I'm reading up on the rural credit system in the late 19th and early 20th century now because I'm writing two more short articles for the Encyclopedia of American Populism.
An interesting thing I came across is the system of mortgage backed securities that emerged with the Farm Loan Act of 1916. These MBS's are somewhat different from the ones that caused the current financial crises, though. They can only be issued by farm loan banks on the security of mortgages that they issue, so there's none of this problem of reselling mortgages to multiple firms. The banks presumably know a lot about the condition of the mortgages. Mortgages are also fairly safe - at most they can have a 50% loan to value ratio, and an interest rate not exceeding 6 percent. The MBS's can't have an interest rate exceeding 5%, nor lower than 1% less than the mortgage they're secured by. The bank is also on the hook for investigating the title, appraising the value of the land, etc. So nobody's going to make a mint off of this and the MBS issuer has a ton of skin in the game. I don't know how all this turned out just yet, but I'm guessing these didn't lead to a financial crisis.
I'm also reading more about the crop lien system in the South which read to a lot of these calls for rural credit reform. I had read about this earlier in Ransom and Sutch's One Kind of Freedom, which I recommend. It's incredibly depressing stuff. Crop liens often amounted to a reinstitution of slavery.
Friday Night Music: Sarah Jarosz, House of Mercy
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