U.S. farm economics 2

As we have seen a number of times, our family history has always been a part of a larger story, a broader historical context. Presumably our earliest Mennonite ancestors moved to the Vistula River area of Poland not on a whim but to escape or avoid religious persecution. Later our family relocated farther east, to Volhynia and then to Molotschna, for political and economic reasons, to avoid any possibility of military service and (mostly) to secure the farm land necessary for economic self-sufficiency. In the last quarter of the nineteenth century our family once again reacted to both local and world events: a lack of access to farm land and the threat of military service and Russification in their Molotschna home. In response, our ancestors joined the throngs of immigrants heading to the North American continent, there to build a new life in a new context.

Even after our family became tucked away in their new little corner of the world in the Henderson–Lushton area, they did not suddenly become immune from the influences and effects of world events. That is why, in addition to discovering all that we can about our family story in the early twentieth century (when Peter P was well established and Grandpa Chris and Grandma Malinda were just starting out), we also need to learn about the larger historical and economic context in which they lived.

For farmers like our forebears, this entails exploring both history and farm economics, which will be the focus of this series of posts. We will begin with a brief historical overview of the times that will provide the context into which we can then locate Peter P and Chris. The chart below (from Filley and Hauke 1933, 1) points us in the right direction by showing how world events affected Nebraska farmers in the first three decades of twentieth century.

1. A World at War

Although World War I (1914–1918) never touched our shores, it had a profound effect on U.S. life, even on the lives of noncombatants such as our Mennonite ancestors. Dorothy Weyer Creigh writes:

World War I erupted; the world needed food—food which Nebraska farms could produce. Prices spiraled; wheat, which was eighty cents a bushel in 1910, was a dollar sixty in 1916, and by 1918, almost two dollars. Corn leapt from thirty-six cents in 1910 to more than a dollar and a quarter in 1918. The Council of Defense … kept crying, “Wheat Will Win the War!” The farmers saw their duty. They plowed up their pastures, and planted them to wheat; they stretched out into the southwestern parts of the state.… Almost three million acres of land were added to production during the war years, almost forty percent of it in the wheat-lands of the west. (Creigh 1977, 184)

The chart above shows the spike in prices that Creigh references and demonstrates fairly clearly that war was good for farm prices. Why? World War I disrupted European food production significantly, which created a higher demand for other sources of food, that is, food produced in the U.S. Further, the millions of men now waging war were not producing food or any other economic goods, which increased the demand placed on those who were. It is simple economics that a reduction in supplies and an increase in demand inevitably leads to an increase in the price of the commodity, and this is precisely what we see in the World War I period.

2. The Postwar Collapse

The end of World War I in 1918 did not lead to an immediate drop in crop prices, but the writing was on the wall (or at least it should have been). With the end of hostilities, Europe once again began to produce grain, and by 1920 overall world production of wheat was up (Filley and Hauke 1933, 14). In addition, the 1917 U.S. price stabilization program, which set a minimum price on wheat, ended in the spring of 1920, which led to wheat once again being subject to the law of supply and demand. Within a year the prices of wheat and corn had fallen to half their 1920 levels; by 1921 corn was selling for the same price as it had in 1905.

Unfortunately, many farmers did not believe that the prosperity of the war years would end. Creigh explains:

When the war ended and prices continued to soar [through 1920], farmers assumed that a new era of farming had arrived; they bought whatever land they could find, at whatever price, mortgaging what they already had. From 1910 to 1920, mortgage debt on Nebraska farms increased one hundred seventy percent. And then the bottom dropped out; from 1921 to 1923, one-fourth of the farmers failed. Although for townspeople, the 1920s were a period of prosperity, for most Nebraska farmers the decade was one of struggle to pay off debt, high-interest loans for high-priced land with low-priced wheat and corn. Although from 1923 to 1926 there was a brief period of recovery [see the spike at 1925 in the chart above], prices collapsed again. Six hundred fifty Nebraska banks, most of them country banks, closed their doors during the 1920s, too far extended on credit to farmers. (Creigh 1977, 185)

The decade after the War, which began with a boom in land sales, ended for many as a financial bust that forced them to leave farming for good.

3. Great Depression

The U.S. farm economy had suffered hard times for nearly a decade before the rest of the population followed suit. The crash of the New York Stock Exchange in October 1929 signaled the start of the Great Depression, which lasted through 1941. The Great Depression was not limited to the U.S. but was a worldwide crisis that led to a decrease in manufacturing, an increase in unemployment, and an increase in bank failure, to name just a few.

All these factors contributed to the worsening of an already-difficult situation for farmers. Those who were at the mercy of the banks were less likely to be shown grace, given the pressures of the financial markets across the nation and around the world. Even worse, the economic downturn prompted a significant decrease in demand (people without money are unable to buy much), which inevitably led to further erosion of crop and commodity prices.

4. Drought and Dust

The final blow was weather-related: a period of drought and dust and wind. According to Creigh,

The farmers’ financial condition was precarious to begin with. When the unrelenting heat and dryness and wind seared the crops in the field, there was no produce to sell, no feed for livestock, mighty little food for human consumption. As the winds blew day after day, eventually the topsoil went with them, the soil that was the lifeblood, the means of existence, for Nebraskans. At that moment, then, and for most of the decade of the 1930s, Nebraska became truly the Great American Desert.  (Creigh 1977, 185–86)

What is worse than continued depressed crop prices (see the chart above)? Having the drought, heat, and wind combine to devastate yields, so that farmers had few crops to sell even at the low prices of the 1930s.

The period covered during this short survey, from roughly 1915 through the 1930s, was a crucial time in our family’s history. The next post will locate our family, especially in the persons of Peter P and his son Chris, within this historical framework. The goal of all this is to understand our family story better by appreciating the challenges that our ancestors faced in the first four decades of the twentieth century.

Sources Cited

Creigh, Dorothy Weyer. 1977. Nebraska: A Bicentennial History. The States and the Nation Series. New York: Norton; Nashville: American Association for State and Local History.

Filley, H. C., and Arthur M. Hauke. 1933. Local Prices of Farm Products in Nebraska, 1895–1932. Nebraska Agricultural Experiment Station Research Bulletin 284. Lincoln: University of Nebraska, College of Agriculture, Experiment Station. Available online here.