New Deal

Farms & Public Works

US Farms in 1920s

• Expanded production during WWI

• Increased production

– New techniques & machines

– Less need to grow food for horses

• Flat or declining demand

– Changing tastes

– Slower population growth

• Declining birthrate

• Immigration restrictions

Farm Income

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1910 1913 1916 1919 1922 1925 1928 1931 1934 1937 1940

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Farms’ Economic Status

• Farm income:– $17 billion in 1919

– $13 billion in 1929

• Continued high debt ($9 billion)

• “Parity” -- index of farm sales v purchases– 1910-14 = 100

– 89 (1929)

Mainstream GOP Solutions

• Cooperative marketing

• Easier credit– Federal Intermediate Credit Banks (1922)

• Higher farm tariffs

• Purchase of surplus crops– Agricultural Marketing Act of 1929

– Federal Farm Board

McNary-Haugen Plan

• Maintain farm prices at pre-1920 levels

• Govt control of farm market

– Higher tariffs

– Buy domestic products

– Sell surplus overseas

• Most popular notion among farmers in 1920s

Land Use Planning

• Too much land in production

• More land for forests

• End homesteading

• Control Federal development projects

• Reduce production

• U of Wisconsin (Richard Ely)

Domestic Allotment Plan

• Plan & control production

• Payments to farmers tied to prices

• Producer referenda

Farm Crisis in 1933

• Farm income down 2/3 from1929

• 1932: Parity = 55

• Farmer boycotts -- Upper midwest

Henry A Wallace

• Born Iowa 1888

• Iowa State

• Father: Sec of Ag, 1921-24

• Journalist

• Hybrid corn seed

Farm Credit

• Emergency Farm Mortgage Act

– May 1933

– Allow refinancing at lower rates

• Farm Credit Act

– Loans on favorable rates

Agricultural Adjustment Act of 1933

• FDR: stakeholders must agree first

• Omnibus bill

• Gave executive several options

• Raise prices by restricting production

• Pay farmers to reduce acreage

• Tax food processors

• Cotton, wheat, tobacco, hogs, milk & rice

AAA Implementation

• 1933:– Plow under 10 million acres of cotton

– Slaughter 1.8 million pounds of pork (16% of total)

• Complex, time-consuming process– One million agreements with farmers

– Cooperation of processors

• Reduce production in 1934 & beyond

Conflicts within Agriculture

• Henry A. Wallace– Focused on importance of farms

• George Peek– McNary-Haugen supporter

– Pro-business, tariffs, exports

• “Urban Liberals”– Social & economic change

– Jerome Frank & Rexford Tugwell

AAA & Farmers

• Focus: crops not people

• Favored larger farmers

• Production controls popular with many farmers

• Ignored small farmers & tenants

• Reports of evicted & cheated tenants

Southern Tenant Farmers Union

• Arkansas delta

• Agitated for better treatment for tenants

• Supported by Socialist Party

• Provoked conflict within Agriculture

• Led to 1935 purge of SFTU supporters

AAA Short Term Impact

• Reduced production 1/3 for 12 key crops

• (Combined with drought) raised farm prices 50% by 1936

• Created opposition to processing tax

• Executive discretion invited legal challenge– Declared unconstitutional (Jan. 1936)

Soil Conservation & Domestic Allotment Act of 1936

• Response to Supreme Court decision

• Paid farmers for soil conservation measures

• Farmer-run soil conservation districts

• Reaction to dust bowl

• Did little to reduce production

Commodity Credit Corporation

• 1933

• Loans to farmers

• Non-recourse: no liability if price lower

• Crops as collateral

– Sell or

– Leave in storage & wait for better price

Agricultural Adjustment Act of 1938

• Ever-normal granary

• Sec of Agriculture to allot acreage

• Staple crops

• CCC to play major role

Farm Exports

• Farm exports

– 10% of total

– Still important

• Wallace & Cordell Hull

– Multi-lateral free trade

• Reciprocal trade agreements

Taylor Grazing Act of 1934

• Federal control of rangelands

• Grazing districts

• Locally controlled district boards

• Leased to ranchers

Resettlement Administration

• Emergency Relief Appropriation of 1935

• Rexford Tugwell

• “Subsistence” communities

• Greenbelt towns

• Relocate farmers to better land

• Provide advice

Resettlement Administration:Impact

• Relocated fewer than 1% of eligible farmers (5,000)

Farm Security Administration

• Bankhead-Jones Farm Tenancy Act (1937)

• Loan to tenants

– $293 million to 47,000 farms (5%) (10 years)

• Improve conditions for migrant workers

• Loans to small farmers

– $516 million to 870,000 families (6 years)

Farm Security AdministrationPhotography

• RA Information Division

• Positive depiction of programs

• Professional photographers

– Dorothea Lange

– Walker Evans

• Record of 1930s on the farms

Migrant Woman

Oklahoma Farm Family

Dorothea Lange

New Deal Farm Policies: Impact

• Farm policies remained controversial

• Most farm products short of parity by 1939

• Farm income $10 billion in 1939 (lower than 1929 level($13 billion)

