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Agricultural Depression, 1920–1934

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Black and white photograph of a starving farm family who appealed for aid, Hollandale, Freeborn County, 1929.

Starving farm family that appealed for aid, Hollandale, Freeborn County, 1929.

Minnesota farmers enjoyed a period of prosperity in the 1910s that continued through World War I. Encouraged by the US government to increase production, farmers took out loans to buy more land and invest in new equipment. As war-torn countries recovered, the demand for US exports fell, and land values and prices for commodities dropped. Farmers found it hard to repay their loans—a situation worsened by the Great Depression and the drought years that followed.

The onset of World War I in 1914 sparked an economic boom for farmers in the United States. Demand for agricultural products soared as the war-ravaged countries of Europe could no longer produce needed supplies. This created a shortage that drove up prices for farm commodities. In Minnesota, the season-average price per bushel of corn rose from fifty-nine cents in 1914 to $1.30 in 1919. Wheat prices jumped from $1.05 per bushel to $2.34. The average price of hogs increased from $7.40 to $16.70 per hundred pounds, and the price of milk rose from $1.50 to $2.95 per hundred pounds.

To meet the demand, the US government encouraged farmers to produce more. In 1916, Congress passed the Federal Farm Loan Act, creating twelve federal land banks to provide long-term loans for farm expansion. Believing that the boom would continue, many farmers took advantage of this and other loan opportunities to invest in land, tractors, and other new labor-saving equipment at interest rates ranging from 5 to 7 percent. By 1920, 52.4 percent of the 132,744 Minnesota farms reporting to the Agricultural Census carried mortgage debt, totaling more than $254 million.

After the US entered the war in 1917 and continuing into the post-war years, 40 million acres of uncultivated land in the US went under the plow, including 30 million acres in the wheat- and corn-producing states of the Midwest. In Kittson County alone, wheat acreage increased from 93,000 acres prewar to 146,000 acres. Minnesota farmers had nearly 18.5 million acres under cultivation by 1929. The demand for land inflated the price of farm real estate, regardless of quality. The average price of Minnesota farm land more than doubled between 1910 and 1920, from $46 to $109 per acre.

After the end of the war, relief efforts kept the demand for US agricultural products high. Gross exports of all grains in 1918–1919 totaled 525,461,560 bushels. During that period, the US shipped more than 2.9 billion pounds of pork, 1.1 billion pounds of beef, and nearly 8.8 million pounds of dairy products to allied countries, various relief programs, and American Expeditionary Forces overseas.

Farmers continued to produce more, expecting demand and prices to remain stable. As Europe began to recover from the war, however, the US farm economy began a long downward trend that reached a crisis during the Great Depression. Minnesota farmers' gross cash income fell from $438 million in 1918 to $229 million in 1922. In 1932, it fell to $155 million.

With heavy debts to pay and improved farming practices and equipment making it easier to work more land, farmers found it hard to reduce production. The resulting large surpluses caused farm prices to plummet. From 1919 to 1920, corn tumbled from $1.30 per bushel to forty-seven cents, a drop of more than 63 percent. Wheat prices fell to $1.65 per bushel. The price of hogs dropped to $12.90 per hundred pounds.

As surpluses mounted, the federal government promoted lowering production. It also created programs designed to help stabilize prices. The goal was to achieve parity – to bring prices back to prewar levels and equalize the prices farmers received with the prices they paid for goods.

The passage of the Capper-Volstead Act on February 18, 1922 legalized the sale of farm commodities through farmer-owned cooperatives. Co-ops cut out the middlemen who often underpaid farmers for their products. Congress passed the Agricultural Appropriations Act later that year, creating the US Bureau of Agricultural Economics for economic research.

Foreign trade restrictions, such as the Fordney–McCumber Tariff (1922) and the Hawley-Smoot Tariff (1930), imposed high taxes on imports in an attempt to protect US farms and industry. International trading partners reacted by increasing import fees on American goods. US export of farm products declined, surpluses grew, and prices continued to drop. In 1932, Minnesota corn prices fell to twenty-eight cents per bushel, wheat dropped to forty-four cents per bushel, and the price of hogs fell 75 percent to $3.20 per hundred pounds.

