G. Harold Powell and the corporate consolidation of the modern citrus enterprise, 1904-1922.
Yet Powell and his Exchange constituted much more than another well-managed marketing cooperative. Orange growers and their allies, in fact, brought something akin to an industrial revolution to Southern California. Growers demonstrated their commitment to the new capitalism by consolidating their industry into an organization similar to those which Alfred D. Chandler, Jr. designates as modern business enterprises, investing in professional management to run it. Their principal manager, G. Harold Powell, endowed the citrus enterprise with a powerful and systematic ideology of corporate liberalism to justify the nature of their program. Through managerial corporate capitalism, CFGE members transformed the Southern California landscape, reshaped the organization of work, and strategically cultivated a mythology of California as an American Mediterranean. Together, they represented a vanguard in American agriculture altogether as potent, and as indicative of future directions for farming, as the National Civic Federation became for industrial manufacturing enterprises. By wedding the citrus enterprise with Liberty Hyde Bailey's Country Life ideology, and his own Society of Friends cooperative theology, Powell gave the orange growers of Southern California a systematic rationale for the corporate reconstruction of their industry. Moreover, the growers and Powell did so at a time when many other agrarian reformers and their allies were rejecting modern business methods as destructive of family farming as a way of life.
Powell's reconstruction efforts began in 1904. In the rain-drenched January of that year, Powell, protege of Liberty Hyde Bailey and a rising star with the United States Department of Agriculture's Bureau of Plant Industry, arrived in Riverside, the capital of Southern California's inland navel orange districts. Surrounded by twenty thousand acres of navel oranges representing an investment of more than thirty million dollars, Riverside stood as one of California's wealthiest towns.(3) With Powell came a team of scientists on a reconnaissance mission ordered by Chief of the Bureau of Plant Industry, B. T. Galloway. Powell's team carried a mandate to quell an uproar arising from Riverside's politically connected orange growers. Growers there, as elsewhere in the citrus belt, claimed that as much as twenty-five percent of all their fruit was decaying while in transit to New York and other eastern destinations. If true, despite the lucrative nature of their industry, growers were losing hundreds of thousands of dollars. In short order Powell and his team determined the cause and the solution to the growers' problem. Within four years, his recommendations transformed the entire industry.(4)
In 1910, Powell returned to California, once more at the urging of growers. This time he came to take charge of their trade association. Formed in 1906 with Powell's assistance, the California Citrus Protective League (CPL) had come into being at the urging of B. A. Woodford, General Manager of the newly incorporated California Fruit Growers Exchange (CFGE). According to Powell and others, the CPL emerged as the first industrial trade association in American agriculture. By the beginning of Powell's tenure as Executive Secretary, the CPL represented more than ninety percent of the state's citrus growers and shippers in matters before the Congress, the Interstate Commerce Commission, the California legislature, and in the courts. (Their usual opponent in these battles was the nation's railroads.) Less than two years after taking charge of the CPL, Powell accepted appointment to be Woodford's successor as General Manager of the California Fruit Growers Exchange.
At this time the CFGE was an agricultural marketing corporation already well on its way to the status of a modern business enterprise. Based upon twenty years of hard-won experience in the trenches of produce marketing through various cooperative schemes, the CFGE's distribution network matched in complexity and size those of the great meat processor companies, Swift and Armour. The CFGE's leaders were tough and entrepreneurial leaders, their skills honed from battles with railroads, independent shippers, and middlemen.
Orange growers had first incorporated their cooperative in 1895, under the corporation laws of California. They named it the Southern California Fruit Exchange (SCFE).(5) SCFE was made up of local packing associations, district exchanges composed of those associations, and a central exchange sales brokerage located in Los Angeles. After an unsuccessful attempt in 1903-04 to unite with the eight largest independent shippers and commission merchants in the state, growers re-incorporated in 1905, again under the stock corporation laws of California, as the California Fruit Growers Exchange. While the CFGE continued to operate on an at-cost basis, like a non-profit cooperative, it enjoyed the legal power of stock corporations. Status as a stock corporation enabled the Exchange to avoid allotting each local association an equal vote, a requirement under the 1895 farm cooperative law of California. In this way, the Board of Directors, one each elected from the district exchanges, maintained a free hand in establishing policy and company direction.(6)
By 1912, the CFGE board had come to realize that their organization had reached a level of complexity which required professional management in order for it to compete successfully for market share. Accounts of the organization's rising strength in the market grew steadily with G. Harold Powell's ascension to the General Manager's position. His notoriety, coupled with the growing prominence of the Exchange, drew the attention of journalists writing about agricultural subjects. They began producing articles in the leading agricultural magazines just as Powell initiated his improvement campaigns. In 1913, as Powell took over, the Exchange sold an annual average of 30,000 carloads of fruit from 6,000 growers. (By 1922, it moved over 55,000 carloads of fruit to market.) By 1913, the sales force of the Exchange was already larger than that of any other in the nation dedicated to the marketing of an agricultural commodity. In 1917, just prior to American entry into the war in Europe, the Exchange had seventy-seven branch offices in the United States, Canada, and Great Britain. These offices were staffed by bonded, salaried salesmen who served over 2,500 wholesale carlot jobbers who themselves employed more than 7,500 salesmen. The jobbers, in turn, dealt with retailers selling citrus fruit to 100,000,000 consumers in the United States alone. Powell's knowledge of "big business concerns," as he referred to them, helped him shape the sales force into one more akin to those in manufacturing than to traditional produce brokerage. He quickly established a Dealer Service branch of the Sales Department, a first for any agricultural industry in the country. He intensified the CFGE's efforts to cooperate with the jobbers and retailers to increase the consumption of citrus fruits.(7)
The CFGE sales force cost more than $600,000 per year, with annual telegraph bills exceeding $100,000 by 1917, not far behind Swift and Armour. Coordination of fruit shipments by carlot, the Exchange's minimum unit of sale, were extremely intricate, and had to be monitored constantly to ensure a steady flow to market. By the mid-teens, daily carlot shipments rolling from California, mounted into the hundreds. Given the perishable nature of the fruit, no room for "banking up" cars on sidings or waiting to go into market could be tolerated. In order to avoid conditions that might jam sales or obstruct the orderly flow of fruit into the market, Powell and the Exchange directors adopted a broad-based approach to selling. They "sold through their own agents to the jobbing trade on an f. o. b. (free on board) basis; on a delivered basis subject to condition on arrival; for cash California acceptance; or to jobbers, retailers or others through auction in the larger cities."(8) The established reputation of Exchange fruit enabled most of it to be moved via delivered sales, especially for those associations and packing houses with recognized brands of known quality. Riverside Fruit Exchange and its companion, Arlington Heights Fruit Exchange, fell into this most-favored category and the fruit from houses in the Riverside district sold consistently for premium prices.
