The Cigarette, page 7
Figure 2.2 The Agricultural Adjustment Administration toots its own horn, 1934. (Agricultural Adjustment: A Report of Administration of the Agricultural Adjustment Act, May 1933 to February 1934 (Washington, D.C.: United States Government Printing Office, 1934), page 264)
The exception was tobacco. Had such a chronological range been applied to the crop, tobacco growers would have been locked into a parity price lower than what they received during 1932. And thus the base period of 1919–1929 was applied to tobacco alone, which allowed growers to realize the benefits of that decade’s increased cigarette consumption, as well as the brief period of higher prices secured by the cooperative movement.17 Use of the 1919–1929 period raised the base price level for tobacco farmers nearly 60 percent over the prewar base calculation.18 Parity for farmers was to be achieved through direct payments to those who took part in acreage reduction programs. These payments were financed through a “processing tax” levied on the firms that first bought and processed covered commodities, including tobacco.
New Deal understandings of the organic connection between industry and agriculture were evident not only in the concept of parity, or the favored metaphors of Wallace and Tugwell. The first administrators of the Agricultural Adjustment Administration (AAA) and the NRA shared a long professional history and spent the 1920s as the nation’s foremost evangelists of the parity concept. And both had served on the WIB, the agency comprised of businessmen that oversaw industrial production and distribution during the First World War.19 George Peek was selected by Wallace to be the AAA’s first administrator. Peek’s counterpart at the NRA, Hugh Johnson, had succeeded him as president of the Moline Plow Company, an Illinois-based farm implement firm. As executives of a farm equipment company, Peek and Johnson were vitally concerned with whether farmers had the money necessary to make capital investments in plows and tractors.
During the agricultural depression that followed the First World War, the two men had become the foremost exponents of the concept of “fair exchange value”—synonymous with “parity.” Peek and Johnson unveiled their plan at a 1922 national agricultural conference convened by Wallace’s father, Henry Cantwell.20 Equality for Agriculture, a pamphlet produced by the two men after the 1922 conference, was a call to arms. Farmers were instructed to urge their congressmen to “support legislative action” in favor of the parity principle.21 The parity concept was central to the McNary-Haugen legislation, introduced every year from 1924 to 1928 and championed by the Farm Bureau.22 The McNary-Haugen bill was the white whale of the Farm Bloc: passed by Congress only to be twice vetoed by Coolidge. It would have raised prices on farm goods by having the government buy surplus production at high prices and then dump the surplus on world markets. Peek and Johnson would leave the AAA and the NRA within a year of their appointment, both men apparently unwilling to compromise with their ideologically diverse colleagues. But the parity concept would stand as a testament to corporatist notions of national economic balance for nearly the rest of the twentieth century, guiding U.S. Department of Agriculture (USDA) assessments of farm welfare, quantifying where farmers belonged in the organic whole of the economy.23
Two Months in North Carolina
Achieving parity by controlling supply was a task of monumental proportions. It required the deployment of thousands of government officials spread over the expanse of the United States. And it required the consent of millions of farmers, who signed contracts in which they agreed to curtail production on the promise of payment from the government. This was no small feat: the concept of agricultural adjustment ran directly counter to the economic intuitions of producers, who had never before experienced the price-raising benefits of sustained collective action. Farmers, like the tobacco growers who had witnessed the previous decade’s experiments in cooperative marketing, had made it a practice to produce to the hilt.
Farmers all over the nation were eager for help from Washington. At the time of FDR’s inauguration, the fortunes of agriculture had slid further relative to industry, such that “the exchange value of farm products for industrial goods had fallen to 50 percent of the prewar average.”24 For tobacco farmers, the situation was acute. Receipt from the sale of tobacco had cratered during the first three years of the Depression, falling from $286 million in 1929 to $107 million in 1932. Adding fire to farmers’ anger was the fact that during the same period, tobacco manufacturers saw profits rise to a combined $146 million in 1932, a significant increase compared with their $134 million profit in 1929.25 Cigarettes, it would seem, were depression-proof. Tobacco was not.
The drive for production control had its dramatic moments: barn-storming rallies and the shutdown of tobacco auction houses. Cooling these tensions required the cooperation of agricultural officials and prominent growers—a mutual dependence that privileged elite control over broad-based democracy. Fewer farmers produced tobacco than wheat, corn, cotton, hogs, or milk. Nevertheless, tobacco was considered a basic crop by the agriculture law—more illustrative of the power that southern congressmen held in the New Deal coalition than of the crop’s importance to the overall economy. But before working out a scheme for contracts with farmers, AAA officials met with the well-heeled representatives of the leading tobacco companies in July of 1933, attempting to persuade them to raise the prices they offered to farmers. The companies were noncommittal, expressing only a vague intention to “pay the farmer more for his tobacco” that year so long as “it could be done without causing overproduction in subsequent years.”26 Government officials were hoping to secure a concession from the companies as an incentive for farmers to sign contracts.
