American Agriculture and the Problem of Monopoly: The Political Economy of Grain Belt Farming, 1953-1980

Published by EH.NET (July 2001)

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Jon Lauck, American Agriculture and the Problem of Monopoly: The Political Economy of Grain Belt Farming, 1953-1980. Lincoln: University of Nebraska Press, 2000. xiv + 250 pp. 10 tables, notes, index. $45.00 (cloth), ISBN 0-8032-2932-1.

Reviewed for EH.NET by Victoria Saker Woeste, American Bar Foundation, Chicago, Illinois

Twentieth-Century Agricultural Politics: Playing the Monopoly Card

Farmers’ attacks on monopoly have been the main event of U.S. agricultural politics since the Civil War. Industrialization transformed modes of production and processing, reconfigured the relationships between producers and consumers, and resulted in a higher concentration of bargaining power in corporate hands. These results supposedly sounded the death-knell for the family farm and answered the question of whether Jeffersonian values could endure in an industrial society, apparently in the negative. Though variations on this theme have been sung, the tune has remained the same. American agriculture’s monopoly problem has endured from the nineteenth through the twentieth. Yet we produce more food than ever before, pay less for it than ever before (even after adjusting for inflation), and we have fewer individual farmers than ever before.

Jon Lauck, a historian and practicing agricultural lawyer, has performed a valuable service for historians of American agriculture, business, and law with this book, American Agriculture and the Problem of Monopoly: The Political Economy of Grain Belt Farming, 1953-1980. Lauck’s purpose is to trace the politics of agriculture’s antimonopoly crusade in the post-World War II period. This is obviously a subject with a substantial “prehistory,” so to speak. Historians are pretty well versed in the history of nineteenth-century agricultural protests, even if we don’t agree on the meaning or implications of those protests.[1] We also know a fair amount about the impact of 1920s associationalism and the New Deal on the economic organization of agricultural production.[2] Yet it would be a mistake to believe that the entire story of American agribusiness has been told. In fact, as Lauck shows, while the essential nature of the political struggle between farmers and corporate monopoly hasn’t changed much since 1950, or even 1900, the changing American state has altered the ways in which farmers and politics interacted, producing new shifts in policy and shaping the processes of competition and concentration.

The book’s seven chapters survey what Lauck, writing in the tradition of Ellis Hawley, calls the political economy of farming. Chapter One surveys the problem of post-war American farming, which Lauck defines as the persistence of “monopoly capitalism” in the agricultural sector (p. 1). How, he asks, can competition be preserved in an economy with such a pronounced tendency towards oligopoly? And, more importantly, why should it be? The second question is much easier to answer than the first. We want to preserve competition in agriculture, according to Lauck, because farmers connect us to our democratic roots, to the Jeffersonian agrarian tradition, and corporations do not. In view of the rise of large-scale industrial and technological techniques of production, which have become permanent fixtures on farms throughout the country, however, it has become imperative to examine empirically the historical development of markets and to look at factors other than firm structure and market dominance in order to determine whether and where competition actually exists (pp. 9-18). Laws, including antitrust laws, Lauck writes, “are necessarily political” (p. 15). He might have added, all politics are local, for local, specifically situated agricultural interests and the national state, already intimately related by the recovery programs of the New Deal, became inseparable in the second half of the century. It is the resurgence of local interests, both political and economic, that continue to press for the preservation of competition, even though to do so is to swim against the current of our national market.[3]

In Chapter Two, Lauck surveys the debate over corporate farming and calls for policy makers to pay continued attention to the issue of corporate ownership of farm land and control over agricultural processing. Here he traces the interrelationships between public officials and corporate agribusiness, arguing that agribusiness influence over such institutions as the land grant colleges, the Small Business Administration, and the U.S. Department of Agriculture posed significant threats to the need to balance corporate influence with the values of family farming (pp. 23-25). The National Farmers’ Organization, the Farmer’s Union, and a whole host of other interest groups, including environmentalists, the Catholic Church, and prominent writers such as Wendell Berry, all vocally opposed corporate farming and criticized national political leaders for their collusion with agribusiness. Skipping across these pages are many of the nation’s most prominent political figures with agricultural constituencies: senators George McGovern, Hubert Humphrey, James Aborezek, Gaylord Nelson, and Frank Church and secretaries of agriculture Earl Butz and Orville Freeman. Their positions on and connections to corporate farming, farm subsidies, and antitrust enforcement were crucial to their political careers (pp. 36-38).

