November 23, 2020
The Farm Crisis of the 1980s

The Farm Crisis of the 1980s by Pamela Riney-Kehrberg, Ph.D, Iowa State University

On December 10, 1985, farmer Dale Burr of Lone Tree, Iowa, walked into the Hills Bank and Trust and killed his banker. Before leaving for town, he had shot and killed his wife. When he returned home, he shot and killed a neighbor, then killed himself. His wasn’t the only act of violence during the 1980s, but it was one that shocked the whole nation. People found it hard to believe that a farmer, in Iowa, of all places, would walk into a bank with a shotgun and murder the man who handled his loans. But it did happen, and it wasn’t the only time during that decade when a depressed and desperate farmer would do violence to himself and others. 

There were lots of desperate farmers during the 1980s, when the nationwide Farm Crisis affected farms from coast to coast, from the Canadian border to Texas. Its most serious effects were felt by farmers in the upper Midwest—Minnesota, Wisconsin and especially Iowa, where The Year We Left Home is set. Over the course of the decade, a quarter of the state’s farms disappeared, with Iowa losing population even as the rest of the Midwest made modest gains. One of the book’s most vivid chapters, set in Iowa in 1983, puts daughter Anita and her husband Jeff, right at the center of the action. A few days before she is to entertain Jeff’s banker coworkers, she picks up the local paper to read about a desperate Fort Dodge area farmer who kills his banker, his family and himself. She listens as Omaha bankers describe the causes and effects of the Farm Crisis. Feeling guilty and more than a little mad at her husband, Anita gives money to members of her extended family whose farm is being auctioned off to repay their loans to Jeff’s bank. To fully appreciate this chapter, and to understand the changing fortunes of the Ericksons’ hometown, it’s important to understand the long-term and acute causes of the Farm Crisis, as well as how it affected rural Midwestern communities.  

Since the beginning of the twentieth century, America’s farmers had produced more than the nation’s citizens could eat. Sometimes, as during World War I and World War II, this meant that the U.S. could feed itself, an army, our allies, and large numbers of refugees. At other times, however, surpluses depressed prices and caused economic stress for farmers. Farmers do not set the price for their own corn, wheat, hogs, cattle, and other products. The market sets their price. Often, farmers were caught in what came to be called a “cost-price squeeze,” wherein the income they received for the goods they produced did not meet the cost of the items they needed to produce them. Yet unlike other producers of goods, farmers numbered in the millions, were typically self-employed, and were spread out over the entire nation, making it all but impossible to come together to limit production in order to improve their incomes. 

This normal cycle of fluctuating commodity prices could be exacerbated by other factors, such as the cost of farm equipment or land, the availability of credit, or the openness of foreign markets for American-grown crops. The story of the Farm Crisis features all of these circumstances playing out over two decades, the same period covered by the first half of The Year We Left Home

Throughout most of American history, to be a farmer was to be poor, but the early 1970s were a time of prosperity for many. Even so, events in the decade set the stage for the troubles to come. Early in the decade, the price of fuel soared when the Arab members of the Organization of Petroleum Exporting Countries embargoed the U.S. and other nations over support for Israel in the Yom Kippur War. The cost of petroleum products, and therefore the cost of farming, increased sharply. Meanwhile, for the first time, the U.S. decided to allow trade with its Cold War enemy, the Soviet Union, whose people were desperately in need of grain after experiencing significant crop failures. Harve, Jeff’s boss at the bank, explains it thusly: “Then one day…[a farmer] can ship his corn and wheat all the way to the great Union of Soviet Sorehead Republics, because those boys can build all the missiles in the world, but they can’t feed their own people” (p. 144). American farmers, producing a surplus as they had for most of the 20th century, supplied that need. So despite rising oil costs, farmers were making a whole lot of money. 