Employing the latest telegraphic communications technology, the central exchange of the newly structured CFGE managed to keep growers in constant contact with trade conditions. Bonded CFGE agents in the United States, Canada, and other locations wired current information to the central agency in Los Angeles on a daily basis. By means of these cables, growers were apprised of amounts and condition of Exchange fruit in transit to each market. They received complete carlot sales data, current weather reports, stocks of competing deciduous fruit entering the market against citrus fruits, and information on all other issues required to carry on intelligent transactions with the trade several thousand miles away from the point of shipment. The Exchange market news service made the latest information available to all Exchange shippers daily. To ensure thorough dissemination of information to growers, the Exchange's morning bulletin included every telegram that had passed between sales agents and fruit shippers concerning all aspects of the ongoing enterprise. It further contained special reports from private sale and auction markets. Weekly and monthly summaries of various components of the enterprise rounded out the effort to keep growers informed.(9) This system, like that of the meat-packing houses, provided the high level of administrative coordination required to ensure the continuous marketing of a perishable product several thousand miles from the point of production.(10)
To facilitate orderly sales, Powell had his sales staff divide the United States into six areas that were then sub-divided into districts. Each district possessed its own corresponding managerial staff. Field agents kept the Central Exchange informed by wire daily regarding trade conditions in their areas. They reported the number of cars rolling in that day, prices for fruit, future arrivals of cars in sight, market demand, weather conditions, and other factors that could influence sales in their district. At the Central Exchange headquarters, night clerks translated coded sales reports into a daily bulletin sent to growers' associations on the early morning newspaper trains. Across the entire expanse of the California citrus districts, breakfast brought with it a copy of the daily bulletin. Powell and the general sales agents used this information to equalize distribution and promote sales.(11)
The multi-million dollar marketing cooperative Powell took over represented above 6,000 member growers. Already a successful enterprise, the Exchange had integrated backward in 1906 into raw materials through its wholly owned Fruit Growers Supply Company (FGSC). By 1921, FGSC owned prime California timber land totalling a billion-and-a-quarter board feet, plus a number of well-run sawmills. FGSC supplied all the Exchange packers' box shook (orange crate materials) requirements, and many of the grove management materials used by Exchange field crews. The Fruit Growers Supply Company enabled the CFGE to hold down raw materials costs by breaking the monopolistic hold of California Pine Box Company on shook supplies.(12)
By 1912, the CFGE had also extended its forward integration into international distribution. As Powell took the helm, the CFGE represented a revolutionary vanguard in American agriculture. Unlike other agricultural cooperatives, the post-1905 CFGE applied modern business enterprise methods in all aspects of its operations. All production and marketing functions were controlled by the Exchange through contract arrangements with member growers, and supervised by paid top and middle managers, from the local level up through the Central Exchange in Los Angeles. Member growers ceded individual control over these functions in exchange for the marketing power provided by their cooperative corporation. As Powell took over, the CFGE consisted of three kinds of organizations; one organization packed the fruit, one sold the fruit, and one furnished the mechanism for selling it. The growers owned the local packing associations, the packing associations owned the district exchanges, and the district exchanges, in turn, owned the central exchange. In this manner, the growers owned the whole exchange system.(13) Together, these three levels of functional units made up the vertically integrated California Fruit Growers Exchange.
