Increment of workers in agriculture during periods of economical crisis

Increment of workers in agriculture during periods of economical crisis

Was there an increment of the percent of people working in the agricultural sector during the economical crises of the last couple of centuries?

What are the factors influencing the ratio of farmers?

The chief impact on the ratio of agricultural workers to workers in all other industries has been the dramatic growth of workers in other sectors.

Agricultural workers have increased in number at times, particularly with the proletarianisation of peasants, petits-bourgeois, and lumpen-proletarians in the development of modernity. The "total workforce" has also changed. Small scale industry has reduced, but large scale mobile regional workforces have increased. Labour has flowed from capital intensive sectors towards labour intensive sectors. Workers are generally where the profit isn't.

Moreover, the "farmer" the owner operator of a family concern, even if they exploited itinerant workers, has been reduced in power and status to a locked-in-contractor.

Noel Butlin's data on Australian agriculture is good here, as is the account in Connell and Irving, Class structure in Australian history.

Qing Period - Economy

A handful of factors lead to a fast population growth during the mid of Qing period. The first source for the population growth was of course the economical prosperity under the century of the three Emperors Kangxi, Yongzheng and Qianlong (abbreviated to Kang Yong Qian Sanchao 康熙雍正乾三朝). During the whole course of Chinese history, the lack of arable land in the densely populated areas made it necessary to invent new techniques of agriculture to harvest as much as possible from a small amount of land. In the 18th century, Chinese agriculture was the most advanced of the world - but the cheapness of labour force in a densely populated land was an impediment for the widespread use of machinery on the countryside - until nowadays. New fruits from the Americas helped the Chinese population to obtain a better nourishment: potoatoes (tudou 土豆), peanuts (huasheng 花生), sorghum millet (gaoliang 高粱), corn (mais yumi 玉米 or bangzi 棒子). Additionally, crops that can be used in industrial agriculture (plantations), like tea (cha 茶 Fujian dialects: dé), cotton (mian 棉), and sugar cane (jian 薦), stimulated private entrepreneurship and employment. Until 1770, the tax for the small peasants was the lowest of the whole history of China, and the whole countryside during the mid-Qing period seemed to be blessed with a relative high living standard and an education system that allowed many wealthy peasants to learn the basics of reading and writing. The crafts and minor industries in the cities were equally much higher developed in China than in Europe. Textile industry first provided an extra income to the peasant families, but later developed to a separate industrial branch with factory workers, especially in Songjiang 松江 near later Shanghai, Suzhou 蘇州/Jiangsu and Hangzhou 杭州/Zhejiang - a city famous for its silk production. Tea plantations in Zhejiang and Fujian did not only deliver their products to all places in China, but produced also goods for export to Europe, especially England. Another item exported to Europe was chinaware or porcelain (ciqi 磁器 often called "earthenware" taoqi 陶器), produced in the state-owned kilns in Jingdezhen 景德鎮/Jiangxi, or in private porcelain producing cities like Lijiang 醴降/Hunan, Zibo 淄博/Shandong, or Dehua 德化/Fujian. Paper, hempen cloth, lacquerware, and metal objects also belonged to the early industrially produced commodities. Wuhu 蕪湖/Jiangsu was a center of steel production. "International" trade exists since we find states in human history, but China never had a system of import taxes, or customs convention. Trade and traffic with foreign countries originated already in the period of the Warring States between China and the Inner Asian nomad tribes, later with the Korean kingdoms, with Japan, South East Asia, Tibet and India. The high export rates of tea, porcelain and other agricultural or industrial products to Europe were rewarded with a very positive balance of payments (if this modern term may be allowed to use) - Chinese merchants and the state were payed with silver coins made of silver from the Americas. To provide the whole country with good and items needed, an intense trade system was necessary since the Sui Dynasty, when the Great Imperial Canal was dug. In China, the waterways had always had a much higher importantce for trade and commerce than the land routes or the sea traffic along the coast. Until today, the canal system in the Yangtze area serves as the main transport medium. Since the days of Tang Dynasty, merchants and traders took over the resonsibility to transport not only wares of private origin, but also commodities that were subject to state monopoly, like salt and liquor. Last but not least, we can see that from the Manchu conquest of whole China until the First Opium War, there were almost no military conflicts with foreign powers or inside the empire - a long period of peace.

Economical Changes: Jiaqing, Daoguang

While the first half of the 18th century was a time of prosperity, corruption and favoritism at the end of the century helped to create hopless situations for peasants in many areas. The White Lotus Sect (Bailian Jiao 白蓮教) was revived and helped to launch peasant uprisings in territories where the mismanagement of local magnates and magistrates had neglected the maintenance of dikes and waterways and had lead to flood disasters. Other peasant uprisings followed a secret society named Triad Sect (Sanhe Hui 三合會). The suffering of peasantry in many areas was worsened by the demographic increase of population during the 18th century. The economical and technical standards of the 18th China were quite high, but they did not fit the needs and demands of an increasing population. Qing China did not make use of paper money but instead relied on copper and silver coins. When the import of silver decreased - or rather the export of silver increased - at the begin of 19th century, the small copper coin ("cash") suffered depreciation: a fatal situation for the lower classes of society. Corruption, favoritism, and nepotism within the Chinese officialdom has two sources. The first can be seen in the exaggerated centralism of Qing administration. Governmental posts in the territorial administration were occupied by officials that came not from actual province, but the magistrates had to rely on the help of local secretaries and the local gentry and therewith had personal relations to these people. The second reason for the spoliation and nepotism mentality is the fact that - after passing the difficult state examinations and obtaining a post as local governor - the newly posted official had to reward his sponsors and his family as long as he was sitting on his post. Additionally, the daily flood of paperwork in a centralized bureaucracy lead to severe cautiousness and inflexibility of the officialdom. Paralysed by administratorial instructions and controled by censorate inspectors, local officials were unable to cope with new challenges in a changing enviroment. The state itself run into financial crisis after decades of prosperity, and the requirements for financial stability within an unstable economy were to high at the begin of 19th century. While the small states of Europe could develop an industrial and capitalist economy, the agronomical background and the loss of monetary investment could not help China in her backwardness that became so obvious when the agressive European merchants tried to enter the Chinese market.

Issue Summary

Prosperity in the Farm Belt

Throughout U.S. history farming has been very important to the nation's economy. Most Americans have viewed farming as a distinctive and superior way of life. These beliefs are based on Jeffersonian ideals. These ideals bestow great respect on those nobly working the soil to gain economic self-sufficiency and independence.

As late as 1900, 60 percent of the U.S. population lived in rural areas. Horsepower and manpower remained the key means of performing farm work. Kerosene lamps, wood and coal stoves, and outhouses were typical of farm life. Few rural homes had electricity. Those that did have electricity received it from a steam engine, windmill, or water wheel that was used to generate it.

The distinctive agricultural character of the various regions in the country had become well established. Dairy and poultry farms were dominate in the Northeast, cotton and tobacco farms in the South, corn and hog production in the Midwest, wheat farms in the Great Plains and Northwest, open grassland livestock grazing in the West, and vegetable fields, cotton, and orchards in California. Sharecroppers and tenant farmers were commonly found in the South, and migrant farmers in the West.

Prior to 1900 Congress had come to the assistance of farmers on occasion. In 1862 alone three laws were passed making cheap land available through the Homestead Act, establishing agricultural colleges through land grants to states, and creating the U.S. Department of Agriculture. Typically for this period, none of the laws passed were designed to provide direct monetary assistance to U.S. farmers or to raise their economic status in society. For example, the 1862 Morrill Act was important to future agricultural development in the United States. The act granted certain amounts of federal lands to each state. The states were to sell the lands to raise funds for establishing colleges to teach agriculture and engineering. This was designed to help meet the needs of a rapidly industrializing nation.

During the first two decades of the twentieth century, American farmers enjoyed considerable economic growth and prosperity. In fact, the period from 1909 to 1914 has been called the golden age of agriculture in the United States. Increased prices for farm products and increased farmland values raised the purchasing power of farmers above that of many other U.S. workers. This period created the expectation that farmers should enjoy incomes and a standard of living equal to workers in other parts of the national economy.

Good Times Turn Hard

The conclusion of World War I in 1918 brought a rapid decline in the demand for farm products. The

Number and Value of Farms, 1880-1940
YearPercent of farm population from total populationNumber of Farms (1,000)Average value of farm land and buildings ($)

decline led to large surpluses and falling prices as farmers kept producing at their World War I levels, trying to cover expenses. Years of angry debate focused on federal agricultural policies. As a result, the 1920s proved a harsh period for American farmers. Times were only to get harder, however, with the 1929 stock market crash.

