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wheat given gratis to the Red Cross.
The wheat program was the FFB s major effort. The Board also
attempted several other programs, including a similar cartel in cot-
ton. In the fall of 1929, the FFB made substantial loans to cotton
cooperatives to stem the decline in cotton prices. These loans were
added to loans from the Federal Intermediate Credit Banks. But
cotton prices continued to fall, even after the American Cotton
20
This was to become a permanent question for logical people, with no sign
yet that anyone is willing to answer. From the point of view of the general pub-
lic, of course, the policies are contradictory and irrational. From the point of view
of the government bureaucracy, however, both measures add to its power and
swell its number.
21
The FFB forced the Chicago Board of Trade to prohibit short selling by
foreign governments, notably by Russia.
232 America s Great Depression
Cooperative Association was encouraged to assume management
of the operation. Finally, in June 1930, the FFB established the
Cotton Stabilization Corporation (CSC) to try to stem the tide.
The CSC took over 1.25 million bales from the coops. Under
severe competition from external sources, the CSC announced
that it would maintain its holding for an entire year if prices did
not rise. But this proclamation, designed to firm the market, had
no effect.
Again, the cartel was confronted with growing surpluses, and
therefore heavier pressure on farm prices. Finally, the FFB tried to
exhort the cotton farmers, too, to reduce acreage. Chairman Stone,
of the FFB, urged the governors of the cotton states to immedi-
ately mobilize every interested and available agency . . . to induce
immediate plowing under of every third row of cotton now grow-
ing. This action stirred up a host of indignant opposition, the New
York Times calling it one of the maddest things that ever came
from an official body. 22 The proposal met with no success; in fact
the 1931 cotton crop was considerably larger. In early 1932, the
Board then tried an heroic action along with its 1.3 million bales,
it obtained an agreement from southern bankers to withhold all of
their cotton (3.5 million bales), while it continued to finance 2.1
million bales held by the coops. This firmed prices until June 1932,
when they fell drastically again. By July, the Board had bought
$127 million worth of cotton, and it had lost over half of its value.
The upshot was that the CSC had to give up, and it began to liq-
uidate its cotton holdings in August, 1932, completing its unload-
ing in a year. The net loss of cotton was $16 million, in addition to
850,000 bales, worth over $78 million, donated to the Red Cross.
At the end of 1929, the FFB established a national wool coop-
erative the National Wool Marketing Corporation (NWMC)
made up of 30 state associations. The Board also established an
allied National Wool Credit Corporation to handle finances. The
NWMC, unskilled in the affairs of the wool industry, turned over
22
Harris Gaylord Warren, Herbert Hoover and the Great Depression (New York:
Oxford University Press, 1959), p. 175.
The Depression Begins: President Hoover Takes Command 233
its selling operations to the private woolen handling firm, the
Draper Company. The NWMC made huge advances to wool
growers from 1930 on, thereby concentrating a large part of the
domestic wool output in the hands of the NWMC, and the FFB
loaned heavily to its creature. While prices firmed at the begin-
ning, they kept drifting inexorably downward, and the NWMC
program only served to stimulate a greater production of wool.
The overhanging surplus depressed prices further, and overex-
tended the funds of the NWMC. Eventually, the NWMC had to
sell its huge stock of wool at very low prices, thus aggravating the
wool price problem still further. A total of $31.5 million in loans
for wool were made by the FFB, of which $12.5 million were per-
manently lost.
In October, 1929, the FFB set up the National Livestock Mar-
keting Association, but the livestock producers disagreed and set
up conflicting cooperatives, and the program was never launched
on any considerable scale. The FFB also organized a dairy pro-
gram, with five regional butter-marketing associations, providing aid
to dairy cooperatives. An advisory committee angered the farmers
by suggesting that they reduce the size of their dairy herds in order
to cut the surpluses in dairy production. The farmers preferred to
lobby for legislation to outlaw oleomargarine or to prevent imports
of cocoanut oil from the Philippines.23 Other FFB attempts were a
National Bean Marketing Association; a National Pecan Market-
ing Association, established in February, 1930; aid to citrus indus-
tries, as well as to figs, grapes and raisins, potatoes, apples, sugar-
beets, honey, nuts, maple syrup, tobacco, poultry, eggs, and rice.
However, the Board only tried fully to stabilize prices in wheat and
cotton, where it failed ignominiously. Similar attempts, on a
smaller scale, were made in butter, wool, and grapes, while FFB
activity for the other crops was confined to subsidizing existing
cooperatives. The grape stabilization program was a fiasco like the
23
To their great credit, some organizations bitterly opposed the FFB through-
out these years. These included the Nebraska Farmers Union, which attacked
the FFB as a great exploitative bureaucracy, the Corn Belt Committee, and the
Minnesota Farm Bureau.
234 America s Great Depression
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