From 1900 to 1920 has been called the "Golden Age of Agriculture." an age old-timers often have referred to as the "good ol' days," The period, however, was not without its problems; some of which would persist and fester to this very day.
The dawn of a new century brought relative prosperity and abundance to American agriculture after the recurring depressions of the late 19th century. By 1910 the purchasing power of farmers would at last equal that of urban, industrial workers, resulting in a four-year period that would soon become in the decades following the basis for calculating "parity" prices for agriculture.
What happened in these first 20 years of the new century, therefore, is crucially important to any study of the chronic agricultural depression of most of the 20th century. While these decades would alter the character of American agriculture the social transformations that took place proved to be so rapid and profound for farmers and their communities they never be able to adjust adequately.
Farm prices moved upward, in some cases more rapidly than the increase in the general price level. Steam power and broader-based education by the State Experiment Stations and USDA would also come to play important roles in increasing farm production.
Following the panic of 1893, a severe drought triggered a marked decline both in the number and quality of livestock and a dramatic increase in the price of two essential winter feed crops -- corn and hay. These unfavorable weather conditions in turn accelerated the acreage devoted to grain production in 1895 and early 1896, leading to exceedingly low prices for both farm products. Prices would remain low for the next year or so while the nation struggled with the currency question.
Several countries abroad, however, began to have short crops of grain and feed in 1896, so by the end of 1897 commodity prices began to rise. Soon thereafter the US, still a debtor nation, resolved that the best method of meeting its foreign obligations was through exporting its agricultural products.
The influential Iowa farm editor, Henry C. Wallace, described this period, writing in 1900:
"The farmer is the main element in national prosperity because there are so many of him. When the farmers prosper, have money to pay their debts, provide for their families, and make improvements, good times are clearly in sight, as they were in 1897. The farmer's money started the mills and factories all over the land. For two or three years they had been running on short time, the country was bare of manufactured products, the farmers had great need of them, and this farm prosperity started a wave of prosperity among all classes, which has continued to the present hour."
Some believed that a "surplus" of farmers created this new "wave of prosperity." "In very truth," one observed, "when enough [farmers] have been driven into manufacturing ... they would be numerous enough to manufacture two or three times as much as this country could consume and the surplus would have to find a foreign market."
Economists like Michael Perelman, author of Farming For Profit in A Hungry World: Capital and the Crisis in Agriculture, have even suggested that this surplus and its "wave of prosperity" contributed directly to World War I.
"Once the farm surplus turned into a surplus of goods in general, the momentum generated in the drive for agricultural exports continued as a policy to expand manufacturing exports as well. The US was eventually drawn into conflict with the other great industrial nations in a world struggle over markets which culminated in World War I."
It was at this time farmers were also accelerating their struggle against the trusts and tariffs, believing that protectionism, while benefitting the trusts, raised farmers' costs and reduced their overseas markets on the other.
During the Progressive era, which reached full flower in the early 1900s in the first Theodore Roosevelt administration, it was widely acknowledged that the US's "new wave of prosperity" was creating enormous social and economic problems. However, it was believed that that same system that created them could solve them. Consequently, progressives argued, if officeholders and businessmen were honest, upright, good and efficient, and applied the principles of science with the public good in mind, all the apparent evils of the time would disappear.
They also believed that scientific management and monopoly integration and power, if used wisely, could assuredly benefit all of society. To progressives, therefore, trusts were a fact of life; it was simply a matter of "good" and "bad" trusts.
The key to the monopoly question became one of motive rather than the fact that monopolies. When Edward Harriman and J.P. Morgan's fight for control of the railroads in the Midwest went to the Supreme Court and the Court ordered Morgan's Northern Securities Company dissolved because of its intent to restrain trade in interstate commerce, the "rule of reason" in anti-trust judicial opinion was introduced.
"Rule of reason" considered only motives, good or bad, behind monopoly, not the de facto economic effects of the combination. In dissenting from the majority opinion Justice Oliver Wendell Holmes wrote that precedents should be sought in common law to distinguish between "reasonable" and "unreasonable" intent in restraint of trade. In writing for the majority Justice John Marshall Harlan expressed the idea that every such combination restrains trade by its very size and is to the public's detriment.
To the scientists, professional people, businessmen and politicians -- the American elites -- bigness and vertical integration was the assured means for a more efficient, stable and prosperous society as a whole. Further, they sincerely believed that vertical integration and/or monopoly was, in Professor Joseph Petulla's words, "the manifest destiny of capitalism."
Ironically, however, while the Morgans and the Rockefellers were preaching this gospel from their Wall Street cathedrals many small businesses were rapidly growing in number and often proving themselves more efficient than the corporate giants. For that reason the elites began looking to the Federal government for relief and for the maintenance of their control in industry. As Petulla, author of the classic American Environmental History, observes:
"They became convinced that business and government could cooperate in 'rationalizing' the nation's economy for everyone's benefit. By the end of the first decade of the century, businessmen were actually initiating social reforms or at least suggesting national regulations when the demands of individual states and their laws regarding rates, competition or income taxes became oppressive."
By way of example, US Attorney General Olney, as early as 1892, wrote to a close friend of a Burlington Northern rail lines executive that it would be wise for the railroads to use the Interstate Commerce Commission for their own purposes since "the older the Commission gets to be, the more inclined it will be found to take the business and railroad view of things. It thus becomes a sort of barrier between the railroad corporations and the people and sort of protection against hasty and crude legislation hostile to railroad interests ... The part of wisdom is not to destroy the Commission, but to utilize it."