President Herbert Hoover took office in early 1929 when the nation's economy appeared healthy and growing, except in the area of agriculture. In 1929 one-fourth of all workers in the United States were farmers. Though having a reputation as a humanitarian, Hoover, like Coolidge before him, firmly believed government should not take an active role in social and economic reform. Under pressure from agricultural interests, however, Hoover established the Federal Farm Board. The board was to help farmers sell their produce through farm organizations known as cooperatives, and to increase farm prices. Hoover believed voluntary production controls and modest support for farm cooperatives would help. Farmers, still trying to cover costs, continued to keep overall production high, however, and as a result prices remained low.

Following the stock market crash in October 1929, Congress took action again. It passed the Hawley-Smoot Tariff Act in 1930 to help both farmers and manufacturers. The act established the highest tax on imports, known as a protective tariff, in U.S. history. The tariff would shield agricultural products from foreign competition. The effects of the act, however, backfired by greatly reducing foreign trade and farm exports. Other countries did not have the cash to buy U.S. products since they could not easily sell their own products in the United States. Foreign countries also retaliated by raising their tariffs on U.S. goods. These tariffs soon decreased world trade by 40 percent. Th export of farming products had previously provided one fourth of all farm income. To make matters even worse for U.S. farmers, European and Russian farm production increases created a greater worldwide glut in produce, further reducing prices. Farming income was devastated.

One of the most famous depictions of rural life in the United States came from this time period. Grant Wood's 1930 painting American Gothic shows two stern-faced people, a father and daughter, standing stiffly in front of their farmhouse with the father holding a pitchfork.

The Farmer's Revolt

In 1932, aside from black Americans, farmers were the hardest hit by the economic turmoil. In 1932 farmers' income was less than one-third of what it was in 1929. Farm prices had bottomed out at half of what they were only a few years earlier. That meant the farmer, with his money made from wheat, corn, hogs, and cotton, could only purchase half as many goods as before. As a result, many farmers were going broke. Between 1929 and 1932 approximately 400,000 farms were lost through foreclosure. A foreclosure is where a bank that holds a mortgage on a farm seeks to take possession of the farm when the farmer could not meet his mortgage payments. Many who lost their land turned to tenant farming, an arrangement in which the farmer pays a landowner for use of the land to farm.

With the nation's economy worsening, anger over Hoover's limited efforts in raising low crop prices led to farmer protests. Rural poverty was leading to despair and desperate action. Farmers burned their corn and wheat and dumped their milk on highways rather than sell for a loss. In May 1932 farmers met in a national convention organized by the Iowan Farmers' Union to decide what they could do to pressure for change. They created the Farmers Holiday Association, with well-known farmer advocate Milo Reno as president. The association aimed to organize a strike, or "farmers' holiday," in which farmers would refuse to sell their produce for several weeks. The farmers hoped that by reducing the supply of farm produce to markets that prices would increase. The action became so popular among farmers that it lasted more than a month. Roads were often blocked, preventing food from reaching market. On August 25, 1,200 pickets blocked five highways leading to a large produce market in Omaha, Nebraska. Occasional violence broke out, including a gun battle that erupted near Sioux City, Iowa. The onset of winter weather in late 1932 brought a break in these actions.

During the winter efforts turned to blocking farm foreclosures. "Penny auctions" occurred in which farmers would pack the auction sale and bid only pennies for the foreclosed farm, equipment, and livestock. They would then give it back to the owner after the auction. In February 1933 Iowa passed a law reducing the number of foreclosures. Other Midwest and Plains states followed. Force was also used to stop authorities from foreclosing on farms. In early 1933 farmers took over a Nebraska sheriff's office until they were driven out by tear gas. Others faced off with authorities in an Iowan courthouse.

A New Deal for Farmers: Relief Takes Shape

With the nation's economy steadily in decline following the 1929 stock market crash, Franklin D. Roosevelt ran on the 1932 Democratic presidential ticket promising a "new deal" for the American citizen. Roosevelt handily defeated the unpopular Hoover in the November 1932 elections, and an overwhelming majority of Democrats won seats in Congress. Roosevelt believed Hoover's policies were clearly insufficient for solving the farm crisis. Revolutionary changes in federal farm policies to aid the farmer were soon to appear.

Given the urgency of the agricultural situation, Roosevelt believed he could not wait until he moved into the White House in March 1933 to begin action. While Hoover was serving out the remainder of his term, Roosevelt identified new agricultural legislation as a priority. He wanted to take action before the spring planting began. Meetings were held in December 1932 between farm representatives and Roosevelt's key advisors, including Henry Morgenthau, Jr., and Rexford Tugwell. Soon, Roosevelt nominated Henry Wallace, a highly knowledgeable Iowan, as his secretary of agriculture and Tugwell as the assistant secretary of agriculture. Wallace was dedicated to restoring the farmer as a key part of the U.S. economy and to bring back "parity" for farm goods. Parity meant that farm goods would have the same value relative to manufactured goods as they did during the golden years of the 1910s. This would mean farmers would have the same purchasing power to buy goods as they did during the period of 1909 to 1914.

Roosevelt and his advisors realized that to have any chance of success, new government programs would have to first gain farmer acceptance. Supporters for agricultural assistance stressed to Roosevelt that programs would have to be locally operated, rather than by federal bureaucrats in Washington, DC. Therefore, on March 16, 1933, shortly after Roosevelt's inauguration, Wallace gathered farm leaders again in Washington at Roosevelt's invitation to draft a revolutionary farm bill. Their goal was an "agricultural adjustment" of farmer income. These leaders came up with highly inventive solutions that clearly went beyond the traditional limits of governmental action known at that time.

Four types of actions were proposed in early 1933: (1) enticing farmers to reduce the amount of crops they grew (2) reducing the amount of farm debt (3) increasing the prices for crops and (4) developing new foreign trade agreements to expand markets for American farm produce.

Biography: Henry A. Wallace

1888, October 7–1965, November 18

Wallace filled the important role of President Franklin Roosevelt's secretary of agriculture during the New Deal years. Wallace was born on a farm near Orient, Iowa. His father also served as U.S. secretary of agriculture from 1921 to 1924, under presidents Warren Harding and Calvin Coolidge. Wallace's contribution to the agriculture field was notable before joining Roosevelt's administration. He was editor of the influential Wallace's Farmer publication, originally founded by his grandfather, from 1924 to 1933. A keen interest in plant breeding led Henry to experiment with corn. He eventually became head of the largest hybrid seed company in the nation.

As farm economic woes grew in the 1920s, Henry Wallace was a spokesman for increased mechanization of farms. He also lobbied for government price support and production control programs. Wallace's views attracted the attention of Franklin Roosevelt, who appointed him secretary in March 1933. Wallace became the architect of the New Deal agricultural programs and policies. He is considered one of the most knowledgeable secretaries of agriculture in U.S. history. Wallace was ambitious and outspoken on farm issues. As a result, he attracted considerable criticism as well as praise. Wallace served as secretary of agriculture until 1940.

In 1940 Wallace became Roosevelt's running mate for vice-president in the presidential elections. He served as vice-president through the war years of 1941 to 1945. Later he was the presidential candidate of the Progressive Party in 1948. He died in 1975. Wallace has been one of the most influential people associated with U.S. agricultural programs. He began policies that remained in place for the rest of the twentieth century.

Throughout the New Deal era, Wallace had proven highly popular with many farmers in the nation. Coming from a farm family himself and with his father having been a former secretary of agriculture in the early 1920s, Wallace had a firm grasp of the complex economic issues farmers faced. He also had a great deal of sympathy with their plight. Though he would not go as far as some farm activists wanted in terms of government aid, he was highly respected by most. This respect was evident in a note written by U.S. Senator Louis Murphy of Iowa to President Roosevelt (Schlesinger, The Coming of the New Deal, p. 71)

Corn is 70 cents on the farms in Iowa. Two years ago it was 10 cents. Top hogs sold at Iowa plants yesterday at $7.40, or $4.50 to $5.00 better than a year ago. Farmers are very happy and convinced of the virtue of planning … Secretary Wallace can have whatever he wants from Iowa farmers.

