Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-30T18:52:07.872Z Has data issue: false hasContentIssue false
  • English
  • Français

Labor Costs, Paternalism, and Loyalty in Southern Agriculture: A Constraint on the Growth of the Welfare State

Published online by Cambridge University Press:  03 March 2009

Lee J. Alston  and
Joseph P. Ferrie
Lee J. Alston
Affiliation:
The authors are Assistant Professor and Research Assistant in the Department of Economics, Williams College, Williamstown, Massachusetts 01267. They wish to thank Mary Alston, Ralph Bradburd, Henry Bruton, Stefano Fenoaltea, Price Fishback, Michael Fortunato, Burleigh Gardner, Claudia Goldin, Robert Higgs, Gary Libecap, Peter Lindert, Michael McPherson, Douglass North, Carol Petraitis, Jonathan Pincus, Roger Ransom, Joseph Reid, Randy Rucker, Morton Schapiro, Juliet Schor, Richard Sutch, John Wallis, Warren Whatley, Gordon Winston, Robert Zevin, the participants at the 1983 Middlebury College Conference on Economic Issues and the 1983 Cliometrics Conference, and two anonymous referees for comments on earlier drafts. This article draws freely upon an earlier essay by Joseph Ferrie which was awarded the David A. Wells Prize in Political Economy. Lee Alston wishes to thank the Liberty Fund for the opportunity to participate in an interdisciplinary summer seminar on paternalism in 1981; several of the ideas in this paper were conceived over that summer. Any errors of fact or omission remain those of the authors.
Joseph P. Ferrie
Affiliation:
The authors are Assistant Professor and Research Assistant in the Department of Economics, Williams College, Williamstown, Massachusetts 01267. They wish to thank Mary Alston, Ralph Bradburd, Henry Bruton, Stefano Fenoaltea, Price Fishback, Michael Fortunato, Burleigh Gardner, Claudia Goldin, Robert Higgs, Gary Libecap, Peter Lindert, Michael McPherson, Douglass North, Carol Petraitis, Jonathan Pincus, Roger Ransom, Joseph Reid, Randy Rucker, Morton Schapiro, Juliet Schor, Richard Sutch, John Wallis, Warren Whatley, Gordon Winston, Robert Zevin, the participants at the 1983 Middlebury College Conference on Economic Issues and the 1983 Cliometrics Conference, and two anonymous referees for comments on earlier drafts. This article draws freely upon an earlier essay by Joseph Ferrie which was awarded the David A. Wells Prize in Political Economy. Lee Alston wishes to thank the Liberty Fund for the opportunity to participate in an interdisciplinary summer seminar on paternalism in 1981; several of the ideas in this paper were conceived over that summer. Any errors of fact or omission remain those of the authors.
Get access Rights & Permissions [Opens in a new window]

Abstract

We examine the role of southern legislators in resisting the early expansion of the welfare state in the 1930s. A desire to keep agricultural labor cheap and dependent on southern landlords motivated the resistance. Dependence promoted a loyal labor force and thereby reduced monitoring costs in the labor-intensive production of cotton. Federal and state welfare programs would have substituted for landlord paternalism and hence made labor less loyal. Evidence on the federal Old-Age and Unemployment Insurance systems and state Old-Age Pension and Mothers' Aid programs are found consistent with our hypothesis.

Type
Articles
Information
The Journal of Economic History , Volume 45 , Issue 1 , March 1985 , pp. 95 - 117
Copyright
Copyright © The Economic History Association 1985

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Borcherding, Thomas E., “The Sources of Growth of Public Expenditures in the United States, 1902–1970,” In Borcherding, Thomas E., ed., Budgets and Bureaucrats: The Sources of Government Growth (Durham, N. C., 1977);Google ScholarMeltzer, Allan H. and Richard, Scott F., “Why Government Grows (and Grows) in a Democracy,” Public Interest, 52 (Summer 1978), pp. 111–18,Google Scholar and “A Rational Theory of the Size of Government,” Journal of Political Economy, 89 (1981), pp. 914–27;CrossRefGoogle ScholarNorth, Douglass C., Structure and Change in Economic History (New York, 1981);Google ScholarOlson, Mancur, The Logic of Collective Action (New York, 1969);Google Scholar and Peltzman, Sam, “The Growth of Government,” Journal of Law and Economics, 23 (10 1980), pp. 209–88.CrossRefGoogle Scholar