With less demand for land, real estate values plunged to an average of $35 per acre by the late 1930s. Farmers struggled to repay loans for land that had lost its value. Rising property taxes, freight rates, and labor costs added to the financial hardships facing many farmers. In Minnesota, the average tax per acre increased from forty-six cents in 1913 to $1.45 in 1930.

The west-central counties of Minnesota suffered from the severe drought conditions of 1933–1934. A combination of poor farming methods and drought caused extensive soil erosion. A grasshopper infestation compounded crop losses in many western counties.

Farmers across the country began to default on their loans. An estimated sixty of every 1,000 farmers in the US either lost their farms or filed for bankruptcy. From 1926 to 1932, 1,442 farms totaling 258,587 acres were lost to foreclosure in Minnesota. Marshall County had the highest number of foreclosures during this period with 191. It was followed by Kittson County with 127 and Pennington County with 123. From 1922 to 1932, 2,866 Minnesota farmers declared bankruptcy.

In spite of the hardships, Minnesota's rural population increased during the 1930s. Many who lost farms to foreclosure remained on the property as tenants. Others moved from urban areas to the country.

On July 29, 1932, farmers met in St. Cloud to organize the Minnesota Farmers Holiday Association. Members staged a thirty-day strike to call a moratorium on foreclosures. The following April the state legislature passed a bill declaring a state of emergency for Minnesota farmers and approving a mortgage moratorium.

Congress passed several farm relief measures in 1933. The first Agricultural Adjustment Act established the Agricultural Adjustment Administration (AAA) and gave it the power to pay subsidies to farmers who voluntarily reduced production. The Federal Emergency Relief Act (FERA), the forerunner of the Works Progress Administration (WPA), provided relief for both urban and rural residents through work projects.

The Resettlement Administration (RA), begun in 1935, moved 300 families from poor quality land in northeastern Minnesota to better farms through programs like the Beltrami Island Project. The RA was replaced by the Farm Security Administration in 1937.

The Supreme Court ruled in 1936 that the AAA was unconstitutional and suspended farm subsidies. Congress, in turn, responded with the Soil Conservation and Domestic Allotment Act. In 1938, a second AAA bill passed that controlled crop production through acreage allotment and soil conservation.

By December 1934, 18 percent of Minnesota's total population was on some form of relief and had received a total of $67,619,854 in benefits. From 1933 to 1936, rural and urban residents in seventy-seven Minnesota counties received federal aid payments. By the late 1930s, the US farm economy finally began to improve.

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Amundson, Roland C., and Lewis J. Rotman. "Depression Jurisprudence Revisited: Minnesota's Moratorium on Mortgage Foreclosure." William Mitchell Law Review 10, no. 4, Article 7 (1984): 805–850.
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Boeckel, R. M. CQ Press. Foreign Trade of the United States. (1930).
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“Minnesota and Iowa." Minnesota History 52, no. 3 (Fall 1990): 100–111.
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Cieslik, Thomas, David Felsen, and Akis Kalaitzidis, eds. Immigration: A Documentary and Reference Guide. Westport, CT: Greenwood Press, 2009.

Cronin, Francis D. Areas of Intense Drought Distress, 1930–1936. Washington, D.C.: United States Government Printing Office, 1937.

Department of Rural Credit. "Annual Report of the Department of Rural Credit, State of Minnesota." St. Paul: Department of Rural Credit, 1926.

——— . "Annual Report of the Department of Rural Credit, State of Minnesota." St. Paul: Department of Rural Credit, 1928.

——— . "Annual Report of the Department of Rural Credit, State of Minnesota." St. Paul: Department of Rural Credit, 1930.

——— . "Annual Report of the Department of Rural Credit, State of Minnesota." St. Paul: Department of Rural Credit, 1932.

Dowell, A. A. Corporate-Owned Farm Land in Minnesota, 1936–1940. Bulletin 357. St. Paul: University of Minnesota Agricultural Experiment Station, January 1942.

——— . The Trend in Sale Prices of Farm Real Estate in Minnesota. Bulletin 338. St. Paul: University of Minnesota Agricultural Experiment Station, April 1939.

Encyclopædia Britannica. Smoot–Hawley Tariff Act.
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Encyclopedia.com. Gale Encyclopedia of U.S. Economic History. "Fordney-McCumber Tariff."
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Encyclopedia.com. Major Acts of Congress. "Farm Credit Act of 1933."
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Fitzharris, Joseph C. "Minnesota Agricultural Growth, 1880–1970." St. Paul: University of Minnesota, Institute of Agriculture, Forestry and Home Economics, 1976.