Production control was intended to be at least nominally democratic. Farmers would have an active role in the program’s implementation, as the management of the program would rest with state and local farmer-committees. This decentralized planning scheme lent itself to control by local elites such as warehouse owners, farmer-lawyers, and large landowners. The nexus of influence binding growers and the agricultural bureaucracy was hardly new. It rested upon connections forged by the Extension Service in the early part of the twentieth century. Founded in 1914, the Extension Service operated through county agents dispatched all over the country to take the scientific innovations and management techniques of the USDA and the land grant colleges directly to farmers.27 Most often, farmers that partnered with government agents were wealthy enough to implement such recommendations and influential enough to evangelize best practices to their neighbors. The Extension Service left an institutional legacy in the fields, establishing farmer organizations in many counties. These “farm bureaus” federated as the American Farm Bureau Federation in 1919, ensuring a conduit between federal policymakers and growers.28
Under the AAA, this web of local, state, and national policymakers grew. As agricultural economist M. L. Wilson explained, “a national administrative board would determine from price relationships” whether or not producers of a given commodity should be called upon to restrict production. With this information at hand, “state allotment committees of farm and business leaders would be necessary to divide each state’s allotment among counties.” At the more local level, “county and … community committees would finally apportion the allotments among individual growers with acreages and yields over a designated period as allotments.” Farmers would be free not to participate, but those who did not would be ineligible for the benefit funds derived from the processing tax on manufacturers.29
Even as the adjustment plan seemed to be in place, farmers grew antsy. The legislation, after all, was introduced in the House nearly two months before it was signed into law. And tobacco farmers had to wait longer than others to see any relief. Wallace appointed John “Jack” Hutson as chief of the tobacco section shortly after the passage of the Act. More than any other person, Hutson defined the New Deal in tobacco, laying the foundation for subsequent program policy. Like the commodity he represented, Hutson had a knack for flying under the official radar. The Kentuckian moved noiselessly through the agricultural bureaucracy, barely making an appearance in the historical literature on the role of planners in the New Deal or the agricultural politics of the period.30 But Hutson was an able administrator who got along equally well with liberal Alger Hiss and arch-conservative South Carolina senator James Byrnes. At an international sugar conference in London he even managed to become friendly with then- British prime minister Ramsay MacDonald. From his early career in farm management and Extension to his ascent through the Bureau of Agricultural Economics (BAE) and New Deal bureaucracy, and later as president of a tobacco export promotion association, Hutson represented the kind of associational hybridity that characterized agricultural policymaking during the twentieth century.31
Hutson’s time at the BAE was cut short by a post to Europe with the Foreign Agriculture Service. What was supposed to be a one-year position appraising the “immediate market prospects” for American leaf in Europe turned into a three-year immersion in the European tobacco industry. Hutson was a public agent of private market expansion, witnessing—and facilitating—a shift in European preferences from “Oriental [Turkish] types of cigarettes to US cigarettes.” Importantly, he made connections with “tobacco people” in the foreign departments of agriculture and manufacturing.32 By the time he was appointed administrator of the tobacco section of the AAA in 1933, Hutson had discovered the two concepts that would become central to tobacco regulation for the remainder of the century: supply restriction and market expansion.
In the planning phase of tobacco’s AAA, Hutson courted the participation of elite growers. Under the AAA, the six types of tobacco were covered under separate regulations. Hutson was forced to prioritize which would receive first attention. Although flue-cured growers were the most economically significant, Hutson considered them “comparatively favorably situated relative to other growers.”33 They would have to wait until after Burley and cigar-leaf producers were handled. But the AAA was not indifferent to the flue-cured regions. As Hutson told farmers in the summer of 1933: “Don’t expect us to sit in Washington, devise a plan and say here it is.”34 This invitation presented an opportunity for local leaders to foment farmer sentiment for a program that they would also control.
These elites came through, providing AAA officials with huge audiences at mass meetings throughout the tobacco belt. At one such meeting, Hutson and AAA production chief Chester Davis opened the door for growers to rally around the agency and make their own demands while policymakers in Washington were crafting production contracts. Davis told the audience that “we think we are going to go further safely if we do not go too far in front of the army and get shot from behind.”35 And so AAA officials met privately with select growers in late July. The AAA wanted farmer–foot soldiers to lead the reduction drive but were also committed to ensuring that those foot soldiers did not get too far out in front of the generals and their logistical support.
Much as it had with the Co-op drive, the North Carolina Extension Service took the lead in spearheading AAA efforts. Ira Schaub, dean of agriculture at North Carolina State, commanded the shock troops of the AAA, leveraging the on-the-ground connections between his county agents and farmers.36 Schaub was an entrepreneurial administrator who saw the New Deal as an opportunity to expand his bureaucracy.37 Schaub instructed his agents to select growers to meet with AAA officials—a means of putting pressure on federal officials while responding to Hutson’s invitation to devise their own plan.
