THE FARM CRISIS

Demographic Shift

In 1920 the census showed that for the first time in history more Americans lived in urban centers than on farms. The Great Depression, however, sparked an exodus of farmers to the city, irreversibly transforming the United States from an agricultural to an industrial society. On the farm the Depression was an unalloyed catastrophe made worse by drought. It drove millions to the city. Hundreds of thousands of midwesterners made the trek to California in search of agricultural work, ultimately ending up in the defense factories of World War II. The farm crisis was thus at the center of an enormous demographic shift in American life, one that permanently reshaped the character of the nation.

Falling Prices

The farm crisis did not begin with the Great Crash of 1929. Throughout the 1920s agriculture in America was subject to severe economic stress. During World War I prosperity had been the norm as farmers in America and other areas of the world expanded acreage to fill markets formerly supplied by European farmers. When the war ended and the Europeans returned to cultivation, a worldwide collapse in agricultural prices resulted. The collapse continued and was made worse by lack of international cooperation during the 1920s. Bumper crops in Canadian wheat at the end of the decade depressed world prices. The Soviet Union, determined to gain capital for industrial development through the sale of wheat, dumped grain on world markets, depressing prices and depressing their own ability to earn capital, to which they responded by exporting more wheat—even as their own citizenry began to starve for lack of staples. Australian politicians responded to the onset of depression by undertaking a "Grow More Wheat" campaign that made a bad situation worse. American farmers did much the same. Aided by easy credit during the 1920s, farmers increased acreage and made yields more efficient via increased mechanization and the use of fertilizers. Both actions made the decline in prices worse and increased the debt burden of American farmers. By 1930 the mortgages on American farms amounted to $9.2 billion, up from $3.2 billion in 1910, and millions of farmers were tenants.

Foreclosures

The economic pressures on agriculture increased following the stock-market crash of 1929. Struggling banks began foreclosing on farms, and farmers attempted to meet their bills in the only way they knew how: by increasing acreage and yields, further driving down prices. By 1932 farm prices were only 40 percent of their already low 1929 levels. Wheat earned only 25 cents a bushel (down from $2.94 in 1920); oats brought 10 cents a bushel; sugar got 3 cents per pound; and cotton and wool garnered 5 cents a pound (down from 37 cents in 1920). By 1933 prices had sunk to 63 percent of their 1929 level. Fundamentally it became impossible for indebted farmers to earn enough to keep their farms. Farmers had to grow nine bushels of wheat to pay for a pair of shoes; in 1909, two bushels would have sufficed. The Smoot-Hawley Tariff of 1930 was supposed to offer farmers some protection, but agricultural surpluses were so huge that its impact was barely felt, and foreign retaliation dried up exports. President Hoover's Federal Farm Board was a similar failure. It purchased selected crops from farm cooperatives in order to drive up prices. The program had negligible results, losing approximately $345 million without achieving price stablization. The Hoover administration finally suggested that farmers voluntarily refrain from growing crops and thus drive up prices. Following the administration's advice, in some midwestern states farmers did declare "strikes" and curtailed production. Nothing protected such farmers from banks, under severe pressure themselves, from calling in loans and foreclosing on farms, and thus attempts at voluntary production limits failed. Although Hoover did loan some $64 million to farmers through his business-oriented Reconstruction Finance Corporation, it was not enough to prevent massive foreclosures. Farmers turned militant in their attempts to stop foreclosures, threatening to kill bank officers and police. Sedition and revolt were in the air. "Unless something is done for the American farmer," Farm Bureau Federation president Edward A. O'Neal told the Senate in January 1933, "we will have revolution in the countryside within less than twelve months."

the pecora circus

The appearance of Jack Morgan, head of the Morgan financial group, before the Senate Banking Committee became something of a public carnival. The spectacle of the nation's most powerful banker being grilled by bulldog New York prosecutor Ferdinand Pecora inspired a media frenzy. Senators had to request photographers to stop snapping flashbulbs and quit shuffling chairs so they could see and hear the witnesses. "We are having a circus," stammered Virginia senator Carter Glass, "and the only things lacking now are peanuts and colored lemonade."