By the time of his death in 1922 at age fifty, therefore, Powell, together with the Exchange board of directors, had completed the corporate consolidation of the citrus enterprise, and by example the reconstruction of California agriculture, including the race-based industrial labor system they built to power their industries.(14) Further, Powell had fashioned a sophisticated ideology to justify the corporate nature of the industry, while maintaining the CFGE's image as an agrarian mutual help society of small farmers. Based on the Country Life philosophy of Professor Liberty Hyde Bailey, and the political economic theories of Jeremiah Whipple Jenks, both of Cornell University, his alma mater, this cooperative ideology enabled growers to maintain an image of agrarian virtue while enjoying the advantages of modern corporate methods of production and distribution.(15)
Corporate Capitalism and the Country Life Movement
A number of historians, notably Martin J. Sklar, have argued convincingly that a confluence of interests, led by pro-corporate capitalists, dramatically altered the national political economy between 1890-1920, ushering in the age of the corporation. Sklar described this period as rife with anticipation, a time full of portent for change, ranking alongside the Revolutionary and Civil War eras in its significance for the nation's direction.(16) In the same vein, but from another angle, Alfred D. Chandler, Jr., has argued that the modern business enterprise, the managerial corporation, reached maturity during this same period. The arguments of Sklar and Chandler, however, did not extend to agriculture. It is my contention, based upon my own findings and the interpretive work of the historian David Danbom, that a similar coalition of forces sought the same radical transformation of the countryside. Those forces came to a focal point in what was called the Country Life Movement. The orange growers of Southern California emerged simultaneously with this movement and became the chief model for what it might accomplish in the realm of agricultural marketing. Liberty Hyde Bailey, the charismatic Dean of the College of Agriculture at Cornell, quickly emerged as the undisputed national champion of the Country Life Movement. He was joined by other leaders from the United States Department of Agriculture, the state colleges of agriculture, agricultural machinery makers such as International Harvester, the progressives movement (men such as Gifford Pinchot and Walter Hines Page, editor of The World's Work), railroads, banks, civic improvement clubs, and churches. Cornell University emerged as the de facto headquarters of the movement. Key faculty and alumni offered ideological leadership and support in pivotal agricultural industries. Generally, dirt farmers, operating from republican values and Jacksonian proprietary competitive capitalism, objected strenuously.(17)
Like the efficiency-minded urban reformers of the progressive movement, members of the new agricultural coalition wanted to impose an organizational revolution on the rural districts of the nation. Contrary to the agrarian protests against entrenched economic power by the Grange, Farmers Alliance, and People's Party of the previous century, Country Life reformers urged farmers to seek economic power through modern business methods of consolidation and organized effort.(18)
Convened in August 1908 at the urging of Chief Forester Gifford Pinchot and President Roosevelt's English friend Sir Horace Plunkett, the Commission on Country Life, chaired by Liberty Hyde Bailey himself, galvanized reformers behind a set of prescriptions for correcting the so-called "rural problem." The Commission completed its report just before Roosevelt's term ended in 1909. Its inquiries pursued his desire to study existing conditions in the countryside, isolate deficiencies, prescribe remedies, and come up with a means to undertake a more thorough investigation at a later time.(19) More significantly, the Commission launched its inquiry, drew its conclusions, and proposed its remedies based primarily upon urban industrial assumptions and values. While dirt farmers disputed its intent and its conclusions, the scientific appearance of the Report of the Commission gave the Country Life reformers renewed energy and confidence in the righteousness of their mission.(20)
Roosevelt had convened the Country Life Commission partly in order to sustain what he saw as America's march toward industrial prowess and international might. Such a quest, he believed, required perpetual growth in agricultural productivity. American farmers, he knew, fed the swelling urban work force and helped to provide the nation with a favorable balance of trade through agricultural exports. He argued that industrial strength depended on cheap food. The sharp contemporary rise in food prices in the cities convinced him that something had to be done to enhance the efficiency of farming and food distribution.(21) There was also a powerful nativist touch in Roosevelt's approach, for he further believed that the uplift of the farmer had to go forward in order to keep Anglo-Teutonic stock on the land. America faced the loss of its democratic backbone, he asserted, should the nation's farms sink under the immigrant flood from Southern and Eastern Europe.(22)
Historian David Danbom's perceptive summary of the Country Life Movement, the Commission Report, and the mentalite of the corporate industrial supporting cast, accurately catches the Movement's agenda for reform. It "was nothing less than the demand of an ascendant urban-industrial America," Danbom writes, "backed by an increasingly activist state, for an organized and efficient agriculture that would adequately supplement it socially and economically."(23) While many reformers, Bailey in particular, hoped that rural uplift would improve the lot of dirt farmers, Roosevelt meant simply to rid the farmer of his Jeffersonian legacy of individualism and agrarian sentimentality in order to make him a contributing - and happy - citizen of the new industrial state.(24) By this measure, Bailey's Country Life crusade took on the character of a business revolution that attempted to marshal immense resources in a coordinated attack on the "rural problem."(25)
Jeremiah Whipple Jenks and the Trust Problem
Bailey's contemporary at Cornell, Jeremiah Whipple Jenks, Professor of Political Economy and advisor to Roosevelt, the United States Industrial Commission, and later to the Wilson administration, provided the second pillar of thought important to the Country Lifers' rural revolution. Jenks's personal ties with Roosevelt were close, and his influence among business, government, and academic leaders strong. Jenks's influence derived in part from the broad attempts among scholars and business leaders at the end of the nineteenth century to find theoretical models to explain the "trust problem" and other wrenching changes in the American economy.(26)