Decreasing farm production was a priority. Those crops being produced in greatest surplus included wheat, hogs, cotton, and corn. The desire was to establish a voluntary production control system. If a farmer agreed to control his crop production according to an established government plan, he would receive government payments. Those farmers not participating would still benefit from the anticipated higher market prices, but not as much as those who volunteered to participate. To raise the funds to pay farmers for reducing the acreage they were farming, a tax would be placed on companies processing farm products. Processors included flour mills, textile mills, and meat packing houses. This strategy of production control became the heart of the adjustment bill. The proposed legislation took two critical months during spring planting season before finally passing in the U.S. Senate by a vote of 64 to 20. On May 12, 1933, President Roosevelt signed the Agricultural Adjustment Act into law. The act created the Agricultural Adjustment Administration (AAA), which would pay farmers to limit their crop production. The AAA was Roosevelt's first New Deal economic recovery program.

Reducing farm debt was another key concern identified in March 1933. To make loans more available to farmers, Roosevelt issued an executive order reorganizing existing federal credit agencies and forming the Farm Credit Administration (FCA). The FCA replaced Hoover's Federal Farm Board. Roosevelt appointed Henry Morgenthau Jr. to its head. Congress provided funding for the agency by first passing the Emergency Farm Mortgage Act in April, followed by the Farm Credit Act in June. The FCA began moving quickly to provide financial assistance to farmers in danger of losing their farms. The FCA also established a banking system to support farming cooperatives in marketing their crops and purchasing supplies.

The FCA issued considerably more loans than Hoover's Federal Farm Board. In 1932 the board made 7,800 loans for $28 million. The FCA in its first twelve-month period approved 541,000 loans for $1.4 billion. To give an example of its high activity, in one day the FCA once approved 3,174 loans for $8.3 million.

Birth of the Agricultural Adjustment Administration (AAA)

The key benefit of the AAA and FCA programs was that money would be placed directly into the hands of farm households. This direct aid would allow them to avoid bankruptcy, keep their land, and buy goods, thus helping other industries. Due to the desperate economic condition of farms, many farmers had little choice but to participate in the AAA production control program. For them, AAA checks became their chief source of income.

To achieve local control, the AAA's production control program was placed in the hands of county agents from the Agricultural Extension Service and local farmer committees. The committees were often organized with the assistance of local farm bureaus that were members of the national American Farm Bureau Federation. State agricultural colleges were used for technical assistance to farmers.

With the passage of the Agricultural Adjustment Act, problems in reducing crop surplus immediately arose. With the act not passed until May, 40 million acres of cotton had already been planted for another season. To raise cotton prices as quickly as possible, the AAA offered to pay farmers to plow under more than 10 million acres of cotton in the summer of 1933. The local agents and committees recruited hundreds of thousands of farmers to participate. Over $112 million dollars in government benefits were paid. Secretary Wallace, in recognizing the historic nature of this crop reduction effort, sincerely hoped it would be the last time farmers would be asked to destroy standing crops, as the very notion was so much against that in which farmers believed.

Corn and hogs presented another surplus urgency much like cotton. Most of the corn was not sold at markets, but rather was fed to hogs which appeared at market as pork. A National Corn-Hog Committee composed of farmers from around the country was assembled in the summer of 1933 to consider solutions to the surplus of hogs. To the surprise of many, the committee recommended the government purchase and slaughter six million hogs that fall. The recommendation was adopted by Wallace and carried out in September 1933.

The AAA policy of produce destruction brought out many critics. They were angered by the destruction of farm produce while many in the nation were going hungry. In defense of the pig killing campaign, Wallace complained that the public seemed to believe that "every little pig has the right to attain before slaughter the full pigginess of his pigness. To hear them talk, you would have thought that pigs were raised for pets." (Schlesinger, The Coming of the New Deal: The Age of Roosevelt, 1988, p. 63) Responding to the uproar, Wallace agreed to purchase some surplus agricultural produce and give it to the needy. The Federal Surplus Relief Corporation, created in October 1933, purchased over 100 million pounds of baby pork and gave it to hungry people enrolled in various relief programs.

Drought on the Plains

New Dealers on the Great Plains faced a different situation. Because of increasingly dry weather conditions, drought had largely solved wheat overproduction problems by 1933. The AAA made a three-year program available to wheat farmers. Those who agreed to reduce wheat crops in 1934 and 1935 to levels set by the government would receive government payments. The annual average of 864 million bushels of wheat produced between 1928 and 1932 fell to 567 million bushels from 1933 to 1935. Only twenty million bushels of the decrease, however, resulted from AAA programs. Most of the decrease was due to drought.

Though drought solved overproduction problems, it did create others. Soil erosion became critical as hot winds stirred up massive clouds of dry topsoil. The Dust Bowl was born. Soil conservation became an additional concern of federal farm programs. To increase federal support of farmland conservation, in 1935 the Roosevelt administration transferred the Soil Erosion Service from the Department of Interior to the Department of Agriculture and renamed it the Soil Conservation Service (SCS). The SCS provided both technical assistance and loans to farmers to promote soil conservation measures. Such measures included the new methods of terracing, contour plowing, and reseeding with native grasses. The Civilian Conservation Corps (CCC), created in 1935, assisted these conservation activities. In 1936 Roosevelt assembled the Great Plains Drought Area Committee to recommend measures for improving conditions in the region. The committee recommended taking agriculturally marginal lands out of production and reseeding them with natural grasses.

The success of the New Deal agricultural aid programs on the Great Plains was limited. Many farmers lost their farms and moved to cities. An overall improvement in farming techniques did occur, however, during this period of extraordinary drought and severe economic conditions. These methods would serve the surviving farmers well in following decades. Only federal aid allowed many of these farmers to keep their farms. In the northern and central Great Plains, between 40 and 75 percent of farmers' incomes came from AAA and other New Deal programs. Still, approximately 500,000 people left the rural life of the Great Plains in the 1930s, seeking economic relief in the cities. Increased rainfall, as well as the increased demands of World War II, finally pulled the region out of economic hard times. The Dust Bowl left scars for decades, however. Farmers felt more vulnerable than ever to the forces of nature on the Great Plains. This traumatic period became the backdrop for one of the era's most popular Hollywood movies. The 1939 movie The Wizard of Oz, in which actress Judy Garland starred, told a fantasy tale of a young girl's escape from the bleak life in Kansas in the 1930s to the colorful land of Oz.

The Desert West

Conservation concerns of the New Dealers also extended further west. Ranchers had grazed livestock on open range public lands since the mid-nineteenth century without controls. Public lands consist of the millions of acres of land in the West that were never settled due to lack of water, remoteness, or other reasons. Cattle and sheep had overgrazed much of the land. Congress passed the Taylor Grazing Act in 1934, regulating the use of the range lands. Like on the Plains, the Civilian Conservation Corps built fences and made other range improvements. At the end of the New Deal era, over 11 million head of livestock grazed on 142 million public lands. Much tighter control of public land use became the policy of the federal government from that point on.

Farmers Want More

By late 1933 a comprehensive agricultural relief program had become well established in much of the nation. However, the AAA, the cornerstone of the program, was not bringing results quick enough to satisfy everyone. Some farmers continued arguing for more radical policies that would guarantee farm incomes and fix produce prices. Wallace and the Roosevelt administration resisted such proposals and stuck with the program of benefit payments and loans.

In an effort to satisfy the critics, Roosevelt created the Commodity Credit Corporation by presidential executive order in October 1933. The Commodity Credit Corporation provided loans at low interest rates to farmers who agreed to production controls. The loan rates were set so that farmers would receive somewhat more money than the market value of their crops. This measure was a price support. The program was first applied to the surplus of crops stored in 1934, such as cotton, wheat, and corn. The goal was to make sure these surpluses would not further decrease market prices. The Commodity Credit Corporation loan program served the United States well, supporting farm prices at higher levels and substantially expanding operation after World War II.

Though the AAA production control measures were largely voluntary, Congress did apply some pressure in 1934 on farmers to participate. The Bankhead Cotton Control Act, the Kerr-Smith Tobacco Control Act, and the Potato Act imposed substantial taxes on those farmers not cooperating.

The Problem of Small Farm Operators

Despite vital relief provided to many farmers, by the mid-1930s thousands of small farmers had lost their farms. Their land went to the mortgage holders, such as banks and insurance companies, and eventually became parts of large mechanized farms. Corporate agriculture was replacing the family farm.