• Production increased beyond demand

• Surpluses accumulated

• Favored larger farms; number of farms continued to decrease

• Tenants & sharecroppers pushed off land

Public Works: Key Notions

• Public investment– Inspire private investment

– Generate jobs

• Develop West and South

• Revive construction industry– Declined from $10 billion (1929) to $2.3

billion (1932)

Public Works Administration

• Title II of NIRA

• $3.3 billion

• Harold Ickes in charge

• Public works projects

• Careful management

Harold Ickes

• Born 1874 in Pennsylvania

• Reporter, lawyer

• Bull Moose Republican

• Chicago politics

• Curmudgeon

PWA

• 11,000 employees

• Fund, plan and approve projects

• Grants & Loans

– Federal agencies

– State & local govt’s

• Private contractors

PWA Accomplishments

• $1.2 billion wages & $2.2 billion for materials (as of 1939)

• 300,000 - 600,000 workers employed

• 35,000 projects

PWA Accomplishments

• Key West Causeway

• Grand Coulee Dam

• Bonneville Dam

• Tri-borough Bridge

• Skyline Drive

• Federal Triangle…

• 70% of school buildings1933-1939

PWA & Recovery

• Ickes

– Strict accountability

– Careful planning

• Slow pace

– Short term impact limited

Civilian Conservation Corps

• Reforestation Relief Act (3/33)

• FDR pet idea

– Similar to NY program

– Back to Land

• Issues

– $1/day

– regimentation

CCC Impact

• Considered success

• 2.5 million participants

• Impact ?

New Deal & Public Power

California: Model?

• Water (Owens Valley)

• Electric power– Sierra Nevada streams

– WWI consolidation

– 1924:• 85% homes with electricity (US: 35%)

• $1.42/ KWH (US: $2.17)

– Boulder Canyon Project

• Western construction companies– Kaiser, Bechtel…

Public Power

• Reliance on water power

• Cheaper rates

• Willingness to expand & serve rural areas

• Generation & transmission ?

Tennessee Valley Authority

• Authorized 5/33

• Progressive issue– George Norris (Rep - Neb)

– Federal dam at Muscle Shoals• Electric power

• Fertilizer production

– Opposed by• Private companies

• GOP administrations

TVA Programs

• Electric power– Production

– Benchmark for pricing private power

• Fertilizer production

• Flood control

• New industries

• Entire Tennessee Valley basin

• Planning & development

TVA Internal Conflicts

• Arthur Morgan

– Self-sufficient communities

– Cooperation with private power

• Harcourt Morgan

– Scientific farming

• David Lilienthal

– Public power

David Lilienthal

• Born Illinois 1899

• DePauw, Harvard Law

• Utility lawyer

• Wisc. RR Commission

TVA vs Private Power

• Commonwealth & Southern

• Wendell Willkie

• TVA: lower rates

• PWA: loans to municipal utilities

• Fair competition?

• Lower rates -- greater usage & revenues

TVA Planning & Development

• Land use planning

– Soil reclamation

• Community development

• Local control

• Decentralized planning

TVA Impact

• A New Deal success– Electric power

– Industrial development

• Local control

– Disproportionate benefits to large landowners

• Community development– Mixed assessment

Electric Home & Farm Authority

• NIRA (1933)

• $1 million, eventually $10 million

• Loans to buy electric equipment

• Lower cost appliances

• 4% interest; easy terms

• Cooperation with private utilities & appliance producers

EHFA: Impact

• 1939:

– 31 states

– 353 utilities

– 3,203 retailers

– 281 manufacturers

• 1940

– 2/3 purchasers -- income >$1,800/year

Rural Electrification Administration

• Executive Order 1935 -- $100 million

• Legislation 1936 -- $420m/10 years

• More loans thru RFC– Self-liquidating

– Temporary

• Private providers– Too slow & expensive

– Limited interest

• Farmer cooperatives

REA: Impact

• Louisana

– 1935 -- 1.7% farms with electricity

– 1939 -- 6.8%

• Colorado

– 1935 -- 11%

– 1940 -- 25%

• Locally controlled & managed

Bonneville Power Administration: Issues

• Dams on Columbia River

• FDR campaign promise

• Public power or pool with private companies?

• Rates?

• Independent or part of Interior?

Bonneville Power Administration

• Preference for public & coop providers

• Federal backbone transmission system

• Corps of Engineers to operate

• BPA, within Interior, to distribute

• Preference for uniform rates

Seven Little TVAs

• George Norris proposal - 1937

• Apparent FDR support

• Ran afoul of Wallace-Ickes rivalry

• Opposition– Private power

– Western states

– Public administration experts

Public Works Impact

• Huge long term impact

– Development of South & West

– Electric Power

– Infrastructure

• Impact on economic recovery ?