Ed Ellingson's Blog


-13-Grandpa’s Farm Saved from Foreclosure

When I was little I heard a lot about my grandparents, Freeman & Lina Higgins, almost “losing the farm” during the depression.  At some point my dad must have thought I was old enough to understand, and he explained it to me.

At first, during the Depression, when people lost their farms, the attitude was, “they never should have borrowed the money”, or “they were such a poor bet, I can’t understand how they could have borrowed money anyway” or some such response that was really to put the blame on the victims, that it was their own fault.  As the Depression wore on, more and more farmers were losing their farms, and the people in general started to realize that it was good, hard-working people, people like themselves, who were being foreclosed upon.

To understand what was going on you need to understand a little about interest on money and our economic system.   If you buy something, say farmland, with 10% down and take a mortgage for the balance, and the value of that land increases 10%, you stand to double your money, less interest.  Conversely, if the value decreases 10%, you stand to lose all that you put in.  If you can’t make your payments, the mortgage holder can foreclose upon you to gain title to the land, and you’re left with nothing.  If property values are continually rising, buying land can seem like a good investment with very little risk.  Virtually everyone would love to take advantage of this; get financing at a “normal” rate with just a little bit of your own money down, and then make very handsome returns on your investment as prices “inevitably” rise.

As far as our economic system, we have a debt-based fractional reserve system.  This means that money can come into circulation only if “someone” borrows it, and each dollar borrowed tends to promote additional bank reserves and then further borrowing/lending to others, continuing the monetary expansion, perhaps with inflation.  If no-one borrows any money, (either they don’t want to, or they are not allowed to) people are still paying on existing loans/mortgages, so that takes money out of circulation.  The shortage of money makes it more valuable/harder to get, so it’s value goes up, and it drives down the price of things, so there’s a condition of deflation.

As the Depression went on, people began to understand it as a man-made phenomenon, strictly an action by the wealthy class to own an even greater percentage of the country.  Nothing except finances had fundamentally changed.  There were no crop failures, there were no epidemics killing people or animals, no noxious gases spilling from volcanoes, no mass die-offs in the seas.  In fact, grain sat spoiling in the farming country, while there were breadlines and hunger in the cities.  The problem was strictly a man-made financial problem, and the people who were in a position to do something about it were not going to do anything, except grab more.

In this setting, people did what they’re good at, they started to work together.  When the sheriff posted a foreclosure sale, farmers would come from miles around to support their fellow farmer.  They’d come with pitch forks, hay hooks, and clubs.  When the auction started, they’d bid small amounts for the items, maybe a dollar for a hay mower, $2 for a cow, $.05 for a fork.  I’m not sure of the amounts, and it’s hard to compare in different eras, but my dad told me it was pocket change; even though they were hard up, they still had some money.  If anyone tried to bid it up from there, make a serious bid, the farmers would surround them, haul them off to behind the barn, and explain in not-so-gentle terms that no serious bids were allowed.  When the auction was over, the farmers left without taking any tools, crops, or animals with them, the sheriff turned over the pitifully small amount of money raised to the banker, the debt was settled, and the farmer could return to his work, debt-free.

Initial foreclosures were on chattel mortgages, where a farm renter/sharecropper borrowed money at the start of the season to buy seeds and get through the season, and expected to pay the loan back after harvest in the fall.  They secured the loan with the machinery, livestock, and even the future crops through a chattel mortgage.  As the Depression ground on, farmers who owned land, but had a land contract or mortgage, got behind on payments, and came under foreclosure.  These “actions” started to take place at larger auctions, where both the farm operation (machinery, animals) were sold, plus the farmland.  Consider someone buying a 160-Acre farm for, say $100, with not a higher bid to be found.  Then the winning bidder deeds the property right back to the farmer.

This worked out well for the farmer, although not so well for the banker/mortgage holder.  They could try to put pressure on the sheriff to “do their job”, “enforce the law”, etc. but many sheriffs didn’t see it that way.  They figured the crime was committed in Washington, New York, and other big cities out of their jurisdiction, and they weren’t going to be a part of an enforcement at their local level to reward a (presumed, but untouchable) criminal at the national level.  There’s a certain amount of pressure at the local level to treat your neighbors (and voters) well, and fairly, even if not strictly legal.  There’s even the knowledge that people know where you live, where your kids go to school, where and when your wife visits her mother, and a recognition desperate people can turn to physical violence.

There’s also pressure from the top down.  Court Orders are issued, obstruction of justice can be claimed, malfeasance in office can result in removal from office.  As much as they may want to enforce laws on a broad scale, and side with their friends and neighbors, some could be pressured to take actions to support the legitimate bidders, and thereby the mortgage holder.  Some sheriffs started to staff up for these auctions, so as to be able to protect bidders and allow a fair and open auction to take place.  The farmers seemed ready to respond in kind.

This seemed to be the background for a planned auction of my grandparent’s farm in Pleasant Prairie, Kenosha County, Wisconsin in 1934.  The sheriff had organized extra deputies, and the farmers were coming in from miles around to disrupt the auction.  My grandfather sent telegrams to the President (and other political figures) begging for some kind of intervention.  Everyone expected violence.  Recognizing this widespread problem, on 28 June President Franklin D. Roosevelt signed the Federal Farm Bankruptcy Act placing a moratorium on farm mortgage foreclosures.  This was apparently the day before the auction, and the telegraphs were said to be flying fast and furious to verify that that the order had been signed, and to convince the sheriff that he did not have the authority to proceed with the auction.

The auction was cancelled, and announced at the time it was scheduled to start.

I remember a party, I was probably 10 or thereabouts, so in the mid-1950’s, where the featured activity was burning (a copy of) Grandma & Grandpa’s mortgage.  So somehow the mortgage got restructured and twenty years later they finally got it paid off.  They didn’t lose the farm, but they didn’t get the mortgage debt erased either.  Violence was averted, but the economic system remained in place unchanged, and the Depression ground on.  Nothing really changed until the developing war in Europe forced some really dramatic changes.

At least that’s how the story was told to me.

I wouldn’t want to say that stories like this are “covered up”, but they are certainly not publicized.  In A People’s History of the United States the late historian Howard Zinn describes actions like this taken by city folks to help one another, but doesn’t describe the farm actions in any detail.  I have seen some accounts, but they’ve been very limited.  It’s easy to understand how things like this didn’t get recorded very well; any report written to describe these actions could serve to support further action, so just by writing a news report a person could be labeled as a traitor or insurrectionist.

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