This trend brought more criticism of New Deal programs. People complained the programs strongly favored large landowners. In an effort to answer these complaints, Roosevelt created the Resettlement Administration (RA) in 1935. The RA was designed to provide direct assistance to sharecroppers, migrant laborers, and other poor families. Sharecroppers were small farmers who did not own land, but rather rented from large landowners. The goal was to resettle impoverished farm families away from poor land and place them on more productive land. Besides providing a loan to purchase new land, the RA would provide tools and technical advice so that the resettled farmers would have a chance of economic survival. Rex Tugwell, a close adviser to Roosevelt, assumed lead of the agency.

Critics of the RA were uncomfortable with promoting small subsistence family farms. Even Tugwell had second thoughts. Many within Roosevelt's administration firmly believed large commercial farms were the future of American agriculture. They argued federal government efforts to preserve small family farms would likely be more costly than their social value justified. They feared that creating areas of small farms would be establishing isolated pockets of lasting poverty. Most New Dealers strongly believed the application of new technological innovations to large commercial farms was the only real future for the agriculture industry.

Given these concerns, the RA soon evolved into the Farm Security Administration (FSA) in 1937. Rather than resettling poor farmers, the FSA loaned money so farm families could afford such necessities as food, clothing, feed, seed, and fertilizer. This loan system was a last resort for farmers who did not qualify for loans or credit from regular banks or other credit institutions.

The Court Strikes Down AAA

The U.S. Supreme Court played a major role in the New Deal era and agricultural issues proved no exception. Roosevelt had proclaimed in 1933 when introducing the AAA and other initial New Deal programs that the U.S. Constitution was sufficiently flexible and practical to allow new approaches during extraordinary times. The food processing companies being taxed to support the AAA's program, however, charged the farm relief system was unfair. They went to court to challenge the AAA. As a result, in January 1936 the U.S. Supreme Court ruled in United States v. Butler that the processor tax was unconstitutional. Using a narrow definition of federal powers, the Court claimed Congress had no legal authority to control their businesses, hence striking down the AAA. That authority, according to the Court's majority, was reserved in the Constitution for state governments.

Congress responded quickly to the Court decision with passage of the Soil Conservation and Domestic Allotment Act. The new act changed the way in which farmers were paid. Now farmers were paid for soil conservation rather than for reducing acreage of crops. They focused on planting crops that caused the least amount of soil depletion. Also, payments to farmers would come from general government revenues rather than special taxes on processors. Farmers were encouraged to decrease production through voluntary means.

Following his reelection, Roosevelt responded in early 1937 to the Butler decision and to other unfavorable Court rulings by proposing to restructure the Supreme Court. Though his proposal met with great resistance, it did serve to put pressure on the Court. New Deal programs began receiving more favorable rulings. The Court issued rulings supporting the New Deal tax plans in Steward Machine Co. v. Davis (1937) and the regulation of agriculture in Mulford v. Smith (1939) and Wickard v. Filburn (1941). The Court finally affirmed that the federal government held the power to regulate agriculture under the Constitution's interstate commerce clause.

The problem of crop overproduction still continued through 1936 and 1937. Not enough farmers volunteered to cut back their crop production. Pressure mounted again from farmers for government financial assistance. In 1938 Congress passed a new Agricultural Adjustment Act. The new act kept the conservation measures of the Soil Conservation and Domestic Allotment Act. It also added a new method for price supports for farmers when oversupply of produce led to lower prices. The act was very broad and set up research stations and other means of aiding farmers. Unfortunately, overproduction would continue to be a major problem until World War II.

Power to the Farmer

The New Deal brought another revolutionary improvement to rural farm life—electric power. In 1933 most rural areas had no electric service. Congress created the Tennessee Valley Authority (TVA) to bring inexpensive electric service to the farm regions of Mississippi, Alabama, Georgia, and Tennessee. TVA provided hydroelectric power below private industry rates. Roosevelt also created the Electric Home and Farm Authority (EHFA). EHFA provided low-interest loans to farmers for the purchase of electric appliances. At last farmers could enjoy the benefits of refrigerators, cooking ranges, and water heaters and businesses selling such items rebounded. Sales of appliances in the Tennessee River basin tripled.

With the successes of TVA and EHFA programs, Roosevelt created the Rural Electrification Administration (REA) to bring electrical power to other rural regions. The REA provided loans to rural farming cooperatives to finance the wiring of homes, the stringing of power lines, and the purchasing or generating of electricity. Private utility companies contended the demand for electricity in rural farm areas was insufficient to make it profitable to provide power. Consequently, long-standing farming cooperatives became the primary avenue for bringing power to their areas. By 1939 more than 350 REA projects in 45 states provided electric service to nearly 1.5 million rural residents and 40 percent of U.S. farms. The REA proved one of the most successful New Deal programs. Most immediately these programs provided farmers power to operate barn machinery, irrigation water pumps, and other labor saving devices. The availability of electrical power led to later development of more mechanical and electrical equipment.

Immediate Benefits of Agricultural Relief

Despite criticisms and shortcomings, the AAA and other farm programs helped many farmers. No strong recovery resulted from the programs but the decline was halted. Gross farm income in the nation rose from a low of $6.4 billion in 1932 to $8.5 billion in 1934. Income increased 50 percent between 1932 and 1936. Prices of farm produce rose 67 percent. Benefit payments of $577 million were paid out in 1933 and 1934 to several million farmers. Farm debt decreased by $1 billion. The federal government replaced private banks and insurance companies as key creditors. The government held 40 percent of farm mortgage debt by the end of the 1930s. Human suffering was eased, and the future outlook for many improved. Some considered this rural economic recovery remarkable since the U.S. economy in general was struggling.

Problems faced by the New Dealers were numerous: (1) the complexity of the problem was large with many diverse regions and crops affected (2) the difficult challenge of convincing people to produce less product than they were capable of and (3) dealing with a traditionally highly independent segment of U.S. society. Desperation no doubt played an important role in fostering acceptance of new proposed programs and unusual solutions. Despite these obstacles and many more, the AAA and other programs operated surprisingly smoothly for a large bureaucracy. Having a well-trained corps of specialists coming from the land-grant agricultural colleges and working in cooperation with state and county extension service agents helped. Every state has an extension service and almost every county have extension agents to help farmers. The service and agents, part of the Cooperative Extension System formed by federal, state, and county governments, provide farmers with up-to-date information on farming techniques. Above all, reliance on local grassroots guidance proved critical. Letting farmers make important decisions and using county farmer committees to oversee production control programs guided by their own elected leaders was crucial. Nearly four thousand local committees existed in 1934. Programs were largely voluntary with most pressure to participate coming from local farmers themselves. In 1935 Presidential advisor Raymond Moley, looking back at the first three years of the New Deal's effort to improve the economy, considered the AAA one of the more successful and popular programs adopted.

Agriculture and Farming in Ohio

Throughout history, farming has been a major component Ohio’s economy.

Prior to the 1800s, most people who called Ohio home earned their living through farming. Ohio's original settlers, the American Indians, at least partly supported themselves through farming. They grew corn, beans, squash, and pumpkins. Besides multi-colored corn, they developed varieties of eight and ten-row corn. They also grew numerous varieties of beans, including kidney beans, navy or pea beans, pinto beans, great northern marrow beans, and yellow eye beans. The American Indians planted corn and beans in small mounds of soil and often pumpkins, squash, or melons in the space between. Ohio American Indians grew many other vegetables, including turnips, cabbage, parsnips, sweet potatoes, yams, and onions and leeks. Europeans introduced the watermelon and muskmelon into North America in the seventeenth century, and American Indians in the interior were growing these fruits within a few years.

Europeans continued to rely on agriculture as the primary means of feeding one’s family as they moved into the Ohio country during the mid-to-late 1700s. Most of the original Europeans to settle Ohio raised wheat, corn, and other grain crops. By 1849, Ohio produced more corn than any other state, and ranked second in wheat production. In 1885, the most commonly grown crop was corn, followed by wheat, oats, potatoes, barley, rye, and buckwheat. Farmers in southern Ohio also raised tobacco. It was the major crop in southern Ohio by the 1830s. During the 1600s, 1700s, and the 1800s, many people believed that tobacco had medicinal qualities. Farmers in southern Ohio also grew hemp, which they used to make rope and cloth. Numerous Ohioans also planted orchards from seeds that they brought with them to the region or purchased from residents living east of the Appalachian Mountains. John Chapman, also known as Johnny Appleseed, played an important role in developing apple orchards in Ohio. Due to the climate, apples and peaches were especially easy to grow and became quite popular. Along the Ohio River, especially near Marietta, apple orchards flourished. Strawberries and Catawba grapes also grew well. Ohio farmers also raised livestock, most importantly cattle, sheep, and pigs. While all of these animals served as food sources for Ohioans, sheep also provided their wool to textile factories that opened in Ohio as early as the 1810s.