The next day the circus literally arrived at the Senate. A Ringling Brothers press agent, Charles Leef, had overheard Glass's comment and brought to Capitol Hill a thirty-two-year-old midget named Lya Graf. As the hearing began, Leef took a seat beside Morgan and plopped the twenty-seven-inch-tall Graf on his lap. To the horror of Morgan's partners, Morgan struck up a conversation with the woman, thinking she was a child. Newspapermen from around the country snapped photos of the event, and the pictures became some of the most famous of the decade. Morgan was appalled by the incident, but Grafs shame was greater. Seeking to escape the endless jokes, she quit the circus and returned to her native Germany in 1935. The move was fatal. Prosecuted by the Nazis for her Jewish background, Graf died at Auschwitz during World War II.

Source:

Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Simon & Schuster, 1990).

Agricultural Adjustment Act

The Agricultural Adjustment Act of 1933 was an attempt to coerce reductions of agricultural products, thus driving up prices. Participation in the program was voluntary, but economic reality virtually dictated participation. The Roosevelt administration established the Agricultural Adjustment Administration (AAA) to oversee the reduction of crops and other goods. The AAA paid farmers to leave acreage unplowed and to raise fewer animals. The government also guaranteed participating farmers a minimum price for the goods they did raise, a price secured by taxing food processors and distributors. Finally, the Roosevelt administration established the Farm Credit Administration to protect farmers against creditors, offering generous loans to forestall foreclosure. Because the 1933 growing season had already begun by the time the AAA commenced operations, however, the government was forced to pay farmers to destroy their crops. Ten million acres of planted cotton were plowed under; 6 million baby pigs and 200,000 pregnant sows were destroyed. The spectacle of destroying food at a time when millions went hungry was to many almost surreal. Equally difficult was adjusting farmer's attitudes to the new subsidies. Raised to believe it was sinful to let productive ground lay fallow, many of them found it difficult to adjust to AAA directives. Nonetheless, AAA policy worked. By 1936, with 30 million acres out of cultivation, prices had recovered and farm income had doubled. The AAA had thus set a precedent for farm price supports that continues into the present.

Unions

AAA policy did not work exactly as planned. Although the AAA had specifically set up rules to protect tenant farmers and sharecroppers, in the Democratic South it was difficult to enforce these rules, and as large agricultural owners took land out of cultivation, they often threw out the tenant farmers who worked the land. So frequent were the evictions that tenant farmers organized the Southern Tenant Farmers Union in 1934 and became increasingly militant about opposing farmland owners. Tensions between the two groups were often heightened by racial tensions, as many sharecroppers were blacks. Night riders and Klansmen enforced evictions, but the tenants resisted intimidation. Eastern Arkansas, the sugar-beet fields of Colorado, lettuce farms in Arizona, and the orange groves of California were the scenes of armed battles between tenant farmers, share-croppers, migrant workers, and landowners. Such battles were documented in plays such as Erskine Caldwell's Tobacco Road, movies such as Pare Lorentz's The Plow that Broke the Plains (1937) and The River (1937), and John Steinbeck's novel The Grapes of Wrath (1939),

Dust Bowls

Compounding the misery of the Depression, a long drought in the middle of the 1930s brought hardship to millions. Farmers throughout the Midwest literally watched the fruits of their work dry up and blow away. The farmlands became nicknamed "dust bowls" because of the winds busy drawing the topsoil away. The dust storms caused by the drought were so great that soil was deposited as far east as New York and the Atlantic Ocean. As calamitous as the drought was, however, it combined with the AAA to reduce drastically the number of farmers and farm acreage in the United States, thus driving up prices and facilitating recovery.

Farm Security Administration

Aware of the hardships imposed by AAA policies and the drought visited on farm families, in 1935 the government established an agency that would ultimately be called the Farm Security Administration (FSA). The FSA provided poor farmers with financial relief, health advice, and agricultural information. If it discovered farmers were cultivating substandard land, the FSA resettled them to new, more fertile land and taught them how to farm it scientifically. Of particular importance was instruction in contour plowing, which reduced soil erosion. Entire resettled communities, such as Arthurdale, West Virginia, were established to prove that government assistance and community interest could produce energetic, productive agriculture. The program succeeded, but at such a high price that its economic value was questionable. Ultimately Congress balked at financing so expensive a project and ordered a reduction in FSA programs in 1938. Six years later the project was killed altogether.

