Debt Liquidity Research Articles

Long-Term Farm Credit in a Depression

The principal problem in long-term farm credit in the United States in recent years has become one of paying for credits once obtained, in contrast with the pre-war problem of obtaining new credit. The volume of loans falling due has for some time exceeded the amount of renewals and new advances, the average size of new loans is smaller than the loans renewed, and many loans are renewed only on condition of reduction. Despite efforts toward adjusting debt terms and payments, much long-term farm credit is being cared for only at great sacrifice, and inability of borrowers to meet debt service requirements has led to loss of many farms to creditors while delinquency has threatened the ownership of many others. This course of events characteristic of debt liquidation in a period of declining prices was made more acute by the general business depression accompanied by pronounced declines in farm prices and land values. The extent of this debt distress among American farmers is therefore a point of primary importance, as is the problem of minimizing its undesirable financial and social results.