Bookends

I have been reading Timothy Egan's The Worst Hard Times: The Untold Story of Those Who Survived the Great American Dust Bowl, a book about life in the Dust Bowl. It has been a nice bookend to other information I have read on the Depression. This includes Howard Zinn's People's History of the United States, John T. Flynn's The Roosevelt Myth, Jim Powell's FDR's Folly, and Friedman & Schwartz' A Monetary History of the United States. Egan's book provides a human perspective on momentous times.

My own personal theory, to which I have seen allusions but not the definitive book (surely someone has written it) is that the Depression was the effect of society absorbing the final shift from the agrarian economy. Putting a plow behind an internal combustion engine-driven machine meant you didn't need all those people working on farms. But neither were they finding employment in the cities.

Although Egan alludes to the state's complicity in the conditions that produced those hard times, and at the end acknowledges the bad long term effects of FDR's intervention, FDR, Hugh Bennett, and farm policy are definitely the heroes of the story.

The state's complicity lies in first running the natives out, then establishing incentives to farm the land rather than use it for grazing. The long term effect has been to establish farm subsidies which are detrimental. On the one hand, price supports result in the overproduction of commodities such as cotton, which the government then buys and dumps, further depressing world markets, and further impoverishing African farmers. On the other hand, other convoluted policies such as sugar price supports, ethanol incentives, and ethanol import tariffs, are intended to support corn prices, further impoverishing Mexican peasants. It is a sad reflection on people who worship FDR's policies as the salvation of impoverished American farmers while ignoring the ill effect of those policies on the impoverished farmers in the rest of the world.

Some anarchists claim that defense is the tough problem; I doubt it. I think that The Depression is a tougher problem. The benefit of Egan's book is that it highlights the real stories of real people. In the context of those times, when it seemed reasonable for the state to encourage homesteading and farming prior to the closing of the West, when the prospect of prolonged drought seemed dim prior to 1932, when the invoice for the social cost of their actions was not yet due, what happens to those people in the absence of the New Deal?

Still, one cannot help but think that Egan has absorbed just a little too much of the high school version of those events. The high school version is that the farmers were too dumb to know what they were doing, so FDR hired some smart men who invented and taught contour plowing and the use of trees for windbreaks, and then they paid the farmers to let some fields go fallow. It is an unusually common myth, as seen in this example:

In response to the urgent need for soil and water conservation programs to halt farmland destruction, the Soil Conservation Service was established in 1935. SCS employees set up demonstration plots and taught methods such as contour plowing, terracing, and strip-cropping to retain water on the fields and reduce runoff and erosion. Windbreaks were planted to break the force of the prairie winds, tillage methods were changed to reduce exposed soils, and vegetation or stubble was retained on the fields after the growing season to provide protective cover. With these methods, damaged lands were reclaimed and the dust storms were brought under control.

Also, in the free market banking system of the day, banks ripped everyone off, so FDR instituted banking reforms and federal deposit insurance. The truth? It's a little more complex.

First, the New Deal: FDR ran on the New Deal platform, which was to undo all of the Hoover Administration errors. According to FDR, those consisted of deficit spending, excessively high taxation, and too much government (Flynn). When he actually took office, the first thing they did, of course, was to raise taxes, increase spending, and run a deficit just like Dr. Keynes said they should.

Despite similar conditions in Canada, not a single bank failed there (Powell). In fact, prior to the Federal Reserve Act, the US weathered several similar periods with almost no bank defaults. The FRA was supposed to have made the government the lender of last resort, but the act was truly established to serve the needs of the bankers (Kolko).

Another Hoover policy which FDR had vowed to overturn but then repeated was the destruction of food supplies in the farming states even while people starved in the cities (Flynn and Powell). It is a question of that which is seen (starving farmers helped by the payments) and that which is not seen (starving city dwellers and destroyed crops): the former have much more impact in an era when newspaper photos and newsreels hold sway.

Today, the collective effect of those actions is an agriculture policy which enriches large corporations, leads to a substantial amount of water overuse and water pollution, reduces the quality of our food, and impoverishes poor farmers around the world who have to compete with subsidized American farmers.

Second, there is the problem that conservation measures had been around long before FDR took office. Contour plowing in particular had been around since at least ancient times

Contour farming was practiced by the ancient Phoenicians, and is known to be effective for slopes between two and ten percent. Contour plowing can increase crop yields from 10 to 50 percent, partially as a result from greater soil retention.

Or at least nearly the birth of the Republic

In 1808, Jefferson transmitted a refinement of his design to a Monsieur Sylvestre in France, for the benefit of the Society of the Seine.

