Tag: farmer

Posted on

Rural America Part 3: Development of American Agriculture Up to World War II

In the previous post in this series I presented two models of a farm economy that were widely deployed in the British colonies of North America. In this post we will go over how government action affected the use of both models from the first decades of our country’s independence until the New Deal era just prior to World War II. This review will provide us with some understanding of the problems faced by earlier generations of farmers. That background will make it easier to understand how the American agricultural economy has become a plaything of the wealthy in more recent times.

After our country gained independence, restrictions on expansion westward imposed by the British government were removed. Again, I won’t dwell on the shameful history of our treatment of native Americans. Our focus here is on how government policies shaped which model of rural economy dominated as the country expanded. For more details on the changes in farm policy I will summarizing here, check out this document.

At first, federal policy favored selling newly-seized federal lands in the west to private parties at high prices. Southern politicians favored one goal of this policy, namely the spread of the plantation model. And, in fact, in the south the plantation model continued to expand westward. Wealthy planters could afford to buy large tracts of land. It was cheaper for them to move their plantations westward than to try replenishing the soils they had exhausted by repeatedly planting the same one or two crops they had been growing on their existing plots. The invention of the cotton gin opened a new market for cotton, which happened to grow wonderfully across large sections of the south. This also encouraged the spread of the plantation model, since the intense labor needed to harvest cotton could be obtained cheaply by using slaves.

Over the course of the early 19th century federal policy was repeatedly modified to promote the spread of the yeoman farmer model. Finally, the Homestead Act of 1864, passed during the Civil War when the southern states were not actively involved in US federal policy, settled the issue decisively in favor of the yeoman farm model for newly-settled lands in the mid-western and western US. As a result, by the end of the 19th century the vast majority of agriculture in America was carried out by small farmers. It should be pointed out that this act, and a couple of follow-up acts in the decade of the 1900s led to many new farms in the great plains, many new farmers, and the loss of huge tracts of native prairie land to agriculture. This led to some unforeseen consequences in later decades.

The American economy as a whole was transformed by the Civil War. Manufacturing, finance, and transportation industries exploded in size and economic power. As one might expect from our discussion of the unique vulnerabilities of rural communities, small farms were targeted for exploitation by some of these large businesses. For example, the railroad and riverboat barons raised shipping fees to the point that farmers found it difficult to afford shipping their products to market via rail or boat. Farm communities pressured their federal representatives to give them relief from these monopolies. This is one reason the Sherman Anti-Trust Act of 1890 was passed by Congress.

It would be a mistake to think that these major changer eliminated the plantation model altogether. Instead, via a series of maneuvers powerful landowners in the former Confederate states were able to re-establish the plantation model. First, they were able to break down the Reconstruction Era promise made to former slave owners that they would be able to establish small farms of their own. The famous “40 acres and a mule” policy was weakened and ignored to the extent that the majority of former slaves and their descendants who worked in agriculture in the southern states were either tenant farmers or farm laborers on land rented from the great plantation owners or their descendants.

Family farms did relatively well in the first two decades of the 20th century. As mentioned above, both the number of family farms and the average income of farm owners increased during these two decades. At first this was a result of several factors. Both federal and state government designed policies to protect farmers from exploitation by monopolists, ease their ability to obtain loans, and obtain information on improved farming and marketing techniques. The rise of farm cooperatives and organizations helped farmers pool their power and obtain better prices for their products. Organizations such as the Grange had been lobbying for the interests of family farmers to governments at all levels since its founding after the Civil War and the collective result of these efforts was also bearing fruit (sorry for the pun!) at this time.

When World War I broke out in 1914 European farm output dropped. Many American farmers, who were already doing relatively well, responded by quickly increasing production. During the war years American farmers prospered. The war ended in 1918, and by 1920 European agriculture was well on the way to recovery from the devastation of the war. As their production went up, the need for imports from America declined. American farmers who had rushed to increase production could not find another market for much of the crop they had produced. As a result, the price of agricultural products dropped. Farmers who had taken out loans to pay for lands they had bought to grow more crops or to buy seed and equipment were no longer able to make enough money to keep up with loan payments.