Jenks had been president of the American Economic Association in 1907. Then and afterward, he had drafted legislation for Roosevelt on regulation of trusts and combinations, along with National Civic Federation leaders such as Seth Low and Arthur Twinning Hadley. Both Jenks and the NCF leadership reflected a consensus which had formed by 1908, according to Sklar, among pro-corporate capitalists, certain labor leaders, like-minded politicians and intellectuals, and corporate industrial farm groups such as the California Fruit Growers Exchange. This consensus favored the explicit legalization of reasonable restraints of trade, federal regulation of interstate commerce to curtail unreasonable restraints on trade and unfair methods of competition, and a federal agency to carry out the regulatory activities necessary to implement such a program.(27) Jenks's views found expression in Wilson's New Freedom legislation during his first term, including the agricultural program submitted under the direction of Country Lifer David F. Houston, Secretary of Agriculture.(28)
G. Harold Powell and the Corporate Mind in Agriculture
Wilson's first year in office, in fact, proved pivotal for G. Harold Powell(29) and the Country Life coalition. Powell had just begun his tenure as General Manager of the powerful CFGE, serving as its first professional executive officer.(30) Early in the Spring of 1913, Powell was asked by Secretary of Agriculture Houston to assume the leadership of the newly formed federal Office of Markets and Rural Organization.(31) Simultaneously, Bailey's Rural Science Series published Powell's book, Cooperation in Agriculture, a publication which quickly propelled him to the forefront of the Country Life Movement's corporate reconstruction campaign.(32) Powell's book became an organizational manual for efficiency and order in the countryside. Contrary to previous treatises on agricultural organization, Cooperation in Agriculture called upon farmers to build their cooperative enterprises on the models of corporations and labor unions. Powell told farmers to eschew altruistic self-help endeavors in favor of modern business methods and principles.(33)
As a brilliant product of Bailey's mentorship at Cornell's College of Agriculture, Powell carried the modernizing philosophy of the Country Lifers in his heart, and Jenks' pro-corporate ideology in his mind. Powell epitomized the new agricultural scientist with a missionary zeal to uplift the farmer.(34) By most measures, Powell appeared to be intellectually and spiritually prepared for a collective and cooperative approach to problem solving, even to the point of making cooperation a religion.(35) Powell's illustrious Quaker family tree and intense religious training gave him much in common with fellow Quaker Herbert Hoover, who would become friend and superior during World War I in the United States Food Administration.(36) Hoover's philosophy of "cooperative individualism" and "cooperative competition," and his concept of an "industrial democracy" based on these ideas, as well as his "ruthless righteousness," closely paralleled Powell's thought.(37)
The maturing of Powell's views, however, had actually begun in 1904 with his tenure in the citrus districts of Southern California. During that stay, he observed with keen interest how an early corporate approach to fruit marketing by industrially minded businessmen-growers succeeded in making them the most potent economic force in the region. Eager for advancement and a larger salary, Powell drew on his California experience in future publications to spread the news to other farm industries, enhance his standing with the citrus industry, and promote his stature in the Department of Agriculture and in the profession generally.
The Yearbook of Agriculture published the first of Powell's articles in 1910. "Cooperation in the Handling and Marketing of Fruit" read like an amalgam of Bailey's rural uplift and Jenks' call for the acceptance of trusts and combinations. It reflected Powell's grasp of the broad national implications of the experience of the California Fruit Growers Exchange. From Powell's vantage point as the Acting chief of the Bureau of Plant Industry, the CFGE had evolved the most sophisticated marketing organization of any farming sector in the United States. As a producer-owned cooperative marketing corporation, the Exchange exhibited capabilities and business attributes generally associated only with large-scale enterprise in manufacturing, meat processing, and mass retailing. The Fruit Growers Exchange, he told his readers, arose as a means for grower-capitalists to join forces in order to secure economies of scale and scope, and to dampen fractious competition.(38) The CFGE existed to enable growers to purchase raw materials and other supplies, and to deal with the production and marketing of grower fruit. It was formed to allow growers the same advantages enjoyed by other combinations of capital in the country. In short, Powell told readers, the corporate-cooperative aimed to rationalize the market in fresh citrus fruit by standardizing the "harvesting, handling, grading, and packing of the fruit." The Exchange meant to accomplish this "to prevent disastrous competition by bringing about an equitable distribution throughout the country, and to handle the fruit business in other ways collectively rather than individually whenever it can be done more economically and effectively."(39) In Powell's mind, the cooperatives' organized corporate character made them many times more efficient than conventional farmers.
Grim business necessity, Powell wrote, had driven the orange growers of California to organize. But in the process - and here Powell imposed a Country Life Commission interpretation - "after the growers . . . learned the power of cooperation as a business opportunity, their organizations," became "permanent and exert[ed] a powerful influence in the development of a better social life and, through their participation in the progress and management of rural affairs, in the development of a better citizenship." Then, returning to the Roosevelt-Jenks perspective, Powell concluded that "[t]he American farmer is beginning to realize . . . [that] the powerful influence of consolidated capital has been the source of the tremendous industrial progress of the last generation."(40) Powell's praise of the citrus industry knew few bounds, and he reiterated it throughout his writings over the next twelve years. A characteristically effusive statement from the 1910 piece reads as follows: "The orange and lemon growers of California have the most powerful and successful organization to be found in any agricultural industry in . . . the world. . . . Many of the cooperative associations organized in recent years have been formed on the principles that underlie the citrus-fruit associations and these, when wisely managed, have shown great strength."(41)
In terms reflecting the influence of Sir Horace Plunkett, Jeremiah Jenks, and the Commission on Country Life, the Yearbook article further explained that "[f]ruit growing is a highly specialized industry in the Western States," and "[t]he growers there have often had extensive business experience before engaging in horticulture." Western land values required access to substantial capital to buy into the industry, and cultural practices were expensive and intensive, requiring a large segmented labor supply. With markets more than two thousand miles away, "production, transportation, distribution, marketing, and legislation," were "too complex for the average individual grower to meet and solve alone."(42) Success under these circumstances required thorough organization and social overhead investment in infrastructure that could only be secured through corporate consolidation and pooling of capital.