The deep tillage could heavily erode the steep terrain of Jefferson's plantations, though, and he discovered that contour plowing around the curvature of the hills, rather than cutting furrows straight down-slope toward neighboring streams greatly reduced erosion.

He wrote to Tristam Dalton in May 1817 about his son-in-law Col. T.M. Randolph’s development of this method, laying off the plow lines in advance using a (wooden) rafter to measure and strokes of a hoe to mark the contours.

Plowing across slope on hilly terrain put a severe strain on the plowman and Col. Randolph modified the plow, fusing two separate shares against their flat sides at a right angle.

Plowing one way with the sod thrown down slope around the hill to the end of a furrow, the plowman would flip over the plow bottom and head back in the other direction with that sod thrown down slope as well. This eventually developed into a widely used "hillside plow."

Jefferson sent Dalton "a bit of paper cut in the form of the double share, which being opened at the fold to a right angle will give an idea of its general principle."

Jefferson's farms, including Monticello, had been losing soil into Chesapeake rivers for years and these new methods resulted in substantial improvements: "Let me beseech you" Jefferson wrote to others, "to make a trial of this method."

These techniques were not unknown to moderns:

As he had always been a voice for the working class, Villa would continue in this facet as the owner of a large piece of land. He attempted tremendous agrarian reform on his land. First, he studied the new, American techniques of contour plowing and crop rotation. His agrarian reform went one step further to include not only the crops, but also the people who tended the crops. Villa remembered the unfair economics used by the hacienda owners and made refreshing changes.

Pancho Villa died in 1923, less than a decade before Egan's story begins.

Egan relies on an article, "Small Farms, Externalities and the Dust Bowl of the 1930s" by Zeynep K. Hansen and Gary D. Libecap, published by the NBER. Among other things, the article discusses erosion as an example of several kinds of externality. In one, suspension, fine particles are blown into and then suspended in the air. To the farmer, this was an internal cost, but the fine particles in the air caused health problems to humans and livestock. Saltation and creep are externalities in which the topsoil from one farm is deposited on another farm, not only killing the wheat but also burying the downwind farm's erosion control stubble. In the article, they note that prior to the creation of the SCS,

The two leading erosion control methods in the 1930s were strip cropping with strip fallow and windbreaks of trees or brush. Both provided barriers to lower surface wind velocity and carrying capacity, but the former was more prevalent because trees could not be grown in many parts of the plains. Strip fallow also had the advantage of building up soil moisture and roughness, which reduced erodibility, whereas tree windbreaks actually absorbed moisture from surrounding ground.

This is interesting because it shows that (1) Dust Bowl farmers did practice conservation before FDR saved them, and (2) one of the fables from the high school version, FDR's commitment to using trees to block the wind, was not only a failure, but potentially could have worsened the situation. Egan also describes the tree idea as a failure.

Further in the article, they explain,

To completely combat regional erosion, all of the cultivated acreage in a topographical area of similarly erodible soil would have to be included in a "wind erosion unit" of 50,000 to 500,000 acres or more. The optimal farm sizes for addressing wind erosion and production, however, were not the same. Most estimates by agricultural economists and extension agents in the 1930s of appropriate production sizes for the region suggested two sections of land, 1,280 acres, depending on location in the plains. Few scale economies could be realized beyond that size. Nevertheless, in the 1930s, most farms were smaller than the prescribed levels for optimal production. The Great Plains was covered by hundreds of thousands of small farms. This condition was largely a legacy of the Homestead Act that limited claims to 160 to 320 acres when the region was settled between 1880 and 1925.

This is the same opinion reported by Egan of Hugh Bennett, the first director of the Soil Conservation Service. The area covered by Egan's story was formerly the domain of Plains Indians who thrived on grass-fed buffalo. The first whites to successfully live on the land ran the XIT cattle ranch. It was government policy to replace both with small claims farmers. According to their report written for Roosevelt,

"Mistaken public choices have been largely responsible for the situation," the report proclaimed. Specifically, "a mistaken homesteading policy, the stimulation of war time demands [World War I] which led to over cropping and over grazing, and encouragement of a system of agriculture which could not be both permanent and prosperous."
[...]
[Egan, continuing to quote from the report] "The Federal homestead policy, which kept land allotments low and required that a portion of each should be plowed, is now seen to have caused immeasurable harm. The Homestead Act of 1862, limiting an individual to 160 acres, was on the wesern plains almost an obligatory act of poverty."

Since the government subsequently wanted farms greater than 500 acres, and most farms of that period were smaller, Hansen and Libecap conclude that the farms were too small. This is consistent with other rationalization schemes of that era in which it was thought that efficiency required government-directed coordination.

