Farmer Bankruptcies, 1898-1935

Excerpts from the report: The National Bankruptcy Act of July 1, 1898, with subsequent amendments, has governed the procedure for the legal adjustment involved in bankruptcy cases under Federal jurisdiction since that date. The principal provisions of this law are that any debtor who is unable to meet his obligations as they mature may present his case to a Federal court, listing his assets and liabilities. If the court, after verifying assets and claims and after hearing creditors, decides that the case warrants the action, it may apportion the assets among the creditors, subject to the borrower's exemptions, discussed later, and may declare the debtor free from all further obligations. Bankruptcy cases for farmers as well as for other occupations are dealt with in the Federal district courts, the lowest branch of the Federal judicial system. Figure 1 shows the 86 districts into which the country is divided and within which the district court has Federal jurisdiction. The relative number of farmer bankruptcy cases in any one period has shown a significant relationship to the economic conditions affecting farmers in that period. From 1898 to 1914, the annual number of bankruptcies averaged 1,085. During the 6 years, 1915-20, there was an average of 1,441, making an average of 1,182 cases for the 22 years. In 1921, a rapid increase began in farmer-insolvency cases adjusted in the courts, the number rising to a peak in 1925 and continuing at a high level through 1934. Farmer cases averaged 5,276 per year during the 15 years 1921-35, as compared with an average of 870 per year during the pre-war years 1910-14.