Powell's second key to successful business organization among farmers drew directly on the Country Life Movement, and on Powell's pro-corporate assessment of agriculture. Along with the Country Life Commission, Powell argued that once established, modern agricultural cooperatives employing corporate methods and structures required professionally trained managers. Powell's argument regarding management of the modern agricultural cooperative closely parallels the importance of professional management in corporate enterprise documented and assessed by Alfred D. Chandler, Jr. in The Visible Hand (1977) and Scale and Scope (1990). Too many farm organizations, Powell warned, had collapsed from the refusal of owners to hire competent managers and work closely with them.(43) Further, he asserted, too many of them also had failed because they were founded on strictly altruistic motives. (This was a back-handed critique of the Farmers Alliance cooperatives of the 1880s.) To ensure success, an agricultural cooperative "must be primarily an organization for industrial purposes, not a society of altruistic idealists formed solely on the principle of universal brotherhood."(44)
Powell considered it "essential to the prosperity of American agriculture and to the welfare of the country that the distribution of farm products" rest in the hands of professionally managed producer-cooperatives. "Any other system would lead to an unequal distribution of products and to economic chaos."(45) The resulting loss in rural efficiency, he cautioned farmers, would retard the general development of country life and prevent agriculture from taking its rightful place within the broader industrial society.(46) Powell later, in language reminiscent of both Jeremiah Jenks and Woodrow Wilson, postulated that unregulated competition among the distributors of farm products had not resolved the problem of higher food prices or chaos in supply. He therefore called for "reasonable regulation" by the state and federal governments of the "semi-public agencies" in charge of the nation's food supply at the point of distribution as a necessary corollary to producer-organized and -owned cooperative marketing agencies.
Clinching of Pro-Corporate Ideology in Agriculture: Powell and The Decay Problem in California Citrus, 1904-1910
In Cooperation in Agriculture, Powell told farmers that when they understood the fundamentals of industrial society, when they grasped the full potential of corporate consolidation, it would be possible to generate a true industrial agriculture and create a new breed of farmers.(47) All of this he assured them, would lead to better farming, better living, and a better country life. Powell knew that the citrus growers of Southern California already practiced industrial agriculture. The California Fruit Growers Exchange, representing sixty percent of the state's citrus growers by 1913, though clothed in agrarian apparel, enjoyed the advantages of full corporate contractual authority, and managerial efficiency. The CFGE met the definition of a modern corporation, both in legal form and business function. Cornell's Jeremiah Jenks, for example, saw "trusts" as modern corporations created by capitalists to protect their investments against cut-throat competition, and to take advantage of economies of scale and scope. California citrus growers, Powell knew, employed these same justifications to explain their own combination under the California Fruit Growers Exchange.(48)
In Riverside, Powell had discovered that growers counted few actual dirt farmers among their ranks. Instead, the growers were former captains of industry, doctors, lawyers, accountants, bankers, and refugees from other urban professions in the East and Mid-West.(49) In reality, orange growers were members of the same pro-corporate cohort which reconstructed the political economy during the Progressive Era. Powell further saw that these same growers represented what the Country Life Commission considered the highest of democratic ideals, and what Roosevelt wanted desperately. to preserve; they were virtually all Anglo-Teutonic, and they accepted industrial methods as axiomatic.(50) The growers and Powell, as a matter of fact, operated from similar industrial assumptions. None of the Riverside growers, or Powell, according to existing records, suggested that the problem of in-transit fruit decay would be remedied by a return to the self-sufficient family farming methods of the 1880s. Previously, some growers had argued that citrus farming should remain the domain of the owner working his own small acreage. Citriculture, they argued should not be left to hired help who were ill prepared to appreciate the need to carefully handle fruit.(51)
In fact, as early as April 7, 1905, the date of Powell's well publicized appearance at a packed Farmers' Institute in Riverside, his team had gathered enough evidence to provide a searing indictment of growers themselves. Powell told the assembled audience of growers, packers, shippers, railroad men, and refrigeration interests that growers brought on most of the in-transit decay of oranges and lemons themselves through the cavalier way they handled their fruit in the grove and packing house.(52) Technically, Powell reported, decay resulted from the infection of fruit by blue mold, which could not injure a fruit with healthy undamaged skin. Powell's presentation, however, concluded in praise of California's citrus growers for their keen sense of cooperation and business acumen. "In our experience in experimental work," he said, "we have never seen a more efficient cooperation between practical business industry and scientific research." Moreover, "We have faith to believe that an industry that is ready to cooperate with science to this extent will be able to apply the results of the investigation in whatever direction they may lead."(53)
Throughout his four-year set of research projects in the region, 1905-1908,(54) Powell made a number of radical recommendations and was surprised and gratified to discover each year that more and more of the industry had adjusted to the Powell methods.(55) He recommended industrial solutions, involving cultural practices, management, and handling methods, which if implemented meant nothing short of the revolution he himself had predicted in 1905.(56) If they wanted to prevent heavy losses, growers needed to attack the decay issue as a business problem, not a fruit pathology problem. The ultimate solution, he said, required the application of the modern business principle of corporate organization under the aegis of trained management. "To overcome the losses from decay in transit," he argued confidently, "is a business matter related to the methods of organizing the citrus-fruit business, to the system of labor hiring, the methods of picking and hauling the fruit, the system of packing-house management, and the methods and efficiency of transportation."(57) By the Winter of 1908, the revolution Powell called for had come to pass. Backed by powerful support from the California Fruit Growers Exchange, the railroads, and refrigeration interests, implementation of his solutions moved ahead quickly and decisively. Some so-called "ten-acre" (small) growers initially stonewalled reform in the name of individual freedom of action. But they apparently recognized the economic efficacy of Powell's results and quickly fell into line with the large-scale and pro-corporate growers.(58)
Powell and the Consolidation of the Citrus Enterprise
In late 1912, Powell accepted the Exchange Board's unanimous appointment as B. A. Woodford's successor.(59) Over the next decade, Powell preserved the cooperative-corporation from collapse in the face of the worst freeze in the history of Southern California. He built strong ties with the University of California through his support of the College of Agriculture and the newly formed Citrus Experiment in Riverside. He conferred closely with agencies in Washington, such as the USDA's Bureau of Markets. Overall, he worked with the entrepreneurial leadership of the Exchange Board to consolidate an organization resembling what Alfred D. Chandler, Jr. calls for other industries the "first mover" position.