As Lauck proceeds to show in Chapter Three, the economic choices farmers and processors make are also not without political consequences. This chapter surveys the meat packing and grain processing industries through the 1980s, arguing that the best (and really, only) solution to concentrated corporate power is effective farmers’ marketing and bargaining associations (p. 40). Yet, surprisingly, “throughout the postwar period the sectors farms sold their livestock and grain to [sic] showed signs of competitiveness” (p. 40). Despite the record pace of merger in the food manufacturing sector in the early 1980s, which produced some gains in economies of scale and overall efficiency, firms did not always exercise monopoly power over prices or supply. As a result, Lauck argues, it remained important for farmers to criticize the creation of new monopolies (and to pressure the federal government to enliven antitrust enforcement), but at the same time, market-based checks on the economic power of food-processing conglomerates continued to emerge. For example, the growth of the food retailing sector-including grocery stores and restaurants-undermined the power of packers to dominate sales to end-consumers. More importantly, farmers held the means of their own continued survival in their own hands, if only they could make good on the promise of organizing themselves.

Chapter Four examines the grain-trading “cartel” that dominated the American grain market in the 1970s and 1980s. This chapter explores in detail the impact on American grain farmers of U.S. export policy, a policy that consisted of a slew of treaties, federal statutes, and the recommendations of federal commissions. The nationalization of international trade in grain and other agricultural commodities arose not only in the U.S. but also in Australia, Canada, Great Britain, and other countries whose farmers demanded protection against downward pressure on prices (pp. 69-72). Lauck examines the impact of the U.S.’s grain sales to the Soviet Union during the 1970s and the impact of the 1973 oil crisis on foreign trade in farm commodities. He concludes here, as before, that despite increases in mergers, the grain trade remained highly competitive, meaning that private market ordering by farmers remained a potent source of influence on supply and prices.

Chapter Five takes an extended look at the National Farm Organization, painting a more flattering portrait of the NFO during the 1950s and 1960s than it has tended to receive in the historical literature. Lauck argues that the NFO succeeded in providing some bargaining power to its member farmers in their dealings with food processors. Despite the outbreaks of violence that accompanied the NFO’s insistence on collective bargaining, Lauck writes, “the history of the NFO indicates that farmers could organize and receive better prices at times and were not always the hapless victims of the corporate ‘monopoly problem'” (p. 85). The NFO’s harsh criticism of meat packers’ control over livestock prices led it to advocate such practices as the “holding action,” which was essentially a boycott designed to force packers to deal directly with the NFO for the purchase of livestock (p. 91). Whether this strategy worked or not, Lauck admits, is difficult to determine, but he cites archival evidence that packers grudgingly acknowledged the NFO’s role in raising wholesale prices. During the 1960s the NFO turned to “block marketing,” a method by which it pooled its members commodities and acted as their agent in negotiating prices (p. 93), and to selling directly from farmers to consumers (p. 94). The NFO’s gains for its members spurred other farm groups such as the American Farm Bureau Federation to act; they formed similar pools and sought to reestablish their influence with their own members. These moves resulted in market practices and state laws that gave farmers further protection from the illegal exercise of monopoly power by processors. Lauck acknowledges that “the violence and radicalism of the NFO did serious damage to its credibility and undermined its larger goals,” which would seem to have some consequence for his argument that the NFO has gotten a bum rap (p. 103). The NFO succeeded not least in dividing farmers who disagreed about its methods and leadership and who believed that cooperation was their real ticket to economic stability. In view of farmer organizations’ evanescent influence on farm prices, Lauck’s claim that the NFO “succeeded” may come across as hyperbole.