As Ohio's population grew in the nineteenth century, many residents began to diversify their economic interests. Some Ohioans even ventured into industry, but it is important to note that most early factories and industries grew out of Ohio's agricultural past. For example, by the 1810s, Dayton had a tobacco processing plant. Cincinnati became known as "Porkopolis" during the 1800s, because the city was the pork processing capital of the United States. Bezaleel Wells established a woolen mill in Steubenville in 1815, employing more than one hundred workers. Many manufacturers produced farming machinery, including Cyrus McCormick and Obed Hussey. McCormick invented the reaper, while Hussey developed an early version of the mower. Both of these men lived in Cincinnati during the 1830s. While some people developed new businesses, agriculture continued to dominate Ohio's economy. Many early businesses sold their products for grain crops. Many farmhands and skilled artisans also received payment in grain rather than in money. During the first half of the nineteenth century, a day's wages for a person was a bushel of wheat. Workers may also have been paid in corn at one and one-half bushels or in oats at three bushels.

Industries continued to grow as Ohio became more heavily populated and as available land became scarce. Production flourished in all types of factories and on farmlands as a transportation infrastructure came into existence. The first component of this system was paved roads and turnpikes. The National Road, the first paved (gravel) road to cross the Appalachian Mountains, connected Ohio with the East Coast by the late 1810s. These paved roads helped make transportation easier across the Appalachian Mountains, but most Ohio farmers who produced a surplus continued to sell their products locally or sent them down the Ohio and Mississippi Rivers to New Orleans. River traffic became even easier with the invention of steamboats. Canals arose during the 1820s and 1830s and diverted some of the traffic from the Ohio River especially in northern Ohio, where farmers sent their products across Lake Erie to the Erie Canal. The Erie Canal ended at the Hudson River in eastern New York, and provided a quick route to East Coast cities. The Ohio and Erie Canal also provided Ohioans with a navigable water route connecting the Ohio River and Lake Erie. By the 1840s and 1850s, railroads connected Ohio with much of the rest of the United States. This allowed farmers and businessmen to transport their products quickly and relatively cheaply to market.

The Ohio economy grew for most of the nineteenth century, and many people prospered. While some Ohioans began to invest in other businesses, the vast majority of Ohioans, like the natives before them, continued to farm the land to ensure their survival. By the late 1800s, Ohio farmers had a more difficult time earning a living off the land. Competition from states in the West reduced the prices that Ohio farmers could receive when they sold their crops. New farm machinery also was very expensive, forcing smaller farmers out of business because they could not compete with their larger neighbors. There were periods of success for Ohio farmers, especially during World War I and World War II, as the United States provided its allies with food, but farming, for the most part, was in decline. Ohio began to rely increasingly more on industry and less on agriculture by the late 1800s. By the early 1900s, a majority of Ohioans lived in urban areas and found employment in other industries besides farming. Still, agriculture remained an important segment of Ohio's economy during the twentieth and, now, the twenty-first centuries.

The Impact of COVID-19

While experts can estimate what the economic fallout from a pandemic, such as COVID-19, will be, the precise impact will vary based on how many people are affected, how severely it hits, and which societal interventions are necessary to contain its spread.

Many workers and potential shoppers sequestered themselves in the early days of the COVID-19 pandemic, which had a momentous impact on the global economy, as well as that of the United States. In the U.S., for example, retail sales plunged in April 2020 before recovering in July.   On top of that, data from the Federal Reserve shows the worst dip in manufacturing output since the 1940s.  

Of course, that sudden drop in demand had a disastrous effect on employment. The national unemployment rate climbed as high as 14.8% in April 2020 before dropping to 6.2% in February 2021.   Additional estimates indicated more than 25.7 million workers were affected by the pandemic. This figure included those whose hours or compensation were cut and those who were completely unemployed, among others.  

Those economic shock-waves are being felt from Beijing to Madrid, creating a drag on the world economy that hasn't been seen for decades. In January 2021, the International Monetary Fund (IMF) forecasted the global economy had contracted by 3.5% in 2020—the worst slide in recent memory. However, the IMF envisioned a robust recovery in 2021 and 2022, with worldwide growth of 5.5% and 4.2%, respectively.  

How long the pain will last remains an open question. A century ago, the economic toll from the Spanish Flu was not particularly long-lasting. However, no one can say for certain whether that will be the case this time around. Certainly, the more effective governments in the U.S. and abroad are in facilitating medical care and reducing the rate of transmission, the more muted the economic impact will be.



As early as 1945, Sir Alexander Fleming raised the alarm regarding antibiotic overuse when he warned that the “public will demand [the drug and] … then will begin an era … of abuses.” 7 , 14 The overuse of antibiotics clearly drives the evolution of resistance. 5 , 9 Epidemiological studies have demonstrated a direct relationship between antibiotic consumption and the emergence and dissemination of resistant bacteria strains. 10 In bacteria, genes can be inherited from relatives or can be acquired from nonrelatives on mobile genetic elements such as plasmids. 9 This horizontal gene transfer (HGT) can allow antibiotic resistance to be transferred among different species of bacteria. 9 Resistance can also occur spontaneously through mutation. 9 Antibiotics remove drug-sensitive competitors, leaving resistant bacteria behind to reproduce as a result of natural selection. 9 Despite warnings regarding overuse, antibiotics are overprescribed worldwide. 10

In the U.S., the sheer number of antibiotics prescribed indicates that a lot of work must be done to reduce the use of these medications. 12 An analysis of the IMS Health Midas database, which estimates antibiotic consumption based on the volume of antibiotics sold in retail and hospital pharmacies, indicated that in 2010, 22.0 standard units (a unit equaling one dose, i.e., one pill, capsule, or ampoule) of antibiotics were prescribed per person in the U.S. 17 The number of antibiotic prescriptions varies by state, with the most written in states running from the Great Lakes down to the Gulf Coast, whereas the West Coast has the lowest use ( Figure 2 ). 5 , 12 In some states, the number of prescribed courses of treatment with antibiotics per year exceed the population, amounting to more than one treatment per person per year. 12

Antibiotic Prescriptions per 1,000 Persons Of All Ages According to State, 2010 5

The frequency with which doctors prescribe antibiotics varies greatly from state to state. The reasons for this variation are being studied and might suggest areas where improvements in antibiotic prescribing (fewer unnecessary prescriptions) would be most helpful.

In many other countries, antibiotics are unregulated and available over the counter without a prescription. 10 , 15 This lack of regulation results in antibiotics that are easily accessible, plentiful, and cheap, which promotes overuse. 15 The ability to purchase such products online has also made them accessible in countries where antibiotics are regulated. 15

Inappropriate Prescribing

Incorrectly prescribed antibiotics also contribute to the promotion of resistant bacteria. 5 Studies have shown that treatment indication, choice of agent, or duration of antibiotic therapy is incorrect in 30% to 50% of cases. 5 , 18 One U.S. study reported that a pathogen was defined in only 7.6% of 17,435 patients hospitalized with community-acquired pneumonia (CAP). 14 In comparison, investigators at the Karolinska Institute in Sweden were able to identify the probable pathogen in 89% of patients with CAP through use of molecular diagnostic techniques (polymerase chain reaction [PCR] and semiquantitative PCR). 14 In addition, 30% to 60% of the antibiotics prescribed in intensive care units (ICUs) have been found to be unnecessary, inappropriate, or suboptimal. 18

Incorrectly prescribed antibiotics have questionable therapeutic benefit and expose patients to potential complications of antibiotic therapy. 11 Subinhibitory and subtherapeutic antibiotic concentrations can promote the development of antibiotic resistance by supporting genetic alterations, such as changes in gene expression, HGT, and mutagenesis. 8 Changes in antibiotic-induced gene expression can increase virulence, while increased mutagenesis and HGT promote antibiotic resistance and spread. 8 Low levels of antibiotics have been shown to contribute to strain diversification in organisms such as Pseudomonas aeruginosa. 8 Subinhibitory concentrations of piperacillin and/or tazobactam have also been shown to induce broad proteomic alterations in Bacteroides fragilis. 8

Extensive Agricultural Use

In both the developed and developing world, antibiotics are widely used as growth supplements in livestock. 5 , 10 , 14 An estimated 80% of antibiotics sold in the U.S. are used in animals, primarily to promote growth and to prevent infection. 7 , 12 , 14 Treating livestock with antimicrobials is said to improve the overall health of the animals, producing larger yields and a higher-quality product. 15

