Final answer:
The main financial challenge for farmers in the late 19th century was the vicious cycle of debt and overproduction, which decreased crop prices and led to foreclosures. High transportation and interest costs worsened their situation. Government policies and land speculation also inflated costs and contributed to economic hardships.
Step-by-step explanation:
The financial challenges for farmers in the late 19th century were numerous, but one of the main issues they faced was the cycle of debt and overproduction. Overproduction of crops led to a decrease in market prices, and despite an increase in land size and improvement in farming machinery, this surplus drove prices down, making it harder for farmers to pay off debts and leading to foreclosures.
Furthermore, high interest rates from banks and expensive transportation costs from railroads added to their financial burdens. In response to these pressures, farmers often tried to increase production even more, which counterintuitively lowered prices further because of basic supply and demand economics.
Finally, government policies and speculation also played a role by inflating land values and causing financial stress for farmers who expanded their acreage or invested heavily in modern equipment but did not see a commensurate return on their investments, exacerbating the economic difficulties of the agricultural sector during this period.