These short-term gains, however, caused significant long-term problems. Across the country, the good times, as well as low interest rates in combination with high rates of inflation, caused land prices to soar. Indeed, the “good times” directly led to the rising cost of land, as the value of land rises when agriculture is profitable. At the same time, people were looking for a place to put their money that would keep it safe from inflation. With low interest rates, putting money in the bank didn’t seem like a good idea. Given how land prices were increasing, buying more acres seemed like a safe bet. Farmers bought more land at high prices, and often did so with borrowed money. The illusion of lasting good times made it seem like a good idea. Or, as Harve puts it” “Now wouldn’t you want to buy yourself some more land, and maybe build a bigger barn, and everything else you’d need to take advantage of [the new markets in the USSR]?” (p. 144). 

Unfortunately, this tenuous situation started to unravel in the late 1970s. Even greater overproduction caused the price of wheat, corn, hogs, beef, and other farm goods to fall. Many farmers kept their operations going by borrowing money against the equity they held in their land. And then the Chairman of the Federal Reserve, Paul Volcker, decided that inflation was out of control, and that the way to control it was by significantly increasing interest rates. While that was a welcome decision for those who had money in the bank, it was disastrous for those—including thousands of farmers who had borrowed to buy land in the 1970s—who were in debt.  When land prices started to fall in 1981, the results were catastrophic. Large numbers of farmers had borrowed against the value of their land. When the value of their land fell, they no longer had collateral for their outstanding loans. Banks started to foreclose, accelerating the rate at which farmers, especially small family farmers, were losing their land. In Iowa, farmland would lose 60 percent of its value between 1981 and 1986. About a third of the state’s farmers found themselves in serious economic trouble. Scenes like the auction set at the Goodells’ farm (p. 146-153) were common.

While Harve the banker dismisses the Farm Crisis as “survival of the fittest” and “natural law,” the 1980s were exceptionally hard years for farmers and the Midwest. Farms failed and small communities suffered. Many small towns lost banks and stores. Schools closed and consolidated as communities lost population. While the effects of the crisis may have been more evident in Iowa, they were felt all across the Midwest, as families lost their land, and small towns lost their people. A generation of young people left the rural Midwest, looking for greener pastures. They relocated to the region’s major cities or to what they perceived as more attractive locations on the coasts. The Midwest that existed at the end of the crisis was not the Midwest that existed in 1970 or 1980; too much had been lost.

“Individuals,” Harve says, “are not the same thing as economics, or history, or farm policy, or the man in the moon” (p. 145). The Year We Left Home helps us consider the lives of individuals, like Anita or Jeff, like the Goodells or the Pearsons, like our families and neighbors, who are caught up in and affected by the big sweeping forces that have and continue to shape the Midwest. We see the ways that individual choices are shaped by factors far beyond any one character’s control, even as those same characters search for explanations of whom to blame for their misfortunes or grapple with the guilt of benefitting from other people’s misfortunes. The Farm Crisis chapter, in particular, helps us consider how urban or suburban characters like Anita and Jeff are tied to rural farmers like the Goodells and the Pearsons—and vice versa. Hopefully, as you read and talk about The Year We Left Home, you’ll focus on this particular chapter and consider the many questions it raises about the recent past and the ways Midwesterners have shaped and are shaped by history.

 

Pamela Riney-Kehrberg is Professor of History at Iowa State University, where she has taught since 2000.  She is the author of    Rooted in Dust:  Surviving Drought and Depression in Southwestern Kansas,  Childhood on the Farm:  Work, Play and Coming of Age in the Midwest,  Always Plenty to Do:  Growing Up on a Farm in the Long Ago  and  The Nature of Childhood:  An Environmental History of Growing Up in America Since 1865.  She is also the editor of the Routledge History of Rural America.  In 2017, she became a Fellow of the Agricultural History Society.  Currently, she is researching the Farm Crisis of the 1980s, and writing a book tentatively titled “When a Dream Dies:  Agriculture, Iowa, and the Farm Crisis of the 1980s.” 

Posted In: One State / One Story

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