The Leon reporter. (Leon, Iowa) 1887-1930, 1919-10-30
SERIOUS RESULTS FROM LAND
BOOM WARNED AGAINST.
The Bureau Of Farm Management
Sees Many Dangers as Result OF
Great Buying and Selling.

Serious results from the boom in
farm LANDS Ill me corn De!t aie
warned AGAINST by the federal bur
eau or fam management III a state
ment issued through the department.
OF agriculture recently.
lfne statement Is made up from
thel reports OF eight Investigators
sent into the corn Deit, several OF
whom worked Ill Iowa. The great
in tarms," as the statement puts IL,
is iowa and the principal corn pro-
dHcing counties OF central Illinois.
In this area representative farms
have been sold and are being SOLD
at increases averaging from 80 10
500 an acre ana much more IN
many instances. The fever or specu-
Missouri, eastern Kansas, Nebraska,
North and South Dakota, southern
Minnesota and western Indiana.
The report takes up the specu-
lation in farms by city people, re-
marking that many, who are not
farmers, have been making large
fortunes in farms.
'.This represents, in effect" the
report says, "a process OF trans er-
ring the ownership Of rural wealth
to persons who are not farmers: IN
one form or another toll will be
levied on the farming industry to
pay interest on these speculative
profits. Wealth that should constl-
tute a permanent basis OF rural
the resources of rural communities.
The higher prices brought by the
speculation will make it more diff
cult for tenants to acquire land, the
report fears. The initial payment in
case of purchase, being, at, the same
ratio as formerly, viii be higher be-
cause Of the . higher ,o total aH yalle:
such as insurance companies,
are not disposed to lend more per
acre on first mortgages than former
ly, despite the increased payment
price. In Iowa the standard has
been about $94 an acre, although
some companies lend as high as
s125. A much greater margin re-
mains, therefore to be accounted for
by cash payment or second mort
The report takes up the practice
of selling the farms several times,
with full payment to come March 1,
with only a small percentage OF the
ment This method, the report says,
contains elements of danger.
1.-THE seller in each case depends
says. The latter, in turn. becomes a
seller and depends on the settle
ment to be made by his purchaser
in order to make his own cash pay
doubtedly some persons in the chain
of transactions who are unable to
complete their settlements on March
/, unless they succeed in selling
again. Preliminary observations
are convincing that such persons are
in the minority: However the far
mer who sells should be exceedingly re- aI Ely
purchaser is depending on resale for
settlement or whether he can COM
plete the purchase out of other re-
sources available Caution in this
respect will greatly reduce the i'm
mediate dangers of the speculative
tendency. Banks also should be
CAUTIOUS in extending their credit to
lation. The commissioners of banking
Of one of the states affected declares
that there is danger that country
banks especially may find them
selves possessed next spring of a
large amount Of paper which really
rests on non-liquid security. In fact
the bankers of the regions affected
can do much to prevent the natural
tendency toward speculation in
period of rising land prices from
getting entirely out of bounds"
Some practices are employed by
the spectators the report says that
are unfair in character. Corpor-
ed liability, enabling promoters to
speculate in farm lands in the name
of the corporation, without personal
liability In some cases dummies
who are not good for obligation,
are employed, subsequently selling
to the real SPECTATOR. though still
retaining liability. In case the
speculator is unable to- resell, the
dummy is unable to fulfill the obi
cation and the farm may revert to
the original seller who may in the
meantime have lost an advantageous
opportunity to sell.
The most fundamental question
involved that the investigators
found however, is whether the pres
ent boom is justified by the future
earning power of the farms.
Farm MANAGEMENT surveys 1T
said. "have shown average cash rent
ais to yield net returns of only from
2 to 2 Der cent Of the average esti-
mated prices Of the land.
If the increase in prices continue;
il saws, the result will be a still
greater decentralization.
There is no bear side to the
mdIhSt OuCc d Dcl iOu VI SpCSu
1ation is under full Roadway. Such
an activity runs its full course un-
til it collapses.
eft is very clear that with the re-
turn of normal conditions the farm
er who purchases a farm. at, the
price which have recently been
paid is likely to find it exceedingly
difficult to earn a reasonable return
on his investment, and if he buys
the farm on small cash payment.
paying from 51a to ~ per cent
interest on his Indebtedness the re-
suit may prove positively dis
astrous.'
The report tells of farmers, who
have appeared to have gotten an ad-
vantageous price for their farms:
buying back at an advance of
$4,000 to $4,000 and of others
who sold out and moved away. to
cheaper lands. thus surrendering
association with friends. relatives
and established associations.
Moreover, it says. "the OPP
portunity to sell at high prices is
undoubtedly inducing many good
farmers to leave the farm at an
early age because the ignorance in
price of the farm has assured a good
u - g