Texas, Cotton, and the New Deal

Published by EH.NET (December 2006)

Keith J. Volanto, Texas, Cotton, and the New Deal. College Station, TX: Texas A&M University Press, 2005. xv + 194 pp. $35 (cloth), ISBN: 1-58544-402-2.

Reviewed for EH.NET by Ryan Johnson, Department of Economics, Brigham Young University-Idaho.

Keith Volanto has written an interesting book on New Deal cotton policy among Texas cotton farmers during the Great Depression. By focusing on agricultural policy in one state, Volanto explores the details of New Deal agricultural policy administration in a way that would be difficult for more broadly focused studies. His study describes the debate at the national level and then delves into the complicated details of implementing the programs at the local level. He describes the effects of the agricultural policies on landlords, tenants, sharecroppers, ginners, and shippers.

In May of 1933, when the Agricultural Adjustment Act became law, cotton farmers had already planted their crops. Five weeks after the inception of the law, the Agricultural Adjustment Administration (AAA) called on cotton farmers to destroy ten million acres of cotton in hopes of increasing cotton prices. Participation by the farmers was voluntary. The AAA used the federal Extension Service and state and county agricultural agents to actually implement the plow-up rather than expand the size of the AAA to the local level. A particularly enjoyable feature of the book is Volanto’s detailed descriptions of the local agricultural agents’ efforts to rally the support and compliance of farmers. The local agents generally already had a relationship of trust with the farmers and thus were in a good position to elicit their support. However, the use of multiple agencies at different levels and the voluntary participation of farmers created problems of their own. These problems were enhanced by the speed in which the policies had to be implemented in light of the time between the passing of the Agricultural Adjustment Act and the impending harvest. The local agents had to be trained. The agents in turn had to educate local farmers, persuade them to sign up for the plow-up, and then inspect their farms before and after the plow-up.

Volanto points out that for part of the season many agents worked eighteen-hour days and often on Sunday. Numerous difficulties arose throughout the process. For instance, farmers were slow to sign up, requiring local agents to make house calls. Speculation about price increases led some farmers to not sign up for crop reduction. Farmers that agreed to plow up some of their acreage became less willing after tropical storms destroyed some of the crops. Other farmers claimed their mules refused to destroy the crops because that was something they had been trained precisely not to do. Even though the AAA and local agents were relatively successful at reducing crop acreage, an exceptional growing season mitigated the crop reduction’s effects on prices somewhat. This coupled with a slow disbursement of checks frustrated the farmers.

Initially in 1934, it appeared that the only difficulties were associated with the understanding of definitions and the assigning of quotas. Farmers generally did not have good written records that could be used to certify past production claims. To qualify for subsidies, farmers had to comply with a minimum amount of acreage reduction. Some farmers padded their estimates of past production so that they could get subsidized with less acreage reduction. In counties where farmers’ claims exceeded government estimates, blanket adjustments were applied to all of the farmers’ estimates to bring them into line with government estimates of the county’s past cotton production. This penalized farmers who submitted honest estimates of past production and caused contention in the counties where the farmers’ aggregated estimates significantly outstripped the government’s production records.

Volanto argues in Chapter 3 that even with these difficulties, the implementation of the program in 1934 would have been relatively smooth if there had not been a push for compulsory control. Under the voluntary crop reduction program it was potentially possible for farmers that did not cooperate with the program to benefit more from the increased prices than those that cooperated in reducing their acreage benefited from the government subsidy and increased crop prices. This was seen as unfair and as a structural problem that could undermine the government program. Senator Bankhead, from Alabama, sponsored the bill implementing compulsory quotas which became law in March of 1934. By the time the new compulsory quotas were released in late June, cotton farmers had already planted their crops. Despite the fact that the quotas were supposedly based on past production, many farmers argued that they were arbitrary and that they penalized farmers that had submitted accurate estimates of past acreage.

