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Grapes of Wrath and the Great Depression

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June 03, 2010 – Comments (14)

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When reading Grapes of Wrath by John Steinbeck, one is painted a picture of corporate abuses over helpless people who are finally saved after years of struggle by the government. Steinbeck blames banks and the invention of the tractor and other machinery for displacing thousands of “Okies” who were no longer needed to attend to the crops. He also describes a scene where the California farmers destroyed their oranges and other goods in front of the starving people because no one had the money to buy the products. I will do my best to address these points and explore the reality of the economy during the Great Depression.

Contrary to popular belief, the problem in the eyes of government and corporations was not high prices, it was low prices. Corporations blamed low prices on evils such as “unfair competition” and claimed their “profits weren’t protected.” In response to these complaints, Franklin Roosevelt started the first of many “New Deal” government interventions by creating the National Recovery Administration (NRA) in 1933. The first administrator of the agency, Hugh Johnson, called it “the greatest social advance since the days of Jesus Christ.”

The NRA essentially centralized businesses and industries into regulatory cartels. Large businesses suddenly had the power of law to declare “codes of fair competition” and eliminate “destructive competition.” This led to the formulation of price floors and minimum wage laws, meaning that if a business offered a lower wage to employees or lower price to consumers than the industry’s standards they would be fined and/or imprisoned. A famous example is that of Jacob Maged, a New Jersey tailor who charged 35 cents for pressing a suit, 5 cents below the 40 cent minimum established by the NRA. Only when he agreed to follow the NRA standards did he avoid a $100 fine and a 30 day jail sentence.

Such a law diminishes creativity in start-up businesses, provides a de facto monopoly to the larger players in an industry, and establishes what large businesses consider “fair competition”: no competition. Without free competition and fluctuation of prices and wages, the individual people are inevitably the ones who are most impacted in a negative way. Mandatory higher wages destroy jobs for lower-skilled workers, and mandatory higher prices obviously prevent people from buying goods they especially need during a depression. In other words, the NRA was preventing the market from readjusting its labor and goods to the productive areas of the economy in the name of “fair competition” and other terms created by businessmen looking to use government to protect their profits.

The NRA was just the beginning of the attack on low prices. Many farm goods such as wheat and cotton were experiencing large drops in prices as the recession and depression worsened. Government believed the problem was overproduction, which they then believed led to prices that were too low, putting a strain on businesses. It is worth noting that the economists who actually predicted the Great Depression strongly recommended against the policies pushed through by the Roosevelt Administration.

In an attempt to “stabilize” farms and food prices, the Agriculture Adjustment Act was passed in 1933. The basic goal of the newly formed Agriculture Adjustment Administration (AAA) was to pay farmers to reduce their crop area and output. This, the AAA and Roosevelt Administration believed, would bring stability to the economy by raising prices to their so-called appropriate level. Oklahoma is the initial setting of the Joad family in Grapes of Wrath, so we’ll stick with Oklahoma figures for now.

In Oklahoma in 1933, 87,794 cotton farmers plowed under acres of their already-growing fields for a total payment of $15,792,287 from the federal government.

In 1934, Oklahoma pig farmers received more than $4 million to slaughter a portion of their sows and younger pigs.

In 1934 and 1935 wheat farmers were paid nearly $14 million to reduce their acreage. What’s ironic is just years earlier in 1917, under the watch of Herbert Hoover at the Food Administration, the government paid farmers an artificially high $2-per-bushel of wheat to expand the production of wheat for the efforts of World War 1. First government subsidized the unnatural growth of wheat (causing a major wheat bubble and artificial reallocation of farmers’ resources in the Midwest), and less than 20 years later government was paying farmers to stay away from wheat and do absolutely no farming on their land.

In the entire U.S., production of other products like milk and butter decreased approximately 30% thanks to the new federal subsidies.

It was this process that played the single greatest role in landowners getting rid of their tenants in Oklahoma, not some far off mysterious bankers as Steinbeck portrays in Grapes of Wrath. Another major factor was that the federal subsidies did not reach the smaller family farms in Oklahoma, which provided a double-whammy to the small farms with the artificially higher prices that came with the food destruction. Basically, large farms were paid to do nothing and even destroy their crops, which increased prices and diminished competition artificially, which in turn led to the eventual decline of small farms (who were often bought by the larger subsidized farms) as well as the removal of many tenants of the larger farms.

These fatally flawed policies monopolized large farms and forced many farmers to leave the state, most choosing to go to California and the Southwest. Steinbeck places the majority of the blame on corporations, but he failed to see that the corporations would have been powerless without the force of government. Both the NRA and AAA were ruled unconstitutional by the Supreme Court in 1936, but many similar policies have remained in place up to the present day.

Basic economic common sense tells us that you cannot create wealth by destroying wealth. If this were the case you’d have Apple destroying most of its iPods, Chipotle would demolish its burritos, and more businessmen would probably be following this practice. However, it is plain common sense that assures and convinces us that you cannot expand your wealth by voluntarily destroying your goods. This is what Steinbeck blames California farmers for doing, but there is no historical evidence that suggests farmers sprayed kerosene on their oranges and dumped their potatoes in the rivers. The only examples of farmers destroying their crops are those who were paid to do so by the federal government.

A question is worth asking: if, as Steinbeck wrote, farmers did destroy their oranges and potatoes because no one could afford to purchase them, why not sell them for even 1/2 cent a piece? The loss would be far less than actually paying people to harvest the goods, only then to proceed to physically destroy them all. Such a bogus event would not benefit the farmer, the workers, or the consumers. The farmers would be better off not growing those crops at all or simply giving them away, rather than expending even more resources on hiring guards and people to destroy the food.