The federal government made some attempts to address farmers’ concerns in the 1920s but they didn’t lead to significant improvements for most farmers. Then twin disasters struck between 1929 and 1935. The Great Depression caused prices for agricultural products to drop precipitously, leaving many more farmers unable to make loan payments. Many farmers responded at first by trying to increase yields, but that just pushed prices down even further. Starting in 1931 a multi-year drought struck the mid-west. Crops failed. Many of the newer farm families were relatively inexperienced with drought conditions and had not developed strategies to deal with them. As a result, millions of acres of land were left bare. High winds carried off topsoil in dust storms. With their farms ruined, many farm families had little choice but to abandon their homes and move. All told, about 2.5 million people migrated out of the great plains states due to economic hardship during the 1930s.

The New Deal program initiated by the FDR administration included several measures addressing agricultural issues specifically. These measures altered the economics of farming fundamentally and laid the legal parameters for the recovery of American agriculture that took place starting in the 1940s.

The primary piece of legislation included in FDR’s New Deal for agriculture was the Agricultural Adjustment Act of 1933. This law, with some follow-up legislation in 1934 and 1935, set up a subsidy system for production of major agricultural commodities: wheat, corn (maize), hogs, cotton, tobacco, rice, milk, rye, flax, barley, grain sorghum, cattle, peanuts, sugar beets, sugar cane, and potatoes. Farmers were encouraged to work with the newly-formed federal agency, the Agricultural Adjustment Administration, to arrive at a level of production that would enable the farmer to receive a price for their produce as close as possible to the target price fixed by the law. The law specified that the target price would be the price for the produce in the years 1910-1914, when prices for farm products were high enough for most farmers to do well financially. If the farmer was forced to sell her produce below the target price the federal government paid the farmer a subsidy to bring her total receipts up to what they would have been if she had been paid the target price.

This law stabilized agricultural markets and saved many farmers from going bankrupt and many farms from foreclosure. The law was drafted largely based on the yeoman farm model, where the owner of the farm was also the person working the land. The federal agency worked directly with landowners, not farm laborers or tenant farmers. In a sharecropping situation, the federal government reimbursed the landowner if the price of the produce sold by tenant farmers using that land did not meet the target price. The law included provisions to ensure that for any subsidies awarded to landowners, appropriate percentages would be shared with tenant farmers or laborers who had worked the land. Southern lawmakers were able to weaken the subsidy sharing provisions and some agency employees overseeing the program in southern states purposely failed to enforce the provisions. As a result, tenant farmers in the south were largely driven out of business in the following decades.

The Supreme Court overthrew the Agricultural Adjustment Act in 1936 but the FDR administration was able to pass modified legislation tin 1938 hat passed muster with the Supreme Court and continued the subsidies. Congress also included in this legislation provisions to help mid-west farmers recover from the dust bowl devastation and change farming practices to protect and preserve topsoil.

The sum total of the changes brought about by the New Deal brought many American farmers teetering on the edge of bankruptcy and desperation into relative prosperity. In other cases, e.g. the “Okies” who migrated from the midwest to California to escape the Dust Bowl or the southern tenant farmers we mentioned above, the New Deal programs were not enough to save them from impoverishment. As a whole, however, the use of the plantation model was greatly reduced. Most farms remained of moderate size and operated on the yeoman model.

After World War II this situation changed drastically. What happened to the farm economy then and what it did to rural communities will be the topic of our next post.

Posted on

Rural America Part 2: Some Advice on Voting. Plus, Two Models of American Agricultural Practice.

Publicly-accessible

For this fifth post in my “If You Can Keep It” series we will continue our focus on the economic fortunes of rural Americans. So much has changed in this year’s presidential election since my last post in this series, that I delayed this post until the changes had shaken out. We now have new Democratic candidates, the major party conventions have past, a long-awaited presidential debate has taken place, and in general, the presidential election landscape has been turned upside down.

