Agricultural Economy

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Agricultural Economy

Agriculture in an Industrial Economy. As the new industriai economy burgeoned, agricultural production also underwent profound changes. American farm output did not decline in the face of industriai growth; in fact, it grew at impressive rates over the last decades of the nineteenth century. New farmlands in the Dakotas, Nebraska, Kansas, and Colorado were linked by railroads and brought under cultivation. At the same time, farmers experienced fundamental, often unsettling, changes as they adapted to new conditions. By the late 1800s farm production was influenced by more impersonal market forces than ever before. Farmers depended heavily on banks for finance, railroads for shipping, and grain elevator operators for selling their crops. As a result, many farmers went into debt in the years after the Civil War. Whenever farm prices dropped, the financial pressures on farmers mounted steadily.

Wheat. Changes in the way wheat was shipped, stored, and sold typified the more general transformation in agriculture. Over the last decades of the nineteenth century two wheat processing centers emerged at the heart of a national network of distribution. In Minneapolis, Minnesota, a vast flour-milling industry developed and supplied new companies such as Pillsbury-Washburn. In Chicago, at the railroad hub that linked the farms of the West and Midwest to national markets, tens of thousands of carloads of wheat funneled through annually, each car carrying more than three hundred bushels. In 1890 alone, 150 million bushels of wheat moved through Chicago. To handle this volume, railroad companies and grain investors built huge grain elevators holding as many as five million bushels apiece; by 1888 Chicago grain elevators held thirty million bushels. Grain was divided and stored in the elevators by grade, the owner or agent receiving a receipt for this grain drawable from the elevators. These receipts were bought and sold, fueling a heated market in what were called grain futures. Other businessmen in the industry—millers, dealers, and exporters—relied on investments in grain futures to hedge against fluctuations in price and supply.

Meat. The production of meat underwent a parallel process of centralization. In 1881 the Chicago meat-packer East, Swift & Company made its first shipment of butehered meat in refrigerated railroad cars to the East Coast. In the process, the company redrew the map of meat production. Once the viability of long-distance transportation had been demonstrated, meatpacking on a national, centrally controlied scale became possible. Other companies such as Oscar Meyer rapidly spread their operations to take advantage of the entrepreneurial possibilities, setting up processing plants, stockyards, feeding stations, and auction sites at key points in the country’s new railroad network. Like the changes overhauling wheat farming, the revolution in meat production took farmers’ markets out of locai orbits and placed them in national as well as international hands.

Agrarian Protest. From the perspective of American farmers, these changes interposed a host of monopolistic middlemen between them and their markets. Railroads controlied shipments (without which crops or livestock were virtually worthless) and manipulated rates in ways that favored large shippers and penalized average farmers. Banks, mortgage associations, and other moneylenders demanded what farmers considered to be extortionate rates. Warehouse, elevator, and stockyard operators held broad leverage over how agricultural produets were marketed and at what price. As a result, agrarian protest rose against eastern financial and business interests. This sentiment had been centrai in the organization of the Grange in 1867 and the farmers’ alhances of the 1870s—efforts by farmers’ collectives to control shipments, the marketing of crops, and the supply of seed and implements. These efforts continued in the 1880s as farm prices slowly declined. Farmers in the West, meanwhile, pressured their state legislatures to establish railroad regulations and the federai government to ease monetary policies by issuing greenbacks or coining silver currency. The Depression of 1893 made the farmers’ plight especially acute, bringing many to rum. Only the recovery of farm prices after 1897 brought relief.

MODERNIZING AGRICULTURE

The changes that overtook agriculture over the last dozen or so years of the century were nearly as dramatic as those transforming industry, Farm-ing stili made up a substantial part of the econ-omy, but one declining in relative importarle. In 1870 just over half of the American workfcrce, 53 percent, made their living on farms. By 1890 the proportion had dropped to 42 percent. Stili, agricultural production expanded, and the number of farms grew, from 4 million in 1877 to 4.5 million in 1890. At the same time, the farms mechanized; during this same period, the total value of American farm machinery climbed from $42 million to over $100 million. By 1890 more than nine hun~ dred American companies were manufacturing agricultural machinery, producing more than $92 million worth of machines annually, including plows, harvesters, threshers, twine binders, dairy centrifuges, sprayers, pumps, and other imple-ments, Mechanization affected ali kinds of farms, but took root especially strongly in the upper Mississippi basin, on cereal farms in the northern plains. Here, over the late 1870s and 1880s new “bonanza” farms sprouted, spreading across thou-sands of acres each, marshaling heavy machinery and platoons of migratory workers — workforces of several hundred and more — to harvest their crops. These farms were not yet typical, but already they were signaling the direction American farming would take in the twentieth century.

Sources: John A. Garraty, The New Commonwealth, 1877-1890 ( New York: Harper 8c Row, 1968);

Fred A. Shannon, The Farmer’s Last Frontier: Agriculture, 1860-1897 (New York: Holt, Rinehart & Winston, 1945)