Chapter Six gives a sustained examination of the postwar cooperative movement, giving Lauck an opportunity to restate his claim, originally made in the introduction, that historians have slighted agriculture in their study of postwar political economy. Lauck’s take on cooperatives follows his interpretation of the NFO: farmer-controlled marketing organizations helped to blunt the impact of monopoly on prices by enabling producers to assert collective control over the sale of their commodities to processors. His reliance on the NFO as his sole historical benchmark leads him to examine the cooperative movement from the perspective of the 1960s and 1970s, rather than recognizing that the legal foundation of cooperative marketing emerged out of its own process of experimentation, protest, litigation, and violence during the Progressive Era. For example, Lauck sees the Capper-Volstead Act, which exempts cooperatives from the federal antitrust laws, as “the first significant statutory help” to the cooperative movement (p. 111). In fact, state laws providing for the organization of cooperatives (both as nonstock associations and as capital stock corporations), state and federal laws exempting farmers from the antitrust laws, and federal laws restricting the Justice Department from spending appropriations dollars prosecuting farmers under the Sherman and Clayton Antitrust Acts all provided significant legal recognition to the cooperative movement several decades prior to the enactment of Capper-Volstead in 1922. Moreover, Capper-Volstead itself emerged out of a specific controversy that directly raised the question of the ability of a farmers’ marketing cooperative to monopolize its product. Though contemporary lawmakers fudged on the answer, it is important that historians recognize that, then as now, farmers have exploited for political purposes the image of corporations as inherently monopolistic and cooperatives as the pure and noble defense against that inevitable end. The New Deal, in fact, enabled cooperatives to act as monopolists in so many ways by providing mandatory production controls that eliminated uncontrollable surpluses. The ideological power of the farmer-owned and -controlled marketing association remained the political touchstone of the postwar era, with president after president making the obligatory declaration that a cooperative movement sufficiently protected by law would save the family farmer. With this kind of consistent support from the Executive Branch, the cooperative movement warded off all attempts to strip farmers’ organizations of their antitrust exemption and their federal tax exemption (p. 119). Lauck continues to press his thesis that farmers’ organizations were successful in competing with agricultural monopolists, despite his finding that cooperatives found it difficult to achieve vertical integration in the grain industry. He even hedges when it comes time to declare “how much the cooperative processors directly engaged the monopoly problem” in industries with commodities requiring a high degree of processing and manufacturing to render them saleable (p. 122). Farmers were and are, it’s safe to say, adept at playing the monopoly card in order to distance themselves (and their organizations) from the specter of concentrated economic power, in order to extract favorable treatment from the state, and to bolster their image as the bastion of democratic values in American society. This doesn’t mean the family farm isn’t worth saving, only that doing so is as much an ideological choice as a political or economic one.

Chapter Seven considers the relationship between the state and agricultural organization, observing the reliance of farmers on state structures and incentives for private efforts at organizing and marketing. Here Lauck ties such issues as the depopulation of American farms, surplus management, and budgetary politics to the identity of the political party in power in Washington and to the careers of certain senators with presidential ambitions (p. 141-148). Farmers continued to exhibit that streak of individualism and independence that persistently undermined attempts at coordinated crop control (p. 150), and by 1968, when the Democrats failed to understand that even endless subsidies might lose their appeal, the Republicans began swaying the farm vote their way. (One might note here that the Democrats have never fully recovered in the Plains states, at least in presidential races, if the 2000 election is any guide.) Part of the problem, as Lauck points out, is that the USDA was involved in programs to make farms more productive even as commodity surpluses spiraled higher (p. 152). Ultimately, in its attempts to create a rational pricing policy for American farm products, the state was unable to bridge the many divisions among farmers, reflected in the diffusion of power among the many farm lobbying organizations (p. 153).

The book presents an impressive collection of archival sources. Lauck’s research is downright amazing; if he’s quoted only half of what he collected, his files must contain a treasure trove of still unpublished evidence. Tons of inside information, excavated from the correspondence of dozens of politicians, farmers, farm leaders, and others, enable him to do a nice job of blending the trajectory of political careers with agriculture’s political fortunes during the twentieth century. The monopoly problem, so chronicled in the nineteenth century, deserves to be more fully understood for the twentieth, and Lauck has contributed mightily to that project.

He is in a good position to do so. Lauck is clearly unafraid of economics, or economists. He engages directly with claims about monopoly with clear and understandable analysis. Especially interesting is his critique of the Chicago School’s sustained attack on antitrust, though why he put this at the end of the book, buried in an epilogue whimsically titled, “Toward an Agrarian Antitrust,” is difficult to discern. If the integrity of the republic relies, as he argues, on the preservation of a competitive farm sector, and if the legal system has thwarted attempts to preserve competition, then debunking the intellectual (or ideological) supports for the status quo deserves to be put front and center.

Instead, Lauck’s central interest here seems to lie in the arena of old-fashioned political history, the history of party alignments and interest group politics. In an attack on the new social and rural history of the last twenty years, Lauck explicitly disdains the conceptual and historical categories of race, gender, ethnicity, arguing that they “overlook what [Louis] Harz called the ‘liberal tradition'” (p. 170). Lauck is deliberately looking back, as if to sweep aside the past twenty years of historical scholarship, in an attempt to reclaim Hartz through the words and values of rural America. Is it really impossible to return to Hartz unless we follow Lauck’s imperative? After all, the historical treatment of race, gender, and ethnicity can reveal the depths to which liberal democratic values permeate both economy and society, shape political and institutional responses. Indeed, scholars are already deeply engaged in creating what Catherine McNichol Stock and Robert Johnson are calling the new political history of rural America.[5]