It’s worth reminding you that the focus of this series is on the long-term effects of policies promoted by different interest groups in our country. What has happened to rural America is not an exception but just one part of a process that started several decades ago and extends across all sectors of our economy and society. The Biden administration and its allies on congress have, for the first time in decades, taken some critical steps to fix the structural problems in our society caused or made worse by pro-corporate government policies. The next congress and administration could continue fixing this but it’s likely that progress will be uneven and may require citizens to put additional pressure on whoever ends up in office next year before changes take place. The better we understand how we got into this pickle and what can be done to fix it, the likelier it will be that we choose the right people to govern us.

Given that there is less than a month left before this year’s election, I’ll give you my opinion on how to vote. I start from the fact that there are stark differences between the two major parties’ approaches to economic matters, including how to deal with the unique problems faced by citizens in rural America. The Republican party has clearly prioritized the needs and desires of the wealthiest citizens and left the rest of us to pay the price. This has been true since the Reagan revolution and the recent ascendance of the MAGA movement has not changed it much. Trump and his lackeys talk a better game than some of the older economic conservatives, e.g., Newt Gingrich, but the actual policies they support and propose lead to the same results. Hence, the Gingriches, Thiels, Musks, and other wealthy Republican backers largely still support Trump and other MAGA candidates. Most of the federal and state policies that have cost rural Americans the most were enacted under Republican administrations, most of the laws enabling these policies were passed by state and federal legislatures in which Republicans were the majority.

These facts do not excuse the Democratic party. Many Democrats, including some representing rural communities, having bought into mistaken economic theories, cooperated with Republicans in passing harmful laws. Some members of Democratic presidential administrations, especially in the Carter, Clinton, and Obama administrations were also foolishly overawed by the economic theories of market fundamentalists and ran agencies in charge of federal policy toward rural communities in a way that favored the wealthy.

If you believe our government is handling the problems of rural America poorly, your best bet is to vote for Democrats in this election. If this election yields both a Trump administration and a Republican congress, rural Americans will suffer for it. It’s highly ironic that some of the strongest support for the MAGA movement comes from rural Americans. There are many reasons for this, but it remains a fact that the policies that Republicans favored in the past and are favoring now will not help rural Americans. There is at least hope for improvement if a Harris administration and Democratic congress take over, but only hope. Over the last several years large numbers of economically-conservative citizens have started supporting Democratic candidates, mostly due to fear of/disgust toward the MAGA movement in the Republican party. These folks will be bending the ears of Harris administration members and congressional Democrats to moderate or gut new policies designed to fix structural economic problems that impoverish rural communities. This goes for every other area of economic policy as well. What ordinary citizens communicate to their representatives after the election may matter as much or even more than which representatives we elect.

In the previous post in this series I gave you some background economic context, namely that people who live in rural areas face some unique challenges that make them especially vulnerable to the twin economic evils of monopoly and monopsony. If you aren’t familiar with that background you should probably read that post first. This post will start a brief history lesson that will take us through the next few posts.

What I’m about to describe is a vast oversimplification, that despite regional variations still holds true. As Europeans began to settle in the British colonies of North America, rural farming communities organized themselves following one of two models, the plantation or the yeoman farm.

Plantations were designed to produce large quantities of one or two cash crops, such as tobacco, rice, or cotton for sale on the export market. Typical plantation owners farmed hundreds or even thousands of acres and relied on slave labor to do the bulk of the work. A planter needed access to a lot of money to afford the land, the slaves, and the materials needed to start and maintain a farm this large. They obtained this money via inheritance from rich relatives who were wealthy merchants or royalty in Europe, generous land grants from the government, bank loans, and profits from the sale of the prior harvests of these highly-valued crops. This model resulted in a highly-stratified society, with a few relatively wealthy planters surrounded by a far larger number of impoverished slaves, indentured servants and free citizens who were trapped in low-wage occupations with no realistic ability to obtain enough capital to improve their lot in life. In this arrangement, the members of the planter class enjoyed far more freedom than everyone else. It should also be noted that in the regions where plantations dominated, there were relatively few urban centers or even small towns. Most planters depended on their slaves to provide many of the adjunct services that farmers in other areas would obtain from specialists in nearby towns or cities, e.g. smithies, carpentry, leather-working, tailoring, etc. This situation prevailed in the southern colonies.