In the process, he molded a modern corporate infrastructure for the Exchange and backed it with a strong Country Life ideology. Already a successful entrepreneurial enterprise, the Exchange under Powell's tenure became a full-fledged, vertically-integrated corporate enterprise, with a hierarchy of professional managers at all levels. Powell built this structure through what Chandler has called, for other industries, functional and strategic competition. Powell's work included refinement of production standards through implementation of careful handling methods in all aspects of the production and distribution processes at all levels of the organization. It included new designs for packing machinery and grove implements, scientific studies of ways in which to improve the commercial uniformity and keeping quality of fruit. It featured the on-going preservation and enhancement of the mass distribution system, penetration of new markets and development of new products, and professionalization of the management at all levels.
By the end of Powell's decade in office (1912-1922), he had led the Exchange to gross annual sales exceeding $120,000,000. Already by 1917, the California Fruit Growers Exchange, on schedule with many manufacturing industries, had achieved the status of one of Chandler's modern industrial enterprises. "The first entrepreneurs to create such enterprises," Chandler writes, "acquired powerful competitive advantages. Their industries quickly became oligopolistic, that is, dominated by a small number of first movers." Furthermore:
These firms, along with the few challengers that subsequently entered the industry, no longer competed primarily on the basis of price. Instead they competed for market share and profits through functional and strategic effectiveness. They did so functionally by improving their product, their processes of production, their marketing, their purchasing, and their labor relations, and strategically by moving into growing markets more rapidly, and out of declining ones more quickly and effectively, than did their competitors.(60)
Powell's tenure at the helm of the Exchange solidified its position as the first mover among all fresh fruit marketing industries in the country. In so doing, Powell in effect brought it into conformance with the Chandlerian description of the modern industrial enterprise.(61)
Powell's Managerial Revolution
When Powell took charge of the Exchange, he brought with him an immense reservoir of knowledge on every facet of the business. He also brought research skills and a commitment to the scientific method. These he used to increase his own knowledge and to disseminate it among the growers, the government, and the citrus trade as a whole. Powell envisioned solutions in big, all-encompassing terms, but terms based in hard data, not what he viewed as folklore or rumor. Ever at hand were data-laden reports and statistics on all aspects of the enterprise. Powell used these as tools for shaping Exchange policy and for arguing issues before legislative bodies. He also used them as instruments to minimize internal dissent on sales techniques, attacks by growers on jobbers and retailers, and what he viewed as disloyal non-cooperative behavior from grower members. Powell's executive style served to cement his predecessor Woodford's objective of securing the loyalty of growers, particularly of the grower-run CFGE board.(62)
Under Powell, the Exchange embarked upon a vigorous recruitment campaign to attract and keep talented and energetic management personnel. Backed by board members Charles C. Teague of the gigantic Limoneira Ranch, and F. Q. Story, president of the board and retired wool merchant from Boston, Powell's effort soon paid off. A core of youthful executives joined the CFGE at its headquarters in Los Angeles, and rose through the ranks under Powell's "promotion on merit" policy.(63) The General Manager's overhaul of management retention policy ranged from a renovation of the headquarters building, through paid vacations for full-time employees, to initiation of a retirement program through the Provident Insurance Company.(64)
Faced also with a massive increase in bearing acreage, coupled with stiffening competition from citrus growers in Florida and deciduous fruit growers everywhere, Powell launched a program for steady scientific improvement of the quality of fruit (both the grade and keeping quality). He encouraged development of lemon and orange by-products manufacturing for lower grades of fruit.(65) He continued to emphasize careful handling of citrus from the grove to the market to prevent losses to decay. He strove for improvements in the size and quality of yield per acre, for state and federal regulation of fruit standards to control what he considered destructive speculative competition, and for year-round uniform shipments, at appropriate times for each variety. Overall, he worked to ensure a proper rate of return for growers, to convince consumers of the reliably high quality of Exchange fruit.(66)
An advocate of scientific inquiry and hard facts, Powell set out to quell dissident voices within the Exchange through the use of irrefutable data. As a Jenksian pro-corporate manager, he saw a rationalized, administered market as the ultimate route to an augmentation of citrus sales. So, with the aid of the new Office of Markets and Rural Organization of the USDA, he ordered a two-year scientific study of the distribution costs of the California citrus crop. In this study, Powell sought to ascertain what percentage of the final retail price of oranges and lemons went to the producer, to production costs such as picking and packing, to transportation, to the jobber, and to the retailer. This precedent-setting investigation quashed dissent within the Exchange over marketing methods while at the same time revealing important information for food distribution in general.(67)
