The 1920s were a decade of economic contraction in agriculture. This period marginalized farmers throughout the nation, severely impacting their ability to produce the goods they needed to feed the population. A perfect storm of several interconnected factors caused this rapid decline in agricultural output and profitability, leading to a loss of control over the farmlands and their livelihoods. Let us take a closer look at why agriculture suffered in the 1920s.
Rising Debt and Decreasing Prices
The biggest issue farmers faced was debt. Many had borrowed money to purchase land, equipment and seed, expecting to pay off the loans with the proceeds from their harvests. But, just as they did during World War I, farmers began to experience the same trap of diminishing returns. As production increased, the prices of the commodities they produced dropped, meaning the products of their labor were no longer financially worth their labor.
Moreover, rising prices for consumer goods and the inability to sell their produce for more than what it cost to grow them, expensive farm machinery and adhering to the demand for higher standards for land ownership and management, added to their debt and decreased the number of profitable farms. This could not only make it difficult for farmers to sustain themselves, but also encourage them to sell off their land.
High Tariffs and Foreign Competition
The introduction of the Fordney- McCumber Tariff Act by President Harding in 1922 further disrupted the agricultural industry. This Act was meant to protect the domestic industry but instead, resulted in higher food prices across the board. The tariffs are said to have reduced the prices paid by farmers while also reducing their ability to export crops. This stifled farm-based businesses, leaving them to compete with foreign imports.
The 1920s saw the emergence of steam-powered combines imported from Europe, which had the capability to harvest many farms simultaneously, displacing the need for labor. This technology made more efficient farming techniques possible, allowing for more product to be created in less time and at a lower cost. The availability of these combines gave foreign products an edge, further widening the gap between American-grown farming and imported products.
The Great Depression and the Dust Bowl
The Great Depression of 1929 drastically hit agriculture, leading farmers to suffer through multiple years of drought and dust storms in many parts of the Midwest. The Dust Bowl as it became known, further reduced the fertility of these regions, and with very little topsoil, water or rainfall, it became almost impossible for farmers to sustain their land and reap any harvest at all. The Great Depression’s current effects of credit debt and mortgage foreclosure was unpredictable, yet devastating to the agricultural industry.
The Dust Bowl, drought and the Great Depression were all interrelated and each of these factors directly contributed to the decline of the 1920s agricultural industry. Farmers were unable to move forward and chose to abandon their farms rather than take on more debt to stay in business.
Land Consolidation
All of these factors combined led to a large-scale land consolidation which saw large farming businesses take over small farms. Over the course of the decade, large farm operations had greater access to credit, leading to a faster growth than the small farms. This created a further disproportionate financial power between the bigger farms and the small farmers, creating a chasm between them.
These farms had better access to the latest technologies such as irrigation, fertilizers, and pest control which allowed them to produce large yields of the best quality food. This led to a decline in the demand for the products of the small farms which, coupled with the economic impact of all the other factors, further decimated the agricultural industry of the 1920s.
Government Strategies
The government of the time was aware of the problems facing farmers, and as a result, the Agriculture Adjustment Act (AAA) was passed in 1933 to try to manage the surplus of farm products, thus stabilizing prices and attempting to level the playing field between small farmers and large landowners. The aim was to shift the supply-and-demand equation to benefit farmers. However, the AAA was ultimately unsuccessful in reviving the agricultural industry.
The AAA also proposed a series of other initiatives, such as land-use controls and the introduction of new plant and animal breeding techniques. While these measures had some positive effects, they ultimately could not solve the problem of the 1920s agricultural crisis.
External Factors
The 1920s saw an increase in the population, leading to higher demand. This shift in the total number of people had a profound effect on the agricultural industry, with increased demand and prices leading to higher costs in production. This led to increased global competition, further squeezing out profits for many small farmers.
The decade also marked the beginning of World War II, which further exacerbated the economic disruption caused by the agricultural industry’s decline. War-related industries attracted skilled workers, making it difficult for farmers to find good labor, and military conscription drained the available manpower from rural areas. At the same time, the war also heavily taxed agricultural land and increased the demand for food.
Political Changes
The 1920s also saw a shift in governmental support for the agricultural sector-or a lack thereof-at the federal level. This was mostly driven by the presidential administrations of the period, which had little interest in the farmer’s struggles. The decline of the national frontiersman was also a result of the growth of industry and the movements of large labor and political forces.
With little interest in the plight of the farmer, the government took no action to protect them, leaving them vulnerable to market forces outside of their control, such as the entry of foreign farm produce, reduced tariffs and, most notably, the Great Depression. As a result, the 1920s saw a steep decline in the number of farms and in farming income.
Government Policies
The government of the time put in place some protections for farmers, such as the passage of the Agricultural Marketing Agreement Act of 1937 and the Agricultural Adjustment Act of 1933. This allowed for a more flexible pricing structure for farmers, permitting the level of production to be adjusted according to market conditions. These measures did help some, but their effectiveness was limited by their focus on commercial farming over smaller, more sustainable, family-run operations.
Higher taxes on agricultural land and cheaper transportation of food products also took their toll on farmers, as they were unable to compete financially with larger corporate farming operations. This further resulted in a higher level of competition and decreased sector profitability.
Inadequate Financial Support
In addition to the lack of government policy, the lack of available financial support was another problem. The banking system of the 1920s had very little non-recourse loans and federal credit-based savings to sustain and support small farmers. This made it difficult for them to purchase their own land, diversify their production, and restructure their operations.
The 1920s saw a dramatic decline in agricultural production as farmers were crushed by debt and the inability to compete with industrialized farming operations. The lack of governmental interest in their plight and inadequate financial support only added to their woes, resulting in many fleeing the agricultural sector and forfeiting their lands.
