Economic Development in the 1930s: Balance Agriculture with Industry

In 1929 the mayor of Columbia, Mississippi, Hugh Lawson White, gazed out his office window and contemplated the town’s future. Located in the Piney Woods region, Columbia had depended on the cutting and milling of longleaf yellow pine as the principal source of employment for its 4,000 residents. By the middle of the 1920s with the vast stands of pine “timbered out,” the largest companies packed up their machines, sold their buildings for scrap, and moved on to new, more promising locations.

Columbia would refuse to die

White, a former lumberman, surveyed the “sawmill graveyards” of muddy ground and stumps, and decided that Columbia would not disappear like other lumbermill towns; it would “refuse to die.”

With White’s encouragement, Marion County organized a Chamber of Commerce and secured a small textile mill and a canning factory. Up until this time, community efforts deviated little from past southern industrial development: local business boosterism attracted small industrial processors which used local resources.

What White and Columbia did next changed the way Mississippi and the South thought about industrialization.The plan White conceived in 1929 brought new economic growth to Columbia and launched the “Balance Agriculture with Industry” program that Mississippi later adopted during the Great Depression of the 1930s.

Employing the services of a Chicago-based industrial relocation firm, White approached Reliance Manufacturing Company, a maker of men’s dress shirts and pajamas. The company expressed an interest in establishing a Columbia factory if the town would guarantee $85,000 for the construction of a building to house the plant. In return, Reliance promised to employ 300 workers (increasing to 700 workers) and to pump $1 million in wages into the local economy over ten years.

The people build a factory

Rather than asking a few prominent businessmen to pledge the necessary funds for building the factory, Mayor White declared a two-hour holiday to hold a community meeting and decide the matter. After discussing the proposition, businessmen, secretaries, clerks, schoolteachers, and farmers signed promissory notes, payable over several months, to guarantee the funding. With the pledges in hand, White obtained a loan from New Orleans bankers for the full amount needed to start construction of the factory. The modern brick building Reliance Manufacturing soon occupied belonged to the people and represented their expectations for future prosperity.

Reliance executives worried that Columbia and Marion County could not provide sufficient skilled labor to meet the demands of the company. But when factory representatives held a hiring fair to take applications for the first 300 jobs, almost 1,500 women applied. To equip the workers with the necessary skills to meet the exacting demands of a modern textile plant, White and his associates opened a training school using the company’s equipment and Reliance supervisors as teachers. Initially the student workers trained without pay until they reached an agreed-upon level of skill. Not surprisingly, most of the workers were farm women whose wages brought sorely needed money to the area’s small farms.

White claimed immediate success for his plan. The Reliance plant opened in July 1932 and within four years, the factory met the employment and wage promises it expected to fulfill over a decade. The wages paid by Reliance benefited farm families and local merchants. The Columbia Plan was all the more impressive because it succeeded during a period of national economic failure.

Mississippi enters the Depression

By any measure, Mississippi entered the Great Depression far behind the rest of the nation. The mere 52,000 industrial jobs the state claimed in 1929 fell to 28,000 by 1933. Bank deposits dropped from $101 million to $49 million over the same three-year period. Nearly 1,800 retail stores closed as sales shrank from $413 million to $140 million. Farm income was reduced by 64 percent. The average annual income, already the worst in the nation at $287, fell to an unbelievable $117. On a single day in 1932, one-fourth of the state’s farm land was sold for taxes.

Mississippi families struggled to survive in a state that had no money to aid the impoverished and no social service agencies to distribute aid if money had been available. The desperation of the situation forced Mississippi to re-evaluate its relationship to the federal government and formulate an economic plan of action at home.

Roosevelt’s New Deal put money into the Mississippi economy through a variety of agencies and programs. The Agricultural Adjustment Agency (AAA) promised to raise farm prices through crop reduction; the Civilian Conservation Corps (CCC) hired young men to reforest badly eroded land; the Works Progress Administration (WPA) built piers, highways, schools, airports, and national guard armories. The Tennessee Valley Authority and Rural Electrification Administration brought modernity to rural families in a state where few families had access to electricity. Although Mississippians traditionally avoided federal programs, Fred Sullens, the editor of the Jackson Daily News believed they supported the New Deal “stronger than horseradish.”

Man with a plan

Mississippi could not rely on New Deal programs forever; a transformation of the state’s economy was vital. The man with a plan was Hugh White, who successfully ran for governor in 1935 on the promise to balance agriculture with industry. White recognized that the Columbia Plan could not be applied statewide – enthusiastic local support could work wonders, but chambers of commerce were the exception in Mississippi towns, and the lack of surplus capital and expertise limited the potential for success and raised legitimate concerns that small town industrial delegations would be victimized by unscrupulous con men.

The Balance Agriculture with Industry Program (BAWI) White proposed to the Mississippi Legislature met those concerns with a two-tiered plan of “state sponsorship and control” balanced by “local financing and operation.” Although the scheme moved Mississippi toward state economic planning that mimicked New Deal programs, the plan’s directors operated in a conservative manner.

The Mississippi Constitution clearly prohibited the use of the credit of the state to support industrial development and likewise enjoined municipalities and counties from becoming subscribers to capital stock in corporations – the very thing BAWI proposed. To evade the legal barriers, White appointed six Jackson attorneys to draft a bill that would meet the constitutional test.