Ironically, when drought struck, substantially decreasing cotton yield in parts of the South, Senator Bankhead became a supporter of suspending or significantly altering the Bankhead Act. This was because his home state, Alabama, had a surplus of cotton production which could not be marketed under the provisions of the Bankhead Act. On the other hand, in Texas, where the drought had substantially affected cotton yields, growers had an excess of Bankhead certificates which were needed to market cotton. The government’s willingness to allow the purchase of the surplus certificates under the Bankhead Act afforded drought stricken farmers a degree of “farm insurance.” This national debate led to a referendum in which voters overwhelmingly opted for retention of the Bankhead Act. Volanto argues that the combination of the cotton reduction program and the drought pushed cotton prices above 12 cents per pound. This was still short of the 15.9 cent per pound objective.

In 1935, there were some new modifications to the program but things went relatively smoothly. However, 1935 was a year of increased debate at the national level which created uncertainty about the future of agricultural policy. In May, the U.S. Supreme Court invalidated the National Recovery Administration, sending an ominous signal to the AAA. On January 6, 1936 the U.S. Supreme Court effectively killed the Agricultural Adjustment Act (1933) by declaring the production-control contracts and processing taxes unconstitutional.

As a result of the Supreme Court decision, Congress passed the third new program in four years: the Soil Conservation and Domestic Allotment Act (1936). The act sought to increase crop prices by diverting acreage away from cash crops by paying farmers to grow soil-building crops and undertake erosion-prevention practices. The new program was more complicated than previous programs administered by the AAA and farmers had a hard time forgetting the details of the past programs. Further complicating things, the law was once again implemented after the growing season had already begun. Severe drought turned out to be better at increasing cotton prices than the SCDAA.

The voluntary nature of the SCDAA led to its demise in 1937. Induced by high-cotton prices, growers planted and harvested a large crop which sent 1937 cotton prices back to single-digits. The failure of the SCDAA led to the Agricultural Adjustment Act of 1938. Volanto points out that the new law was once again a difficult one to implement due to its complicated provisions and disagreement with farmers. However, he also points out that the program had some success at reducing the cotton crop.

The New Deal agricultural programs have been criticized for striving to help the politically powerful land owning farmers at the expense of ginners, shippers, tenants, and sharecroppers. In the penultimate chapter of the book Volanto focuses on the story of tenants and sharecroppers in Texas. As the government programs decreased cotton production, there was less need for tenants and sharecroppers, driving many of the laborers off the farm and into the city and onto relief rolls. It is also argued that in an attempt to maintain landlord cooperation, the government was reluctant to try to protect tenant and sharecropper interests. Volanto presents the arguments the AAA made in defense of the dislocation of the tenants and sharecroppers. The AAA officials and many of its supporters argued that there were too many tenants and sharecroppers on the land and that their displacement was inevitable due to the mechanization of agriculture.

The AAA defense to the tenant and sharecropper dislocation is somewhat ironic and highlights a concern I have with the way in which much of the story of the AAA as told by Volanto is framed. In light of declining cotton prices, one could also apply the AAA’s argument to the landlords and land owning farmers and argue there were too many land owners farming cotton, and that their dislocation was also inevitable. This is consistent with the simple model of entry and exit in competitive market learned in a principles of microeconomics course. Technological innovation, such as the invention of the tractor, causes an increase in cotton supply and lower prices. In the face of declining revenue, some farmers are driven out of business until prices are brought back up to a level where a normal rate of return can be earned. After reading Volanto’s book I am left to wonder if anyone in the national debate applied this argument to the land owners or if the argument was only applied, ironically, to the tenants. Volanto, when casting the New Deal agricultural program’s effects against the counterfactual of no AAA intervention, argues that cotton prices would have been much lower.

Overall I found the book an enjoyable and informative read. Volanto’s description of the struggles, success, and failures at the local level in Texas to implement a program that was constantly evolving and being reinvented at all levels adds real-life color to the story of the AAA.

Ryan Johnson’s dissertation was titled “The Economic Progress of American Black Workers in Periods of Crisis and Change, 1916-1950.” Among his working papers is “A New Deal for the Forgotten Man? The Impact of New Deal High-Wage Policies on Relative Black Employment.”