In lieu of an abstract, here is a brief excerpt of the content:

  • From Breadbasket to Dust BowlRural Credit, the World War I Plow-Up, and the Transformation of American Agriculture
  • Sara M. Gregg (bio)
Key Words

banking, farm finance, Federal Farm Loan Act, Kansas, Progressive Era

During the summer of 1914, as Europe prepared for war, the United States Congress debated whether to adapt European models of agricultural finance to the Americas. The question was whether the federal government would intervene in the farm mortgage market. Modernizing agriculture was an important priority for farmers, businessmen, and government officials, and federal policymakers saw boosting farm production as a national imperative. At stake in these debates were significant questions about the prerogatives of the nation-state: did the national government have the authority to assist in the expansion of mortgage credit to rural producers, who had long suffered from limited access to long-term loans? Should the reforms to the banking system that had been passed through the 1913 Federal Reserve Act be extended into agriculture? How should rural communities adapt: through farm consolidation, large-scale mechanization, or a commitment to a diffuse network of small-scale, low-technology farms? For decades, farmers had argued that they suffered from limited local credit markets, and many argued that they were constrained from expanding their operations because of the dearth of lenders willing to invest in agricultural improvement. After 1912 members of Congress embraced this cause, negotiating the terms of a radical new federal intervention in the rural economy.

Congress established a mechanism that proved crucial to the reorganization of American agriculture with the passage of the 1916 Federal Farm Loan Act. This legislation appropriated funds from the US Treasury to create a network of regional land banks extending government-seeded, long-term, low-interest-rate mortgages on land and improvements. This program provided an influx of new credit for American farms, building upon the precedent of decades of subsidies to railroads, [End Page 129] homesteading, agricultural research, and irrigation.1 During the wartime emergency these farm loans allowed expansion-minded American farmers to invest in new machines, consolidate operations, and modernize their facilities in order to produce ever-higher yields deemed crucial to the war effort. The federal land banks injected hundreds of millions of dollars into American agriculture during this moment of economic and technological transformation, spurring a dramatic expansion in rural finance.

This article examines the Federal Farm Loan Act’s impact on the southern Great Plains, where federal land banks invested the majority of farm mortgages during the late 1910s. By surveying these developments within the larger history of agricultural credit, this study demonstrates the impact of the federal land banks on wartime production. After 1917, the new federal land banks distributed millions of dollars in loans to wheat farmers in the Great Plains. The sudden availability of long-term, low-interest-rate mortgages in these historically undercapitalized lending markets funded the purchase of machinery, the consolidation of farms, and the unprecedented expansion of wheat acreage during World War I, a confluence of events known as the Great Plow-Up.2 These government-seeded mortgages provided the capital that stimulated technological expansion on the Great Plains, spurring the consolidation and industrialization of the region’s farms. At the same time, the federal government’s intervention in the rural credit market sought to neutralize the historical climatic and economic vulnerabilities that had discouraged lending in the region. Ultimately, the new land bank loans facilitated the push to plant the Plains in wheat, both severing the deep roots that had held the soil on the land for millennia and injecting a new reservoir of capital into the region.

Most scholarly analyses of the impacts of World War I on the American home front have featured the expansion of federal control over transportation networks, food policy, and political dissent. Yet despite the considerable literature on wartime conditions, historians and economists often overlook one of the most pronounced and long-lasting effects of this transformation: the altered relationship between agricultural producers and the state. Vast increases in production reshaped the rural landscape, and reordered the relationship between the United States and its allies while creating surpluses of grain and cotton that would vex agricultural policymakers...


Additional Information

Print ISSN
pp. 129-166
Launched on MUSE
Open Access
Back To Top

This website uses cookies to ensure you get the best experience on our website. Without cookies your experience may not be seamless.