Mississippi Industrial Act

Seizing on a recent U.S. Supreme Court decision (Greene v. Frasier) that empowered the state to determine the limits of the general welfare clause of the constitution, the authors of the BAWI bill presented the legislation as a “necessity to protect [the] people.” In a special session convened in September 1936, the legislature passed the Mississippi Industrial Act. Arguing that “the present and prospective health, safety, morals, pursuit of happiness, right to gainful employment, and general welfare” dictated their actions, the act created a three-member commission to oversee the program and outlined their duties.

The act empowered the commission to issue certificates of public convenience and necessity that allowed cities and counties to hold bond elections to finance land purchases and plant construction. The certificates also validated the existence of surplus labor of at least one-and-one-half workers for every prospective job. In addition, the commission screened proposals from firms interested in the BAWI program. Prospective businesses learned about BAWI through advertisements placed in magazines and trade journals by the Mississippi Advertising Commission. As hopeful participants submitted their proposals, the Industrial Commission sifted through them to evaluate their potential for success.

The commission quickly narrowed the initial 3,800 inquiries from interested firms to a more manageable 300. A second culling narrowed the number to sixty. From these, the commission issued 21 certificates, and twelve firms actually established plants in Mississippi. The manufacturing plants were scattered across the state: three in Pascagoula – Ingalls Shipyard, Jackson County Mills, and W.G. Avery Body Co.; Grenada Industries in Grenada; Armstrong Tire and Rubber Co. in Natchez; Lebanon Shirt Co. in Union; I.B.S. Manufacturing Co. in New Albany; Crystal Springs Shirt Co. in Crystal Springs; Winona Bedspread Co. in Winona; Real Silk Hosiery Mill in Durant; Ellisville Hosiery Mills in Ellisville; and Hattiesburg Hosiery Co. in Hattiesburg.

Praise for BAWI

The BAWI plan attracted a number of admirers. The newly established Southern Governors Conference gave its stamp of approval to the Mississippi program and encouraged other states to introduce similar plans. E. J. Hopkins, the chief economist for the Federal Reserve Bank of Atlanta, published an analysis of BAWI in 1944 in which he demonstrated the positive impact of industrial wages on the Mississippi economy and anticipated a revival of the scheme as a model for post-World War II economic development. He praised the Columbia experiment for capturing the surplus labor of farm women, an initiative that allowed the factory to support the farm.

According to Hopkins, wages from the new plants rose from $1.4 million in 1939 to $17.9 million in 1942 on a total sale of $980,500 in public bonds – a good investment in the state’s effort to “purchase payrolls.”

Legality of BAWI is tested

Some Mississippians viewed the BAWI program as socialistic and determined to test its legality. After voters in Winona narrowly supported a bond issue to construct a plant, W. S. Albritton, a local citizen and railroad employee, filed a suit charging that BAWI was unconstitutional. Defeated in chancery court, he took his case to the Mississippi Supreme Court where the justices ruled 5 to 1 that the measure met constitutional tests under the general welfare clause. Although recognizing that the act departed from traditional concepts of state power, the justices noted that “every intervention of any consequence by the state and national government in the economic and social life of the citizen has been so branded.” Albritton’s appeal to the U.S. Supreme Court was rejected on grounds that the issue was a state matter.

A mixed legacy

Economists argued, with some justification, that BAWI provided incentives to firms that least needed support. The only plants approved by the commission were expansions of older, well-established firms. The strict criteria established by the commission effectively eliminated a number of innovative, but riskier, firms from consideration. Evidence of fiscal stability protected the public investment of tax dollars and assured immediate jobs, and critics claimed that such firms might expand into Mississippi without subsidies. But Mississippi’s desperate situation demanded stability and security, and the BAWI commission operated to provide it.

Labor leaders pointed to the low-wage history of the state as evidence that BAWI represented a bonanza for industry without improving the lot of Mississippi’s working poor. Even the economist E. J. Hopkins recognized that the state’s long history of poverty, its large unskilled labor force, the few alternatives for employment, and the failure to include a minimum wage provision in the BAWI enabling legislation invited abuse. But he dismissed the “shrewd” business practices that took advantage of the low wage climate as “regrettable rather than remarkable.”

Except for Ingalls Shipyard in Pascagoula and the Armstrong Tire and Rubber Plant in Natchez, most of the new industries were traditional low-wage textile firms that attracted largely female labor. Mississippi advertised its program by noting the abundance of “Anglo-Saxon” workers available for employment. Clearly Black Mississippians, still largely employed in agricultural work, need not apply. Advertisements claimed that workers were, or could be, well-trained.

New Deal grants to build training facilities that were equipped and operated by the new factories came under federal scrutiny when investigative journalists charged that WPA-funded “training programs” at Ellisville and Brookhaven operated as sweatshops for the benefit of local mills. As “class” after “class” passed through the training programs without obtaining employment, the WPA cried fraud and demanded a return of the federal money invested in the so-called vocational schools.

Finally, Mississippi’s well-known animosity toward labor unions invited the relocation of firms antagonistic to labor demands. The anti-labor reputation of the state united labor unions and manufacturers’ associations in complaints that Mississippi engaged in unfair practices to attract new industries.

Historians of southern industrialization view the legacy of BAWI as mixed. The determination to balance agriculture with industry, and not simply invite industrial development for short-term gains, represented a transformation of the state’s economic outlook. Nevertheless, the unwillingness to protect workers and invest in new innovative industries perpetuated low-wage, unskilled, no-benefits employment. While acknowledging the importance of this transition from farm to factory, these historians note that Mississippi remains at the bottom of the economic ladder.

Connie Lester, Ph.D., is a professor of history at Mississippi State University.