Frazier–Lemke Farm Bankruptcy Act
Encyclopedia
The Frazier–Lemke Farm Bankruptcy Act was an Act of Congress
passed in the United States
in 1934 that restricted the ability of banks to repossess farms.
in conjunction with President Franklin D. Roosevelt
passed several economic programs with the goals of giving work (relief) to the unemployed, reform of business and financial practices, and recovery of the economy during The Great Depression.
Roosevelt was interested in farm issues and believed that general prosperity would not return until farming was prosperous. Many different programs were directed at farmers. The first hundred days produced a federal program to raise farm incomes by raising the prices farmers received, which was achieved by reducing total farm output. The Agricultural Adjustment Act
created the Agricultural Adjustment Administration (AAA) in May 1933. The act reflected the demands of leaders of major farm organizations, especially the Farm Bureau
, and reflected debates among Roosevelt's farm advisers such as Secretary of Agriculture Henry A. Wallace
, Rexford Tugwell
, Lewis C. Gray and George Peek
.
Senator Lynn Frazier
and North Dakota Representative William Lemke
.
The Act amended the previously voluntary Section 75, adding subsection (s). Subsection (s) delayed foreclosure of a bankrupt farmers' property for five years, during which the bankrupt made rental payments. The farmer could then buy back the property at its currently appraised value over six years at 1 percent interest, or remain in possession as a paying tenant.
s, and by May 1935, the Supreme Court
reviewed the law in Louisville Joint Stock Land Bank v. Radford
. The Act was ruled unconstitutional because it deprived secured creditors of their property rights in violation of the Fifth Amendment to the United States Constitution
to the Constitution.
The law was challenged, but the Supreme Court upheld the law in Wright v. Vinton Branch of Mountain Trust Bank of Roanoke.
After expiring in 1938, the act was renewed four times until 1949, when it expired.
Act of Congress
An Act of Congress is a statute enacted by government with a legislature named "Congress," such as the United States Congress or the Congress of the Philippines....
passed in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
in 1934 that restricted the ability of banks to repossess farms.
Background
Between 1933 and 1936, the United States CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
in conjunction with President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
passed several economic programs with the goals of giving work (relief) to the unemployed, reform of business and financial practices, and recovery of the economy during The Great Depression.
Roosevelt was interested in farm issues and believed that general prosperity would not return until farming was prosperous. Many different programs were directed at farmers. The first hundred days produced a federal program to raise farm incomes by raising the prices farmers received, which was achieved by reducing total farm output. The Agricultural Adjustment Act
Agricultural Adjustment Act
The Agricultural Adjustment Act was a United States federal law of the New Deal era which restricted agricultural production by paying farmers subsidies not to plant part of their land and to kill off excess livestock...
created the Agricultural Adjustment Administration (AAA) in May 1933. The act reflected the demands of leaders of major farm organizations, especially the Farm Bureau
American Farm Bureau Federation
The American Farm Bureau Federation , commonly referred to as the Farm Bureau, is a nonprofit organization and the largest general farm organization in the United States...
, and reflected debates among Roosevelt's farm advisers such as Secretary of Agriculture Henry A. Wallace
Henry A. Wallace
Henry Agard Wallace was the 33rd Vice President of the United States , the Secretary of Agriculture , and the Secretary of Commerce . In the 1948 presidential election, Wallace was the nominee of the Progressive Party.-Early life:Henry A...
, Rexford Tugwell
Rexford Tugwell
Rexford Guy Tugwell was an agricultural economist who became part of Franklin D. Roosevelt's first "Brain Trust," a group of Columbia academics who helped develop policy recommendations leading up to Roosevelt's 1932 election as President...
, Lewis C. Gray and George Peek
George Peek
George Nelson Peek was an American agricultural economist, business executive, and civil servant. He was the first Administrator of the Agricultural Adjustment Administration and the first President of the two banks that would become the Export-Import Bank of the United States.-Early life and...
.
The Frazier–Lemke Act
The Frazier–Lemke Farm Bankruptcy Act was enacted on 28 June 1934 and restricted the ability of banks to repossess farms. The bill is named for North DakotaNorth Dakota
North Dakota is a state located in the Midwestern region of the United States of America, along the Canadian border. The state is bordered by Canada to the north, Minnesota to the east, South Dakota to the south and Montana to the west. North Dakota is the 19th-largest state by area in the U.S....
Senator Lynn Frazier
Lynn Frazier
Lynn Joseph Frazier was a politician from North Dakota, serving as a U.S. Senator from 1923 to 1941 and the 12th Governor of North Dakota of that state from 1917 until being recalled in 1921. He was the first American governor ever successfully recalled from office...
and North Dakota Representative William Lemke
William Lemke
William Frederick Lemke was a United States politician.-Life and career:He was born in Albany, Minnesota, and raised in Towner County, North Dakota, the son of Fred Lemke and Julia Anna Klier, pioneer farmers who had accumulated some of land...
.
The Act amended the previously voluntary Section 75, adding subsection (s). Subsection (s) delayed foreclosure of a bankrupt farmers' property for five years, during which the bankrupt made rental payments. The farmer could then buy back the property at its currently appraised value over six years at 1 percent interest, or remain in possession as a paying tenant.
Court case
The law was challenged by secured creditorSecured creditor
A secured creditor is a creditor with the benefit of a security interest over some or all of the assets of the debtor.In the event of the bankruptcy of the debtor, the secured creditor can enforce security against the assets of the debtor and avoid competing for a distribution on liquidation with...
s, and by May 1935, the Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
reviewed the law in Louisville Joint Stock Land Bank v. Radford
Louisville Joint Stock Land Bank v. Radford
Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555 , was a decision by the Supreme Court of the United States that ruled the Frazier-Lemke Act unconstitutional in violation of the Fifth Amendment...
. The Act was ruled unconstitutional because it deprived secured creditors of their property rights in violation of the Fifth Amendment to the United States Constitution
Fifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
to the Constitution.
Modification and renewal
Congress responded by enacting the revised Frazier–Lemke Act, naming it the "Farm Mortgage Moratorium Act" in 1935. The terms were modified, limiting the moratorium to a three-year period. The revision also gave secured creditors the opportunity to force a public sale, although the farmer could redeem the sale by paying the same amount.The law was challenged, but the Supreme Court upheld the law in Wright v. Vinton Branch of Mountain Trust Bank of Roanoke.
After expiring in 1938, the act was renewed four times until 1949, when it expired.
See also
- Dust bowlDust BowlThe Dust Bowl, or the Dirty Thirties, was a period of severe dust storms causing major ecological and agricultural damage to American and Canadian prairie lands from 1930 to 1936...
- Chapter 12 of the Bankruptcy CodeChapter 12, Title 11, United States CodeChapter 12 of Title 11 of the United States Code, or simply chapter 12, is a chapter of the Bankruptcy Code. It is similar to Chapter 13 in structure, but it offers additional benefits to farmers and fishermen in certain circumstances, beyond those available to ordinary wage earners...
- Great DepressionGreat DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...