PAUL SCHWIETERING
Government action in the 1930s turned despair to hope

October 7th, 2011    Author: Paul Schwietering    Filed Under: Opinion

Paul Schwietering

The measures taken by concerned rural citizens in places like Le Mars, Iowa, did not go unnoticed by the press of the day. The New York World – Telegram said, “For all the loose talk in America about red revolution and menaces of the kind that exist only in the hysterical imaginations of patrioteers, Americans are slow to understand that actual revolution already exists in the farm belt. When local revolt springs from old native stock, conservatives fighting for the right to hold their homesteads, there is the warning of a larger explosion.”

As historian Arthur M. Schlesinger points out, “The farmers had been through too much – their crops crushed by hailstorm and withered by drought and consumed by plagues of grasshoppers, their hard labor brought to naught by falling farm prices, their homes and their livelihood menaced by the banks and the insurance companies, their recourse to legislation now threatened by nullification in the courts and apathy in the Congress.”

“It was more than a mere coincidence,” wrote Harlan Miller of the Times, “that the Le Mars riots occurred precisely at the moment when the farm bill seemed to waver.”

And still the debate dragged on in Washington. But the clamor for action was too great. “The Senate passed the bill by a vote of 64 to 20, and on May 12th it went to Roosevelt for signature. It now contained three parts. Title I was the Agricultural Adjustment Act; Title II was the Emergency Farm Mortgage Act; Title III, concerned with monetary issues, included the Thomas Amendment. As Roosevelt signed, the Farmers’ Holiday Association, under pressure also from [Governor Floyd B. Olson of Minnesota and other Midwestern political friends, agreed to postpone its strike to give the new program a chance” (Schlesinger).

“The mortgage question was causing more immediate unrest than anything else; and the administration had already moved with vigor to relieve the situation. At the end of March, Roosevelt reorganized the hodgepodge of federal agricultural credit instrumentalities into a single new agency, the Farm Credit Administration.

Roosevelt made Henry Morgenthau, Jr., its administrator. Under the fast-moving direction of Morgenthau and his deputy, William I. Myers of Cornell, the new agency took quick action to stave off the sheriff. Its powers confirmed by the Emergency Farm Mortgage Act and supplemented in June by the Farm Credit Act, FCA refinanced farm mortgages, inaugurated a series of ‘rescue’ loans for second mortgages, developed techniques for persuading creditors to make reasonable settlements, set up local farm debt adjustment committees, and eventually established a system of regional banks to make mortgage, production, and marketing loans and to provide credits to cooperatives. It loaned more than $100 million in its first seven months – nearly four times as much as the total of mortgage loans to farmers from the entire land-bank system the year before. At the same time it beat down the interest rate in all areas of farm credit” (Schlesinger). Vice President John Garner, who owned a local bank in Uvalde, Texas, complained to Morgenthau at a Cabinet meeting that the interest rates he had been able to charge dropped from 16 percent to 5 percent since the FCA had taken action. “Though anger still rumbled in the farm belt, FCA gave every evidence of getting at least the emergency debt problem under control” (Schlesinger).

The Agricultural Adjustment Administration proceeded swiftly and effectively to put its crop control programs into operation. “The first problem was cotton, where the carryover of stocks from previous years was eight million bales, almost three times as much as normal – enough, indeed, to satisfy the world market for American cotton for 1933 without the harvesting of a single new plant in the United States. By the time the Act was passed in May 1933, forty million acres had been planted in cotton, and a bumper crop was in prospect. What could be done at this late date? ‘We were’ as (AAA Administrator) George Peek said, ‘working against the sun.’ Yet it was all too obvious that if the 1933 crop ever went on the market, cotton, already down five cents a pound, would sink out of sight” (Schlesinger).

“There was a single hope – to take part of the planted acreage out of production.

Under the agricultural extension service of the land grant colleges, most rural counties already had county agents – men charged with bringing the farmers information on improved agricultural techniques” (Schlesinger).

“In a whirlwind drive, the county agents now signed up hundreds of thousands of farmers for the cotton plow-up campaign” (Schlesinger). The farmers uprooted a quarter of the 1933 crop. “In return the growers received over a hundred million dollars in benefit payments. It was an extraordinary development – ‘An epoch in American agriculture’ even Peek was willing to exclaim in July. ‘History has been made during these days.’ Henry Wallace was more rueful. The effort, he said, in its sweep and boldness went beyond anything known to history, but the like of it, he added, ‘I hope we shall never have to resort to again. To destroy a standing crop goes against the soundest instincts of human nature’” (Schlesinger).

“The administration took other steps to strengthen cotton prices. Oscar Johnston, a Mississippi planter in AAA, suggested government loans to cotton farmers at a rate above the market price. Holding the cotton as security would keep the surplus from further depressing the market. If prices rose above the loan, then the grower could redeem his cotton; if not, then it remained in the possession of the government. On a fall afternoon, Roosevelt called Jesse Jones, Chairman of the Reconstruction Finance Corporation, to the White House and said, ‘Jess I want you to lend ten cents a pound on cotton.’ With cotton at eight or nine cents, the ten cent loan would operate as a means of price support. Jones talked the matter over with his General Counsel, Stanley Reed of Kentucky; and on October 16th they set up the Commodity Credit Corporation to operate the new program. With capital from the RFC, the CCC immediately made loans to cotton farmers who had agreed to participate in the 1934 Reduction Program. By the end of the year, cotton growers could look at future cotton prices with qualified hope instead of total despair. And the CCC introduced a brilliant new technique of price support, which the administration soon applied to corn, wheat, and other storable commodities” (Schlesinger).

Paul Schwietering is a resident of Union Township.

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