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I don’t think so, but consider this: a great deal of disruption was thought to have been caused by rapidly falling farm prices in the late 1920s and into the 1930s. Indeed, most of the horrible things done by FDR’s first New Deal involved gruesome attempts to raise farm prices amidst massive unemployment (unlike anything we see today) and lots of hungry people.

It is well understood that during the 1930s America was undergoing a transition away from small-scale farms and toward larger, capital-intensive farms. This change was brought about by improvements in farm technology, aided by technologies outside of farming that allowed people to make a good living elsewhere. However, consider one thing that kept farm incomes high until the 1920s – draft animals.

It takes a lot of land and food to feed a single horse. It is estimated that it takes about 5 acres of oats to feed a single horse for a year. That was enough land to feed a family of eight people. Horses and oxen were the prime movers of carriages until the early 20th century – until Mr. Ford figured out a way to deliver internal combustion powered cars to the masses. With the rise of cars came the end of horses and oxen. Thus, Henry Ford is in no small way responsible for a reduction in demand for oats and other feedstocks, which had to put downward pressure on farm prices and farm-land prices.

Is this why the Great Depression happened? No. But it had to be a small part of it. And on another note, it is not entirely obvious to me why a decrease in demand for various grains by draft animals HAS to result in farmers being worse off. If the rise of the automobile and related industries made us richer, would we not expect to see a corresponding income effect raise the demand for different (and better) farm products? Why did this not happen? Or did it?

6 Responses to “Did Henry Ford Contribute to the Great Depression and Ruin American Farming?”

  1. Harry says:

    All commodity prices fell in the Depression. I’d have to get to my Warren book on the timing, but cannot do that right now.

    The blame goes not to Henry Ford but rather to the US Congress, which has the constitutional power to regulate the value of the currency, which it did not, and to the Federal Reserve, which blew it.

  2. Michael says:

    It’s impossible to consider everythng, but one of many possible effects would be that demand for feed grains goes down, price of oats and other feed grains (corn) goes down, making food like oatmeal cookies and grits cheaper, but would also make the price of meat tend to go down because it’s cheaper to feed cows, chickens, and hogs, which would result in demand going up for feed grains….
    This can go on and on, and is essentially what I would call a Keynesian excersize in circular logic. Really, from my agricultural experience, farmers don’t plant one type of crop, but diversify a bit and look at overall futures prices to determine what to plant (or not). Overall I would expect farmers who could buy the tractors to be much better off and more productive than ever (and to cultivate more land), while it would drive the less efficient farmers out of the market. A growing economy requires that this process takes place, but because there are so many things to consider, it is entirely impossible to know exactly what happens.

  3. Harry says:

    Replacing draft horses with tractors that run on Esso meant you could get a lot more done, and you would have more room in the barn for cows.

    Of course, the world would have perished had Rooseveldt’s Brain Trust not created the Agricultural Conservation and Stabilization Service.

  4. Rod says:

    Henry Ford saved or created 40 million jobs, or something like that.

    Franklin Roosevelt did not know which end of the horse was the front end, which explains how, in government, the number of the posterior ends of horses always exceeds the anterior ends, to put it delicately.

    In Third World countries tractors are scarce, as are cars. Only the Agricultural Conservation and Stabilization Service bureaucrats of these collectivist countries have cars. Is this why it’s cool to own a Range Rover?

  5. Rod says:

    At 40 bushels per acre, five acres would produce 200 bushels of oats, or about 0.56 bushels per day. That is a lot of oats. But don’t forget that horses ought to have ten pounds of hay per day, at least, or a quarter bale of hay.

    This brings to mind a story about a man who wanted to board his horse. He first went to his neighbor’s farm. “How much will you charge me for boarding my horse?” he asked. “Fifteen dollars per day, plus the manure,” said the neighbor.

    Then he went to a farm down the road. “How much will you charge to board my horse?” he asked. “Well, I know that your neighbor would charge you $15, but times are tough now that Obama is president. I’ll do it for $12, plus the manure.”

    That wasn’t much of a difference, so he went to another farm farther down the road and asked what it would cost to board a horse. “Just $2 a day,” the farmer replied.

    “That’s great!” said the man, “but what about the manure?”

    “There won’t be any.”

  6. chuck martel says:

    The Panic of 1873 was exacerbated by the Great Epizootic of 1872, an epidemic of equine influenza that disabled almost the entire horse population of the US and Canada. Transportation came to a standstill, fire fighters couldn’t respond, it was a mess that wasn’t straightened out for years. Marlboro’s most successful campaign against the French, including the battle of Blenheim in 1704, was helped by a rampant infection of glanders in the French horses. Imagine the problems if 3/4 of the cars in America refused to start.

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