A Preliminary Study of Farmer Bankruptcy Experiences in the Dakotas, 1928-1952

The objectives of this study were (l) to analyze the operation of general bankruptcy procedure as used by farmers (2) to appraise the effectiveness of section 75 of the United States Bankruptcy Act as a relief measure and of the Frazier-Lemke Act in particular; and (3) to evaluate the bankruptcy experience of farmers in North and South Dakota from 1928-1953, in regard to the development of effective farmer-debtor relief legislation. It is generally agreed that farmers are very vulnerable to price, income, and weather fluctuations. Therefore, it has been contended that, in the national interest, farmers need and deserve legislative assistance to protect them from financial distress and the subsequent loss of their farms and homes. Section 75 of the Bankruptcy Laws of the United States, and particularly subsection (s), the Frazier-Lemke Act, were passed by Congress in an effort to afford debt relief to insolvent farmers which would permit them to retain ownership of their farms. This act resulted in a scaledown of the original debt at the initiative of the borrower and under supervision of the courts. The legislation encountered the hostility of the lower courts even after its constitutionality was upheld by the Supreme Court, It was generally considered, even by its supporters, to have been poorly drafted. The numbers of farmer bankruptcies in North and South Dakota 1928-1953 were relatively small when compared to the number of foreclosures during the same period. Farmers were apparently not informed, unable, or unwilling to seek relief of under existing bankruptcy laws. Further inquiry into the reasons for this situation would seem to be justified in view of the recent efforts in the United States Congress to make farmer-debtor relief legislation a permanent part of our bankruptcy laws