Murray, William G

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Masthead Logo The Palimpsest
Volume 48 | Number 10 Article 9
10-1-1967
Variations Within the State
William G. Murray
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Murray, William G. "Variations Within the State." The Palimpsest 48 (1967), 492-500.
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Variations Within The State
Iowans have alw ays been conscious of different 
qualities of farm land in the state. In the early 
years, as explained in the Public Land Sale chap­
ter, settlers preferred land with a combination of 
timber, dry prairie, w ater, and closeness to a navi­
gable river. Later, in the 1860-1900 period, with 
the coming of the railroads and improved methods 
of drainage, the quality preference shifted to the 
level and undulating tillable lands of rich soil 
which were usually distant from timber and water.
Even in the last 50 years there has been a 
marked shift in the quality preference as indi­
cated by farm values. A ttention was draw n to the 
quality factor by the foreclosures and other cases 
w here lending agencies acquired m ortgaged farms 
during the depression years 1921-1940. These 
lenders, principally insurance companies and the 
Federal Land Bank of Om aha, w anted to know if 
they could do a better job in lending on farms in 
the future. Accordingly, they cooperated with the 
agricultural experiment stations, including the one 
at Iowa State University, in studies designed to 
improve appraisals for farm loans.
In these studies it became apparent that the 
lower valued lands, with some exceptions, had
492
VARIATIONS WITHIN THE STATE 493
been over valued and the loans placed on them had 
been excessive compared to the loans on the better 
grades of farm land. Concrete evidence on this 
point was provided by the percentage of corpor­
ate land (land owned by lending agencies) that 
existed in each county. T he corporate land map 
for the state in 1939 showed a much higher per­
centage in the counties of below average farm 
values. W here  this did not occur, as in parts of 
northeast and southeast Iowa, it was due to the 
fact that farm lands in these areas were recognized 
as not being capable of supporting farm mortgage 
loans out of line with soil productivity.
Unfortunately, the appraisal policy prior to 
1930 had not given a correct estimate of soil pro­
ductivity, especially in relation to erosion and 
drainage aspects. N ot enough discount on land 
valuation had been made for thin soil on rolling 
land and poorly drained areas. For example, a 
thin or wet soil was given a $70 an acre loan while 
a deep rich soil was given a $100 loan. W hen  the 
depression hit, farm owners had to farm their soils 
hard to get maximum production to pay taxes and 
interest. This resulted in severe erosion on the 
rolling farms with an eventual decline in produc­
tivity, which left the farm owners unable to meet 
the interest on relatively high mortgage loans.
An example of the faulty loan policy is readily 
available in a comparison of the corporate acreage 
in some of the southern Iowa counties compared
494 THE PALIMPSEST
with some central Iowa counties. Thus, in 1939, 
in one group of seven southern counties corpo­
rations owned an average of 24 per cent per coun­
ty, while a group of seven central Iowa counties 
averaged only nine. T he value per acre of the 
southern counties in 1940 w as $42, while in the 
central counties it w as $106. A state soil erosion 
map showed heavy erosion in southern and w est­
ern areas, the same areas w here corporate land 
holdings were heavy in 1939. In northern Iowa 
the heavy corporate land holdings resulted not 
from over valuation of areas subject to erosion but 
to failure to allow for drainage problems, depth of 
surface soil, and other soil productivity factors.
A new emphasis on soil productivity came out 
of these studies. In fact, a new method of farm 
appraisal called the “ Productivity M ethod” devel­
oped. In essence, the shift to productivity was 
recognition of crop yields and net income as more 
im portant than sale values in determining valua­
tions for loans. As a consequence, productivity in 
appraisal was introduced into the textbooks and 
w as adopted and practiced by the lenders and 
their appraisers beginning in the middle 1930's.
An example from the Federal Land Bank of 
O m aha’s lending experience in Iowa illustrates 
how the new emphasis on productivity worked. 
T he  example covers a four county district in north 
central Iowa analyzed by A aron G. Nelson with 
the following results:
V A R IA T IO N S  W IT H IN  T H E  S T A T E  495
Quality of Land
H igh M edium Low
A verage  Loan
1917-1932 $77 $78 $73
Foreclosures 8% 7% 23%
A verage  Loan
1933-1936 $63 $58 $50
1937-1941 67 59 48
Loans after 1932 were spread wider to reflect the
difference in productivity and income potential of 
the high and low grades of land.
V ariations in farm values within the state differ 
widely. A spectacular increase in the values in 
northern Iowa as compared to southern Iowa took 
place after 1910. W h a t happened can be shown 
by comparing two counties— Hancock County in 
northern Iowa and W ayne  County on the south- 
ern border. T he farm value figures for these two 
counties in 1910 and 1966 show the dramatic 
change which occurred:
Farm Values Per Acre
1910 1966
H ancock  C oun ty $71 $422
W a y n e  C oun ty 72 161
S ta te  of Iow a 96 331
In this period Hancock County values rose from 
a level the same as W ayne  and below the state 
average to a level two and one-half times W ayne
County and almost 25 per cent above the state av­
erage.
