I found a 2011 paper by the Kansas City Federal Reserve titled, Agriculture’s Boom-Bust Cycles: Is This Time Different? What a thought-provoking read. Let’s skip to the end. No. This time is not different unless you mean worse. Now, let’s look through their paper together and talk about a few interesting things. (So interesting I had to break this up into several parts.)
The Fed’s paper looks at agricultural boom and bust cycles over the last 100+ years. Not only can I see evidence of those cycles on my own farm, I can see evidence of them in my plat book. In fact, if we leave the paper behind for a moment you can see a timeline that illustrates the changes over time here (link). Notice the entry from 1889-1919 is called simply “Farm Prosperity”. Some of this was, apparently, the result of increased farm productivity. Farmers were able to grow and sell surpluses rather than just work for subsistance as noted in the transcript of a speech by Peter A. Coclanis:
During the period between the Civil War and World War I, we find other changes in the agricultural sector as well. American farmers became much more commercialized in this period, offering more and more of their annual output for sale on local, regional, national, and international markets. Put another way, there were fewer and fewer subsistence farmers and fewer and fewer farmers striving for, let alone achieving self- sufficiency.
This period of prosperity is obvious on our farm. The main part of our house was built in 1911 by Dick Chism (my great, great uncle). Our big barn was built in 1914 by men hired by uncle French and my great-grandfather Charlie (all brothers).
The British Army also purchased a large number of mules from the USA. The mule has amazing stamina and endured the terrible conditions in the front-line better than the horse. At the end of the war the army owned 213,300 mules.
But the Great War ended. Cars became cool. Europe could focus on feeding themselves again. Not only did a large portion of our agricultural exports cease, our need for livestock feed fell off because we had fewer animals in harness (and thank God). So more of the ground used to grow livestock feed could be used to grow grains for human consumption. This led to huge surpluses in crops and a crash in agriculture. From the K.C. Fed Report:
Farm prosperity, however, was short-lived as global food production rebounded, export demand collapsed, and farm incomes fell. With the conclusion of the war, export demand faded. By 1922, U.S. agricultural exports returned to pre-war levels, slashing agricultural commodity prices by 40 percent from 1919 to 1921. Returns to operators plummeted.
Moreover, the industrialization of U.S. agriculture through the adoption of the tractor and other mechanized equipment reduced the need for feed grains for draft animals. The combination of weak exports and increased food grain production led to another collapse in agricultural commodity prices and profits during the early years of the Great Depression.
But nothing brings high prices like low prices (the inverse is true too) and nothing generates demand for food like hungry people. And when the world went to war again we were busy feeding the world. Farming became valuable again. Again from the Fed notes:
Similar to the 1910s, World War II sparked another farm export and income boom. A surge in wartime food demand boosted U.S. exports through the 1940s. After bottoming at $4.3 billion in 1941, real agricultural exports quickly rose to $25 billion by 1944. Similar to World War I, a wave of livestock exports fueled U.S. export growth during the war, while crop exports increased moderately.
The paper goes on to note that exports remained high following the war and into the ’60’s. In what must have been around 1937 (at age 16) my grandpa borrowed money directly from Oliver to buy a new Oliver 70…the first tractor in the neighborhood.
Sidebar – This story is a part of my own life because around 1984 my grandma wanted to buy a dress. Grandpa said they didn’t have the money for a new dress (we’ll discuss the ’80’s next time). In spite of the cash flow issue grandpa went to a farm auction and came home with a rusty old Oliver 66. Grandma, at least slightly angry, said, “Tom, what is that?” Grandpa, knowing he was caught, said, “um…that’s for Christopher. It’s…ummm…like the tractor I started with.” Some time later we went to the farm for a visit. Before I got out of the car grandma was on the porch yelling for me. “Christopher, go to the machine shop and see the tractor your grandfather bought for you!” You can imagine my shock! Apparently grandpa was shocked too. He stood, defeated and staring at his feet as I ran off to the shed. I have had that tractor for nearly 30 years now. Dad restored it when I was a kid. Truth be told, it’s more of dad’s tractor than mine…or it’s a memory we share. He has something apart on it even now.
Shortly after grandpa bought that first tractor, my great-grandfather and all of his sons sold their horses. The story goes that my great-grandpa got sick (had a stroke?) and grandpa Tom had to take over the farm. He got the tractor and earned $1/acre plowing the neighbor’s fields. Everybody saw the productivity gains available with the tractor and grandpa’s business only lasted one season. My great-grandfather wasn’t having any of it. By reputation, he was a little hard-headed and demanded that men work hard because men should work hard. (That notion may be countered by the story that my great grandpa bought a car but couldn’t drive it. So he told my pre-teen grandfather learn to drive.) I guess my great-grandpa Charlie recovered enough that the two of them decided to go out and plow in the spring, grandpa Tom with the tractor, his father with the horses. By the time lunch came around my great-grandpa decided it was time to unhitch the horses forever. Grandpa Tom claimed to have little use for horses, just as his sister is shocked that we milk cows (lol). Guess they were done doing things the hard way.
Grandpa went bananas building ponds and bulldozing the world around 1955. At one point he even moved a creek bed! I have heard that neighbor teens (who are all grandparents now) would gather and swim at the beach on the pond. Water lines were trenched all over the farm (and are now overdue for replacement). In the ’60’s my grandpa’s cousin built an addition on to the house. We have some nice pictures of my parents wedding reception in that room as well as family reunions and Christmas dinners every year. That’s the room our wood stove is in now. All that stuff and all of those memories were built by a time of agricultural prosperity.
When dad first came to the farm grandpa was still farrowing pigs on pasture. There is a story of a big rain flooding the pastures surrounding my house and washing away pigs. So in the late 70’s grandpa and his hired man built a concrete hog floor and a pig nursery at the home place. This was top of the line stuff at the time. The floor and slurry pond are still there, though overgrown, and we use the pig nursery as a chick brooder (and it’s awesome!).
Look at all the wealth that has been accumulated on our farm over the last 100 years. The infrastructure changes line up perfectly with the boom periods outlined by the K.C. Fed. But I have left out the busts.
Every boom is followed by a bust. The views are great on top of the mountain but the fruit is grown in the valley. At least if you are optimistic about low points. At certain points, my ancestors took money off of the table. Rather than spend that money they made infrastructure improvements and parked that wealth in the farm itself. This is like planting a tree knowing you will never rest in its shade. This is planning for abundance in future generations.
Come back next time and I’ll tell you about the low points in our own farm’s history, how grandpa held things together and I’ll share some of the neighborhood history. I can point out 20 barns nearby that are roughly the same age as ours. Not very many are still owned by the builder’s family. The Fed paper says there is a reason for that. Debt.