American Agriculturist 
THE FARM PAPER THAT PRINTS THE FARM NEWS 
“Agriculture is the Most Healthful, Most Useful and Most Noble Employment of Man.”— Washington 
Reg. U. S. Pat. Off. Established 1842 
Volume 114 For the Week Ending December 6, 1924 Number 23 
The Outlook for Farm Land Values 
Inflation During the War Caused Trouble 
By GILBERT GUSLER 
A DISCUSSION of the outlook for farm 
land values can hardly be approached 
without fear and trembling. To assume 
to say with confidence what the future 
will bring involves a much fuller comprehension 
of the trend of events in the agricultural field 
than this writer claims to have. 
. Such questions as the long time trend of prices 
of farm products, of prices of industrial com¬ 
modities that farmers must buy, of changes in 
farm labor costs, of increasing or decreasing 
competition from foreign farm products in our 
own markets, or changing demand 
for our farm products abroad, the 
trend of taxes and of interest rates 
need to be considered. In short, 
the whole range of economic factors 
entering into the determination of 
farm profits, or the lack of them, 
will in the long run, decide what 
farm land and prices are to be. 
In spite of the difficulty of ap¬ 
praising all these influences, the 
man who buys a farm really makes 
a market forecast that involves 
consideration of such forces and he 
backs his judgment with his money. 
By making a purchase, he implies 
that these factors will be sufficiently 
in his favor to enable him to make 
the farm pay out in due course of 
time. 
As has been pointed out so for¬ 
cibly by Dr. Ely, the eminent land 
economist, a large share of the 
agricultural distress of the last few 
years has been due to a faulty 
forecast of the future of farm land 
values. The principal sufferers dur¬ 
ing the depression have been those 
who bought land at high prices, with 
only moderate cash payments, seem¬ 
ingly on the assumption that war prices for farm 
products would continue indefinitely. A nation¬ 
wide mistake in judgment was made as to the 
farm land market from which many individual 
farmers will be a long time in recovering. 
“The cause of panics is ’avin’ ’igh ’opes.” 
This was the sage comment of a London cockney, 
source forgotten. Farmers’ hopes, apparently, 
were a few notches too high back in 1919 and 
1920. Since so many people made such a bad 
guess at that time, it may not be out of place 
to risk a few observations as to the outlook. 
An examination of the trend of land prices in 
the last sixty years and an examination of the 
factors that determined the trend should be 
helpful in sizing up what may happen in the 
future. Four fairly well defined periods can be 
isolated. The first three of these periods are 
illustrated by the land price curve on the accom¬ 
panying chart. 
In the first period, from 1860 to 1900, average 
farm land prices in the United States, as reported 
when the census was taken every ten years, 
showed a slight upward trend. New land was 
available so that the desire for a farm could be 
satisfied more readily merely by moving on, 
taking up raw timber or prairie land and forging 
a farm out of it, rather than by the purchase 
of improved farms in the older settled sections. 
The opening up of fertile new lands in the middle- 
west and west furnished such a surplus of grains 
and live stock to be forced on foreign markets 
that prices were low and farm profits were small. 
The chart shows that the average value per acre 
of the ten leading crops followed a downward 
trend during most of this period. 
In the second period, extending up to 1915, 
land prices advanced steadily and much more 
rapidly than in the preceding forty years. Close 
observers of this period consider that the starting 
point of this advance was around 1897 when 
prices of farm products were just emerging from 
the effects of the depression of 1893. The census 
reports show that land prices more than doubled 
from 1900 to 1910. 
But little good new land was brought into cul¬ 
tivation in this period. The population kept 
growing while our land resources did not. Agri¬ 
cultural production did not keep pace with the 
growth of domestic demand so that the export¬ 
able surplus declined. Industrial expansion made 
an excellent home market. The chart shows that 
crop values per acre advanced although less 
sharply than land prices. 
The savings of agriculture were largely in¬ 
vested in clearing, fencing and draining of fields 
and the construction of farm buildings. Roads, 
schools and courthouses were built and paid for 
to a large extent out of taxes on farm lands. 
With but little new land available, the tendency 
was to capitalize such values in the form of 
higher land prices. Increased profits in farming 
brought about by the application of scientific 
methods and modern machinery had a similar 
effect. 
Then followed the period of inflation, extend- 
Sound Basis Ahead 
ing from about 1915 up to 1920. The chart shows 
the sharp rise in crop values per acre brought 
about by the war-time increase in demand for 
farm products. Farm profits increased and the 
assumption that these profits would continue 
indefinitely finally led to a runaway boom in 
farm lands. Some of the buyers were speculators, 
but actual farmers predominated. Some were al¬ 
ready owners who wished to farm on a larger 
scale. Others were tenants who had saved money 
and desired to become farm owners. Still others 
were farm boys who wished to start farming on 
their own. The prices paid re¬ 
flected the belief that prices for 
farm products would remain lofty 
and that the land market would 
go still higher. In most cases, cash 
payments were relatively small and 
new farm debt totalling several 
billion dollars was created. 
The fourth period is the recent 
agricultural depression. Crop val¬ 
ues per acre, based on December 
1 farm prices, dropped from $35.74 
in 1919 to $14.45 two years later. 
There was a recovery to $21.55 in 
1923, and 1924 will record a further 
gain. 
The average value of plow 
lands, as reported by the United 
States Department of Agricul¬ 
ture, dropped from $90 per acre 
on January 1, 1920, to $65 four 
years later, a decline of 28 per 
cent. The same percentage of de¬ 
cline as applied to census values 
of farm land and buildings is 
shown on the chart. The value of 
the average farm declined nearly 
$3,000 and the total loss was 18 
billion dollars. Naturally, the shrink¬ 
age was most severe in the mid- 
dlewest where the boom has been most marked. 
This brings prices back to about the same level 
as in 1915 or 1916. 
The equities of many of the buyers of land 
during the boom period were wiped out when 
prices of farm products became too low to per¬ 
mit continuation of payments on mortgages and 
the market price of the land itself declined. A 
year ago, records collected by the Department 
of Agriculture showed that more than 8% per 
cent of the land owners in fifteen corn and wheat 
producing states in the upper Mississippi valley 
had lost their farms. 
This brings us down to the present time. Nu¬ 
merous unfavorable conditions still cloud the 
land situation, although signs of improvement 
can be seen. Prices of farm products are doing 
better just now but, until this year, cash or crop 
rentals, after deducting taxes, were not enough 
to pay ordinary interest rates on current land 
prices. The farm owner who credited himself with 
a fair labor income did not have enough left to 
pay a return on his investment. If he assumed 
that the land earned a fair rate of interest, he had 
to work for less than hired man’s wages or, per¬ 
haps, for nothing at all. 
There have been enough farmers at the end of 
their financial string to (Continued on page 1 + 04 ) 
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Land values showed a slight upward trend from 1860 to 1900 while crop values 
followed a slight downward trend. During that period the average annual crop 
values per acre ran from 50 to 75 per cent of the price of the land and buildings. 
In those days it was much easier to become a farm owner than at present. In 1897, 
crop values started upward and the price of farm land began its climb which ter¬ 
minated in 1920. The sharp advance in crop values per acre which started in 1916 
accelerated the rise in land prices. Crop values dropped about 60 per cent from 
the peak. Land values dropped nearly 30 per cent. Crop values have shown a sharp 
recovery in the last three years. The land market is only beginning to show the 
effect of this improvement. Land prices have hardly turned but buyers are more 
willing to take hold. 