2 The Agricultural Adjustment Administration (AAA) provides a striking example of strong southern support. Left largely in the hands of local agricultural interests and loathe to interfere in landlord-tenant relations, the AAA was warmly received in the South. Not surprisingly, the largest southern planters gained the most from the AAA's programs. Mordecai Ezekiel, one of Roosevelt's agricultural advisors, wrote: “There can be no question that the farm owners, constituting less than half of those engaged in agriculture, have been the dominant element in the preparation and administration of AAA programs heretofore. In certain commodities, notably cotton, this has resulted in their receiving the lion's share of the benefits resulting from the programs. (Records of the Secretary of Agriculture, National Archives, Record Group 16).” This stands in marked contrast to the southern reception of programs such as the Economic Security Act as initially proposed which threatened to interfere in landlord-tenant relations and give southern elites little control. The same was true of the Farm Security Administration and its reception by southerners. See Alston, Lee J. and Feme, Joseph P., “Resisting the Welfare State: Southern Opposition to the Farm Security Administration,” in Higgs, Robert, ed., The Emergence of the Modern Political Economy (Greenwich, Conn., 1985).Google Scholar

3 See, for example, Tindall, George B., The Emergence of the New South (Baton Rouge, 1965), p. 618.Google Scholar

4 The desire to maintain low agricultural wages, rather than simple white supremacy, is plausible if in predominately white areas, low wages were also paid. A resolution of this issue requires an analysis of data on state benefits disaggregated by counties. We are presently undertaking such a study. We find the existing evidence sufficiently ambiguous which prevents us from accepting racism as the sole or even dominant explanation.Google Scholar

5 Further, no grandfather clauses or literacy tests were invoked to allow the payment of benefits to whites as had been used to allow them to circumvent the disfranchisement laws at the turn of the century.Google Scholar

6 See Alston, Lee J., “Tenure Choice in Southern Agriculture,” Explorations in Economic History, 18 (04 1981), pp. 211–32;CrossRefGoogle ScholarAlston, Lee J., “Race Etiquette in the South: the Role of Tenancy,” Research in Economic History, 10 (01 1985, forthcoming);Google ScholarAiston, Lee J. and Higgs, Robert, “Contractual Mix in Southern Agriculture Since the Civil War: Facts, Hypotheses, and Tests,” this JOURNAL, 42 (06 1982), pp. 327–53;Google Scholar and Alston, Lee J., Datta, Samar K., and Nugent, Jeffrey B., “Tenancy Choice in a Competitive Framework With Transaction Costs,” Journal of Political Economy, 92 (12 1984), pp. 1121–33.CrossRefGoogle Scholar

7 It appears as if the mechanization of cotton was delayed primarily because of the technological difficulties in duplicating the motions of the hand. See Street, James B., The New Revolution in the Cotton Economy (Chapel Hill, N.C., 1957), p. 3.Google Scholar The best account of the technical problems encountered in mechanizing cotton cultivation (particularly the harvest) is contained in Alston, Lee J., Datta, Samar K., and Nugent, Jeffrey B., “Tenancy Choice in a Competitive Framework With Transaction Costs,” Journal of Political Economy, 92 (12 1984), pp. 1121–33, chap. 4.CrossRefGoogle Scholar These issues are also addressed in Musoke, Moses S., “Technical Change in Cotton Production in the United States, 1925–1960,” (Ph. D. diss., University of Wisconsin at Madison, 1972). A dramatic illustration of the effect on labor dermand from mechanization was the Wilson plantation in Wilson, Arkansas. The plantation was mechanized in virtually a single year in the early 1960s. The labor force went from 10,000 to 100. The source of this information was a private conversation with the owners of the Wilson plantation.Google Scholar

8 See Higgs, Robert, “Race, Tenure, and Resource Allocation in Southern Agriculture, 1910,” this JOURNAL, 33 (03 1973), pp. 149–69,Google Scholar and “Patterns of Farm Rental in the Georgia Cotton Belt, 1880–1900,” this JOURNAL, 34 (06 1974), pp. 468–82; Alston, “Tenure Choice”; Alston and Higgs, “Contractual Mix”; and Alston et al., “Tenancy Choice.”Google Scholar

9 Paternalism played an important part in the labor relations surrounding cotton, sugar, and tobacco. The states in which these crops were important included Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia. Although cotton was important in some counties in Texas and Oklahoma, the statewide influence of paternalism was small compared to other states. In fact, data on many of the variables discussed in this paper disaggregated at the county level for these states would prove useful in testing some of the hypotheses we advance. Throughout the paper, we refer to the advantages of paternalism for cotton producers, but the implications are similar for tobacco, sugar, and other crops where paternalism was important.Google Scholar