From the report, Powell then crafted an efficiency campaign to stabilize production costs while regaining control of fruit handling along the whole line of production. To achieve these aims, he and the directors created the Field Department and brought in a specialist from the USDA to run it.(68) Powell later said that the Field Department had been created in 1914 to assist the local associations in better handling of fruit from grove to packing houses, to improve machinery in the packing houses, to standardize the grades and pack (particularly of the advertised brands) to expand and stabilize the membership in local associations and to develop new associations. The Field Department cooperated with the Fruit Growers Supply Company, the Exchange's wholly owned raw materials procurement company, in improving its efficiency and usefulness to members. After an extensive survey in early 1915, Pratt submitted several proposals for improving efficiency. These included designs for new packing house machinery and layouts, better picking and packing procedures, and the introduction of a standard accounting system for use by the Exchange packing houses.(69) Not all of his recommendations were immediately implemented, but by the time of Powell's death in 1922 every one of them was in place.
By training and experience, Powell leaned toward research and development as a means of solving problems. Coupled with his interlocking connections with the USDA and the University of California College of Agriculture, this propensity led him to promote cooperation with both agencies for the furtherance of the industry. He understood that they practically provided the Exchange with a ready-made research and development division, that the organization itself could not possibly duplicate. His support for both, in Washington and Sacramento, paid dividends not only for them but also for the Exchange. In 1919 Powell established his own Research Division, which included a chemist and three assistants, at the Exchange By-Products Company in San Dimas (later Ontario). In 1920, Powell brought in an entomologist to assess the results of the $1.5 million annual expenditures by Exchange growers on pest control. The Research and Development Division grew steadily over time until it became a full-fledged department making significant contributions to the enterprise.(70)
Powell strengthened the strategic position of the Exchange by enhancing its complex marketing mechanism and expanding its Traffic Department. Responsible for tracking shipments among the various railroad lines, the department intensified its inspection of refrigerator cars. Its systematic inspections revealed that sometimes as high as one in four cars produced a claim for damages or rate over-charges. According to Powell's reports to the board of directors, such claims cost the railroads in excess of $150,000 annually in rebates to Exchange shippers. Powell's willingness to sue the carriers produced policy changes by the railroads that the CFGE had long sought: better ventilated cars, the right to pre-cool and re-ice cars in transit and better general care in handling Exchange fruit en route to market.(71)
Powell next launched a systematic campaign to penetrate the vast rural market in America. More than fifty percent of all potential domestic customers still lived outside cities, and logistical problems associated appeared too large for the CFGE to surmount profitably. Powell's two-year investigation of the industry's distribution costs showed otherwise. He proved that this vast market could be penetrated with great success, given effective advertising, good dealer and jobber service face-to-face with retailers, and arrangements for cooperative purchasing in the required carlot sizes sold by the Exchange.(72) By 1917, the Exchange had reinforced its first-mover status in the citrus industry by virtually dominating the rural areas (a position it still enjoys to this day), and by increasing its presence in Canadian markets such as Vancouver, Toronto, Ontario and London.(73) Further strategic expansion gained ground in 1921, when Powell and the board launched an extensive ocean transport effort which sent oranges to the Atlantic coast, England, and Denmark by way of the Panama Canal. Hawaii, Japan, and other Pacific ports-of-call also saw their first shipments of Sunkist grade fruit this way. Although initially slowed owing to the end of American export credits, this action extricated the Exchange once and for all from total dependence on the railroads.(74)
Powell also took the Exchange's national advertising program to new levels, allocating a half-million dollars for it by 1920. By establishing the national reputation of its branded products, Powell fought to give the Sunkist trademark the same status as the Sterling mark on silver.(75) Under his twenty-four year old advertising prodigy, Don Francisco, and the advertising firm of Lord and Thomas (now Foote, Cone, and Belding), the Exchange moved beyond name recognition to the creation and promotion of entirely new products. Before the "Drink an Orange" campaign of 1916, for instance, orange juice had been sold only as a limited novelty item. Francisco's campaign coupled advertising with sales of juice extractors, at cost, for home and commercial use. Orange juice soon entered the American diet as a breakfast staple, especially taking off during the war because of the influenza epidemic. The establishment of by-products operations for oranges and lemons, and a Mutual Indemnity Program which enabled Exchange packing houses to modernize while avoiding the high costs of commercial fire insurance, rounded out his improvement program.(76)
Francisco spread his pro-citrus propaganda primarily by means of ads in seventeen national magazines, mostly for women, and via more than 300 daily newspapers. Given the combined circulations of these magazines and papers, the total of Sunkist advertising pieces run in these two sources for 1916 amounted to approximately 450 million. The Advertising Department distributed 300,000 Sunkist citrus recipe books to consumers upon request for that year as well. This direct advertising received a boost from the Dealer Service Department through its cooperation with the jobbers and retailers. Knowledge gained from their study of the trade enabled Francisco's staff to target national advertising in ways that made it much more effective.(77) In 1918, Francisco's Advertising Department made a movie that ran in theaters as a lead for feature films. Under Powell's tenure, according to one writer, the Exchange advertised citrus as if it were a manufactured product.(78)
