As land values increased, lenders and farmers
alike mistakenly concluded the ideal conditions
would become the norm.
Borrowing became the order of the day and
there were plenty of lenders eager to accommodate
optimistic farmers.
Alan Tubbs: There was intense competition
for agricultural lending at that time, a very
aggressive Farm Credit System and banks were
of course trying to compete with them.
And even within the Farm Credit System, you
had the Federal Land Bank, you had the Protection
Credit Associations.
And the Production Credit Associations also
became very aggressive in land loans.
So in a way you had, within the same system,
a competition between PCAs and Federal Land
Banks and then you had the institutional lenders
out here trying to compete with that competition
and so I think everybody got a little too
laxed in their lending at that time and that
also escalated land prices and contributed
to the inflation that was going on particularly
in land.
Money to borrow was everywhere, it seemed.
Private sector lenders came on board in addition
to entities created by the federal government
during the last great Farm Crisis.
There also was the Farmers Home Administration
created in 1947, often called FMHA, the so-called
"lender of last resort."
Farmers of all income levels leveraged the
rising value of their land as collateral to
secure new loans.
The benefits of upgrading or expanding a farm
operation were viewed as unquestioned acts
of faith.
Evangelists of growth preached a powerful
message.
Mark Pearson: You know, it was like you wanted
to own things.
You didn't want to own paper, you didn't want
to have cash, you wanted to have it in something,
in dirt.
Successful Farming ran a cover story, "Black
Gold" and that was the push.
To young, ambitious farmers, the time was
ripe with possibilities their parents never
could have imagined.
Older generations observed with caution.
Yet, they understood younger farmers faced
a new world, one in which it seemed the risk
of seizing the moment was as great as doing
nothing at all.
Chuck Hassebrook: They had supposedly the
smartest people in the country telling them,
some of the smartest people in the country,
ag economics and bankers and people like that,
telling them that land couldn't go down and
that they ought to buy it sooner rather than
later and leverage themselves because it's
always going to go up and they can borrow
more to buy more.
Not everyone was convinced the future was
fail safe.
Gary Lamb: I didn't fall into this trap like
a lot of farmers did.
And I can understand it.
I don't blame them.
They were listening to all the experts and
I really can't explain what it was, I just
had this feeling in the pit of my stomach.
Gary Lamb has farmed in east Central Iowa
for over 60 years, raising corn, soybeans,
hay, hogs and cattle on 400 acres.
His ancestors helped settle the area making
Lamb the fourth generation of his family to
be a steward of the land.
Gary Lamb: At the time, uh, my banker came
out on a Sunday night, he had never come out
here before on a Sunday night to help me do
chores.
That was at the big silo across the road.
I heard the dog barking so I opened the door
and there was my banker.
And he said, say, Gary, are you aware there's
280 acres right east of you for sale?
And I said, yeah, I heard it is.
And he said, you making arrangements to buy
it?
And I said, no.
I said, I'm farrowing 600, 700 head of hogs
and feeding out a couple hundred head of cattle
and I've got 125 stock cows.
I said, hell, I'm -- and I was renting another
couple hundred acres of row crop ground, I
said, I'm staying busy from daylight until
dark now.
I don't need another 280 acres.
All I need is a return on what I've got.
Well, he said, you have to -- he said, when
you get your head straightened out, he said,
I know you, I know your operation, just give
us the word and we'll buy it for you.
Well, needless to say I didn't do it.
But if I would have listened to my financial
expert, my banker I could have not only lost
that 280 acres, I could have lost everything.