10 See Weisskopf, Thomas E., Bowles, Samuel, and Gordon, David M., “Hearts and Minds: A Social Model of U.S. Productivity Growth,” Brookings Papers on Economic Activity, no. 2 (1983), pp. 381–450.CrossRefGoogle Scholar

11 See discussion in Section IV.Google Scholar

12 One motive for resistance was the consumption benefits planters received from the deference their workers offered in response to these paternalistic benefits. See Alston, “Race Etiquette” and Alston and Ferrie, “Resisting the Welfare State.”Google Scholar

13 Loyal behavior tends to carry a connotation of affection between two parties. We suspect that in some instances the provision of benefits resulted in an intimacy between planter and worker. To the extent that this occurred, monitoring costs were reduced further. However, our hypothesis does not rest on the existence of reciprocal affection.Google Scholar

14 We are indebted to Gordon Winston for raising this issue.Google Scholar

15 See Fenoaltea, Stefano, “Slavery and Supervision in Comparative Perspective,” this JOURNAL, 44 (09 1984), pp. 635–68,Google Scholar who following Tversky, Amos and Kahneman, Daniel, “The Framing of Decisions and the Psychology of Choice,” Science, 211 (01 1981), pp. 453–58, argues that improved worker performance can be generated by making payments over some expected norm.CrossRefGoogle Scholar

16 Wherever direct supervision is costly, we expect to observe payment schemes such as this designed to induce self-supervision (for example, bonuses in large corporations or tips in restaurants).Google Scholar

17 For documentation, see Alston and Ferrie, “Resisting the Welfare State” and the sources cited therein.Google Scholar

18 Genovese, Eugene, Roll, Jordan, Roll—The World the Slaves Made (New York, 1974), p. 661.Google Scholar

19 Davis, Allison, Gardner, Burleigh B., and Gardner, Mary R., Deep South (Chicago, 1969), p. 234.Google Scholar

20 Davis et al., Deep South, p. 239;Google ScholarPowdermaker, Hortense, After Freedom (New York, 1969), p. 325.Google Scholar

21 No doubt planters recognized the worth of a discriminatory state—it surely increased the value of the paternalism they were providing—and planters were instrumental in its maintenance.Google Scholar

22 These issues are also examined in Alston, Lee J. and Higgs, Robert, “An Economist's Perspective on Southern Paternalism,” in Proceedings of the Second Annual Sewanee Symposium on Economics (Sewanee, Tenn., 1981). Our model represents an extension of the model presented there.Google Scholar

23 See National Resources Planning Board, Security, Work, and Relief Policies (Washington, D.C., 1942), pp. 25–28.Google Scholar

24 The political prominence of big southern planters and some of the ways in which they shaped the New Deal in this manner in Georgia are examined in Fossett, Roy E., “The Impact of the New Deal on Georgia Politics,” (Ph.D. diss., University of Florida at Miami, 1960).Google Scholar These issues are also addressed in Key, V. O., Southern Politics in State and Nation (New York, 1949),Google Scholar with particular emphasis on the 1940s; Mowry, George E., Another Look at the Twentieth Century South (Baton Rouge, La., 1977);Google Scholarand Tindall, Emergence of the New South. The political power of the southern rural elite is more fully examined in Alston and Ferrie, “Resisting the Welfare State.”Google Scholar

25 As described in Fossett, “Impact,” p. 7–9, these “elites” included bankers, local lawyers, merchants, and others in addition to the planters themselves with “a fundamental pecuniary interest” in the maintenance of the plantation system.Google Scholar

26 Mowry, George E., Another Look at the Twentieth Century South (Baton Rouge, La., 1977), p. 9.Google Scholar

27 Mowry, George E., Another Look at the Twentieth Century South (Baton Rouge, La., 1977), p. 9.Google Scholar

28 See Schlesinger, Arthur Jr, The Coming of the New Deal (Boston, 1965), p. 415.Google Scholar

29 See Witte, Edwin E., The Development of the Social Security Act (Madison, Wisc., 1963), p. 415.Google Scholar

30 U.S. Congress, Congressional Directory, 72nd Congress, second session (Washington, D.C., 1933), p. 192.Google Scholar

31 The problem of data availability is important for the issue of coverage under the Old-Age Insurance and Unemployment Insurance provisions of the Act, because no votes were recorded and because all agricultural workers (from all states) were excluded.Google Scholar

