Latimer, Iowa Impact of the Farm Crisis on Farming Communities

On January 15, 1987… …the FDIC closed the only “farmers” bank in Latimer, Iowa. The following announcement was merely a foreshadowing of the difficult months that would follow: A small fleet of rented silver Lincoln Continentals pulled Into Latimer shortly after 3 p.m. last Thursday as a team of 45 Federal Deposit Insurance Corporation bank closing specialists began the task of transferring ownership of the failed Latimer Bank and Trust, closed that afternoon by state banking officials (Hampton Times. 1987a:1).

The Farm Crisis 1970s: Farmers expand production Land-grant colleges promote farmers as “business managers” Earl Butz: “Get Big or Get Out” Farmers take on debts to purchase land & equipment Overproduction spurred declining prices, as costs of production rose

The Result: Mid-1980s: 90,000 delinquent farm loans : Farm banks on the FDIC problem list increased from 106 to 413 Iowa: 1930 – 215,000 farms 1986 – 109,000 farms 2000 Census no longer included farmers as an occupational category

Bank Foreclosures The Latimer bank was the only one of 12 banks that remained solvent in Franklin County during the 1930 depression In 1986, FDIC closed 10 banks in Iowa The Latimer bank was closed with no forewarning

FDIC -Ensures that bank deposits are paid -Supervises banks to identify financial problems -Is a receiver of failed banks The Latimer bank’s $3.5 million loan losses had depleted capital Half the loan portfolio ($5.4 million) was in agricultural loans

The Latimer Bank Closing In selling off delinquent loans, FDIC drained $7.3 million out of the community Farmers with loans received a letter within a week after closing stating that: FDIC now holds the loan All assets are frozen (for all loan holders) The loan is delinquent and payment due within 10 days

Situation of the Farmers Must fill out FDIC financial statements Inability to write checks, sell property & crops FDIC notifies sale barns, grain elevators, packing plants, auctioneers within 100 mi. FDIC raised interest from 13% to 21% Urban orientation of FDIC officers & impersonal relationship with farmers

Liquidation Farmers unable to pay their loans are liquidated, including land, machinery, & the family home When some farmers bought the land of liquidated farmers, the response was they were “feeding on the blood of your own people”

Community Impact: “The farm crisis also has become a crisis for local government, crippling its ability to collect taxes, debilitating the maintenance of schools, public utilities, and services. Main Street businesses are losing their trade and falling under the pressure” (Des Moines Register) “Everything in the county depends on the farm. If farmers don’t have money to spend, it’s reflected on Main Street” (Hampton Chronicle) 6 Businesses in Latimer (pop. 441 in 1980) closed

The Psychological Impact March, 1987: an Iowa farmer walked into his burning farm building. A Latimer Task Force member asked of this suicide, “How much stress is there? Can we feel it in the community? How do we deal with it?”

Community Response Fear, shock, denial Failure to confront reality & contact FDIC Reluctance to complete FDIC financial statements Reluctance to talk about problems Threatened suicides, violence

Final Remarks: Rural America is viewed by many as a dinosaur— a curious remnant of a past age and unsuited to today’s sophisticated and complex environment. But the rural America of today is fully integrated into U.S. society. What hinders rural America is the ignorance, neglect, and inconsideration that permeates the actions of an urban-dominant government. The challenge to America is to rediscover its rural heritage. Creating new policies that embrace rural values, traditions, needs, and potential can unleash opportunities for all Americans.