FAKM LAND VALUES IN IOWA. 39 



because farmers who would otherwise have purchased farms for their 

 sons postponed these purchases until the boys should return from the 

 army, while many farmers were investing in Liberty Bonds instead 

 of in land. With the close of the war and return of the soldiers this 

 source of demand for land again became effective. It is difficult to 

 prove this theory, but it seems probable that it may account in part 

 for the "boom," although undoubtedly a subsidiary cause. 



The large increase in the net earnings of farmers was responsible 

 for the "boom" in still another way. It increased the investable 

 funds in the hands of farmers. This condition was also rendered 

 still more favorable by the easy market for credit which prevailed in 

 1919. Both conditions were reflected hi the financial status of State 

 and savings banks and trust companies. A statement of the condi- 

 tion of 371 State banks, 926 savings banks, and 23 trust companies 

 in the State of Iowa, published in the press under date of July 22, 

 showed that bank deposits had increased more than $100,000,000 

 during the year, or about 17 per cent, while loans and discounts had 

 increased less than $40,000,000, a little over 8 per cent. 



By easy market for credit is not meant easy terms of credit. We 

 have no grounds for believing that during the period of the "boom" 

 there was a strong tendency to lower the standards of security ordi- 

 narily required in Iowa for farm purchases financed by credit. What 

 is meant is that loanable funds both for mortgage and for personal 

 credit were abundant. Not only was this true of bank credit, but it 

 was especially true of credit furnished by the sellers of farms. Large 

 numbers of farmers who had prospered during the war desired to 

 retire, and many of them were glad to avoid the responsibility of, 

 and risk involved in, renting land, by converting their equities so far 

 as possible into farm mortgages. 



Such were the important conditions which formed the basis of 

 increased activity in buying and selling land in the spring and summer 

 of 1919, and the accompanying increase of land values. 



This movement, however, was cumulative, increasing of its own 

 momentum. As soon as it became apparent that land values were 

 rising the speculative interest developed. Many people who other- 

 wise would not have been interested in the land market bought for 

 the purpose of selling again within a short time. The motive was 

 not for investment and had little reference to the earning power of 

 the land except so far as this might form a basis for judging the prob- 

 ability of further increase of value. This class of buyers increased 

 the volume of demand for farm land. Moreover, since most of this 

 class also desired to sell again as soon as a substantial speculative 

 profit could be realized, the volume of supply was considerably 

 increased. From one-fourth to one-third of purchases and sales were 

 made primarily for speculative motives. There were many persons, 