32 Mean per recipient Mothers' Aid for the southern states paying pensions in 1934 was $19.68. For nonsouthern states paying Mothers' Aid, the mean was $25.82. Committee on Economic Security, Social Security in America—the Factual Background to the Social Security Act As Summarized From Staff Reports to the Committee on Economic Security (Washington, D.C., 1937), p. 247.Google Scholar

33 The staff reports of the CES relating to agriculture can be found in Committee on Economic Security, Reports of the Committee on Economic Security, VI, part 2. Apparently, only two complete sets of these reports have survived, both in typescript—one in the archives of the Department of Health and Human Services and one in the archives of the Social Security Administration. These reports were confidential until very recently (apparently because the staff's recommendations were so at variance with the act as it emerged from Congress in 1936) and may still be read only at the respective archives and not photocopied.Google Scholar

34 Witte, Development, p. 152.Google Scholar

35 See U.S. Congress, House of Representatives, Hearings on the Economic Security Act, 74th Congress first session (Washington, D.C., 1935) [henceforth Hearings], p. 58.Google Scholar

36 Old-age pensions were to be noncontributory and unearned (more like relief for the aged than social insurance). Old-age insurance, on the other hand, was to require contributions from the recipient and some link between payments by the recipient and eventual payments to the recipient. The distinction is important. If southerners wanted to prevent Old-Age Insurance from interfering with paternalism, they would have had to make sure that all agricultural workers were excluded from the program. To prevent interference from Old-Age Pensions, they merely had to manipulate the benefits paid in their states.Google Scholar

37 Bean, Louis H., “The Economic Security Program in Relation to Farm Operators and Employees,” in Committee on Economic Security, Reports of the Committee on Economic Security (Washington, D.C., 1934), vol. 6, part 2, pp. 802–10.Google Scholar

38 Folsom, Josiah C., “Economic Security of Farmers and Agricultural Workers,” in Reports, vol. 6, part 2, p. 827.Google Scholar

39 Tversky, Amos and Kahneman, Daniel, “The Framing of Decisions and the Psychology of Choice,” Science, 211 (01 1981), p. 827.CrossRefGoogle Scholar

40 Tversky, Amos and Kahneman, Daniel, “The Framing of Decisions and the Psychology of Choice,” Science, 211 (01 1981), p. 827.CrossRefGoogle Scholar

41 Tversky, Amos and Kahneman, Daniel, “The Framing of Decisions and the Psychology of Choice,” Science, 211 (01 1981), p. 819.CrossRefGoogle Scholar

42 Tversky, Amos and Kahneman, Daniel, “The Framing of Decisions and the Psychology of Choice,” Science, 211 (01 1981), p. 819.CrossRefGoogle Scholar

43 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 872.Google Scholar

44 Witte, Edwin E., “Major Issues in Unemployment Compensation” (unpublished memorandum), Dec 1934, Records of the Committee on Economic, National Archives, Record Group 47, [henceforth CES], Box 23, p. 3.Google Scholar

45 Witte, Edwin E., “Major Issues in Unemployment Compensation” (unpublished memorandum), Feb 1935, CES, pp. 17–18.Google Scholar

46 “Staff Report on Unemployment Insurance” (unpublished memorandum), Dec 24, 1934, CES, Box 23, pp. 1–2.Google Scholar

47 Warren Samuels, a student of Witte's and later his assistant at the University of Wisconsin, agrees that the document which eventually emerged from the CES was highly political in nature. He suggests that Witte was fully aware of this (despite the equivocations in this book). Witte was interested, however, in forging a coalition of sufficient strength to get the bulk of the act passed and was willing to bend to political pressure (from southerners in this case) to achieve that end. Private conversation with Samuels, May 1983.Google Scholar

48 Bean, “The Economic Security Program” pp. 802–03.Google Scholar

49 Armstrong, Barbara N., “Provision for Old-Age Security” (unpublished memorandum), CES, Box 23, p. 4.Google Scholar

50 Constance Kiehel, A., “Agricultural Workers and Farmers in Foreign Social Insurance Systems” (unpublished memorandum), Oct. 25, 1934, CES, Box 23. Natalie Jaros, “Agricultural Workers in Foreign Unemployment Insurance Scchemes” (unpublished memorandum), Nov, 1934, CES, Box 23. Final versions of both studies can be found in Reports.Google Scholar

51 Folsom, “Economic Security,” p. 819.Google Scholar

52 See U.S. Congress, House of Representatives, Committee on Ways and Means, Hearings on the Economic Security Act (Washington, D.C., 1938), 74th Congress, first session, p. 58.Google Scholar

