The New Deal Co-Ops: Depression-Fighting Strategies Involved Co-Ops in Agriculture, Utilities and Health Care Sectors

By Reynolds, Bruce J. | Rural Cooperatives, March-April 2014 | Go to article overview

The New Deal Co-Ops: Depression-Fighting Strategies Involved Co-Ops in Agriculture, Utilities and Health Care Sectors


Reynolds, Bruce J., Rural Cooperatives


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The development of cooperatives was high on the agenda of U.S. government officials for implementing President

Franklin D. Roosevelt's New Deal programs during the Great Depression (1933-1942). Two general strategies for rural development were based on cooperatives.

First, cooperatives had a track-record of improving the livelihood of many farmers, and New Deal policies recognized a role for government assistance to these farmer-owned businesses with credit, research and technical assistance.

Second, there was a unique strategy of the New Deal in assisting with the organization of new cooperatives to provide rural communities with electricity, health care, housing and new community settlements for farming and subsistence-gardening. President Roosevelt's proclivity for creating new and independent agencies to address problems of different economic sectors resulted in several different cooperative programs that were administered through these various agencies of the federal government.

A look back at how New Deal programs utilized cooperatives for economic recovery is informative when thinking about present challenges for rural development. Three sectors are selected for this historical review: agriculture, electrical utilities and health

The child of a migratory farm worker in Tulare County, Calif., receives medical care from a staff nurse of the Agricultural Workers Health and Medical Association. The photo was taken in 1939 by Dorothea Lange. Photos courtesy U.S. Library of Congress care. References for this article include some authors who played an important part in the New Deal cooperatives and are discussed in a sidebar (page 25).

Farmer cooperative programs

Assistance to farmer cooperatives was not an innovation of the New Deal, but their widespread operations throughout rural America by 1933 made them an indispensable resource for economic recovery. Federal government assistance to farmer cooperatives had been mandated in 1926 with the passage of the Cooperative Marketing Act. A Division of Agricultural Cooperation had been organized within USDA's Bureau of Agricultural Economics in 1922. The 1926 Act provided annual appropriations by Congress for research and technical assistance to farmer cooperatives by this division.

More organizational changes occurred in the U.S. government in 1929 with the agricultural depression, which presaged the outbreak of the Great Depression. The USDA division serving farmer cooperatives was transferred in 1929 to the newly created Federal Farm Board.

The Roosevelt administration abolished the Farm Board in 1933 and implemented the first programs of price supports directly to individual farmers. These were administered by USDA under the Agricultural Adjustment Act (AAA). USDA used the services of cotton and rice cooperatives to implement its program of non-recourse loan payments to farmers. The cooperatives reduced the government's administrative expenses by taking responsibility to distribute the AAA loans to their members as advance payments on their marketing pools and provided record-keeping on storage and sales of government-owned commodities. The USDA also worked with cooperatives in implementing orderly marketing programs for several perishable commodities that required approval by producer voting referendums.

Some of the Federal Farm Board's lending programs to cooperatives were transferred in 1933 to the newly created Farm Credit Administration (FCA). A network of 12 district Banks for Cooperatives was established. In addition, responsibility for carrying out the 1926 Cooperative Marketing Act was moved to FCA. In 1934, FCA launched News for Farmer Cooperatives, the predecessor of this magazine.

FCA was moved to USDA in 1939. Research and technical assistance were transferred to a separate USDA agency, the Farmer Cooperative Service, when FCA became a lending system independent of the federal government in 1953. …

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