The antibiotics used in livestock are ingested by humans when they consume food. 1 The transfer of resistant bacteria to humans by farm animals was first noted more than 35 years ago, when high rates of antibiotic resistance were found in the intestinal flora of both farm animals and farmers. 14 More recently, molecular detection methods have demonstrated that resistant bacteria in farm animals reach consumers through meat products. 14 This occurs through the following sequence of events: 1) antibiotic use in food-producing animals kills or suppresses susceptible bacteria, allowing antibiotic-resistant bacteria to thrive 2) resistant bacteria are transmitted to humans through the food supply 3) these bacteria can cause infections in humans that may lead to adverse health consequences. 5

The agricultural use of antibiotics also affects the environmental microbiome. 5 , 14 Up to 90% of the antibiotics given to livestock are excreted in urine and stool, then widely dispersed through fertilizer, groundwater, and surface runoff. 5 , 14 In addition, tetracyclines and streptomycin are sprayed on fruit trees to act as pesticides in the western and southern U.S. 1 While this application accounts for a much smaller proportion of overall antibiotic use, the resultant geographical spread can be considerable. 1 This practice also contributes to the exposure of microorganisms in the environment to growth-inhibiting agents, altering the environmental ecology by increasing the proportion of resistant versus susceptible microorganisms. 1

Antibacterial products sold for hygienic or cleaning purposes may also contribute to this problem, since they may limit the development of immunities to environmental antigens in both children and adults. 1 , 15 Consequently, immune-system versatility may be compromised, possibly increasing morbidity and mortality due to infections that wouldn’t normally be virulent. 15

Availability of Few New Antibiotics

The development of new antibiotics by the pharmaceutical industry, a strategy that had been effective at combating resistant bacteria in the past, had essentially stalled due to economic and regulatory obstacles ( Figure 3 ). 14 Of the 18 largest pharmaceutical companies, 15 abandoned the antibiotic field. 14 Mergers between pharmaceutical companies have also substantially reduced the number and diversity of research teams. 13 Antibiotic research conducted in academia has been scaled back as a result of funding cuts due to the economic crisis. 13

Number of Antibacterial New Drug Application Approvals Versus Year Intervals

The number of new antibiotics developed and approved has decreased steadily over the past three decades (although four new drugs were approved in 2014), leaving fewer options to treat resistant bacteria.

* Drugs are limited to systemic agents. Data courtesy of the CDC 5 and the FDA Center for Drug Evaluation and Research.

Antibiotic development is no longer considered to be an economically wise investment for the pharmaceutical industry. 14 Because antibiotics are used for relatively short periods and are often curative, antibiotics are not as profitable as drugs that treat chronic conditions, such as diabetes, psychiatric disorders, asthma, or gastroesophageal reflux. 1 – 3 , 13 , 14 A cost�nefit analysis by the Office of Health Economics in London calculated that the net present value (NPV) of a new antibiotic is only about $50 million, compared to approximately $1 billion for a drug used to treat a neuromuscular disease. 14 Because medicines for chronic conditions are more profitable, pharmaceutical companies prefer to invest in them. 2

Another factor that causes antibiotic development to lack economic appeal is the relatively low cost of antibiotics. Newer antibiotics are generally priced at a maximum of $1,000 to $3,000 per course compared with cancer chemotherapy that costs tens of thousands of dollars. 2 , 3 , 13 , 14 The availability, ease of use, and generally low cost of antibiotics has also led to a perception of low value among payers and the public. 13

In addition, microbiologists and infectious-disease specialists have advised restraint regarding antibiotic use. 13 Therefore, once a new antibiotic is marketed, physicians—rather than prescribing it immediately—often hold this new agent in reserve for only the worst cases due to fear of promoting drug resistance, and they continue to prescribe older agents that have shown comparable efficacy. 1 , 2 Therefore, new antibiotics are often treated as “last-line” drugs to combat serious illnesses. 1 , 2 This practice leads to the reduced use of new antibiotics and a diminished return on investment. 13

When new agents are eventually used, the emergence of resistance is nearly inevitable. 2 However, since bacterial evolution is uncertain, the timeline for the development of resistance is unpredictable. 2 A manufacturer that invests large sums of money into antibiotic development may therefore discover that profits are prematurely curtailed when resistance develops to a new antibiotic. 2 Economic uncertainty related to the Great Recession has also had a restraining effect on the end users of antibiotics. 2 Developed countries with well-funded health care systems have applied austerity measures, while developing countries such as China and India still have a large cohort of population that cannot afford expensive new medicines. 2 As an additional complication, most antibiotics are currently off-patent and are supplied by manufacturers of generic drugs. 3 The result has been access to cheap and generally effective drugs, which is good for the public however, the downside is that many payers expect all antibiotics to be priced similarly𠅎ven new agents that target multidrug-resistant (MDR) pathogens. 3

Because of these factors, many large pharmaceutical companies fear a potential lack of return on the millions of U.S. dollars that would be required to develop a new antibiotic. 1 , 2 , 13 The Infectious Diseases Society of America (IDSA) reported that as of 2013, few antibacterial compounds were in phase 2 or 3 development. 11 , 14 In particular, the IDSA noted that unacceptably few agents with activity against emerging, extensively resistant gram-negative bacteria, such as Enterobacteriaceae, Pseudomonas aeruginosa, and Acinetobacter baumannii, were being developed. 11 Pharmaceutical companies have also taken a more active interest in developing antibiotics for methicillin-resistant Staphylococcus aureus (MRSA), rather than gram-negative pathogens. 2 The most likely explanation for this imbalance is that MRSA is a major problem worldwide, whereas the market for treating gram-negative organisms is smaller, and somewhat more unpredictable given that resistance is rapidly acquired. 2

Regulatory Barriers

Even for those companies that are optimistic about pursuing the discovery of new antibiotics, obtaining regulatory approval is often an obstacle. 2 , 13 Between 1983 and 2007, a substantial reduction occurred in the number of new antibiotic approvals. 2 Difficulties in pursuing regulatory approval that have been noted include: bureaucracy, absence of clarity, differences in clinical trial requirements among countries, changes in regulatory and licensing rules, and ineffective channels of communication. 13

Changes in standards for clinical trial design made by the U.S. Food and Drug Administration (FDA) during the past two decades have made antibiotic clinical trials particularly challenging. 3 Studies comparing antibiotics with placebo are considered to be unethical therefore, trials are designed to demonstrate noninferiority of new agents compared to existing drugs, within a varying statistical margin. 3 This requires a large sample population and consequently high costs, making the development of antibiotics uneconomical and unattractive. 3 , 13 While small companies have stepped in to fill the gap in antibiotic discovery and development formerly occupied by large pharmaceutical companies, the complexity and high cost of phase 3 clinical trials can exceed the financial means of these companies. 13 However, in December 2014, Merck acquired the small antibiotic research company Cubist Pharmaceuticals, which is expected to accelerate the study and regulatory approval of new antibiotic agents in the future. 19

Shlaes and Moellering have discussed how altering the requirements for trial designs can have a significant impact on the size, and hence cost, of conducting clinical trials. 2 Although more work in this area needs to be done, the FDA issued guidance in 2013 that changed the required clinical trial for acute bacterial skin and skin-structure infections. 20 These changes included new disease state and endpoint definitions, a schedule for assessing endpoints, guidance on patient inclusion and exclusion, as well as supportive evidence and statistical justification for proposed noninferiority margins. 20 Although still in draft form, the updated guidelines have been adopted in some clinical trials and serve as a basis for discussions regarding further study-protocol improvements. 20

Additional new regulatory approaches are needed to ensure the continued development and availability of antibiotic medications. 2 The IDSA has proposed a new, limited-population antibiotic drug (LPAD) regulatory approval pathway that has drawn positive public comments from FDA officials. 14 This model would enable substantially smaller, less-expensive, and faster clinical trials. 14 In return for regulatory approval based on smaller clinical trials, the antibiotic would receive a very narrow indication focused only on the high-risk patients for whom benefits were shown to outweigh risks. 14 Such limited approvals already exist in other situations, such as orphan drugs for the treatment of rare diseases. 2 , 13

Neolithic economy

Generally, Neolithic agriculture was based on a mixed economy. About agriculture most convincingly spoke oldest villages in which the livestock and growing of crops were present with clear tendency for a further economic progress, and therefore the overall development of society.

