the seasons on the land through dramatic storytelling. Take a look at the tools they employed. Listen to how they battled the elements to raise their crops, as well as the dangers of sickness and accidents. In the face of adversity, they took courage from their families and neighbors to overcome their hardships. Cars began to connect these rural households to communities at the end of the twentieth century, transforming their lives forever. By telling the stories of those who lived through it, the history of rural Nebraska in the 1920s comes to life.
