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New Deal Utopianism

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Back to the Land: Arthurdale, FDR’s New Deal, and the Costs of Economic Planning by C.J. Maloney (Hoboken, N.J.: Wiley, 2011), 292 pages.

Drive south from Morgantown, West Virginia, and you soon come to the little town of Arthurdale. At the outskirts of town, there is a roadside plaque informing those who stop to read it that Arthurdale was “Established in 1933-34 under the Federal Homestead Act.” We also learn that it was a “pet project” of First Lady Eleanor Roosevelt and that the town was created to “assist the unemployed through self-sufficient farming and handicrafts.”

That certainly makes Arthurdale sound wholesome and quaint — proof that the federal government has the ability to improve the nation. As usual, however, there is much more to the story, and in Back to the Land: Arthurdale, FDR’s New Deal, and the Costs of Economic Planning, C.J. Maloney, a writer for Bloomberg News, gives us a commendably thorough and illuminating history of Arthurdale. The town was a gigantic economic flop that was kept alive only with transfusions of taxpayer money. Far from an advertisement for the glories of government social intervention, the Arthurdale story is a testament to the social and economic damage that such intervention does.

Maloney begins with that most horrendous of all government interventions — war. World War I caused many economic changes, and one of them was that the price of coal rose dramatically, especially after Woodrow Wilson managed to drag the United States into the conflict. That led to a huge expansion of the American coal industry. Working in the coal industry paid rather well compared with the hard life of Appalachia, and many families were drawn to the “coal camps.” Coal prices remained high after the war but began to fall in 1926. Many workers left the industry, but others were “stranded” in the increasingly decrepit camps. Matters were made considerably worse by the militant posture of the United Mine Workers, which repeatedly called strikes against declining wages, refusing to recognize that consumers simply wouldn’t pay the old prices that made higher wages possible. The coal fields were riven by violence, hunger, and desperation.

As the Great Depression settled on the nation, conditions went from bad to unspeakable. Journalists wrote about the hungry, ill-clad children; the cheap, filthy houses; and the lack of sanitation. Among those who read about this extreme poverty was Eleanor Roosevelt, wife of soon-to-be president Franklin Roosevelt. She was determined to help the suffering people, and one of the earliest of the New Deal programs greatly appealed to her, namely the Division of Subsistence Homesteads (DSH). She and many other Progressives who were intent on remaking America along collectivistic lines, saw DSH as a perfect opportunity to show how wonderful things could be under their philosophy. The idea was that if people would leave cities and industrial employment and go “back to the land,” clean, moral, natural life would replace the nasty conditions under capitalism. Arthurdale (and many other planned communities) would lead the way.

Many years before, in 1911, Roosevelt himself had written a piece for the New York Globe extolling the Rousseauian notion that Americans should “return to the land” because, he claimed, those who live on farms “have more time to think and study.” He had never lived on a farm, much less done the tedious and exhausting work that farming involves. His was just a romantic notion, a yearning for an imagined golden past. He was full of such foolish ideas, and they flew out of the Pandora’s box of his New Deal like a swarm of vampire bats.

The subsistence-homesteads concept also appealed to one of Roosevelt’s top advisers, Rexford Guy Tugwell. Tugwell, trained in the Progressive economic theories of Richard Ely, had gone to the Soviet Union, and like so many other western intellectuals, came back convinced that central economic planning was the wave of the future. He was eager to show that the traditional American beliefs in individualism and free enterprise were outmoded and harmful. Arthurdale would help him prove his point that socialistic, communitarian life was far better. It just had to succeed, no matter the cost.

It is noteworthy that America had had quite a few of these collectivist/agrarian societies in its past. Maloney provides some of their history. All failed rapidly, foundering on the rocks of human nature. They did not, however, have the backing of government officials eager to spend vast amounts of money taken from taxpayers to shore up their idealistic experiments. The DSH communities would.

Funding for DSH came in a single paragraph inserted into the hastily enacted National Industrial Recovery Act of 1933. It stated that $25 million was “made available to the president, to be used by him through such agencies as he may establish and under such regulations as he may make, for making loans for and otherwise aiding in the purchase of subsistence homesteads.” It did not matter that there has never been any authority under the Constitution for Congress to make such appropriations for the president to do as he pleases. Five days later Roosevelt issued an executive order placing responsibility for this program with the secretary of the interior.

Blunder after blunder

Government officials promptly went to work designing new towns. They were no good at it, of course. Why should anyone expect bureaucrats to know anything about the numerous problems and tasks building a new town entailed? Maloney recounts the numerous blunders they made, beginning with the fact that the planners chose a poor site for the farming the people were expected to do. Moreover, because of a porous rock stratum, the water supply was unsafe. Next, the prefabricated houses that an eager official purchased to get the project moving quickly would have been suitable as beach houses, but they were a lousy choice for the cold winters in northern West Virginia. The houses, once delivered, did not fit on the foundations that had been prepared for them. Many of the houses, once constructed, suffered water damage because the officials did not think to have downspouts attached. This expensive comedy of errors continued on and on.