John Steinbeck is a fantastic writer but, as with many writers, he has a flawed or incomplete view of the real economic world. People are not helpless peons when given the ability to make their own choices, start their own businesses, and live their lives as they see best. The attempt at a planned economy during the Great Depression did not reduce unemployment or diminish the impacts of the economic correction as expected or hoped. It is a prime example and vital reminder of the destruction that is bound to occur when a select few are empowered to control, manipulate, and implant their vision of a perfect society on the rest of the people.

14 Comments – Post Your Own

#1) On June 03, 2010 at 12:43 PM, PeteysTired (< 20) wrote:

+1 Rec.

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#2) On June 03, 2010 at 12:53 PM, ChrisGraley (29.63) wrote:

+1 from me too.

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#3) On June 03, 2010 at 1:01 PM, RootnToot (29.86) wrote:

Me three. +1

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#4) On June 03, 2010 at 4:13 PM, MGDG (34.73) wrote:

+1 Rec

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#5) On June 03, 2010 at 10:00 PM, djshagggyd (72.63) wrote:

Awesome post! Thanks for writing.

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#6) On June 03, 2010 at 10:14 PM, goalie37 (91.09) wrote:

Great post.  Haven't seen you on here in a while.  Keep 'em coming.

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#7) On June 04, 2010 at 12:37 AM, awallejr (85.46) wrote:

The one thing you seemed to miss about "The Grapes of Wrath" was the depiction of the brutality that many people had to endure and did endure during that time period.

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#8) On June 04, 2010 at 3:02 AM, whereaminow (< 20) wrote:

Great post, David!  One of my favorite topics.  John T. Flynn's Roosevelt Myth has a very amusing chapter called "The Dance of the Crackpots" that covers all the crazy economic ideas that the Roosevelt administration considered.  Sadly, most were eventually embraced by either his or a succeeding administration.

David in Qatar

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#9) On June 04, 2010 at 4:37 AM, AvianFlu (37.50) wrote:

What a great history lesson! I think you have conclusively proven that the current administration is not the only one that has implemented insane, nonsensical, and counterproductive ideas.

 The underlying theme running through your post is the destruction of individual freedoms by a powermad government.

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#10) On June 04, 2010 at 8:44 AM, JakilaTheHun (99.93) wrote:

Great post, but in regards to this ...

 

A question is worth asking: if, as Steinbeck wrote, farmers did destroy their oranges and potatoes because no one could afford to purchase them, why not sell them for even 1/2 cent a piece? The loss would be far less than actually paying people to harvest the goods, only then to proceed to physically destroy them all.

Actually, the problem with this is that it costs more to harvest the crops and ship them to market than the farmers would be receiving in return.  Farming, especially in the early 20th Century, is an example of an almost pure competitive market.  In that environment, any small shift in demand can create conditions where the industry becomes unprofitable due to weaker prices. 

I totally agree, however, that the Roosevelt Administration's attempts to artificially suppress production and provide subsidises to farmers only exacerbated the problems.  In an unregulated market, the likely affect is that several farmers will have to go out of business, so that production would fall, and supply/demand equilibrium would be reached. 

While the re-alignment of supply and demand are good, the human toll that results is pretty devastating.  So I guess my question is how does one propose that those who are driven out of business as farmers are able to get back on their feet doing something else?  

For this reason, I have no real issue with unemployment insurance and programs that provide temporary pay to those out of work (on the condition that the seek new work).  But I think actually going in and artificially distorting the supply-demand dynamics does more harm than good.  The fact of the matter is that technological advances have creates less of a need for farmers, so measures that artificially create more employment in that sector are inefficient. 

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#11) On June 04, 2010 at 11:05 AM, cthomas1017 (83.47) wrote:

Steinbeck was an avowed socialist.  Traveled Russia in '48 at the pleasure of Stalin.  Little surprise he understood anything about economics except those of the Daily Worker.  Little surprise that his booked were acclaimed by the leftists who awarded him literary prize after literary prize and ensconced his works into the mainstream of public education.  Yes, he could write descriptively and vividly, but that often happens with depressed narcissists.

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#12) On June 07, 2010 at 7:39 AM, bigcat1969 (92.11) wrote:

One thing that I don't understand.  Wouldn't higher prices have helped the small farmer provided he could sell his crop?  I know it wouldn't help sharecroppers who got tossed off land that the owner got paid not to work, but if a farmer owned his land I would think that higher would be better.

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#13) On June 07, 2010 at 8:49 AM, TicoHombre (< 20) wrote:

Both the NRA and AAA were ruled unconstitutional by the Supreme Court in 1936, but many similar policies have remained in place up to the present day.

I beg to differ...the AAA (American Automobile Association) and the NRA (National Rifle Association) both still exist and have never affected the economy in any significant way!  ;-)

 

All kidding aside...

Interesting perspective. The destruction of fruit and vegetables continues today.  If it does not meet minimum government size standards, it gets plowed under or is allowed to rot on the trees.  Nothing goes to the needy.  Even in Bible times by law farmers had to leave the outer edge of the field unharvested, and you couldn't go back for a second more thourough harvest of grapes, olives, etc.  That was left for the poor to glean.  This allowed the poor to maintain the dignity of working for their food and was not a welfare system which promoted laziness.

To bad that "one nation under God" doesn't learn from the best.

 

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#14) On June 08, 2010 at 7:15 PM, Imperial1964 (97.75) wrote:

You mean that destroying all of those usable automobiles last year at the taxpayer's expense didn't save the economy like the government and UAW told us it would? 

Then surely it saved the planet.  Making new cars pollutes less than driving older cars--they told us so.

 

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