Yeoman farms were smaller, rarely larger than 250 acres of actively-farmed land, mainly because the owners relied on members of their own immediate or extended family to perform most of the work. These farms also tended to be more complex operations, because they balanced growing multiple types of crops with animal husbandry. Where this model became dominant, villages, small towns and cities appeared in greater numbers to accommodate the artisans, traders, and professionals needed to support and supply the surrounding farm communities. Cumulative wealth was more equally distributed in regions where this model dominated. It prevailed in the northern colonies but was found in certain regions of the southern colonies as well. Small farms sprang up in the colonies wherever large numbers of European settlers of humble means settled. Most of the northern colonies started out this way.

In the next post we will review the first 150 years of the agricultural history of the United States.

Posted on

A Primer on the Unique Economic Vulnerabilities of Rural America

Publicly-accessible

This fourth post in my “If You Can Keep It” series appears at the end of a week that included the first debate in the 2024 presidential election, a debate that has many of those 50 million Americans who watched it wishing that there were some other viable candidate besides the two that have been chosen by the two major parties. It also included a series of supreme court rulings that will require major changes in the way our government functions and could lead to our federal government changing from a democratic republic to a dictatorship.

Those of you who have been following this series so far may decide to spend your time focusing on these other issues for now. I understand that completely. It seems to me as well that a five-alarm fire has broken out in our society. As scary as some recent events may be, there isn’t much many of us can do about them right now. Also, understanding the context and background events that led to the rise of Donald Trump and Joe Biden and the recent supreme court decisions can help you take a longer view and make better decisions about what you ask of your government representatives and who you vote for come November. The goal of this series is to provide that critical background. I hope you will stick around, and if not, that you will come back later in the year (preferably by September) to catch up on the posts you have missed and share them with others, especially people you know who may be undecided or disenchanted about voting this November.

In the introduction I indicated that one current, fundamental problem of American society is that the extremely wealthy have managed to reconfigure the economy and government policies to give them more freedom and take it away from everyone else. As Warren Buffett put it, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” One of the most obvious illustrations is the accelerating decline of rural American life. Most of the people who will read this series likely don’t know much about the vulnerabilities unique to rural and agricultural communities. Because it was so easy for corporate powers to exploit these vulnerabilities, it also makes it easier for me to illustrate trends that, with some variations, affect the rest of us.

My nuclear family has a personal stake in this issue. We have lived in or near farm communities for most of the last 30 years, including 18 years operating our own small horse farms. Reader, you have a stake in this issue as well, because, for better or worse, what happens in these communities affects what you eat every day, the kind of building in which you live, and how you get around.

One of the major virtues needed to thrive in a rural community is self-reliance. Since you have few others nearby you can rely on to supply your needs, you need to learn how to fend for yourself in many difficult circumstances. This principle broadens out as people in a rural area band together. A family living far away from others needs to be able to supply its own needs by relying only on those in the family. A small community group living far away from others needs to do the same. In fact, we are told that human beings lived in small, relatively isolated groups like this for most of human history.

Unfortunately, living with only a small, relatively-isolated group of human beings to rely on is a risky proposition. Not that others in the group are unreliable or malicious, it’s rather that there are too many potential catastrophic events that a small, isolated group doesn’t have the resources to protect one another from. For that reason, most people living in rural areas have depended on resources provided by a larger society for at least some of their critical needs.