The traditions of the New Stone Age are different according to a degree and direction of economic development. Neolithic people made local cultural – historical communities. Collecting of plant products, then hunting and fishing which were still perfected, became more organized ways of economy. In some regions, noticeable improvement of fishing affected that hunting becomes suppressed and vice versa. Collecting of wild grains has resulted with introduction of primitive farming, and along with it also livestock.

Livestock breeding has developed from hunting. Neolithic people, and before them Mesolithic people, began to domesticate and breed those animals that up until then, during many decades were organizationally killed. In the beginning, people have bred animals primarily for meat, i.e. just for food, but later they began to use their hair, fur, wool and milk, and some of those animals were used for towing. The very process of animal domestication affected an entire earthly place, but not at the same time and not under the same conditions. Domestication of animals was very long, and very hard. Domesticated animals were breed by force and they gave new animal species.

Farming and life in the permanently inhabited place can be accepted as the first feature of a complete Neolithic era revolution. Introduction of agriculture is closely related to the collecting economy that in the late Mesolithic and at the beginning of Neolithic period was at the highest peak. However, during collection of plant products Neolithic people have noticed that by planting or seeding those plants in the grounded earth, they can breed various edible plants and grains. It is assumed that the cradle of agriculture is southwest Asia. The earliest farming was very limited. People worked on smaller plots of land by growing in them one or two different cultures. Tools for work were extremely primitive.

Farming first appeared in those regions that were most suitable for this activity. Those were valleys of large rivers such as the Euphrates, Tigris, Nile, Indus, Yellow River and others. Later, it came to the development of agriculture in forest regions, in areas where forests protected land and crops from various weather conditions. Neolithic people have been cutting bushes and small vegetation with a stone axe, and then they would burn it all, so that they have ashes, which they used for fertilizing the soil. After they would exhaust the fertility of some land, they would leave it so that they could found another fertile land.

People began to put fences around the plots where they planted plants so that they keep them away from wild beasts. New agriculture sector had different character unlike the previous, which were oriented towards the collection of everything that could be found in nature.

The first tool that Neolithic people used for farming was a hoe-digger, whose one end was sharp. Hoe-digger was firstly used during collecting of plant fruits and digging out various roots. Later, they made poles with flat ball-shaped ends, and then hoes, which have large use in agricultural production. The first hoe was an ordinary branch with shorter branch in its working area. After that people started, instead of branch to put on the pole tightly attached sharp stone or bone spike.

Division of labor in Neolithic period reconstruction

At the beginning of the New Stone Age, man was growing only those plants that grow in the area of his residence. Planting crops and farming of edible plants spread rapidly, thanks to the fact that it was easier to accept than to make any changes in the development of tools.

Indochina is considered to be a homeland of rice barley – southwest Asia wheat – Asia, Europe and northern part of Africa millet – Switzerland corn, potatoes, tobacco, sunflower and pumpkin – America cabbage – the European continent tea – China and India coffee – Ethiopia cocoa – Central America rye – the southern part of the Caucasus and the Caspian Sea coast, etc. Homeland of millet and oats is not yet precisely determined, although certain remains of millet were found in Swiss pile dwellings. Among the earliest crops are millet, rice, barley and wheat while rye and oat cereals appeared much later. New branches of economy, agriculture and livestock, represented a great victory of Neolithic people in the struggle with nature. Thanks to them, people have come into a new situation in which they could provided for themselves a diverse and regular diet, creating, at the same time, and food stocks in meat, grain, vegetable fruits and so on.

At the same time, it was the reason to stay much longer in the same area. However, the majority of Neolithic people growing of crops, plants and animals were a minor, less known occupation, while hunting, fishing and collecting of fruits was still in the first place. All members of the gender managed an economy of the tribe in the early Neolithic. Later, this right had only certain selected members of tribal communities. Oldest women of the tribe managed household.

During the Neolithic period almost exclusively was represented so-called natural division of labor, mainly by gender. Later on, a division was done based on the age of a person. While men went hunting for wild animals, or fishing or they dealt with the domestication of animals and the development of tools and weapons, women – mothers were engaged in collecting plant products, also they cultivated the land and also they were involved in home activities such as cooking, childcare, care of the elderly, weaving, making clothes, and so on.

With the introduction of agriculture, neolithic men more and more turn to clearing the forests, neglecting, at the same time, hunting and fishing. However, in this way, people created new arable land for which eventually they became were attached. With this act, man has stooped being a nomad and he moved to a sedentary lifestyle. At the same time, women and children were making ground more suitable for sowing and planting certain plants. Cleared land was divided between the tribes, and home communities, while ownership over the land had the tribe.

Agriculture and livestock breeding thanks to the constant advancing affected on the development of new and further expansions of existing settlements, and thus it spread on to populated territories.

For New Stone Age, it is related phenomenon of primitive spinning, knitting and weaving, and among the most common knitting products were various cloths, numerous ropes, nets, bags, long belts, footwear, hats, various dishes, etc. Materials for knitting consisted of various “wattle, bark, skin, hair, wood fiber, hair, etc.

17.1 Three economic epochs

In the past 100 years, the economies we often refer to as ‘advanced’ (basic­ally meaning ‘rich’), including the US, western Europe, Australia, Canada, and New Zealand, have seen average living standards measured by output per capita grow six-fold. Over the same period, hours of work have fallen. This is a remarkable economic success, but it has not been a smooth ride.

aggregate demand The total of the components of spending in the economy, added to get GDP: Y = C + I + G + XM. It is the total amount of demand for (or expenditure on) goods and services produced in the economy. See also: consumption, investment, government spending, exports, imports. supply side (aggregate economy) How labour and capital are used to produce goods and services. It uses the labour market model (also referred to as the wage-setting curve and price-setting curve model). See also: demand side (aggregate economy). great moderation Period of low volatility in aggregate output in advanced economies between the 1980s and the 2008 financial crisis. The name was suggested by James Stock and Mark Watson, the economists, and popularized by Ben Bernanke, then chairman of the Federal Reserve.

Units 1 and 2 told the story of how rapid growth began. In Figures 13.2 and 13.3, we contrasted the steady long-run growth rate from 1921 to 2011 with the fluctuations of the business cycle, which go from peak to peak every three to five years.

In this unit we will study three distinctive epochs. Each begins with a period of good years (the light shading in Figure 17.2), followed by a period of bad years (the dark shading):

  • 1921 to 1941: The crisis of the Great Depression is the defining feature of the first epoch. It inspired Keynes’ concept of aggregate demand, now standard in economics teaching and policymaking.
  • 1948 to 1979: The golden age epoch stretched from the end of the Second World War to 1979, and is named for the economic success of the 1950s and 1960s. The golden age ended in the 1970s with a crisis of profit­ability and productivity, and the emphasis in economics teaching and policymaking shifted away from the role of aggregate demand toward supply-side problems, such as productivity and decisions by firms to enter and exit markets.
  • 1979 to 2015: In the most recent epoch, the global financial crisis caught the world by surprise. The potential of a debt-fuelled boom to cause havoc was neglected during the preceding years of stable growth and seemingly successful macroeconomic management, which had been called the great moderation.

Figure 17.2 Unemployment, productivity growth, and inequality in the US (1914–2015).

United States Bureau of the Census. 2003. Historical Statistics of the United States: Colonial Times to 1970, Part 1. United States: United States Govt Printing Office Facundo Alvaredo, Anthony B Atkinson, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. 2016. ‘The World Wealth and Income Database (WID).’ US Bureau of Labor Statistics US Bureau of Economic Analysis.

The term ‘crisis’ is routinely applied to the first and the last of these episodes because they represented an unusual but recurrent cataclysmic divergence from the normal ups-and-downs of the economy. In the second epoch, the end of the golden age also marked a sharp deviation from what had become normal. The three unhappy surprises that ended the epochs are different in many respects, but they share a common feature: positive feedbacks magnified the effects of routine shocks that would have been dampened under other circumstances.

What does Figure 17.2 show?

  • Productivity growth: A broad measure of economic performance is the growth of hourly productivity in the business sector. Productivity growth hit low points in the Great Depression, at the end of the golden age epoch in 1979, and in the wake of the financial crisis. The golden age of capitalism got its name due to the extraordinary productivity growth until late in that epoch. The dashed blue lines show the average growth of productivity for each sub-period.
  • Unemployment: High unemployment, shown in green, dominated the first epoch. The success of the golden age was marked by low unemployment as well as high productivity growth. The end of the golden age produced spikes in unemployment in the mid 1970s and early 1980s. In the third epoch, unemployment was lower at each successive business cycle trough until the financial crisis, when high unemployment re-emerged.
  • Inequality: Figure 17.2 also presents data on inequality for the US: the income share of the top 1%. The richest 1% had nearly one-fifth of income in the late 1920s just before the Great Depression. Their share then steadily declined until a U-turn at the end of the golden age eventually restored the income share of the very rich to 1920s levels.

