What did farmers in 1930 think about foreign policy?
President Calvin Coolidge steadfastly resisted the push to have the feds take over crop pricing which was the right thing to do, but unfortunately his successor did not share his views and the tainted war re farmers and their crops was on.
Herbert Hoover strongly supported federal farm intervention. In his speech accepting the presidential nomination in 1928, Hoover promised to create a farm board to establish for our farmers an income equal to those of other occupations. He signed legislation to create the Federal Farm Board and, on July 15, 1929, he told the new board, "I invest you with responsibilities and resources such as have never before been conferred by our government in assistance to any industry". The Farm Boards $500 million budget was larger than any ever authorized for a non defense expenditure.
Immediately after its creation, the Farm Board decided to boost the income of American farmers by cornering the world grain market and driving up prices. In August 1929, the Farm Board pressured the federal credit banks to liberalize their loans to agricultural cooperatives to help them make more generous loans to farmers, so that farmers could hold their crops off the market.
In November 1929, the chairman of the Farm Board declared, Anyone selling wheat or cotton at the present market price is foolish. Prices subsequently plunged. By December 1929, Farm Board officials were preaching to farmers to reduce production and abandon exports so that the government could drive their prices up for them.
The Farm Board set up the Grain Stabilization Corporation, which began desperately buying up wheat. The board managed to boost U.S. prices to 18 cents a bushel above world wheat prices, which led to the collapse of U.S. wheat exports. The Farm Board was certain that a world shortage of wheat was imminent and that importing nations would soon come begging to America. Instead, Canadian and Argentinean farmers reaped windfall profits because of the Farm Boards action. Its massive cache of wheat further depressed world prices, since every grain dealer in the world knew that the United States would eventually dump its surplus on the market. As Bernard Ostrolenk, the author of The Surplus Farmer (1932), observed,
The Farm Board had advised the farmer to gamble with his crop instead of urging him to market it, and these repeated statements of the Board had led farmers to believe that by withholding their wheat and cotton they could get higher prices. During 1930 it was the known surplus of agricultural commodities in the U.S. which forced farmers to face the most drastic price cuts in a decade. The Farm Board also wrecked the market for cotton, Americas largest cash export.
In 1930 to 1998, the federal governments agricultural policy made a mockery of the policymakers rhetoric. The Farm Board intervened to drive cotton prices up and then begged farmers to plant smaller crops. But farmers paid more attention to prices than they did to bureaucrats, so harvests grew instead of shrinking. In August 1931, the Farm Board urged Southern farmers to destroy every third row of cotton; Southern politicians suggested that farmers instead destroy every third member of the Farm Board.
J.W. Garrow of the American Cotton Shippers Association told the Senate Agriculture Committee in 1931 by spreading overconfidence among growers that government would maintain cotton prices at a high level, the Farm Board has made a major contribution to the present large surplus. Thanks to the Farm Board, 1931 was the first year since the Civil War that consumption of foreign-grown cotton throughout the world exceeded that of American cotton.
The Farm Board is clearly the most costly and inexcusable legislative folly in our history. In the effort to enrich farmers, the Farm Board destabilized the grain trade, substantially reduced U.S. exports, and created a massive price-depressing surplus, greatly weakening American agriculture. Argentinean, Canadian, and Australian farmers weathered the Great Depression far better than American farmers did largely because their governments did not abandon export markets. Canadian and Australian exports actually increased in the 1930s. The prices of American wheat and cotton declined far more than those of other domestic crops between 1929 and 1932.
The Smoot-Hawley Act turned a bad recession into a worldwide depression. In the year after Smoot-Hawley was enacted, U.S. foreign trade decreased more than 50 percent. Smoot-Hawley had a major impact on spurring the stock market crash and led to a worldwide trade war that devastated both America and Europe. Once the United States stopped purchasing European goods, Germany and other European powers were forced to default on their debts to the United States. This helped cause a wave of bank failures and panic across the country. Farmers suffered during the Great Depression because of other federal policies as well. The Federal Reserve Bank reduced the money supply by one-third between 1929 and 1932, thereby causing a huge drop in price levels. Farmers with mortgages were hurt badly by the deflation, since the price of their crops fell sharply while their mortgage payments became much higher in real dollars. The deflation-caused mortgage crunch was a major cause of desperation in the farm belt. The single most devastating expense for farmers in the early 1930s was higher taxes. Though much of the farm crisis of the early 1930s was the result of high taxes and government mismanagement of the currency, many agricultural economists and politicians insisted that the problem was the nature of the business and could be solved only by a government takeover of agriculture.