FDR’s New Deal: subsidized sugar & factory farms

I saw a Leftist on social media recently make an old argument supporting loosened immigration restrictions, saying, if we want to eat, more migrant workers are needed to come in and do the rough, hard work on feed lots and egg farms that no self-respecting white-collar American wants to do.

This argument is not only excusing serfdom, it’s promoting it.

But before you make any political assumptions about me, please know that I support completely open borders, a position I’ll explain later in this article. I’m not opposed to this Leftist view because I’m a conservative… I’m opposed because I have no desire to aid corporate feudalism. But before I fully explain my view on open borders and how it differs from the above Leftist’s hat tip to feudalism, I’d like to deep dive into why large-scale farming (something most Leftists blame on capitalism) has degraded into a corrupt industry only migrants seem willing to enter.

Few people want to work the long-hour/low-pay jobs available on factory farms because, according to the Animal Legal Defense Fund (ALDF), the industry’s workers “earn poverty wages to perform dangerous and traumatic jobs. On factory farms, farmers — typically contract growers — bear all of the risk and hazards of raising vast numbers of animals in intensive confinement, while the vertically integrated corporations own the animals, control the manner of raising them, and reap all the financial reward.”

The ALDF article is restating the economic concept of “socialized risk,” a feature of socialism, which is the act of socializing anything (benefits or costs)—in this case, centralizing benefits among the small number of power-holding owners and socializing the risk among the large pool of powerless workers.

So the first question we should be asking is, how did we end up with this kind of socialized risk here in “capitalist” America?

If America ever was capitalist, this would have only been true in small communities where local economies relied on capital: saved resources. Trade based on capital is the kind of behavior you see in small towns: trading eggs for pencils, starting a small business with your savings, or loaning your neighbor the $10 you had first saved in your coffee can. Capitalism tends to function best on the small scale, bringing to mind E.F. Schumacher’s treatise on economics, Small Is Beautiful. The Great Depression that began in 1929, however, was an attempt to dismantle small-scale capitalism that functioned on capital. The Great Depression, instead, was an acceleration of our debt-based economy with a pronounced focus on the expansion of loans.

The problems for U.S. farmers doubled down with the Dust Bowl conditions of the early 1930s, in which severe drought dried out top soils that then blew away in violent dust storms. The farmers, themselves, were blamed for this, being accused of overplanting their crops and degrading their own land.

One of FDR’s Depression-era agencies, the Resettlement Administration (RA), was established in 1935. It saved the day by kicking many farmers off their substandard land and “resettling” them on better farms, each with a newly built house.

A year later, the RA published this brochure to announce how the agency had solved virtually all the problems the farmers had faced.

But although the RA claimed to have given farmers a reduction in their current debts, that reduction was only around 25%, meaning farmers were still on the hook for 75% of their old debt.

On top of this, the RA then “offered” farmers a new 40-year mortgage at 3% to cover the costs of these newly built homes for which there had been no initial, voluntary demand or need. This was Keynesian demand stimulus in action, a move that hugely benefited construction firms, though their benefit wasn’t mentioned in the brochure.

The RA also offered farmers “feed and seed” loans at 5% interest, as well as equipment loans and loans enabling farmers to take part in cooperatives. “All agreements between debtors and creditors are made willingly; the committees have no means of enforcing their recommendations.” Maybe so, but the RA had forced this relocation program in the first place.

Anyway, after compassionately reducing farm-family debt by 25%, the government then exponentially increased farm-family debt. According to the brochure, “Money loaned for these community and cooperative services will be returned to the Government with interest, a sound investment in a better life for the low-income farmer.”

It was force, yes, but compassionate force… with interest.

But never mind all this, because it has nothing to do with the real reason for the establishment of the Resettlement Administration, designed and run by Rexford Tugwell, one of FDR’s “brain trust” of key advisors. (Other core members of this team were Harry Hopkins, Harold Ickes, Frances Perkins, Louis Brandeis, George Warren, James Warburg, Adolf Berle, and Charles Taussig. The last two will become important shortly.)

Tugwell, an agricultural planner and Undersecretary of the Department of Agriculture,  crafted the RA to solve one very specific problem. Large-scale corporate farming operations—which progressives argued were more efficient than a single-family farm—needed land covering thousands of contiguous acres. The problem was, here and there, single family farms stood in their way. The RA would force the removal of those owning and occupying small, inefficient farms so that blocs of connected acres could become available to what we today refer to as factory farms.

Of course, the details of this plan to help corporate firms were never laid out to the public and the RA limited its boasting (aside from the salvation of the farmer) to only vague positive changes in the agricultural industry at large. For example, the brochure states that, “Land which is too dry for crop farming is being used for grazing land.” There’s no mention, though, of the ranchers or the corporations benefitting from this new grazing resource obtained by kicking farmers off their land.

Remember that the reason given for the need to resettle farmers was the substandard soil in the Dust Bowl. But the Dust Bowl was confined to the areas of southwestern Kansas, southeastern Colorado, and northern New Mexico, Texas, and Oklahoma.

And yet, farmers were also being resettled away from farms in such lush and fertile areas as southern Louisiana.

It turns out, the Dust Bowl wasn’t a huge problem for Louisiana farmers, so why was the RA reorganizing farms down there?

The revolving door

Resettlement activities in Louisiana might have had something to do with the fact that two members of FDR’s brain trust, Adolf Berle and Charles Taussig (these two become important now), ran a business in Brooklyn called the American Molasses Company (AMC). And in 1936, just one year after forming the RA, Rexford Tugwell left the RA to become vice president of the AMC.

