From Breadbasket to Dust Bowl: Rural Credit, the World War I Plow-Up, and the Transformation of American Agriculture

Abstract

Numerous scholars have surveyed the creation of a vulnerable agricultural landscape on the Great Plains during the years surrounding World War I, and especially the alterations to the landscape of crop production that precipitated the 1930s Dust Bowl. Most have missed the impact of the first government-sponsored enterprise (GSE), the federal land banks, and the role of government-seeded credit in radically shifting the farm mortgage market and production patterns in this region after 1917.

This article adds the critical element of economic causality to the story of the Great Plains Plow-Up, arguing that federal credit policy, in the form of the 1916 Federal Farm Loan Act, created the financial mechanism for the pattern of surplus production that has challenged farmers and agricultural policymakers since the end of World War I. With this law the U.S. government launched into the mortgage market, and provided the essential start-up capital for farmers in historically undercapitalized regions, thus reshaping the form and scale of American agriculture. Using the financing provided under the Federal Farm Loan Act, Great Plains farmers were able to consolidate and mechanize their farms, and thus respond to the call to “plant more wheat” during the war years, thereby creating the unprecedented grain surpluses that paved the way for decades of overproduction. The high yields and increased cultivation of the postwar years forced farmers to further maximize production, even as surpluses drove prices down. The economic imbalance of production cycles during the 1920s led to repeated calls for government intervention in commodity markets, and eventually to the 1933 Agricultural Adjustment Act, which implemented the production control policies that have dominated U.S. agricultural policy ever since.

The federal land banks contributed substantially to the mechanization and consolidation of American agriculture, and to the problem of surplus that has defined farm policy since the 1920s. “From Breadbasket to Dust Bowl” contextualizes the agricultural reforms of the 1910s, and demonstrates the expansive impact of this new form of federal aid to agriculture on the rural economy and American public policy into the 21st century.