After crop prices fall by more than 60% in the early 1930s, Cargill offers grain elevator owners a creative way to endure tough times.
Rural Americans were hit hard during the country’s Great Depression, a widespread and long-lasting economic downturn that began when the stock market collapsed in 1929. For several years, Cargill financed its network of independent grain elevators.
But by 1933, a bank moratorium curtailed credit so extensively that Cargill faced its own debt crises. Crop prices had fallen more than 60% and many of these independent elevator owners were fast approaching bankruptcy.
John MacMillan, Jr., who at that time was the company’s general manager, realized that the grain elevators in question could be purchased “on an astonishingly cheap basis.” But others felt that foreclosing on the elevators at such a low price would give Cargill a poor reputation in the rural community, especially after decades of strong ties with farmers and suppliers. Austen Cargill, the youngest son of founder W. W. Cargill, understood the importance of the community to Cargill, and helped John Jr. devise a solution that would let individuals keep their businesses.
The company presented a forgiving plan designed to help operators get back on their feet and, ultimately, sustain their operations. Owners would sell their inventories to Cargill in full and the proceeds would be applied toward their existing debt. Upon full repayment, they would regain ownership of their properties.
It was a ray of hope in a dark time. Nearly every owner approached (79 in total) accepted the offer, and the elevators were renamed as “community elevators.” During the turbulent economic era, the company’s long-term view offered greater stability and created long-time loyalties between Cargill and the agricultural community.