Cancellation and Continuance

In 1936 the entire AAA program was eliminated by the Supreme Court, which ruled in United States v. Butler that Congress had no constitutional right to regulate agriculture, and invalidated the taxes raised to pay for the AAA. Conservatives were heartened by the decision, but their joy was short-lived. The AAA was successful and popular enough that Congress recreated it in a form more acceptable to the Supreme Court in 1936 with the passage of the Soil Conservation and Domestic Allotment Act. To the original AAA programs of price supports, agricultural education, and debt relief were added a system of warehouses, which held agricultural products until a good price for them existed in the marketplace—an idea that had been prominent in the farm belt since the 1880s. Thus, by 1936 the farm crisis was fundamentally over, with the number of American farmers sharply reduced (less than a quarter of the population in 1939), prices for their goods substantially raised, and the model of farm/government cooperation firmly built—a model from which subsequent governments would construct their own farm support policies.

Sources:

Stuart Bruchey, Enterprise: The Dynamic Economy of a Free People (Cambridge, Mass.: Harvard University Press, 1990);

Robert Heilbroner and Aaron Singer, The Economic Transformation of America (New York: Harcourt Brace Jovanovich, 1977);

Charles P. Kindleberger, The World in Depression, 1929-1939 (Berkeley: University of California Press, 1986);

Cabell Phillips, From the Crash to the Blitz, 1929-1939 (New York: Macmillan, 1969).

THE FARM CRISIS

Farm Problems before the Crash

Economic depression had struck American farmers earlier than any other element in American society. Indeed, by the early 1920s American farmers were already enduring a severe economic crisis. During World War I the American economy, including farming, had gone into an all-out sprint of productivity. When the war ended, however, the European markets in which American food had been sold were closed off by tariff restrictions. Newly and traditionally cultivated lands in the United States continued to be farmed with evermore-efficient machinery and higher-yielding fertilizers. The result was a vast surplus of agricultural goods and livestock. In the competitive domestic marketplace the purchasing power of Americans could consume only so much cotton, corn, wheat, beef, and pork. As farmers competed to undersell their competitors, who were often their neighbors, prices fell through the floor.

The Onset of the Depression

As the Depression of the 1930s gripped the nation, the farmers' plight worsened. In 1920 wheat sold for $2.94 a bushel in Chicago. In 1929 it commanded only $1.00, and by 1932 it sold for a scant $.30. The price of cotton, a staple crop across much of the South, fell from $.37 a pound in 1920 to an unprofitable $.065 by 1932. During the same period prime beef fell from $14.95 per hundredweight to $5.78. In 1920 U.S. farming had generated $16 billion in sales, but by 1932 this figure had fallen by $10 billion. During the 1920s Congress passed the McNary-Haugen Bill, designed to dump surplus crops in foreign countries and raise prices in the domestic market. President Calvin Coolidge twice vetoed the bill. In 1929 President Hoover allowed the creation of the Federal Farm Board (FFB). The FFB bought up cotton and wheat surpluses in that year, but because it did nothing to halt the farmers' annual race to bring more and more crops and livestock to market, the FFB failed to alter the problem of "overproductivity."

Agricultural Unrest

Exhausted and frustrated, farmers sometimes joined together to protest their plight. In Wisconsin in 1932 angry dairymen hijacked milk trucks and spilled the milk onto the ground. Across the nation farmers with shotguns in hand stopped the sales of friends' farms or forced auctioneers of foreclosed farms to sell them back to their original owners at nominal prices. In summer 1932 farmers in Iowa joined together in the Farmers' Holiday Association, trying to raise prices through a farmers' strike that they hoped would spread across the nation. When violence between striking and nonstriking farmers broke out in western Iowa, however, Milo Reno, the colorful leader of the association, ended the strike.