Accordingly, collective action among farmers was necessary to address wind erosion. In commenting on strip cropping and recognizing the externalities involved, Charles Kellogg of the Bureau of Chemistry and Soils stated: "Such a practice, to be most effective, must be adopted on a community basis. Isolated farmers following this practice are not greatly benefited if the adjoining land is allowed to blow badly." The large number of small farms on the Great Plains, however, raised the costs of coordination. Indeed, Roland Renne of the Montana Agricultural Experiment Station (1935, 426-9) noted: "Dealing with thousands of different owners slows up the adoption of a planned land use program..."

They try to make a case that small farmers face different incentives than large farms:

Private motivation to invest in strip fallow was reduced when farmers did not internalize the externalities. The problem was accentuated for small farm owners. Each farmer had to consider the benefits of strip fallow with the opportunity costs of lost production. Because small farmers captured fewer of these leeward effects, they were less likely to have any fallow rotation, leaving their land in cultivation and their fields exposed to wind.

It might at first appear that there should be little difference in the proportion of land fallowed on a large or small farm since large farmers would face a correspondingly higher opportunity cost. However, a family faces about the same need for income (fixed cost) no matter how large the farm. Hansen and Libecap find that the proportion of land dedicated to conservation was proportionally larger on large farms.

Dissappointingly, they neglect to account for the possibility that adjoining farmers could coordinate through private mechanisms, in much the same way as the Animas Foundation and Malpai Borderlands Group pioneered the grassbank concept. They make passing references to "mixed incentives" to participate voluntarily and to transaction costs, but do not explain what those are. This could be the loss of reputation that might result from buying out a smaller, less profitable, and more harmful farm in a community where bidding in a bankruptcy auction brought threats of violence. Part of the problem may be that the Dust Bowl and the Depression occurred at the same time; had the Dust Bowl occurred separately, there might have been enough money to buy them out without the concurrent bankruptcy and bank failure problems.

I think this is a case in which there was little appreciation for the problem beforehand, and the immediate crisis was solved in conjunction with deep-pocketed and politically motivated politicians. Afterward, everyone is aware of the problem and at least several solutions, but now the state has become associated with the solution and becomes inseparable from it. Before: ignorance, no state. Afterward: knowledge, solution, and state.

Before	After
Ignorance	Knowledge
Problem	Solution
No state	State
Voluntary	Coercion

The frame then becomes that the state and the solution are one and the same when in fact the knowledge and the solution are independent of the state. We forget how often we have ignorance/no-state/before and knowledge/no-state/after, and also how often we have ignorance/state/before and ignorance/state/after. Celera's being the first to map the human genome is an example of the first (the state eventually joined the party), the S&L meltdown of the 1980s is an example of the second (the 1980 S&L Act signed by Carter precipitated the fiasco by expanding the federal insurance and then encouraging them to invest in local real estate (very non-diversified) and high-risk assets like art, creating a predictable problem), and most agriculture policy is an example of the third (nobody seems to know there is a problem or what to do about it).

As Egan describes the Dust Bowl era, farmers were ready for someone to show them a solution; if that happened to be a government agency that would also come in with money, they weren't going to turn it down. That doesn't seem to be the case: One telling fact that comes from the NBER paper is that the voluntary federal programs largely failed, while the coercive state programs succeeded.

Given the mixed incentives to participate in erosion control, the response to calls for voluntary collective action was limited. Indeed, the SCS noted a lack of voluntary farmer participation in the erosion control programs outlined in the demonstration projects.

Later,

More direct and coercive government intervention came in 1937 with inauguration of Soil Conservation Districts (SCDs) that had the authority to force farmer compliance and the resources (subsidies) to cover the costs of erosion control. The SCDs were local government units and required state legislation for establishment.

Oddly, according to Hansen and Libecap, "Kansas, Oklahoma, and Texas, at the center of the Dust Bowl, enacted wind erosion laws in 1935", but Egan fails to note those changes.

I am frequently accused of being too theoretical. For example, I think that this episode in America might have gone differently if the state had stayed out. People who favor state intervention will pooh-pooh the Malpai Borderlands grassbank initiative, inevitably pointing out that no private action did actually occur at that time, and that the farmers failed to join in the voluntary programs. I say that they are not going back far enough: what about leaving the ranchers and before them the Indians alone? Those are actual policies of the state that created the conditions for the environmental and social disaster. That is not a theoretical, paper claim: even Hugh Bennett agreed that the Homestead policy was a mistake. The Nature Conservancy and not the federal government pioneered the use of prescribed fire to maintain the health of the grasslands. Grass-fed buffalo are being reintroduced to the grass-fire-buffalo ecosystem as a sustainable food source. It turns out that laissez-faire would have been the best policy. But I am the theoretical one?