Homes that were built in the later stages of Arthurdale’s development were much better — so much so that they put most of the other housing in the area to shame. They were faced with native stone and had all the modern amenities, which rankled people in neighboring towns who were not lucky enough to be among the favored few. Moreover, the question of exactly how the residents would pay for their houses was unsettled a year after Arthurdale was begun. Because construction was costing far more than originally estimated, officials floated the idea of selling people their houses not on the basis of what they cost, but of what purchasers could afford to pay.

And how were the residents chosen? Faculty members at West Virginia University devised an eight-page questionnaire for anyone who wanted to apply for Arthurdale. (Large numbers did.) Applicants also had to go through extensive interviews that included intimate personal questions. One of the nonpersonal questions was whether the applicant had had any farming experience, an important consideration given that the residents were to engage in subsistence farming. Of those selected, however, a large majority had no farming experience. The entire process, Maloney writes, “had a healthy dose of the subjective and arbitrary.” A federal directive instructed the local officials to favor applicants “who seem likely to welcome supervision and guidance from project administrators.” In other words, they should discriminate against self-reliant individualists.

In a way, though, that discrimination made sense because the Arthurdalians were expected to be obedient. They were not allowed to modify their homes or grounds in any way (without approval that was very hard to obtain), and they could be removed from the community if they displeased their federal overlords, as five families were. Among the things they were forbidden to do was to sell any of their crops to outsiders. That would be inconsistent with the collectivistic philosophy behind the project. Secretary of
Agriculture Henry Wallace, a committed socialist, directed that crops be grown only for “home consumption or consumption of their neighbors in the community.” Any excess was the property of the government.

Arthurdale’s adults were also supposed to have work other than tending their small plots of land — after all, the growing season there was only about 130 days. But what would they do? The planners in Washington tried many different ideas but each proved to be a failure. In anticipation of the famous line from the movie Field of Dreams, (“If you build it, they will come”), DSH officials built a 10,000-square-foot factory. It wasn’t used until June 1936, when it was leased to a company that made vacuum cleaners. It provided jobs for 29 residents — until the company closed it during the sharp economic contraction (“the depression within the Depression”) that began in 1937. But the bureaucrats were undaunted. They proceeded to spend more taxpayer money to build two more, substantially larger factories. Little use was ever made of either facility. 

Arthurdale Inn

Another financial blunder was the Arthurdale Inn, built on the site of an old mansion that Tugwell had ordered destroyed. It provided jobs for a few residents, but the only customers it had were visiting federal bureaucrats and Eleanor Roosevelt, who frequently stayed there while checking up on her “pet project.” Once again, taxpayers shelled out a lot in return for virtually no value. 

Naturally, there were children to be educated. The officials in charge of Arthurdale would not allow “their” children to be schooled with other West Virginia kids. No, they wanted a school just for them and proceeded to build, at huge expense — although not very competently — a state-of-the-art school. Then they chose a woman as principal who was a true believer in progressive education theory. Education, in her Deweyesque view, was to be used to shape young minds according to the collectivist philosophy of the New Deal. She believed in “learning by doing” rather than old-fashioned “book learning” and was determined to socialize students differently than in the past. She had the students sent out into the surrounding fields when the weather was good, and when it wasn’t, the boys were sent to home economics and the girls to shop class. Grading was taboo.

Eventually the people of Arthurdale, even though they had been selected for their compliance, rebelled at the pseudo education their children were getting and demanded that the school comply with West Virginia standards. It wasn’t just the miserable education that the parents were upset about; they were equally upset over the entitlement mentality the school was fostering in their children. Maloney writes, “The settlers in Arthurdale were lucky in escaping the debilitating effects of welfare before it could become too deeply ingrained within them or their children.”

Finally, with the country’s entry into World War II, the administration’s interest in Arthurdale and the other experimental communities evaporated. The houses were sold to the homesteaders at a huge loss. They had cost on average more than $16,000 to build and were sold at prices ranging from $750 to $1,249. The factories and farmland were sold for nominal amounts — $1. Arthurdale had been a stupendous loss for the taxpayers. And yet the visionaries continued to defend their planned communities. In 1958 Tugwell gave a speech in which he argued that government was superior to private enterprise because “we provided sewer and water systems, schools, parks, and other utilities. No speculator did any of those things.”

Maloney responds to that with a devastating counterattack. In truth, many “speculators” who built homes did provide those good things, and they did so without any use of coercion to take money from unwilling people. In particular he points to James Grimes, a Pittsburgh businessman who built durable homes (and whose son was instrumental in Arthurdale). “It is men like Grimes,” Maloney writes, “who built this country and created (rather than destroyed) wealth in the process; he made a profit while making a city.” Private enterprise uses resources wisely and efficiently when the state keeps hands off. In contrast, “Those responsible for Arthurdale were like a plague of locusts, consuming far more than they gave.”

Back to the Land is a book with a message that vast numbers of Americans need to grasp: When government goes beyond its purposes of defending our liberty and property, it is certain to be wasteful, arrogant, and authoritarian.

This article was originally published in the February 2013 edition of Future of Freedom.

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    George C. Leef is the research director of the John W. Pope Center for Higher Education Policy in Raleigh, North Carolina. He was previously the president of Patrick Henry Associates, East Lansing, Michigan, an adjunct professor of law and economics, Northwood University, and a scholar with the Mackinac Center for Public Policy.