496 THE PALIMPSEST
For an answ er to the rapid rise in land value in 
northern Iowa we have to go to the expansion of 
corn acreage and production which has occurred 
in this area. N orth  central Iowa w as poorly
drained originally and drainage improvements 
have been a continual process over the years. Evi­
dence of the progress is revealed by the follow­
ing figures:
Corn Acreage
1909 1966
H an co ck  C o u n ty  81,000 124,000
W a y n e  C o u n ty  77,000 49,000
H ancock C ounty had only slightly more com  
acreage than W ay n e  in 1909 but had two and 
one-half times as much in 1966. W hile  Hancock 
w as having extensive investments made in drain ­
age, W ay n e  w as experiencing heavy losses from 
erosion.
V alue changes for other northern and southern 
counties, which show similar results, can be noted 
with the use of the Federal Census values by 
counties which appear in a table in the center 
spread of this article.
A recent and entirely different type of variation 
in farm values within the state is the change which 
is taking place around the large cities in Iowa. 
T he change is particularly noticeable around those 
cities which have been expanding rapidly in popu­
lation. A comparison of Polk and Story counties 
in central Iowa gives some indication of w hat is
VARIATIONS WITHIN THE STATE 497
happening. T he City of Des M oines with 209,000 
in population is located in Polk County and the 
City of Ames with a population of 27,000 is lo­
cated in Story County. T he farm value figures for 
the two counties are:
Farm Values Per Acre
Polk S to ry
1950 $219 $224
1954 272 278
1959 372 351
1964 391 384
Polk County, with the larger area of land around 
it with rising values, has pushed ahead of Story 
County where there is not as much urban influence. 
These figures, of course, give only an indication 
of the more rapid rise around the cities. If the 
areas around the cities could be sampled by them­
selves the results would show the rapid rise even 
more conclusively.
Farm value comparisons within the state can 
be highly useful to farm owners, lenders, asses­
sors, and others affected by value changes. To 
make good comparisons, however, it is important 
to have reliable figures. Actually, an extensive 
array of farm value figures are now available, in 
a much greater supply than formerly existed.
From 1850 to 1940 the only comparison figures 
available were the Federal Census reports which 
were obtained every 10 years until 1925 when the 
five-year series started. These Census values have
498 THE PALIMPSEST
been obtained by asking the farm operator the 
market value of the farm he is operating. W ith  a 
complete record of these county-by-county data, 
presented in the center spread, farm values 
in any Iowa county can be traced back from 
Novem ber 1964 to the first Federal Census in the 
county. Comparisons over a period of census 
years can be made between counties, as illustrat­
ed in the case of Hancock and W ay n e  counties.
Beginning in 1912 the United States D epart­
ment of A griculture estimated an index of farm 
real estate values for each state. This series, which 
has continued to the present, does not provide any 
district or county figures within the state. A t first 
this index was issued only once a year (on M arch 
1 ), but in recent years indexes have been pub­
lished for November 1 and in some cases for July 
1 also. These indexes appear in a publication en­
titled, D evelopm ents in the Real Estate M arke t.
Beginning in 1941, and continuing to the pres­
ent, the Agricultural Experim ent Station at Iowa 
State University has issued annually as of Novem­
ber 1 farm value figures for five types of farming 
areas in the state. T he boundaries of these five 
areas, which follow county lines, are shown in an 
accompanying state map. A major objective of 
these annual surveys of farm brokers is to provide 
not only area averages but also values for high 
grade and low grade farms as well. Thus, each 
year 15 values are given— three values by grade
VARIATIONS WITHIN THE STATE 499
in each of the five areas. Beginning in 1957, the 
results of these same surveys were broken down 
into nine crop reporting districts, also with three 
grade values in each district.
Another useful aid is a report issued four times 
a year by the Federal Reserve Bank of Chicago 
which shows farm value changes in percentage 
terms for the five farm type areas in Iowa.
As a result of state legislative action in 1961, 
the State Tax Commission began collecting de­
tails on each real estate sale, either by deed or 
contract, as part of an assessment-sale ratio study 
aimed at improving assessment uniformity. Annual 
reports have been published by the Tax Commis­
sion, beginning with the report for 1962, which 
include sales information by counties for both ur­
ban and rural sales, and with the rural sales not 
only broken down into deeds and contracts but 
each of these groups divided into improved and 
unimproved tracts.
At first thought these actual sales figures issued 
by the State T ax Commission might appear to be 
the most nearly accurate data available on the 
farm land market, especially since they include all 
deed and contract sales recorded. This is not nec­
essarily true because to be reliable averages the 
sales would have to be representative of the dif­
ferent grades of land present in the county or 
township. It is common, in some areas, for more 
of the medium or low grade farms to sell than of
500 THE PALIMPSEST
the high grade which are often tightly held by 
families and passed down from one generation to 
the next w ithout being recorded as a bona fide 
sale. O n this account it happens frequently that 
the average of all sales is below w hat would have 
been the average if a proper proportion of high 
grade farms were included in the sales total.
O n the other hand, these farm sales do provide 
a w ealth of information and to the extent that they 
include the same biased representation each year 
they do give an excellent indication of year to year 
changes. In addition, these sales are the best 
source available on the proportion of deeds and 
contracts. T hey  also allow a comparison of im­
proved and unimproved land sales, all on a coun­
ty  basis, and with some comparisons being made 
on a township basis.


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