However Lauck chooses to position himself within the field is of course the author’s prerogative. But the book suffers from a significant formal problem: Parts of every chapter save six and seven have been published previously. The result is the increasingly and lamentingly common form of a string of articles that have not been fully integrated into a whole. The narrative is disjointed and the reading experience fitful, because the book lacks a clearly laid out narrative structure and a clearly defined historical framework. For example, a degree of tunnel vision materializes in Lauck’s discussion of nineteenth century farm protest tactics. He views these through the lens of his interest in the NFO, rather than seeing farmer boycotts as a standard feature of agricultural protest. What is needed is more historicization and more explicit links to nineteenth-century agricultural organizations, which deserve to be understood on their own terms rather than as marginal in the light of subsequent events (p. 111). Each chapter has its own story to tell, but the links between these episodes don’t fully materialize, having been laid aside in favor of a repeated stress on the book’s main argument that farmers have done better in beating back the forces of monopoly than historians have recognized. That is an important argument to make, but to do so more effectively the argument needs to arise out of the historical narrative rather than appear as a superimposition on the evidence. This formal problem can be understood in terms of a specific issue: the task of framing the historical scope of the project. The book’s periodization, 1953-1980, is confusing. The absence of a clear framework undermines the logic of those dates. Several chapters, including 3, 4, and 6, contain historical sections that overlap with each other and aren’t as well developed as they might have been had Lauck treated the historical issues together in one integrated chapter at the beginning of the book instead of presenting them as background. Obvious redundancy could have been avoided with a better organization of the material. These recurring historical sections blur the periodization backwards in history by reaching back to the nineteenth century; other parts of these chapters muddy the ending date by referring to events in the 1980s and 1990s. Chapter 7 does both at once, displaying a maddening tendency to jump backwards and forwards in time without making explicit the connections between eventsor making clear the logic of the presentation. Many a historian has been taken to task for an overreaching title; perhaps Lauck’s sin is one of modesty rather than vanity.

The book also needed a stiffer editing than it got. There are too many awkward phrases and technical mistakes. The prose abounds with overlong paragraphs crammed full of information and quotations from sources but no topic or concluding sentences. In addition, the index is not as serviceable as it should be.

Yet, in the final analysis, what we do come away with here is the unavoidable conclusion that agricultural politics matter, even in an overwhelmingly urban society, because, just as gravity pulls water from higher elevations to lower, farmers will ultimately pursue whatever action brings them the best prices, and, at the same time, be bedeviled by market conditions that undermine those actions. As Lauck writes, “Farmers’ failure to achieve everything they wanted partly reflected their disagreement over which legislation was beneficial and partly reflected ideological opposition to state control of their economic lives” (p. 162). Hence the irony of the enactment of the Freedom to Farm Act of 1996, which supposedly phases out subsidies by 2003, and yet at the same time the federal government has been making record payouts to farmers to prevent widescale abandonment of farms due to-surprise, surprise-depressed prices caused by overplanting and overproduction.

[1] See, e.g., Lawrence Goodwyn, Democratic Promise: The Populist Moment in America (New York: Oxford University Press, 1976); Edward L. Ayers, The Promise of the New South: Life After Reconstruction (New York: Oxford University Press, 1992); Bruce Palmer, “Man Over Money: The Southern Populist Critique of American Capitalism (Chapel Hill: University of North Carolina Press, 1980).

[2] See, e.g., Colin Gordon, New Deals: Business, Labor, and Politics in America, 1920-1935 (New York: Cambridge University Press, 1994); Mary Neth, Preserving the Family Farm: Women, Community, and the Foundations of Agribusiness in the Midwest, 1900-1940 (Baltimore: Johns Hopkins University Press, 1995); Hal S. Barron, Mixed Harvest: The Second Great Transformation in the Rural North, 1870-1930 (Chapel Hill: University of North Carolina Press, 1997); and David Hamilton, From New Day to New Deal: American Farm Policy from Hoover to Roosevelt, 1928-1933 (Chapel Hill: University of North Carolina Press, 1991).

[4] For a brilliant study of local politics and the contingency of regulatory solutions in the railroad industry, see Gerald Berk, Alternative Tracks: The Constitution of American Industrial Order, 1865-1917 (Baltimore: Johns Hopkins University Press, 1994).

[5] Catherine McNicol Stock and Robert Johnston, “Introduction,” in Stock and Johnston, eds., The Countryside in the Age of the Modern State: Political Histories of Rural America (Ithaca, N.Y.: Cornell University Press, 2001, forthcoming).

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