The AAA: Federal Aid for Troubled Farmers

Many New Deal laws were passed in the effort to address the needs of the American farmer. In the early days of Roosevelt's first administration, Secretary of Agriculture Henry A. Wallace worked with presidential adviser Rexford G. Tugwell and M. L. Wilson of Montana State College to develop and promote the Agricultural Adjustment Act. Signed into law in early May 1933, the act created the Agricultural Adjustment Administration (AAA), whose major task was to coordinate an acreage-reduction plan. By reducing the amount of food going to market, the federal government hoped to drive farm-commodity prices upward. Farmers who complied were paid by the federal government for leaving a portion of their farmland idle. By the time the AAA was established, farmers had already begun their growing season. If price controls wrere to be effective in 1932, some crops would have to be plowed under and some livestock killed. Tens of thousands of acres of cotton plants were plowed under and left to rot, while more than six million pigs were slaughtered and their carcasses burned or buried. Many Americans, however, looked on these actions with shocked disbelief, They could not understand how the government could be complicit in destroying food or reducing its production in a nation where many were going to bed hungry.

The Dust Bowl

In some states during the 1930s overproduction was not the problem. Prolonged misuse of grasslands in parts of Kansas, Colorado, New Mexico, Texas, and Oklahoma led to one of the greatest environmental disasters in American history. For years farmers had torn off the grassy mantle of the Great Plains by overgrazing and overfarming. By late 1933—after a year and a half of drought—hundreds of square miles of parched topsoil were churned up by violent winds and swirled upward, creating huge dust storms. Fine dust filled the air and blackened the skies for miles. Scientists calculated that the worst of the dust storms carried 300 million tons of topsoil. By 1935, it was estimated, nine million acres of the Great Plains had been eroded. With crops destroyed and livestock dying, farmers of the Dust Bowl headed westward to California seeking prosperity. The Taylor Grazing Act of June 1934, which set up a program to limit grazing and thus prevent further wind erosion, could not help those who had already lost everything, nor could the Soil Conservation Service, established in 1935. In four short years more than three hundred thousand poor and disheartened farm families migrated to California. On the road from Oklahoma to California a seemingly endless stream of old, overladen cars filled with gaunt, sallow-faced families made their way west. The new arrivals in California needed work. In desperation entire families turned to low-paying jobs picking crops and lived in one-room shacks. "When they need us they call us migrants," said one forlorn farmer. "When we've picked their crops wre're bums and we've got to get out."

The Success of the AAA

Yet the AAA did help farmers. By early 1936 their net income had risen by more than $3 billion, while the government had spent $1.5 billion on the program. In 1936 the Supreme Court declared the AAA unconstitutional, but to meet the Court's objections Congress rewrote the act as the Soil Conservation and Domestic Allotment Act. Farmers continued to receive payments from the government for not producing various crops and livestock. Through agencies such as these, as well as federal projects that brought electricity to the countryside and federal programs to resettle those laboring on poor soil, the government greatly improved life for American farmers.

The Farm Credit Administration

Along with the regulation of Wall Street and the banks, President Roosevelt and Congress also created programs to offer farmers and home owners respite from foreclosures on the mortgages to their homes and farms and simultaneously put unemployed building-industry workers back on the job. Through the Farm Credit Administration (FCA), established in 1932 and expanded under the Roosevelt administration in 1933—as well as in the Home Owners Loan Corporation (HOLC), created in 1933, and the Federal Housing Administration (FHA), set up in 1934—they were successful in stemming the flood of foreclosures that began in the early 1930s. The U.S. Housing Authority, created in 1937, made half a billion dollars in government loans available for public housing for the poor, augmenting earlier New Deal legislation in support of the middle class.

Sources:

William E. Leuchtenburg, Franklin D. Roosevelt and the New Deal, 1932-1940 (New York: Harper 8c Row, 1963);

Leuchtenburg, New Deal and Global War (New York: Time-Life Books, 1964);

Arthur M. Schlesinger Jr., The Politics of Upheaval, volume 3 of his The Age of Roosevelt (Boston: Houghton Mifflin, 1960).