So how does molasses fit into all this?

Taussig, the president of AMC, held other government positions in addition to his advisory work in FDR’s brain trust, positions that could be seen as relevant to the workings of AMC. Taussig’s molasses company sourced its sugar cane from the West Indies and he would eventually head up two governmental commissions to study economic conditions in the West Indies and Caribbean. In fact, those commissions looked specifically at producers of sugar cane.

An anonymous researcher known as “dreamer” on the blog At the Corner of Genealogy and History writes that:

The man FDR appointed to lead the commission was Charles Taussig. A long time friend and advisor to the president, Taussig had experience with the sugar industry in the West Indies through his family business, the American Molasses Company. The study involved visiting a large number of Caribbean islands… They met with people with a wide range of expertise: colonial governors and legislators, military and police officials, business and labor leaders, sugar estate owners, teachers, small farmers, and laborers. They observed a wide variety of economic systems in these islands, from peasant farmer economies in some of the smaller islands, to the prominent oil-based industry in Trinidad, to the sugar cane “plantocracy” in St Kitts.”

This was clearly a mission to check up on Taussig’s current sources of sugar cane, and to scope out new ones, all without spending a dime of Taussig’s money on travel or accommodations.

But an even more attractive possibility was sourcing sugar cane closer to home, and seems a likely reason that farms in southern Louisiana came under the scrutiny of the Resettlement Administration.

In the 1930s, only sugar beets were being farmed on the U.S. mainland, with sugar cane—the form used by the American Molasses Company—only being produced domestically in the West Indies and Pacific Islands. In 1934, the Sugar Act was passed to “stabilize” or limit sugar production in the Virgin Islands and Puerto Rico and force more sugar cane to be produced on the U.S. mainland.

Sugar quotas came under the purview of the Secretary of Agriculture, Henry Wallace. Incidentally, the Undersecretary of Agriculture in 1934 was, as mentioned earlier, none other than Rexford Tugwell.

One reason to push for the growing of sugar cane on the U.S. mainland was to simply save on the costs of transporting it to refineries like the American Molasses Company. Another reason is that, according to Bridgman, Maio, Schmitz, and Teixeira, Puerto Rico was attempting to nationalize its sugar cane farms, a product the Puerto Rican local government claimed as a public utility. This subjected the mainland sugar refineries to a “rate of return regulation,” meaning the local government in Puerto Rico would set the price of sugar cane higher, making it more expensive for companies like Taussig’s AMC.

As a result of all this, the Sugar Act commanded that a certain percentage of sugar be produced on the U.S. mainland. As we can see here, that quota was set at 97.5 percent.

And this 1936 photograph is the smoking gun, in the collection of the Library of Congress and captioned, “Sugar cane field of Resettlement Administration client. St. Charles Parish. Near New Orleans, Louisiana. The planting of the fields, long fallow, has been made possible by Resettlement Administration loans.”

This newly planted sugar cane in Louisiana was the main purpose of Tugwell’s design and implementation of the RA, at which he needed to spend only one brief year before jumping ship to join his friends at the American Molasses Company (a turn through the revolving door that, like the photograph itself, took place in 1936). The RA was the instrument by which the three sugar refiners in FDR’s brain trust (Taussig, Berle, and then Tugwell) could consolidate farmland for the production of sugar cane on the mainland, eliminate the higher cost of sourcing sugar cane from the islands, and receive loans and subsidies while doing so.

Epilogue

With Puerto Rico being a source of sugar cane limited by the Sugar Act to keep costs low for the American Molasses Company, it’s interesting to note that FDR appointed Tugwell the governor of Puerto Rico in 1941. Was the appointment made in order to bring Puerto Rico up to speed on U.S. agricultural policy favoring large-scale, efficient corporate farms?

In “What Ever Happened to the Puerto Rican Sugar Manufacturing Industry?” researchers Bridgman, Maio, Schmitz, and Teixeira explain that:

The average farm size in Puerto Rico was about 40 acres (and had been growing for the previous few decades). With the new policies, average farm size stopped growing and reversed course, falling to about 25 acres over the next few decades. In contrast, in Louisiana, which did not face the local Puerto Rican policies, average farm size grew rapidly over the same period. It was about 25 acres in the mid-1930s and climbed to 200 acres during the next 30 years. So, the movement in average farm size was vastly different in the two locations.

So, farms in Louisiana grew rapidly in the 1930s, exemplifying the trend of factory farms, while Puerto Rico’s farms stayed small and the area was economically punished as a result.

At this point, I hope we’re all beginning to understand why government intervention in trade is always, always, always going to hurt the common people If you believe that government intervention in trade is what protects us from corrupt firms like the American Molasses Company, I hope this breakdown will show you that it’s exactly the opposite: the American Molasses Company is enabled in its corruption by close friends like FDR in the presidency and Rex Tugwell in both the Department of Agriculture and the Resettlement Administration.

If you’re on the political Left, please stop trusting the government to save you from corporate corruption… please stop promoting immigration policies to give those corrupt corporations cheap labor… and please stop venerating FDR and the New Deal policies implemented to help his buddies… it was the New Deal that created subsidized sugar and factory farms.

Am I ragging on the Left because I’m a conservative? No, in fact, I support fully open borders. Though for open borders to work, they need to be in place everywhere, not just in the U.S. With universally open borders, if migration becomes a burden in one area, people can find relief by migrating on, themselves.

Allowing people the freedom to migrate causes population levels to self regulate very quickly. Allowing only oppressed people (no longer productive because of oppressive governments) the freedom to migrate, while productive populations are forced to remain in place, causes problems to emerge just as quickly.