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A New Deal in Reconstruction

ISSUE:  Autumn 1939

A ny reasonably well informed person is aware that

there are rich assets, both in culture and in physical resources, in the South. Unfortunately, there are also some handicaps under which the South surfers severely. Eleven of the twelve states with an annual per capita crop farm income of less than $200 are in the South. The average annual wage of Southern industrial workers is but two-thirds of that of industrial workers in other parts of the country. The twelve states in this country in which the average per capita wealth is less than two thousand dollars are Southern states. Taxable property in the South yields to state and local governments but three-fifths as much revenue per person as the corresponding revenue for the nation as a whole.

More than half of the nation’s illiterates are in the South, and the South has to bear the scourge of many sicknesses, which, if attacked with adequate means by modern medical science, could be eliminated or controlled. Malaria takes a toll of a third of Southern labor’s industrial productivity. Pellagra afflicts one Southerner in fifty.

Farms in the South are small: one in five is less than twenty acres. Two-thirds of the nation’s tenant farmers are in the South, and half of the Southern farmers are tenants. There are no more deserving people in the world than Southern farmers, yet only one farm in twenty has water piped to the house; only a third of the houses are protected from flies and mosquitoes; one farm in five does not have a privy.

The farmer has no monopoly on privation in the South; the industrial worker shares his lot. Two out of five Southern urban homes are substandard, with more than one-fourth of these lacking sanitary plumbing. Southern textile workers, who represent the largest industrial group, receive twelve cents an hour less for the same tasks than workers outside the region. Ninety per cent of Northern and Western textile workers receive more than thirty-seven and one-half cents an hour; less than a half of the Southern textile workers receive this much.

What I have said is unpalatable to us who are of, and who love, the South, but the facts and figures are not mine; they are gleanings from the thorough work of recognized scholars. This is what we must accept objectively in our efforts toward solving the problems before us.


Until the War between the States, the South was in many respects the richest section of the nation. The devastation of the war itself and the subsequent reconstruction cannot be estimated in terms of money. The accumulated capital represented by slaves alone has been estimated at three billion dollars. This was wiped out, together with other forms of capital. The whole “going concern” value of the South was dissipated. Her cities pillaged, homes and factories burned, her young men killed and maimed, and women and children ravaged by disease and starvation, the South was left prostrate and at the mercy of a bitter and hostile North. Under these tremendous handicaps her efforts to build herself anew inevitably forced the South to place herself “in hock” to the remainder of the nation.

Undoubtedly, the fact that our economy had been built on slave labor, and had to experience the shock of an adjustment to free labor, combined with the hazards of weather, price, and markets growing out of the two-crop system, to contribute much of our unhappiness.

The Southern farmer, forced to purchase his commodities in a protected market and sell his products in an unprotected world market, without adequate capital to finance his efforts or to enable him to choose to whom or where he shall sell, and paying exorbitant interest for the money he uses, has continually faced a combination of economic forces which have kept him always poor.

Again, a freight rate structure had grown up in the nation which economically to a large degree isolated the South from the rest of the country. Such a system of rates put the South generally under a thirty per cent disability in reaching the great market north of the Potomac and east of the Mississippi, and naturally limited the extent of the South’s competition. And a low wage scale not only pulled down the South’s standard of living, but it so reduced the South’s purchasing power that we have had no adequate market for what we produced.

Moreover, there has been a continuous draining of the South’s resources and wealth into the pockets of the great financial centers of other sections of the country. Our forests, mines, and minerals—in fact, almost everything we had of nature’s endowment was being developed to the profit of absentee investors, and our savings poured in a steady stream into insurance companies, investment houses, banks, and enterprises of all kinds centered principally in the North. The North was the owner of the machines and the patents constituting the essentials of our mechanization and industry, and to the North went a steady tribute. Meanwhile, the Federal Treasury poured out to citizens of the North billions of dollars in the form of pensions and business subsidies, while the South continued almost “a stranger in a strange land,” her status still almost that of the province she was after the Civil War, except only that her subjugation was now economic and political, instead of military.

Because of the combination of all these conditions, it is not surprising that the South every year has lost thousands of its most alert and enterprising young men and women, whom it has trained and educated at painful expense, only to have them devote their increased productivity to an increased disparity between the South and the North.


What forces have been at work to improve our situation? For the first year after the Civil War, the energies of the South, were dedicated to the restoration of civil order, the preservation of the essentials of our civilization, which war had all but destroyed. With faith and courage the South entered upon the lonely and hard struggle against odds that would have destroyed the faith of a less virile and determined people. By the end of two decades the South had thrown off the shackles of military force and dominion, and regained its political sovereignty.

But the prosperity which came to the South in the wake of the great sales campaign of the South’s resources, so effectively launched and sustained by Henry W. Grady and his colleagues, fattened only a few chosen spots in the South, and almost as many out of the South. Nearly everywhere there was still abject poverty. The state and local governments had little money for education, less for public health, and hardly any at all for public aid either to agriculture or to native industries.

