REAL ESTATE: The Farmer's Memory

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Farmland values have risen more sharply within the past year than for more than 20 years past. Most of the increase has occurred since last November. OWI, reporting this, said that things are not yet out of hand: despite the past year's overall jump of 9%, per-acre values are still just below the 1912-14 average. But the steepness of the rise is cause for alarm.

The last time the farmland value line took a perpendicular upward direction it finally went through the roof. Many a farmer is still in hock because he forgot then that what goes up, etc. On the awful 1921-35 toboggan the average value of a U.S. farm nosedived from $10,284 to $4,825; some 85,000 farmers hit bottom and went through the wringer in the '30s. But this time there are indications that the U.S. farmer does not yet need to be reminded of those doleful years. Most hopeful contrasts between now & then:

>Last year U.S. farmers reduced their total mortgage debt by $360,000,000, three times the average net reduction of the three preceding years. Total farm debt is down some 10% from the beginning of 1939, whereas farm mortgages almost doubled in value between 1915 and 1920.

> Most farmers are also cagily plunking down more & more hard cash for the land they buy, even though interest rates are temptingly low. In the last quarter of 1942 only half the parcels of land bought in the North Central states involved any mortgage at all, and of those, 35% of the purchase prices was paid for in cash. In the Northern Plains only 18% of all the recorded transfers involved a mortgage.

> A substantial fraction of the present rise in farm values is due to city-slicker dollars in search of a hedge against inflation. "Chicago money" has poured into Illinois farm land in recent months; an Iowa farm broker last week reported that one eastern moneybags had just banked $400,000 in Des Moines and was looking for land to spend it on.

Farm equipment and manpower shortages, gas rationing and a host of other wartime worries have put some brakes on the farmland boom market up to now. The real danger in the 1943 boomlet is that too many farmers might decide to take a flyer in land for speculation's sake and not for the land's produce. Against that psychology, if & when it arrives, the U.S. farmer's best weapon will be a long memory.