General Laws of Minnesota for 1933, Chapter 339.
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Gile, B. M., and J. D. Black. The Agricultural Situation in Minnesota. Technical Bulletin 55. St. Paul: University Farm, August 1939.

Johnson, E. C. Farm Mortgage Foreclosures in Minnesota. Bulletin 293. St. Paul: University of Minnesota Agricultural Experiment Station, December 1932.

——— . Farm Real Estate Values in Minnesota. Bulletin 307. St. Paul: University of Minnesota Agricultural Experiment Station, July 1934.

Marquardt, Robert E. Minnesota Agriculture – Prices, 1867–1959. St. Paul: [Minnesota Department of Agriculture?], 1959.

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Murchie, Robert Welch, and Merrill E. Jarchow. Population Trends in Minnesota. Bulletin 327. St. Paul: University of Minnesota Agricultural Experiment Station, May 1936.

Olcott, Margaret T., and Louise O. Bercaw, comps. State Measures for the Relief of Agricultural Indebtedness in the United States 1933 and 1934. Washington, DC: United States Department of Agriculture, Bureau of Agricultural Economics, 1934.

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Related Images

Black and white photograph of a starving farm family who appealed for aid, Hollandale, Freeborn County, 1929.
Black and white photograph of a starving farm family who appealed for aid, Hollandale, Freeborn County, 1929.
Black and white photograph of workers on State Emergency Relief Administration (SERA) farm near Duluth, Lake County, 1935.
Black and white photograph of workers on State Emergency Relief Administration (SERA) farm near Duluth, Lake County, 1935.
Black and white photograph of a Federal Emergency Relief Administration farm to market road construction project near Alexandria, 1936.
Black and white photograph of a Federal Emergency Relief Administration farm to market road construction project near Alexandria, 1936.
Black and white photograph of drought farmers working on a farm to market road in Foster Township, south of Beardsley in Big Stone County, 1936.
Black and white photograph of drought farmers working on a farm to market road in Foster Township, south of Beardsley in Big Stone County, 1936.
Black and white photograph of farmers who braved the picket lines to reach the Minneapolis city produce market during the truckers' strike, 1934. Photograph by the Minneapolis Tribune.
Black and white photograph of farmers who braved the picket lines to reach the Minneapolis city produce market during the truckers' strike, 1934. Photograph by the Minneapolis Tribune.
Black of an auction at Figura farm, Burnsville, 1938.
Black of an auction at Figura farm, Burnsville, 1938.
Black and white photograph of Oliver Farm Equipment, 3310 Como Avenue, Minneapolis, 1934.
Black and white photograph of Oliver Farm Equipment, 3310 Como Avenue, Minneapolis, 1934.
Black and white photograph of a farm abandoned after successive years of drought, possibly near Breckenridge in Wilkin County, 1939.
Black and white photograph of a farm abandoned after successive years of drought, possibly near Breckenridge in Wilkin County, 1939.
Black and white photograph of the Mainquist farm house, Rockford Township, Wright County, ca. 1920.
Black and white photograph of the Mainquist farm house, Rockford Township, Wright County, ca. 1920.
Black and white photograph of rural electrical transmission lines on the farm of Oscar Lindahl, Schaefer, Chisago County, 1931. Photograph by Norton & Peel.
Black and white photograph of rural electrical transmission lines on the farm of Oscar Lindahl, Schaefer, Chisago County, 1931. Photograph by Norton & Peel.
Black and white photograph of a combination of cut worms and heat has destroyed the corn on this farm, six miles east of Appleton in Swift County, 1936.
Black and white photograph of a combination of cut worms and heat has destroyed the corn on this farm, six miles east of Appleton in Swift County, 1936.
Black and white photograph of a farm in windbreak near Lamberton, Redwood County, 1936. Photograph by Napoleon Noel Nadeau.
Black and white photograph of a farm in windbreak near Lamberton, Redwood County, 1936. Photograph by Napoleon Noel Nadeau.
Black and white photograph of grasshoppers waiting for the temperature to rise before moving into a corn field in Marshall, Minnesota, ca. 1930s.
Black and white photograph of grasshoppers waiting for the temperature to rise before moving into a corn field in Marshall, Minnesota, ca. 1930s.
Black and white photograph of a Farmall tractor on the farm of Mike O'Boyle, St. Paul Park, 1938.
Black and white photograph of a Farmall tractor on the farm of Mike O'Boyle, St. Paul Park, 1938.
Black and white photograph of Toro Motor Company farm machinery, ca. 1920-1925. Photograph by C. J. Hibbard.
Black and white photograph of Toro Motor Company farm machinery, ca. 1920-1925. Photograph by C. J. Hibbard.
Black and white photograph of a horse and tractor farming in Roseau County, ca. 1920.
Black and white photograph of a horse and tractor farming in Roseau County, ca. 1920.
Black and white photograph of contour cultivation of corn on the Walter Fox farm near Faribault, 1938.
Black and white photograph of contour cultivation of corn on the Walter Fox farm near Faribault, 1938.
Black and white photograph of a starving cow and horse brought to the State Capitol by farmers to dramatize their demands for relief, 1935.
Black and white photograph of a starving cow and horse brought to the State Capitol by farmers to dramatize their demands for relief, 1935.
Black and white photograph of thousands of farmers gathering at the Minnesota State Capitol to hear Governor Floyd B. Olson talk on farm relief, ca. 1935.
Black and white photograph of thousands of farmers gathering at the Minnesota State Capitol to hear Governor Floyd B. Olson talk on farm relief, ca. 1935.
Black and white photograph of a Wilkin County farmer and his wife talk over the farm plan with the Farm Security Administration County Supervisor, ca. 1937.
Black and white photograph of a Wilkin County farmer and his wife talk over the farm plan with the Farm Security Administration County Supervisor, ca. 1937.
Black and white photograph of a new barn constructed on Beltrami Island Relocation Project, ca. 1937.
Black and white photograph of a new barn constructed on Beltrami Island Relocation Project, ca. 1937.