A great part of the South’s ills grew out of the attitude and the policy of the Federal government, which for nearly two decades after the Civil War was the armed enemy of the South. Afterwards, those dominating the government disdained the South’s problems unless they afforded an opportunity for exploitation of the South’s resources. Hence the local governments were not able to discharge their obligations, and the Federal government was not interested.

The last six years have seen a more fundamental and sympathetic attack upon our real problems than has ever been made. A glance will show what a friendly Federal government has been able to do for the South:

During the past six years, non-repayable Federal expenditures in Southern states amounted to $5,400,000,000. Repayable loans totaled $2,900,000,000. In addition, $300,-000,000 of F. H. A. home mortgages have been insured.

The Reconstruction Finance Corporation has loaned $700,-000,000 to Southern business. Some $900,000,000 has been loaned in the South by the Farm Credit Administration. Over $90,000,000 has been loaned to over 400,000 needy families by the Farm Security Administration’s Rural Rehabilitation Division; subsistence grants allowed by the agency amounted to $65,000,000 for the period. The Rural Electrification Administration has loaned $17,000,000, and provided 24,000 miles of electric lines to serve 90,000 families.

During this period the Public Works Administration made over $300,000,000 available to Southern states. The Home Owners’ Loan Corporation loaned $480,000,000 to two hundred thousand distressed home owners. The Federal Housing Administration insured $210,000,000 for the building of new homes or for refinancing existing homes for 52,000 Southern families, and insured $80,000,000 loaned to 217,000 Southern families for modernization and repair purposes. The Bureau of Public Roads has spent $410,000,000 in building more than 21,000 miles of Southern roads.

The Agricultural Adjustment Administration has made 4,500,000 crop adjustment contracts, amounting to $900,-000,000, with Southern farmers. The important programs of soil erosion control, forest fire protection, and reforestation have been aided tremendously by the expenditure of $32,000,000 in the Southern region. With an expenditure of $570,000,000, the Civilian Conservation Corps has provided admirable training to 586,000 enrollees in the South.

Relief expenditures have amounted to nearly a billion and a half dollars, and in addition to giving jobs to hundreds of thousands of our needy and unemployed, have resulted in an impressive array of public improvements.

The National Youth Administration has helped 93,000 Southern students to earn the cost of their education. Fifty thousand needy youths who are out of school have been helped by the N. Y. A. work projects. Another great humanitarian venture is the Social Security program, which through state and local authorities has provided aid in the South to needy blind people, aged persons, and dependent children.

The engineers of the War Department have done $300,-000,000 worth of river and harbor development and flood control work in the South. Even the angry floodwaters of the Mississippi have been successfully harnessed. The contribution of the Tennessee Valley Authority in reclaiming a great valley of the South cannot be measured in terms of money. It has provided a pattern of such magnitude that the history of the nation will be affected by it henceforward.

Late in the session of 1938 the Congress passed the wage-hour law. Many claimed to see in it the death knell of the South. Others of us saw that the South had to raise her wage scale to get a greater purchasing power, which in turn would lead at once to a better market for Southern industries and agriculture, and a higher standard of living for the Southern worker. We saw also that the South’s native resources had been squandered without conscience and without economic justification, and only by the use of sweated and underpaid labor. There was also the thought that the accelerated emergence of a skilled labor supply of strong and intelligent people would attract industry requiring more skill and responsibility in the worker. In spite of the shock which always follows a fundamental change in economic conditions, and a number of defects in the law which experience has revealed and are now in process of adjustment, the satisfaction with the law has been far more general than was anticipated, and it is realized that the law was an inevitable result of the times.

The South has already gained from the Congress two major concessions as a result of the wage-hour law. The first is the provision in the transportation bill which passed the Senate during this session, directing the Interstate Commerce Commission to abolish and prevent freight rate discrimination against any section or region of the country.

This provision is also in the House bill, and will undoubtedly become law at the next session of the Congress. Here is one of the major obstacles to the South’s progress which would otherwise have challenged our best efforts for years, swept away in a few months after the wage-hour law became effective.

The second glaring discrimination against the South has been a W. P. A. wage scale which gave the worker in the North or West much greater compensation than the Southern worker for the same labor. The Southerners who resisted a W. P. A. wage higher than the impoverishing prevailing wage are as much responsible for this condition as uninterested outsiders. This differential was abolished in the Emergency Appropriation Act of 1939, with the proviso that workers must be paid the same wage the country over for the same work, with a permissible allowance only for actual difference in cost of living. We know that if the same standard of living is maintained, the difference in living cost in different sections of the country is hardly more than five per cent. Thus, more millions of dollars will come to Southern workers and Southern merchants.

