Farmers and Bankers

From Delancey Place:

Today's selection -- from Dreams of El Dorado by H.W. Brands. The uneasy, often adversarial relationship between farmers and bankers:

"For Western farmers, the depression that followed the panic of 1893 -- the worst depression in the nation's history until then -- ­merely added to the stresses they had been feeling for decades. Since the 1870s farm prices had been falling relentlessly, pushing prosperous farmers into the ranks of the marginal, and marginal farmers into ruin. Ironically, a principal cause of the price decline was the farmers' very success; they produced more corn, wheat, cotton, pork and so on than the markets for those commodities could absorb. Some of the overproduction was the result of the increase in farm acreage, notably under the Homestead Act. Some was the consequence of the mechanization of the farm process.

"But farmers didn't like hearing this explanation. It demeaned their labor and accomplishment. They were suffering because they had succeeded too well? It made no sense. And it implied that some of them -- maybe very many of them -- would have to go out of business.

"So the farmers blamed something else: the money system. A Nebraska farmer wrote to the editor of a local farm journal in 1891 lamenting the hard year he and his neighbors were having. 'The hot winds burned up the entire crop, leaving thousands of fami­lies wholly destitute, many of whom might have been able to run through the crisis had it not been for the galling yoke put upon them by the money loaners and sharks -- not by charging 7 per cent per annum, which is the lawful rate of interest, or even 10 per cent, but the unlawful and inhuman country-destroying rate of 3 per cent a month, some going still farther and charging 50 per cent per annum,' he said. 'We are cursed, many of us financially beyond redemption, not by the hot winds so much as by the swindling games of the bankers and money loaners, who have taken the money and now are after the property, leaving the farmer money­less and homeless.'

"The farmer explained how the system worked against those like him who had to borrow to run their businesses....MORE