53 Morgentheau outlined some of the problems the inclusion of agriculture might create. See “Statement of the Secretary of the Treasury on the Economic Security Bill,” CES, Box 4, Legislative History and Amendments file, pp. 9–10.Google Scholar

54 Witte, Development, p. 100.Google Scholar

55 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 132.Google Scholar

56 U.S. Congress, Hearings, p. 112.Google Scholar

57 In the case of farm workers and domestic workers, who would have had little contact with the internal revenue system being suggested as the basis of the nation-wide network for collection of premium, a stampbook method might have eliminated many of the anticipated difficulties. See U.S. Congress, Hearings, p. 112. The British chose this method in 1936 when they began to bong agricultural labor under their social insurance system. See Kiehel, “Agricultural Workers.”Google Scholar

58 Witte, Development, p. 153.Google Scholar

59 See U.S. Congress, Hearings, p. 911. Morgentheau apparently recognized that delaying inclusion would only make eventual coverage more difficult.Google Scholar

60 Witte, Development, p. 153.Google Scholar

61 Southerners apparently pressed for the exclusion of “agricultural laborers” (in addition to croppers and tenants) for three reasons: 1) to protect such paternalistic relations as existed between planters and wage workers, 2) to prevent the payment of benefits to croppers and tenants should they be reclassified as laborers, and 3) to assure that tenants and croppers downgraded to laborer status through the working of the AAA would continue to be denied benefits.Google Scholar

62 U.S. Congress, Hearings, p. 911.Google Scholar

63 Witte, Development, pp. 153–54.Google Scholar

64 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 144.Google Scholar

65 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, pp. 144–45.Google Scholar

66 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 144.Google Scholar

67 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 872.Google Scholar

68 Ham, William T., “The Bearing of the Program of the Committee on Economic Security Upon Farmers and Farm Laborers,” in Reports, vol. 6, part 2, p. 134.Google Scholar

69 Abbott, Grace, The Child and the State (New York, 1938), p. 240. That both black and white tenant families were specified by southerners as the problem tends to diminish the plausibility of the simple racial explanation of the South's aversion to welfare discussed previously.Google Scholar

70 Witte, Development, p. 163.Google Scholar

71 “Returning Relief to the States” (unpublished memorandum), CES, Box 23.Google Scholar

72 See, for example, Piven, Francis Fox and Cloward, Richard, Regulating the Poor: The Functions of Public Welfare (New York, 1971), p. 134. Louisiana and Georgia were among the first states to adopt employable mother rules under which “AFDC families with children seven years old and older [would] be refused assistance as long as the mother was presumed to be employable in the fields.”Google Scholar

73 See “National Urban League Asks Inclusion of Domestic and Agricultural Workers,” New York Times, Jan, 15, 1937, p. 7; “AFL Report Including Agricultural Workers,” New York Times, Feb. 8, 1937, p. 5; “CIO Urges Inclusion of Agricultural Workers,” New York Times, Oct. 14, 1937, p. 9; Bureau of Research and Statistics, Division of Old-Age Benefits Research, “Expansion of Coverage” (unpublished memorandum), Sep. 27, 1938, Records of the Social Security Board, National Archives, Record Group 47 [henceforth SSB], Box 4, pp. 4–15 “Statement of Arthur J. Altmeyer, Chairman of the Social Security Board, before the Senate Finance Committee on Amendments to the Social Security Act,” SSB, Box 4, Amendments 1939 file, p. 10; Paul Taylor, “Relation of Tenancy and Labor in Agriculture” (unpublished memorandum), 1940, SSB, Box 32, Agricultural Labor to 1939 file, p. 1; “Old-Age Insurance for Agricultural Workers” (unpublished memorandum), Apr. 22, 1940, SSB, Box 32, p. 4; John J. Corson to O.M. Powell, “Conference With Farm Labor Committee of the Department of Agriculture” (unpublished memorandum), Nov. 25, 1940, SSB, Box 32, Agricultural Labor file, p. 1; “Alternative Plans for the Coverage of Agricultural Workers” (unpublished memorandum), 1940, SSB, Box 32, Agricultural Materials file, pp. 5–8.Google Scholar

74 Bowles, Samuel and Gintis, Herbert, “The Crisis of Liberal Democratic Capitalism—the Case of the United States,” Politics and Society, 11 (1982), pp. 51–93; Piven and Cloward, Regulating the Poor.CrossRefGoogle Scholar