We saw in earlier units that continuous technological progress has characterized capitalist economies, driven by the incentives to introduce new technology. Based on their expected after-tax profits, entrepreneurs make investment decisions to get a step ahead of their competitors. Productivity growth reflects their collective decisions to invest in new machinery and equipment that embody improvements in technology. Figure 17.3 shows the growth rate of the capital stock and the profit rate of firms in the non-financial corporate sector of the US economy (before and after the payment of taxes on profits).

Figure 17.3 Upper panel: Capital stock growth and profit rates for US non-financial corporations (1927–2015). Lower panel: Effective tax rate on profits for US non-financial corporations (1929–2015).

The data in Figure 17.3 illustrates that capital stock growth and firm profitability tend to rise and fall together. As we saw in Unit 14, investment is a function of expected post-tax profits, and expectations will be influenced by what has happened to profitability in the recent past. Once firms make a decision to invest, there is a lag before the new capital stock is ordered and installed.

effective tax rate on profits This is calculated by taking the before-tax profit rate, subtracting the after-tax profit rate, and dividing the result by the before-tax profit rate. This fraction is usually multiplied by 100 and reported as a percentage.

As profitability was restored following the collapse of the stock market in 1929 and the banking crises of 1929–31, investment recovered and the capital stock began to grow again. During the golden age, profitability and investment were both buoyant. A closer look at Figure 17.3 is revealing. Investment depends on post-tax profitability and we can see that the gap between the pre-tax (red) and post-tax (green) rate of profit declined during the golden age. The lower panel shows the effective tax rate on corporate profits.

Wars have to be financed, and the tax on businesses increased during the Second World War and the Korean War, and more slowly over the course of the Vietnam War. The effective tax rate on profits fell from 8% to 2% during the 30 years from the early 1950s. This helped to stabilize the post-tax rate of profit. In the late 1970s and early 1980s, taxes on profits were cut sharply. Thereafter the pre-tax profit rate fluctuated without a trend. But in spite of the stabilization of profitability in the third epoch, the growth rate of the capital stock fell.

On the eve of the financial crisis, Figures 17.2 and 17.3 show that the richest Americans were doing very well. But this did not stimulate investment, with the capital stock growing more slowly than at any time since the Second World War. The onset of the financial crisis also coincided with a peak in private sector debt (shown in Figure 17.4). Debt in financial firms and in households was at a postwar high (relative to the size of GDP). The swelling in the amount of debt was clearest for financial firms, but households also increased their debt-to-GDP ratio steadily through the 2000s.

Figure 17.4 Debt as a percentage of GDP in the US: Households, non-financial business sector, financial business sector, and the government (1945–2015).

Figure 17.5a summarizes the key features of each period in the US economy over the past century.

Name of Period Dates Important features of the US economy
1920s 1921–1929 Low unemployment
High productivity growth
Rising inequality
Great Depression 1929–1941 High unemployment
Falling prices
Unusually low growth rate of business capital stock
Falling inequality
Golden age 1948–1973 Low unemployment
Unusually high productivity growth
Unusually high growth rate of capital stock
Falling effective tax rate on corporate profits
Falling inequality
Stagflation 1973–1979 High unemployment and inflation
Low productivity growth
Lower profits
1980s and the great moderation 1979–2008 Low unemployment and inflation
Falling growth rate of business capital stock
Sharply rising inequality
Rising indebtedness of households and banks
Financial crisis 2008–2015 High unemployment
Low inflation
Rising inequality

Figure 17.5a The performance of the US economy over a century.

The three epochs of modern capitalism were worldwide phenomena, but some countries experienced them differently compared to the US. By 1921, the US had been the world productivity leader for a decade, and the world’s largest economy for 50 years. Its global leadership in technology and its global firms help explain rapid catch-up growth in Europe and Japan during the golden age. On either side of the golden age, the crises that began in the US in 1929 and 2008 became global crises. Figure 17.5b sum­marizes important differences between the US and other rich countries.

Name of Period Differences between US and other rich countries
Great Depression US: Large, sustained downturn in GDP starting from 1929
UK: Avoided a banking crisis, experienced a modest fall in GDP
Golden age US: Technology leader
Outside US: Diffusion of technology creates catch-up growth, improving productivity
Financial crisis US: Housing bubble creates banking crisis
Germany, Nordic countries, Japan, Canada, Australia: Did not experience bubble, largely avoided financial crisis
International openness (all three periods) More important in most countries than in the US

Figure 17.5b A cross-national comparison of the Great Depression, the golden age, and the financial crisis: Distinctive features of the US.

The three epochs of modern capitalism are very different, as Figures 17.5a and 17.5b show. We need to use the full range of tools of analysis we have developed in previous units to understand their dynamics, and how one epoch is related to another.

Question 17.1 Choose the correct answer(s)

The following figure shows the unemployment rate (left-hand axis) and productivity growth (right-hand axis) in the US between 1914 and 2015.

Based on this information, which of the following statements is correct?

  • The US has been able to achieve increasingly lower unemployment rates in its boom years through this period.
  • There was a consistent and significant fall in productivity growth during the Great Depression era.
  • The US economy’s performance in 1979–2008 was less strong than during the other two boom periods, with a higher average unemployment rate and lower average productivity growth.
  • The unemployment rate reached in the recent financial crisis was the highest since the stagflation years of 1973–79.
  • The average unemployment rates in the boom years of the first two epochs were below 5%, while that in the 1979–2008 period was around 6%.
  • Productivity growth fell very sharply at the onset of the Great Depression. However it also rebounded sharply, making the average productivity growth for the era about 2%, very similar to the average productivity growth of the 1979–2008 growth years.
  • The average unemployment rates in the boom years of the first two epochs were below 5%, while the average productivity growth rates were around 2.2% and 3.2% respectively. Over the 1979–2008 period, the average unemployment rate was around 6% while the average productivity growth rate was 2.1%.
  • The unemployment rate almost reached 10% in the early 1980s, higher than the peak hit during the financial crisis period.

Question 17.2 Choose the correct answer(s)

The following figure shows the income share of the top 1% richest households in the US between 1914 and 2013.

Based on this information, which of the following statements are correct?

  • Inequality always rises in boom years.
  • Inequality can either rise or fall during recessions.
  • The great moderation era was distinct from the other two boom periods in that inequality rose during the period.
  • The top 1% richest US households received nearly one-fifth of the total income in 2010.
  • This is not true. For example, the share of top 1% fell consistently during the golden Age of 1948–73.
  • Inequality had years of decline and years of increase in both the Great Depression and the recession after the financial crisis.
  • Inequality also rose in the boom years of the 1920s. The golden age was distinct in that inequality fell consistently during the period.
  • They received 19% of total income.

Laissez-Faire to Government Regulation

In the early years of American history, most political leaders were reluctant to involve the federal government too heavily in the private sector, except in the area of transportation. In general, they accepted the concept of laissez-faire, a doctrine opposing government interference in the economy except to maintain law and order. This attitude started to change during the latter part of the 19th-century, when small business, farm and labor movements began asking the government to intercede on their behalf.

By the turn of the century, a middle class had developed that was leery of both the business elite and the somewhat radical political movements of farmers and laborers in the Midwest and West. Known as Progressives, these people favored government regulation of business practices to ensure competition and free enterprise. They also fought corruption in the public sector.

Teacher Notes

Module Overview

The 1980s Farm Crisis module recounts factors, such as massive grain stockpiles and a grain contract with the Soviet Union, that lead to agricultural prosperity and economic inflation in the 1970's. This prosperity was followed by the Federal Reserve's response and resulting history-making high interest rates. It describes how farmers incurred massive debt while income declined, and how an embargo of grain to the Soviet Union caused prices to collapse. It also explores the results of the farm crisis including rural population decline, decreases in the number of farms still in business and the impact incurred on related businesses.

This module introduces students to several big ideas. Agriculture can have boom and bust cycles and there are a variety of causes for economic crises. Global issues and government intervention can play a part and these cycles have had a significant impact on rural America.

Watch the video: Οικονομική κρίση.