HISTORY: The New Deal

S.C. Encyclopedia |   The New Deal was a collection of federal programs enacted between 1933 and 1939 to solve the problems created by the Great Depression. In South Carolina the New Deal brought three R’s: recovery for farmers, bankers, textile mill owners, and small businessmen; relief for the unemployed and destitute; and reform in labor-management relations, banking, sale of securities, and retirement. In the process the New Deal radically increased the role of the federal government in the state’s economy by creating permanent acreage allotment programs, agricultural credit, compulsory minimum wage / maximum hours requirements, protection for laborers who sought to unionize, Social Security benefits, a public welfare system, the Federal Deposit Insurance Corporation to protect depositors, the Federal Housing Administration to expand housing opportunities, and the Rural Electrification Administration to electrify the countryside.

Even before the stock market crash in October 1929, South Carolina had suffered several years of economic downturn. Cotton began to decline as early as 1920, a victim of overproduction and the boll weevil. In the next five years, the average value of farmland dropped from $65 to $43 per acre. During the 1920s farmers abandoned one-sixth of South Carolina’s farms. The collapse of the cotton economy brought down forty-nine percent of the state’s banks. In the mid-1920s the state’s textile economy joined farming in economic depression. In 1929 shares of stock in the state’s 230 textile mills sold for one-half their 1923 price. The onset of the Great Depression made wretched conditions even worse. By 1931 cotton was selling for 6{cents sign} per pound, actually below the cost of production, and the cash value of South Carolina’s farm commodities had dropped by half since 1929. In 1932 rural poverty was so severe that taxes were delinquent on almost half the state’s farms. There was no market for the securities of textile mills, and average annual textile wages plummeted from $719 in 1929 to $495 in 1932. Not surprisingly, by 1933 one-fourth of the state’s population was eligible for public relief.

The New Deal attacked these problems through a host of innovative programs and the creation of a myriad of new federal agencies. Managed on the floor of the U.S. House of Representatives by Congressman Hampton P. Fulmer of Orangeburg, the Agricultural Adjustment Act created the Agricultural Adjustment Administration (AAA), which raised farm prices in South Carolina by reducing surpluses through a permanent acreage-reduction program. In midsummer 1933 farmers in the Palmetto State plowed under 425,000 of their 1,770,000 acres of cotton. In subsequent springs they planted only their allotment. Farmers were paid for acres destroyed or not planted. They also enjoyed higher prices because of the reduction in supply. Similarly, the state’s 23,000 tobacco farmers in the Pee Dee reduced their acreage by thirty percent and enjoyed an increase in price per pound from 11.14{cents sign} in 1932 to 21.60{cents sign} in 1934. The reduction in acreage of both crops reduced the need for tenants and thus hastened migration from the countryside to cities and towns. At the same time, the Rural Electrification Administration (REA), set up in 1935, made farm life more tolerable by encouraging rural electrification. The percentage of farms in South Carolina with electricity increased from two in 1934 to almost fifteen by 1940.

Meanwhile the National Industrial Recovery Act of 1933 created both the National Recovery Administration (NRA) and the Public Works Administration (PWA) to bring about business recovery, which in South Carolina meant textiles. Under the NRA, each industry drew up a Code of Fair Competition to allow firms within the industry to raise prices by cutting back production. NRA Code Number 1, the textile code, which was partly written by textile magnate Thomas Marchant of Greenville, required the 230 mills in South Carolina to reduce production from the customary 105 hours a week to 80 hours a week. At the same time, the code forced mills to eliminate child labor, pay a minimum wage of $12 a week, employ each worker for no more than 40 hours a week, and allow workers the right to unionize.

Flaws in the code and its ineffective enforcement led to a host of strikes culminating in the General Textile Strike of 1934, which involved half of South Carolina’s eighty thousand workers. The strike ended on management’s terms, and its failure had a chilling effect on unionization in South Carolina for years thereafter. Despite the protection of the New Deal’s National Labor Relations Act of 1935, which punished mill owners for discharging workers because of union activity, union organizers in South Carolina enjoyed little success in their attempts to unionize the cotton industry in the late 1930s. By 1980 only 6.7 percent of the state’s labor force was unionized, the second smallest percentage in the nation. Workers at least could thank the New Deal for the Fair Labor Standards Act of 1938, which set a permanent minimum wage and maximum workweek.

(To be continued)

– Excerpted from the entry by Jack Irby Hayes. To read more about this or 2,000 other entries about South Carolina, check out The South Carolina Encyclopedia by USC Press. (Information used by permission.)