A resolution of sorts to the trust and anti-trust arguments in the "Progressive Era" came in 1914 with the passage of the Clayton Act which sought to remove the ambiguities of the older Sherman Anti-Trust Act by more carefully defining what specific acts constituted an unfair competition.
The Clayton Act also attempted to stress the value of competition even though it provided little ammunition against the huge monopoly conglomerates that by their very size kept competition out of the market. Curiously enough, labor and agricultural organizations were exempt from its provisions. To establish a means of enforcement the Federal Trade Commission Act was passed within the year.
The dawn of the new century found prices for farm products becoming increasingly attractive, although the agricultural community was still faced with its share of problems.
Tobacco and cotton prices were at a level that caused producers to engage in several, and on occasion violent, withholding operations. The Farmers Union and American Society of Equity were founded in 1902 in an attempt to improve and stabilize the economic position of farmers. While the Equity society, a strictly business organization, mainly emphasized buying, rather than selling, and soon drifted toward cooperative marketing activities, the Farmers Union began in Raines County, Texas, as the Farmers Educational and Co-operative Union of America.
Although it would later turn to the political process, the Farmers Union, known today as the National Farmers Union, originally stressed the importance of the "family farm system" to the social and economic health of the country. It also began attacking farmers' unfair price and market problems systematically.
In its first year, the NFU successfully negotiated cooperative contracts with cotton ginners to acquire a network of cotton warehouses. By 1904 it was withholding cotton from the market in an attempt to fix the price. Later it conducted a series of cotton acreage reduction campaigns. While it succeeded in building warehouses it failed to become a decisive force in the marketplace through control of crop production.
Meanwhile, the farm population continued to decline as the siren call of urban opportunity beckoned the young. In 1909 more than 10 million people were engaged in agriculture on some six million farms which produced one-fifth of the world's wheat crop, three-fifths of its cotton crop, and four-fifths of its corn crop. All these commodities and the rest of the nation's agricultural harvest was being grown on less than one-half of the nation's farmland.
Even though the land was bountiful and productive, the Progressives and Teddy Roosevelt saw a need to "reclaim" arid lands in the west through irrigation. Although midwestern and eastern farmers were alarmed by the possible competition from new farmlands, eastern labor groups and many of the American elite and members of Congress from Western states applauded the idea.
Prior to Roosevelt's call for "reclamation," the Carey Act of 1894 had made a similar attempt to encourage irrigation, but no one devised a method to raise the capital needed to develop new irrigation systems. When the Reclamation Act of 1902 was passed it contained some important provisions designed by Roosevelt to stimulate the "family farm system" of agriculture.
Landowners could apply for federally subsidized water on only 160 acres of their land and absentee landowners were not eligible for such water. While local water laws were to govern water distribution, the receipts from the land sales covered by the Act were supposed to be applied to the construction of reservoirs and irrigation works.
In 1907 the new Reclamation Service was established as an independent Bureau under the Secretary of the Interior. It was soon apparent, however, that speculators, knowing the location of proposed irrigation sites, successfully bought such land from their existing owners even before the Service itself had approved of the projects for the region. By the time they resold this land the price was so inflated that only highly capitalized farmers (and in many cases individuals who owned well beyond the allowed 160 acres) could afford to make the payments to the speculators or the Federal government.
When public officials objected to this trend, Reclamation Director Frederick H. Newell pointed out that the law intended only the reclamation of arid or semi-arid lands and made no distinction between private or public irrigable lands. By 1910 24 projects were under construction, but only a minute portion of the public was being benefited by the federal water.
The Progressives' attitude and handling of the "reclamation" water issue is also illustrative of what Petulla describes as the "ambiguities" of the Progressive program itself.
"Although Progressives attacked monopolists as engrossers of the public domain, they allied themselves with monopolists who agreed on the necessity of a 'wise use' philosophy of scientific management and of economic growth and expansion. And although Progressives were committed to the fight for political and economic justice and to the idea of grassroots democracy, they did not hesitate to force the preservation of forest and mineral lands on smaller political units --- the states and local governments --- in the interests of a rational 'wise use' policy ('socialization of management') and in the name of all the people.
"In the final analysis they, rightly or wrongly, preferred their own ('scientific') counsel to that of the people, perhaps because they were convinced that powerful corporations would win out if these matters were put in the hands of the 'people'."
The government's "scientific counsel" not only took the matter of federal water and reclamation out of "the hands of the people" but placed it part and parcel in the hands of the same "powerful corporations" which would soon come to dominate corporate agribusiness.
Probably no single federal law remained so flagrantly abused, violated and disregarded by both individuals and Federal government as the Reclamation Act of 1902, until both its letter and spirit were drastically altered in 1982.
[Personal Note: On June 9, 2001, Joseph Petulla, this writer's best friend and long-time valued confidant, died of cancer. The environmental movement and progressive populism will be the poorer in his loss, but not his legacy. R.I.P. good friend!]
A.V. Krebs is director of the Corporate Agribusiness Research Project, P.O. Box 2201, Everett, Washington 98203-0201; email avkrebs@earthlink.net; www.ea1.com/CARP/