Again, some things never seem to change. Here’s excerpt from the article that appeared in the July 1933 edition of Harper’s entitled “Gentlemen, The Corn Belt!” as reprinted in the book “The Great Depression” by David A. Shannon:
"The boom period (for Midwest farmland during the period between the end of WWI and the crash of 1929) of the last years of the World War and the extreme inflationary period of 1919 and 1920 were like the Mississippi Bubble and the Tulip Craze in Holland in their effect on the general public. Farm prices shot sky high almost overnight. The town barber and the small-town merchant bought and sold options until every town square was a real estate exchange. Bankers and lawyers, doctors and ministers left their offices and clients and drove pell mell over the country to procure options and contracts upon this farm and that, paying a few hundred dollars down and expecting to sell the rights before the following March brought settlement day.
Not to be in the game marked one as an old fogy, while paper profits were pyramided and Cadillac cars and pleasure trips to the cities took the place of Fords and Sunday afternoon picnics. Everyone then maintained that there was only a little land as fertile as the fields of Iowa, Illinois and Minnesota, and everyone sought to get his part before it was all gone. Like gold, it was limited in extent and of great potential value.
Prices skyrocketed from $100 to $250 and $400 per acre without regard of the producing power of the land.
During this period, insurance companies were bidding against one another for the privilege of making loans on Iowa farms at $90 or $100 of $150 per acre. Prices of products were soaring. Everyone was on the high road, not only to comfort, but to wealth and luxury.
Second, third and fourth mortgages were considered just as good as government bonds.
Money was easy, and every bank was ready and anxious to loan money to any Tom, Dick or Harry on the possibility that he would make enough in these trades to repay the loans almost before the day was over.
Every country bank and every county-seat town was a replica in miniature of a brisk day on the board of trade.
… but, alas, from then on a painful awakening from this financial carousal brought long continuing headaches to the investors, the holders of the second mortgages, and the bankers that had financed these endeavors.
… during the year of the great debacle of 1929 the flood of foreclosure actions did not reach any great peak, but in the years 1931 and 1932 the tidal wave was upon us. Insurance companies and large investors had not yet realized (and in some instances do not yet realize) that, with the low price of farm commodities and the gradual exhaustion of savings and reserves, the formally safe and sane investments in farm mortgages could not be worked out, taxes and interest could not be paid, and liquidation could not be made.
With an utter disregard of the possibilities of payment or refinancing, the large loan companies plunged ahead to make the Iowa farmer pay his loans in full or turn over the real estate to the mortgage holder. Deficiency judgments were the clubs they used to make the honest but indignant farm owners yield immediate possession of the farms.
… The conservative investments in real estate which we Middle Westerners have for years considered the best possible have become not only not an asset, but a liability, with the possibility of deficiency judgments, the bane of mortgage debtors, staring us in the face.
Not only have the luxuries and comforts of life been taken away from us, but the necessaries are not secure."
