Deflation Dooms the Debtor

Deflation Dooms the Debtor - Deflation Dooms the Debtor a....

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Deflation Dooms the Debtor a. Results of a One-Crop Economy i. As long as prices stayed high, all went well. But if they went down, since they were growing only one crop, it really hurt their livelihood ii. Grain farmers competed in a world market against Argentina, Russia, and other foreign countries. If their grain flourished, the price of the farmers’ grain in America would fall and they’d face ruin, as they did in the 1880s and 1890s iii. 1855 – Family borrows $1,000 (when wheat was worth $1 per bushel = 1,000 bushels) iv. 1890 – If they didn’t pay their debt back by this date (when wheat was worth $.50 per bushel = 2,000 bushels, plus interest) b. Currency In Circulation i. Deflation was also caused by the lack of money in circulation, so prices were forced down. The currency in circulation for each person was: 1. 1870 = $19.42 2. 1890 = $22.67 ii. During this period of time, business and industry increased many times, causing a scramble for available currency c. Debts Increase i. Farmers operated at a loss each year ii. Their farm machinery increased their output of grain, lowered the price, and drove them even deeper into debt iii. Many had to mortgage their homes (by 1890, Nebraska reported 100,000 of them) 1. Interest rates were very high – 8-40% d. Farmers Turn To Tenancy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/04/2012 for the course HISTORY 104 taught by Professor Reed during the Spring '11 term at Rutgers.

Page1 / 3

Deflation Dooms the Debtor - Deflation Dooms the Debtor a....

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online