The midland journal. (Rising Sun, Md.) 1885-1947, 1945-08-17
Skyrockefing Land Values

uCldiS anu IGdUGTS III Tie ldI III
mortgage credit field are more than
a little concerned at the present
trend of rapidly increasing farm
land values which are skyrocketing
in much the same fatal pattern set
during and Immediately following
World War I.
Not only is government alarmed
over these soaring values, but pri-
vate industry is equally concerned
to such an extent that the Ameri-
can Bankers association is urging
its country bank members to follow
conservative lending policies and to
beware Of spectators who would
boost prices beyond what bona fide
farmers can pay"
AS of July l, the level of farm
real estate values had risen to an in
dex of 100, or a rise of SO per cent
since March, 1941, as compared to
an index of ITO in 1920 or rise of
IS per cent from 1915 to 1920. But
the end of this increase is not yet
in sight and, with guaranteed farm
prices, return Of thousands of vet
Grams who want farms, and relaxa-
ton of rationing on farm machinery,
these farm values may equal or
even exceed the "boom" values
which crashed with such devastat-
ing effect in 1922 and later.
Farmers Remember Crash
Many thousands of American
farmers well remember that crash,
when some 100000 farms, over
capitalized at high per acre prices,
went the foreclosure and forced sale
route. Then from 1925 when farm
values started to come back until
the crash year of 1929 when values
again hit the toboggan, more than
100000 farms were sold under the
hammer of the foreclosure auction
eer and went into the portfolios of
banks and insurance companies.
Will American farmers forget
the lesson learned during those
years and now, with pockets
bullying with money, bid up the
prices of farm land to another
crash year?
There are some contrasts or saw
ing factors now, which were not
present in the last war: (D in most
areas the level of values started
from point about Is per cent be-
low the base of World War I; (2)
there are more sales for cash now,
about 55 per cent as compared to
less than SO per cent in World War
L; (3) farm real estate debt con-
tinues to decline in spite of soar
ing values, whereas during and
after World War I, mortgage debt
continued to increase.
In four years farmers have paid off
$1,316, 1000, 900 in farm mortgage debt
and the total debt today on farm
real estate is 5,271 200, 900, or less
than half of the all-time peak of 1928
when the debt reached $10,786, 000,-
600.
Parity Guarantee Factor
Another favorable factor today is
the fact that farm prices are guar
anteed by the government at 80
per cent of parity for at least two
years following end of the war, a
factor not present after World War I.
But in spite of these favor
able circumstances, it is pointed
out that the large number of re-
sales (one-eiglrth of all sales)
indicates speculation is influence
ing the farm market that
twO-fifths Of sales during 1914
carried a debt Of IS per cent
or more Of the purchase price
and that in many Of these sales
involving credit, the farm buy
ers have assumed debt great
er than the full market value OF
the land four years ago >. that
In many cases current sales
prices are higher than can be
justified ON the basis Of long
time earning capacity.
In South Carolina and Kentucky
values are up more than double
their 1885 to 1889 average, largely
because Of tobacco prices. Values
are up more than 80 per cent In
Colorado, 81 per cent in Indiana,
Arkansas and Wyoming, 70 per cent
in nine other states. Averages are
above 1920 levels in one-sixth Of the
states and equal or above 1919
levels in one-hah Of the states.
To combat these soaring increases
the USDA has named q National
Agricultural Credit committee Of
governmental leaders and repre-
sentatives Of major lenders In the
farm mortgage credit field to meet
|, in Chicago periodically to plan curbs
on the infiationarys rise In farm
values. But the question still re-
mains up to the individual farmer:
Agriculture, as measured by the
true dollar volume Of its physical
goods has increased from $49, 000,-
DOC, 900 industry to a $4,000, 000, 900
industry during the five-year period
ended January l, 1945.