Show Boom in in Farm Prices races ana and Rapid JL Turnover Prompts Fe Fears ls l's Collapse Will mill Follow Peace Memory o of Drop After AfterWorld ter World T orld War I Still Stil Is Vivid to Many Farmers When GI Joe comes back to his farm home from the war he may find a lot of new faces around the neighborhood And he may miss a lot of the old familiar ones The family up the road may have moved bag and baggage to Oregon A new owner may be tilling the bottom bottomlands bottomlands bottomlands lands on the back eighty Rural America is on the move Farmers like their city cousins have been shifting their base of operations operations operations op op- at an nn increasing ever-increasing tempo tempo tempo tem tem- po in the months since Pearl H Har Har- r- r bor More 1 farms are arc changing hands this year than at any time in the past generation They are changing for scores of reasons but back of almost every sale is the chance to toI strike pay dirt dirt to to realize a profit I on the old hom homestead stead I Many farm folks are frankly conI concerned concerned con con- I over this trend They arcI are arc I troubled not so much about the migration mi- mi gration as they are about the steady increase in farm real estate I They fer feor r that tha t the long threatened threatened threat threat- t- t ened land inflation is under way And they are asking themselves Will the old cycle of boom and bust be repeated Every previous war has brought its ts own land boom that left a wreckage wreckage wreckage wreck wreck- age of deflation behind The collapse collapse col- col lapse apse of the speculative era following following follow- follow ing ng World War I is painfully fresh in n the memry memory of many a farmer famer Symptoms are already evident suggesting suggesting suggesting sug sug- gesting that history could repeat itself it itself it- it self in World War II unless brakes are applied to the moving fast-moving upsurge upsurge upsurge up up- surge in farm land buying For instance land values have risen risen risen ris ris- ris- ris en 38 per cent above their 39 1935 average and are already up to per cent of their World pre War I levels Farm sales during 1943 were at a record volume surpassing even the he previous high reached in 1919 Sales in 1944 are forging ahead of last years year's record Plent Plenty of Ion l Money y Floating Three factors are believed to be immediately responsible for the urge to acquire additional holdings 1 Both l Both farmers and have large and increasing funds a available for land purchase 2 Present 2 Present high income and the roy rosy prospect of more to come make the purchase of farms seem especially attractive not only to farmers but dwellers city-dwellers as well 3 Long 3 Long term credit at low interest rates makes it easy to acquire land Speaking of income nearly 20 billion billion billion bil bil- bil- bil lion dollars dollars to be exact ex ex- act flowed act flowed into farmers' farmers pockets from the 1943 bumper harvest Last years year's total was more than f four ur times the low-ebb low depression income of 4 billion dollars in 1938 It was about in excess of the 1942 total When operating costs including taxes inte interest est wages for labor machinery and other items are deducted farmers were left with witha a income that was almost al- al almost almost al al- most double that of 1939 Meanwhile Meanwhile Meanwhile Mean Mean- while the cost of living had advanced advanced ad ad- advanced only one fourth U. U S. S department of commerce estimates of individual savings indicate indicate indicate indi indi- cate an increase of 7 75 5 billion dollars dollars dollars dol dol- dol- dol lars for 1940 to 36 billion dollars for 1943 A very large part of these savings is in highly liquid assets of currency and bank deposits W Whenever Whenever an industry does as well as farming has done there is a tendency tendency tendency ten ten- dency to speculate Those already in the business seek to expand their operations Others seek to get in inon inon inon on the good thing And thus a spiraling spiraling spiraling spiral- spiral ing boom can be born In the midwestern area comprising ing the Seventh Federal Reserve district for instance which may be considered fairly representative it itis itis itis is estimated that farm land prices have hove risen about 17 per cent between between between be be- tween April 1943 and April 1944 From the beginning of the year until April 1 the advance has been about 2 per cent The increases have been I largest in Indiana Illinois and Iowa i in which states the per cent of purchases purchases purchases pur pur- chases by city investors was largest largest largest larg larg- est being 30 to 37 per cent of all sales It is true that farmers have been using much of their larger incomes to buy bonds and fo 0 pay payoff off debts The steadily decreasing volume of farm mortgage debt is evidence of this trend But now reports indicate indicate indicate indi indi- cate that heavier debts are frequently frequently frequently fre fre- fre- fre being assumed when farms are bought This is especially true of tenants who are buying on contract contract contract con con- tract or with relatively small down payments All Sorts of Buyers Surveys by county banks indicate that tha t all types of of- farm buyers are arc arenow arenow now in the market Tenants are acquiring their own farms Owners are expanding their present units or are taking on additional acreage perhaps for sons now in the service Even large commercial farms in some instances are changing hands a at t increasing prices Local business business business busi busi- ness and professional people and city investors bent on hedging against inflation or higher income taxes are buying land War plant workers too are arc making purchases expecting to turn to farming when their ons jobs are ended All these conditions are reminiscent reminiscent reminiscent cent of what occurred in World War WarI I for that too was a la story of agricultural agricultural agricultural agri agri- cultural upsurge Farm income rose from 6 billions in 1914 to 14 1 1 Midwestern Land alit Prices Climb L 18 p in Year I I I J Rise in prices of farm farmlands lands