Here"s what often happened. During the 20s, many farmers borrowed money from banks to buy more land or new machinery. Farmers pledged their assets as security on the loan. So if a farmer couldn"t make the payments on a loan for land, the bank could take back the asset the land and sell it to get back their money. In the 1920s, many loans were written when land values and crop prices were high. After the stock market crash, few people had the money to buy land, and so land values plummeted. When a bank had to foreclose and sell the land, they couldn"t
Harvey Pickrel (left) had two experiences with foreclosure. His father-in-law, Merle, couldn"t pay off his loan, so the bank sold his farm at auction. But Merle was luckier than most. He kept farming only now he was a renter rather than an owner of the farm. Later in the decade, Harvey got behind on payments
And some farmers and townspeople tried to find buyers of their property so they wouldn"t have a foreclosure on their record. That"s how Louise Dougherty and her husband, John, bought their first house.
Written by Bill Ganzel of the Ganzel Group. First written and published in 2003.
You are watching: How were farmers and banks connected in the 1930s?
See more: A Key Element Of Customer Relationship Management Is To, What Is Crm
Making Money Crash!What Followed the CrashWorldwide DepressionWall Street to RFDBurning Corn for FuelCouldn"t Even Buy a JobRFD to Main StreetBank FailuresForeclosuresPenny AuctionsRadical Farm ProtestsBarter EconomiesA New DealFDRNew Financial LawsWPAWPA Arts ProjectsSocial SecurityThe Politics of REALocal PoliticsPolitical AttitudesMarketing in the 30sA 1930s Balance SheetParityDepression Legacy