As Farm Incomes Expand, So Do Factory Payrolls, 1935

"Farm Pocketbooks and Smoking Chimneys" in Bureau Farmer: The Voice of Organized Agriculture, November 1935

When the full dinner pail returns to the United States, when the industrial chimneys of the country start smoking in earnest, when the forces of labor move regularly through the wide-open factory doors of the nation—this will come about after the pocketbooks of the American farmer are bulging with real money, the returns of sales of arm products at a profitable price level.

No less an authority that General R.E. Wood, president, Sears, Roebuck and Company, one of the leading industrialists of the United States, illustrates, in terms of his own business, the direct relationship between farm pocketbooks and smoking chimneys.

When Depression Strikes

“In 1932,” General Wood has written to Edward A. O’Neal, president of the American Farm Bureau Federation, “the gross farm income of the United States had declined from a total of $12 billion in 1929 to approximately $5.25 billion.”

“Our firm, which is the largest concern dealing with the farmers of the United States, had total sales in 1929 of approximately $250 million. In 1932, our sales were $105 million.

“The orders that we, in turn, placed with the manufacturers of the United States were reduced in like proportion. As nearly as can be estimated, the gross farm income this year will reach $7 billion.

When Farmers Buy

“Our own catalogue sales this year should reach a total of $160 million, and our purchases from manufacturers already have increased approximately 50 per cent from the low point of 1932.”

General Wood attributes the greater part of the improvement in business conditions thus far to the increased purchasing power of the farmer. In other words, as the farmer’s pocketbook bulges, so start the industrial chimneys of the United States in emitting their smoky signs of industrial prosperity.

“Our new wealth,” continues General Wood, “all springs from the soil. Our purchasing power starts with the purchasing power of the farmer.  No firm is in a better position to judge that than our own.

“We saw, during the depression, how the gradually reduced purchasing power of the farmer worked its way back gradually to the cities and industrial sections, just as in the reverse process, the increased purchasing power of the farmer is gradually working back to the industrial sections in the cities and putting additional  people to work at additional wages.”

Like all forward-looking captains of industry, General Wood feels that the program of the American Farm Bureau Federation, and the national policies of the present Administration, have accomplished much for the American farmer. He says that, “If we can get the American farmer’s income back to the level that prevailed between 1926 and 1929, the country will have real prosperity.”

Value of Cotton Program

General Wood was asked to illustrate further the relationship between farm pocketbooks and smoking chimneys in terms of the business done by his firm in the southern states, where the cotton adjustment program has been so helpful in bringing prosperity to the cotton grower. This is the way he answered:

“At the present time, our sales from catalogues, representing our mail-order houses in Memphis and Atlanta, which cover the southeastern states, are running less than 10 per cent behind 1929 figures. This shows that the recovery in farm purchasing power in the cotton states east of the Mississippi River is greater than in any other section. This increase in farm purchasing power in these states is working back in purchases of manufactured products made in all sections of the country.”

Two factors, in the opinion of General Wood, are responsible for the recovery of American industry and business. One of these is the Administration’s monetary policy, which, by revaluing the dollar, has increased prices for more than 30 commodities. The other factor, he adds is the work of the Agricultural Adjustment Administration.

Significant Table

Perhaps the best way to illustrate the relationship between farm pocketbooks and smoking chimneys is to refer to a table which shows by years the gross farm income and the factory wage payroll of the United States. No clearer picture can be drawn regarding their relationship.

	Gross Farm Income	Factory Wage Payroll
1923	$11,041,000,000	$11,009,000,000
1924	11,337,000,000	10,172,000,000
1925	11,968,000,000	10,730,000,000
1926	11,480,000,000	11,095,000,000
1927	11,616,000,000	10,849,000,000
1928	11,741,000,000	10,902,000,000
1929	11,918,000,000	11,621,000,000
1930	9,914,000,000	9,518,000,000
1931	6,911,000,000	7,256,000,000
1932	5,143,000,000	5,022,000,000

More than anything else, this table proves conclusively that national prosperity means, first of all, farm prosperity. It establishes, for all time to come, the importance of the farmer as the man whose work creates jobs for the rest of us.

Bureau Farmer: The Voice of Organized Agriculture, November 1935

R.E. Wood graduated from West Point in 1900, served in the Philippines, Panama, and World War I. By the end of that war, he was brigadier general and acting Quartermaster General of the Army. In 1919, he became an executive at Montgomery Ward and then was vice president at Sears Roebuck from 1928 until 1939 and as chairman from 1939 until 1954. Wood also created Allstate Insurance as a subsidiary of Sears. Wood was politically active and a conservative Republican. In 1940, he helped found the America First Committee to oppose U.S. involvement in World War II, serving as the committee’s first president. In 1954, Wood funded the Manion Forum, a conservative radio program.