m in the Seventh Federal Reserve District r laz 1 i 15 SZ 1 a 13 r l which includes Iowa 10 Wisconsin Michigan 8 and northern parts of Indiana and Illinois 5 4 J April 1 1 1943 July J 1 Ocr Ocl I 1 Jan Jon I J April 1 J. 1944 billions in 1919 High prices and a aready aready aready ready market for agricultural products products products prod prod- plus easy credit facilities encouraged encouraged encouraged en en- farmers to bid up land prices Farms were bought on speculation specula specula- tion with the expectation of a quick sale at a profit Land values were inflated from an average of 40 an acre in 1914 to 70 in 1920 Within those six- six years farm real estate rose in total value from 39 billion dollars to 66 billions The sequel was a making history-making crash Land prices fell from an average of 70 an acre to 28 More than a third of the nations nation's six million million million mil mil- lion farms were foreclosed by the end of the depression All farm farmland farmland farmland land and buildings declined in value from 66 billion to 31 billion It is natural that people today fear that the same thing will happen all over again As a result some agricultural leaders already are urging legislative controls Some of these are drastic some milder Proposals Proposals Proposals Pro Pro- range all the way from restriction restriction restriction re re- of owning land-owning privileges in some cases to credit control and heavy federal capital gains taxes Dangerous Remedies Lest the remedies be as fatal as the disease they are designed to cure however farmers were recently recently recently re re- re- re urged by Ray Yarnell editor of Cappers Capper's Farmer to look carefully carefully carefully care care- fully into these proposals their implications implications implications im im- im- im and what else may be prop proposed sed in inthe the the future before endorsing endorsing endorsing en en- dorsing them The land boom of the first World war and its ifs awful consequences throughout 20 years have been ben credited credited credited cred cred- by some to unwise land ownership ownership ownership owner owner- ship policies he declared Upswings Upswings Up swings of prices with the second World war have engendered the fear that another boom was in the making making making mak mak- ing and that its consequences would be the same as the first Buyers have been warned re re- Still reports of advancing advancing advancing ing prices multiply Some belief holds that voluntary action would be ineffective So legislated remedies remedies remedies reme reme- dies are proposed Most drastic proposal is the permit permit permit per per- I mit system advocated by William WilIiam G. G Murray of Iowa and others It would II require a prospective purchaser to appear before a board and show I reason why he should be allowed to buy a farm If the board found him an unfit person to own land or didn't like his attitude it apparently could turn I him down No permit would be awarded before the land had been appraised Lh Limited Loans Another proposal is credit control First provision is that no loans should exceed 50 per cent of the value of the land Presumably value value value val val- ue would be established by al Such a regulation might be legislated and it might stick Presumably Presumably Presumably Pre Pre- also lending agencies would establish a policy of refusing to lend to men who paid long prices An approach to this is already in effect The land banks mortgage trust and insurance companies have been discouraging borrowers both from paying too much and from borrowing borrowing borrowing bor bor- rowing too much of the purchase price But they dont don't have any control control control con con- over folks who are prepared to pay cash or the private money lender lend lend- er who is willing to take a long chance for a high interest rate or orthe orthe orthe the owner who can finance his own sale Mildest of these proposals is to impose a stiff federal capital gains tax Such a bill bilI was placed before before before be be- fore congress by Senator Gillette of Iowa It is directed at speculators by providing a n tax amounting to 90 per cent of the profits if the land is resold before b fore the end of two years Each year thereafter the tax would be decreased until the end of six years when none would be levied There is no doubt as to the class of transactions which the legislation is intended to curb But would a farmer farm farm- er who was obliged to sell seIl within the limits specified be subject to the tax All the schemes thus far advanced seem to be pointed toward keeping the buyer from making a fool of himself himself himself him him- self but of course every sale must have two parties So the man who wants to quit farming the man who wants to retire on proceeds from sale of his land the fellow who wants to sell and move elsewhere the widow who has been hanging on until she can get the family equity out intact the operator non-operator who is sick of wrangling with tenants tenants tenants ten ten- ants and who has been longing for forthe forthe forthe the time when he can get out and save his shirt shirt all all these welcome the upturn of prices Now lots of farmers who vho have no desire to sell who think their troubles troubles troubles trou trou- bles are caused by folks they dont don't believe should be allowed to own land applaud these proposals And they may be right but it will be bewell bewell bewell well to look into them their implications implications implications what else may be proposed in the future before endorsing them This country can have control of land sales and purchase in two ways First by doing nothing second second second sec sec- I ond by whooping it up for the pro pro- Farmers will wilI be more vitally vitally vitally vital vital- ly affected than any other group grout If they want a Federal agency empowered empowered empowered em em- powered to say who may own land they can have it If they dont don't care they can have it anyway Forces sponsoring the change in inland inland inland land policy will see to that But if farmers dont don't want it they may may maybe be beable beable beable able to forestall it by protest |