Organization by the Best Citizens
The plan that farmers initially devised was not what Hutson had in mind. Talk of government help for farmers all over the country raised expectations in the flue-cured belt. When markets opened in the southernmost reaches of the tobacco belt in August, growers were disappointed. Prices had not budged, and, in fact, many had dipped a little for the highest grades of leaf. Dashed expectations coupled with the promise of government assistance proved galvanizing. Forty leading farmers and businessmen—the same men who had most ardently opposed the Tri-State Tobacco Growers Cooperative Association (TGCA)—arranged a mass meeting in Raleigh. On August 31, more than 2,000 angry growers got themselves to the Memorial Auditorium at North Carolina State—a demonstration of the awesome organizing power of tobacco leadership. They passed resolutions exhorting the governor and the AAA to swift and specific action. They wanted the AAA to ensure parity for the 1933 crop, and an immediate start to the acreage reduction sign-up campaign for 1934.38
Farmers wanted even bolder action from the governor. They urged him to “close every tobacco warehouse in North Carolina, under his exercise of martial law, and that [to] keep them closed until the Federal Government has put into effect measures that will raise the prices of tobacco.”39 Governor J. C. B. Ehringhaus was primed to respond to farmer demands—if only because his wealthy friends had been making similar requests all month. In a letter, merchant and landowner Lionel Weil drew Ehringhaus’s attention to the “various price supporting movements that have recently been undertaken by the government.” Surely, “no other commodity merits our immediate attention more than the proper price of tobacco this fall.” Weil suggested coordinating some “interested people” for a visit with “Secretary Wallace and Mr. Davis” to secure “urgent and immediate action.”40 The governor proclaimed a “marketing holiday”—not unlike the banking holiday proclaimed by Roosevelt the previous March. The governor of South Carolina followed suit, bringing a halt to all flue-cured tobacco sales in the United States.41 In his bid for the governorship, Ehringhaus had been seen as a tool of financial interests. Many farmers had voted for his opponent, a populist insurgent. After he shut down the tobacco markets, the governor became the most popular man in the state.42
The delegation of North Carolinians sent to confer with the AAA on the flue-cured program was originally meant to include only growers and warehousemen selected by Extension officials. But once North Carolina’s senators and congressmen saw how popular Ehringhaus had become, they detected an opportunity to ride the wave of cresting populism and attended these sessions as well. In early September, tobacco leadership conferred in Washington to find a solution that would allow the markets to reopen as quickly as possible while still satisfying growers desperate for prices to increase. Two men from Greenville, in the state’s Coastal Plain—Hutson’s assistant J. Con Lanier and Congressman Lindsey Warren—spearheaded these efforts. They devised a makeshift plan for the season already under way: growers would sign a tentative contract whose details would be worked out later in further consultation with growers and AAA planners. A campaign to sign up growers for the tobacco program would begin immediately, and tobacco auctions would resume.43
Officials were now on the clock to get farmers to sign the contract with the AAA. Extension director Schaub handpicked growers to assist his organization with the campaign, utilizing the well-worn networks of agricultural associationalism. Claude Hall, a member of the Washington delegation, was named the president of the North Carolina Tobacco Growers Association—a descendant of an earlier state-appointed commission.44 The assistant director of the Extension Service served as secretary. This public-private fusion was characteristic of tobacco section’s administration. It was not a representative farmer democracy; it was a fusion of administrative oligarchy and economic populism.
The New Deal for tobacco relied on the interlocking coordination of private individuals and government officials to achieve public ends. Scholars attuned to the organizational and managerial aspects of the New Deal have argued that the exceptional bureaucratic capacity of the Department of Agriculture helped the AAA to succeed where the NRA had failed.45 After all, administrators like Hutson, trained in the BAE, and officials like Ira Schaub, with decades in Extension, 4-H, and at North Carolina’s land grant college, were crucial to the success of the AAA in tobacco. Still, the strong agricultural bureaucracy knew its limits. The structure of that bureaucracy, particularly the highly decentralized Extension Service, rested upon collaboration with the private sector.
During the frantic fall of 1933, the overworked Extension Service needed help in carrying out the sign-up. Pragmatic elitism ran the New Deal in North Carolina. Everybody wanted higher prices for tobacco; rich men—whether owners of warehouses, merchants, or landlords—were the most coordinated, organized, and easiest to enlist. “You would select an outstanding man from a community” to serve the AAA in an advisory capacity, Hutson recalled of those chaotic early days. “He might be an employee of a college of agriculture. He might be just a farmer. He might even be a farmer-lawyer.” Whether the man was in a “public” position at a college or in the Extension Service, or in “private” life as a farmer, was not the salient point for policymakers. What mattered, simply, was that “he was a man that people respected in the area.”46 Crafting the program this way created a positive feedback loop, as handpicked local leaders’ influence rose in tandem with the popularity of the tobacco program and with local communities’ dependence upon it. The tobacco program depended neither solely upon the autonomous will of the AAA, nor on the desires of farmers. Instead, the government’s power was legitimated, exercised, and augmented through the participation of private individuals and organizations.47