Turning Point

The agricultural boom of the 1910s ends when Europe begins to recover from World War I in 1920, leaving US farmers with heavy debts and large surpluses that cause prices to fall.

Chronology

1914

World War I begins in Europe, and the increasing demand for more food for export raises prices on farm commodities and encourages more production.

1916

The Federal Farm Loan Act passes, creating twelve federal land banks authorized to provide long-term loans to farmers for purchase of land to increase production during World War I.

1921

The inflated prices received for farm products during the war years begin to fall.

1922

The Agricultural Appropriations Act passes on May 11, creating the US Bureau of Agricultural Economics in the Department of Agriculture. It also consolidates the Office of Farm Management and Farm Economics and the Bureau of Markets and Crop Estimates.

1922

The Fordney–McCumber Tariff, enacted on September 21, raises import taxes on goods in an effort to protect US industry and agriculture.

1929

Congress passes the Agricultural Marketing Act, making loans available to farm cooperatives.

1930

The Hawley-Smoot Tariff becomes law on June 17, raising the tariff on imported goods. In response, US international trade partners increase their import duties on American goods, restricting the formerly lucrative export market for US farm products.

1932

The Minnesota Farmers' Holiday Association is organized at a convention held in St. Cloud on July 29.

1932

Minnesota farmers stage a thirty-day strike in September to call attention to the need for a moratorium on mortgage foreclosures.

1933

On April 13, state legislators pass a bill declaring a state of emergency for Minnesota farmers and implementing a mortgage moratorium.

1933

Congress passes the first Agricultural Adjustment Act on May 12, establishing the Agricultural Adjustment Administration (AAA).

1933

Congress passes the Emergency Farm Mortgage Act on May 12, appropriating $200 million to assist farmers facing foreclosure and requiring the liquidation of joint stock (corporate) land banks.

1933

On June 16, Congress passes the Farm Credit Act, giving the Farm Credit Administration authority to make loans to farmers for production and marketing of agricultural commodities.

1936

The US Supreme Court rules on January 6 that the Agricultural Adjustment Administration's program of paying farmers to limit production is unconstitutional.

1936

Congress passes the Soil Conservation and Domestic Allotment Act on February 29, giving the government power to pay benefits to farmers who contract to reduce production of wheat and other soil-depleting crops and plant those that replenish the soil.

1938

Congress passes a new Agricultural Adjustment Act, reinforcing soil conservation through acreage allotment.