Relying on a larger society’s resources to support a rural lifestyle comes at a cost. Put yourself for a moment on a farm several miles outside a village in central Kansas, Nebraska, Iowa, or North or South Dakota. Since you are relatively far away from the larger society, making contact with it is expensive and time-consuming. Not many from a more urbanized environment will be willing to invest the time and money to bring the resources you need. Those who do will aim to be your sole provider. If they can pull that off, they can demand a higher price in exchange for the resources they provide. The technical term for this type of arrangement is a monopoly. or single-seller situation.

Conversely, in order to pay for the resources coming from the outside, you have to trade something you’ve gathered, grown or made. Those who are willing to spend the time and money to buy the items you have for trade will aim to be the sole purchaser. If they can pull that off, they can pay you a much lower price than you would be willing to accept if there were someone else you could sell it to instead. The technical term for this type of arrangement is a monopsony or single-buyer situation.

American government has always been aware of the potential for exploitation of rural citizens by outside entrepeneurs. For example, when the country was very young cross-country travel was extremely difficult. Not having the funds to build and maintain roads, governments relied on private investment for road-building. In order to recoup their investments, the companies that built these roads charged tolls. When the state of Pennsylvania contracted with a private company to build a turnpike between Philadelphia and Lancaster, PA, they set toll prices to prevent the company from charging excessive tolls, since the turnpike was by far the fastest and easiest way to get into the interior of the state.

The twin curses of monopoly and monopsony have frequently plagued the rural inhabitants of North America for hundreds of years. Here is a brief list of examples in roughly historical order:

Let’s pause at this point to reflect on the railroads. Railroads are a prime example of what is commonly called a natural monopoly. It costs a lot to build track and trains by design can only run on track. If you want trains running in both directions along the same route, you either have to build two tracks or include frequent and long sidings that allow one train to get out of the way temporarily for another train coming down the same track in the opposite direction. The engines, cars, and fuel needed to operate a train are all very expensive. For these reasons, it is impractical for several different outfits to provide similar train service to the same group of customers. Instead, a single railroad company typically built out all the rail lines that served a specific community or region, depending on the size of the railroad company.

In the late 19th century our federal and state governments by and large failed to follow the example of the state of Pennsylvania’s contract with the turnpike company by regulating the rates the railroads could charge their customers. Railroads were allowed to charge customers whatever they could get away with. Furthermore, it became customary for railroads to provide special rebates to certain customers. Most of us are used to this type of differential, “buy-in-bulk” pricing. In the late 19th century, however, the practice came with some shady extras. For example, a railroad company would make a private agreement with, say John D. Rockefeller’s Standard Oil Company, to ship the oil at a huge discount. In exchange, Standard Oil would ship enough oil to occupy an entire train’s worth of freight and handle all the loading and unloading. This arrangement saved the railroad enough to offer the discount without cutting into its own profits. But Standard Oil added a couple of other provisos. The railroad agreed to either a.) not offer the same discounts to other oil producers or b.) not ship oil for other oil producers at all. (By the way, Standard Oil became a monopoly in the oil distribution industry and was broken up by the federal government in 1911 for violating the 1890 Sherman Anti-Trust Act.)

The Theodore Roosevelt administration brought the railroad monopolies to heal with the help of Congress when it passed the Hepburn Rate Bill in 1906. This bill outlawed the type of discriminatory rebates discussed above and set minimum and maximum shipping rates. President Roosevelt made several public speeches in advance of the votes on this bill, arguing that the government needed to step in to regulate the railroad monopolies because left on their own they would continue to reward large corporate customers with special deals and punish small businesses like farmers and consumers with higher prices simply because these customers had no other option. You can read more about Roosevelt’s reasoning in support of federal regulation of railroad shipping rates here.

In the next few posts we will examine how large corporate interests gained monopsony power over farmers and what has happened as a result. We will also explore how Walmart built its retail empire in part by impoverishing small towns. Finally, we will examine how government’s corporate-friendly approach to healthcare has led to the disappearance of healthcare providers in wide swaths of rural America.