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Federal Farm Loan Act Pros And Cons

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The Federal Farm Loan Act of 1916 was enacted by President Woodrow Wilson and would have an lasting effect on the rural farmer by allowing them to receive a loan against their land. This paper will explore how President Wilson and President William Howard Taft sent ambassadors to study institutions in Europe to help mold the Federal Farm Loan Act. It will also discuss how the law was implemented and how the federal law was structured. Finally, it will discuss the different ways that the farmers benefitted from the Federal Farm Loan Act and if it helped them or put them in debt. Starting in the year 1912, President Taft and President Wilson commissioned a group of ambassadors to Europe to study different financial and developmental institutions. …show more content…

It also allowed them access to credit that they had previously never had access too. The Federal Farm Loan Act was highly touted, passing both branches of Congress by almost an unanimous vote (JSTOR 292). The act allowed for the Federal Land Bank to open in 12 districts across the country, with hundreds of National Farm Loan Associations to serve as agents for the Federal Land Bank. It has been considered as one of the most important measures that Congress had ever enacted. Before the Federal Reserve Act of 1913, farmers found it difficult to secure credit at reasonable interest rates. Up until then, national banks were prohibited from making loans on real estate security. Their land was all many of the famers had, and faced high interest rates that were on the borderline of breaking many usury laws (JSTOR 292). Many of these rural farmers had to pay interest rates from 5.3% in New Hampshire, and 9 to 10% in western and southern states. There was even evidence of farmers paying as high as 25% interest rate to secure a line of credit. Had it not been for the farmer’s land being high in value, they would have suffered many losses due to the high interest rates and commission charges. From the year 1900 to 1910 the U.S. census revealed that the value of land for rural farmers more than doubled in that timeframe (JSTOR

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The FDIC made sure the money in savings accounts was secured and that the client did not need to worry about bank failures again. Farmers struggled to keep their farms going at a very difficult time and the New Deal Agricultural Adjustment Act (AAA) helped farmers by paying them to produce fewer goods and crops which would allow them to charge higher prices for their products. This was very helpful to farmers because they were overproducing and no one was buying, so this new deal gave them a source of income. All in all, these New Deal programs were very successful and are still around

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The 1900’s were a revolutionary century for American Agriculture thanks to the improvement of industrial technology and other advances in the field. The industrial technology ranged from many things, but machines had now given way for a decrease in manpower on the farms. (Farias, 2012) In 1906, in response to Upton Sinclair’s novel, The Jungle, The Pure Food and Drug Law was created, which required the USDA to inspect the sanitation of agricultural businesses.

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Of all the Alphabet Agencies established under Roosevelt’s New Deal, the AAA, the WPA, and the FDIC had the most impact on helping America to recuperate from the terrible effects of the Great Depression. The Great Depression led to many American companies going out of business or cutting their workforce drastically to survive, which left many Americans unemployed. The AAA (Agricultural Adjustment Act) was put in place to deal with the masses of food product being produced in America after the war. After WW1, American farms expanded to produce lots more food to sell in Europe as many European farms had been destroyed. When European farming eventually recovered, they no longer needed to buy American produce, leaving American farmers with far

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Another objective of Roosevelt’s was to provide relief for the poorest Americans whom were primarily farmers whom lived in the Midwest and in the South. The Midwest and the South were the poorest regions of the country. Many lacked basic resources such as electricity and plumbing. The majority of farmers were also suffering from low income due to lack of demand for agricultural products. Roosevelt decided to provide relief to Americans from the Midwest and the South by influencing the market in a way that will cause demand for agricultural products to increase which will cause agricultural prices to increase as well.

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They began defaulting on these loans which wasn’t good for the farmers or the local banks. This was also a huge problem for America because American agriculture employed nearly 30 percent of the workforce in the United States. In his New Deal, Franklin D Roosevelt brought forth the Agricultural Adjustment Act (AAA) which provided relief to farmers by paying them to reduce production. This was important because it helped reduce crop surpluses and give farmers a source of income. Meanwhile, in western Canada, farmers were experiencing a disastrous and prolonged drought, which caused nearly 250,000 people to leave the prairies in the 1930s.

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(Document G) Furthermore, the period brought about significant changes in American agriculture, with technological advancements, government policies, and economic shifts reshaping the farming industry. As outlined in the document, farmers found themselves disillusioned with the political rhetoric that promised prosperity through hard work and increased production. Instead, they were met with the harsh reality of plummeting prices for their crops and livestock, leading to financial hardship and a sense of betrayal by the very politicians who claimed to have their best interests at heart. The stark contrast between the promises of a bountiful harvest and the harsh economic conditions faced by farmers highlighted the disconnect between government policies and the lived experiences of those working the land.

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This caused a new problem when the farmers could not pay back these loans and became bankrupt. The banks kicked farmers off of their land and forced onto the

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The banks gave them generous, oh so generous loans. They encouraged them to overproduce. The rich were waiting for the wheat prices to fall. When the farmers failed to make their loan payments, they repossessed the land.

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Therefore, when ranchers and farmers need help with railroads, they gave it to them. For example, the Hepburn Act that gave the Interstate Commerce Commission which gave the government power to regulate the railroads. Then when Woodrow Wilson took over for office after the 1912 election, he passed the Federal Reserve Act and the Federal Farm Loan Act in response to the Omaha Platform. The Federal Reserve Act was the response to free silver and established the Federal Reserve System with the monetary policy and the Federal Farm Loan Act would lend long term loans to farmers with low interest rates and that was the response to subtreasury. However, the Progressive Era would end at the start of World War 1 and the Great Depression would begin after the end of

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