The passage of the wage-hour law has given other sections of the country a new feeling about the South. Realizing that the South thus undertook new burdens, they have been willing to relieve it of many old discriminations and handicaps.

The Conference on Economic Conditions in the South, summoned by the President and held in Washington last year, marked the first time that a President of the United States so conspicuously and so conscientiously set in motion the machinery of government to help to a new life a particular section of the country. No other President has been so close to the South, has had the same knowledge of its problems and the same sympathy for our difficulties, as has President Roosevelt.

In Congress a real fight is under way to meet another great need of the South—adequate capital and credit for business and business expansion. It is notorious that the South’s vast resources are owned and exploited by absentee ownership. The South did not have the money to develop these resources, and it has had to do what Henry W. Grady and other Southerners after the Civil War did—beg Northern capital to “come over into Macedonia and help us.” Help came, but it stayed and generally took over the place.

As a consequence, our transportation systems, our utilities, our mines and factories are not ours. While our resources have been used up and our wealth has poured into the coffers of other sections, the South has gained little in either taxes or wages. With twenty-eight per cent of the population, our investment banking facilities have been less than twenty per cent of those of the nation. Big investment bankers of the North are not interested in our unknown issues. Such issues are not proper subjects for houses which have a large overhead expense and have to sell quickly. Everywhere there has been an admitted demand for effective long-term credit to small and average-size business, impossible through the existing banking system.

Accordingly, hearings are under way before the Senate Banking and Currency Committee and the Temporary National Economic Committee on the Mead bill providing R. F. C. insurance for bank loans to small business, and the Pepper bill contemplating a system of regional banks with an adequate capital subscribed by the government initially, but open to subscription by the public. Such banks, governed by boards chosen jointly by the President and private investors, would be reservoirs of capital and credit that would not dry up in bad times and make available equity capital and investment capital, as well as both short and long term credit. The plan includes also a system of insurance for the funds employed. With such facilities the alert and responsible business men of any region may develop the resources there, and their increment will go to enrich their communities and states as well as themselves.

The government has also established laboratories and experimental research in agriculture and industry in the South. A vast new industry—kraft paper—has to a large degree grown out of a forest conservation program of the Federal government. Florida and Mississippi have recently joined Virginia in shipbuilding under Maritime Commission contracts. Army and navy air bases, furnishing a permanent payroll, dot the South.

The government has made the greatest effort we have ever seen to stabilize the income of farmers. Control programs subject to the approval of the farmers themselves have been set up. Crop insurance against the hazards of weather and pests has been provided for the wheat crop. A recent Senate bill extended it to cotton. Soon it will be extended to all major crops, and the gamble which the farmer could never afford will have been largely removed.

A vast program for Federal aid to public education, which will have the effect of equalizing educational opportunity in the South with that of the North, is upon the Senate calendar with a favorable report from the Senate Education and Labor Committee. Also upon the Senate calendar with a favorable committee report is a bill for Federal aid to the states in affording required training in the public schools for physically handicapped children and for children in the kindergarten stage. Last year the Congress increased the funds available for vocational education.

The Wagner bill, providing for Federal aid to the states in furnishing better health facilities, will give the South means for health work which now is so badly needed. Last session a great attack on cancer and venereal diseases was launched. New funds for research are about to be voted to the Public Health Service.

Here, then, are only a few of the instances in which a nation, through the effective instrumentality of its government, is undertaking a program which reaches down to the very roots of our problems. Gone is the old enmity and the ancient indifference, and in their place in the White House, in Congress, in the governmental bureaus, there are men and women who are zealous to be helpful to the South.


What is the South’s future? Are we to remain an agricultural economy, or shall we forsake our ancient role and embrace the new industrialism? Or shall we perchance be the favored region where a proper balance may be struck?

There are many who think the South, with the prospective loss of her cotton crop and the general plight of agriculture, has a somber future. Others wonder if, as has happened before, her misfortune may not be her greatest opportunity. With her vast natural resources, her climate and living advantages, the strength and genius of her people, and the rewards of profit, health, and pleasure which await those who come to blend their destiny with ours, no place in the world has an assured future more inviting than the South.

In the last analysis, what the South shall be will be determined by her people, and not by her resources and climate. What shall be the attitude of the South’s people to her problems, toward other people, toward the nation and the nation’s government? There may be some who dream of some glorified isolation for the South. Only the blind can feel such detachment, only the unthinking can desire it. Most of us realize that we cannot, if we would, surmount our difficulties alone. We cannot free ourselves from age-old discriminations and injustices by our own remonstrance and with purely local instrumentalities. In short, we are a part of this nation, and we must go along with it. We must help to solve its problems and see that it aids with ours. If we pull back we shall be dragged along anyway. If we go along joyfully and bear our share, we shall enter into the councils of the common course, have our just rewards, and take our place, as the born leaders we are, in the making of the bright future which a humane and liberal government has in the last six years begun to open up for the South.


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