This picture sure got my attention — it probably got lots of people’s attention. According to Kenny Lindsay of Michigan:
At this particular time in history, AUCTIONS DIDN’T WORK for the bankers. Two hangman’s nooses hang as a grim warning to prospective bidders on this foreclosed farm. Farmers conspired to offer very low bids at foreclosure auctions and warned others not to raise their bids, resulting in a very low return to creditors. The buyers would then return the property to their destitute compatriot. This practice is known as a Penny Auction. May 1936
While this may be known as a “Penny Auction” it is also known as collusion (and also known as price-fixing) as we wrote about here: https://mikebrandlyauctioneer.wordpress.com/2010/05/14/what-is-collusion-at-an-auction/.
In this time period, many owners were in breach of their promissory notes — due largely to being unemployed or otherwise for want of funds — obligating them to make their loan payments to banks, and thus farms and other real property was being foreclosed upon (or repossessed) and sold at auction.
Other farmers and owners worked together (colluded) to lower prices so that property could be purchased by one of the colluders and returned to the prior owners. The nooses reminded those in attendance there could be consequences for bidding in your own self-interest.
The “Great Depression” was a historic economic downturn in the United States (October 29, 1929 – 1938) where over 5,000 banks went out of business. As a result, many new laws and regulations were created including deposit insurance and overall recapitalization of commercial banks.
What’s even more important for auctioneers is that this period in our history firmed an idea — that auctions were a mechanism for forced sales and a last resort when all other sales methods had failed. Many auctioneers report that this thinking lasted until even the 1990s in some communities.
Between the 1970s and the 1990s — as memories of this depression waned — auction marketing in the United States experienced a very healthy revitalization. People started to hire auctioneers as a first choice to sell their property and began utilizing auctioneers to maximize proceeds — while minimizing holding costs — in all kinds of markets.
“Auctions didn’t work” for a bunch of people from the 1930s until the 1970s. Since then, “Auctions have worked” [#AuctionsWork] for a large segment of our population. We wrote about the National Auctioneers Association’s #AuctionsWork campaign back in 2016: https://mikebrandlyauctioneer.wordpress.com/2016/05/23/auctionswork-onlyatauction-naapro/.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.