Other significant actions included the establishment of an Industrial Relations Department to ameliorate labor problems through residential camps and Americanization programs. Powell launched this effort in order to stabilize the citrus labor force. Faced with the need for a segmented, year-round labor supply, Powell sought to develop one through the encouragement of residential connection with the land, in a way that would bring about the creation of multiple generations of low wage laborers. By the first world war, this force was quickly becoming Mexican. To quell nativist fears, and to build permanence, Powell pushed Americanization efforts among his work force.(79)
Finally, Powell and the Board took advantage of President Wilson's New Freedom legislation by using the Federal Trade Commission Act and the Clayton Anti-Trust Act to further enhance and standardize its business practices. These two Acts, both supported by Powell and the USDA,(80) brought to a close years of wrangling over the best method of dealing with a political economy now dominated by corporations. The new arrangement protected the due process rights of property while insulating contracts from direct governmental control. The acts took their direction from the 1911 Supreme Court Rule of Reason decisions reinstating the common law allowance of reasonable restraints of trade.(81)
The threat of FTC investigatory power gave Powell leverage to force a standard accounting system on the entire Exchange organization. He then moved it into a virtually untouchable position regarding anti-trust action by converting it to a non-profit corporation in 1916 under the Clayton Act's Section 6 exemption clause for farmer cooperatives. In this way, the CFGE, although it then represented approximately 60% of all citrus growers in California, could represent itself as a society of farmers banded together for mutual benefit, and not as a group of corporate businessmen seeking market domination.
By 1917, the Exchange possessed the third leg - professional management - of the three-pronged set of investments Chandler describes as the mark of the modern industrial enterprise. Although not on the Federal Trade Commission's list of top industrial firms in 1917, by the value of producer groves it ranked among the two hundred largest industrial enterprises in the country, just behind Swift and Armour. In 1915, the California Citrograph listed the worth of grove investments within the Exchange at approximately $200,000,000. The Exchange served as the USDA's primary model for industrial agriculture and the corporate organization of the countryside. Its thoroughgoing professional organization enabled it to survive the severe pre-war recession while many other agricultural enterprises in the U.S. and abroad were collapsing under the weight of economic distress.(82)
By the end of 1917, Exchange growers were reaping a wartime harvest of profits that obscured the many managerial adjustments brought to the organization in Powell's first six years with the cooperative.(83) The War Food Administrator, Herbert Hoover, recognized the importance of Powell's leadership. In July 1917, Hoover had summoned him to Washington and asked him to apply his skills to rationalizing the perishable foods industries of the entire country. The corporate reconstruction of American agriculture, by this action, took another leap forward.(84)
The war and its aftermath, brought both industry and agriculture a measure of rationalization. In 1921, however, the collapse of war-produced farm prices once again pushed agriculture to the forefront of the national agenda. The collapse focused attention on the "farm problem," and the growing influence of corporate-liberal measures for its amelioration. Powell's keynote address at the National Agricultural Conference of 1921 clearly reflected the newly emergent consensus on cooperative marketing among the American Farm Bureau Federation, the colleges of agriculture, and the government of Harding, Hoover, and Secretary of Agriculture Henry C. Wallace. Powell's call for cooperative marketing organizations, plus legislation enabling farmers to organize on equal terms with the business interests they dealt with, mirrored Hoover's own systematic philosophy of voluntary cooperation. Powell thus advocated for agriculture the same kind of cooperative commonwealth Hoover promoted for the entire economy, as Secretary of Commerce and then as President. The Farm Bureau Federation and the Farm Bloc in Congress took up this cry in their legislative agenda for the 1920s.
In the decade after Powell's death in 1922, the sharp decline of farm prices and the necessary adjustment to rapidly changing technological and market conditions kept much of American agriculture off balance. Farming remained in the throes of depression, in spite of cooperative marketing legislation, improved farm credit, and other pro-corporate and non-statist remedies. President Hoover tried to remedy these conditions through his Agricultural Marketing Act of 1929, which created the short-lived Federal Farm Board (FFB). The FFB received a mandate to usher in an organizational revolution in agriculture by means of large-scale commodity marketing associations, and it foreshadowed similar arrangements enacted later under the New Deal.(85)
By the arrival of the Great Depression and the New Deal, agriculture on a national level had undergone a reconstruction no less radical than that experienced by twentieth century industrial capitalism. Agricultural reconstruction arose out of the conscious efforts of a class of capitalists, political leaders, and their academic advisors. Amid the debate over the basic nature of the American political economy, and more specifically of agriculture, unanimity remained an impossibility. Yet there did emerge a fairly broad consensus regarding the future direction of farming and of rural life. Through the work of progressive agrarians such as Powell, and the urban progressives such as Jenks and Roosevelt, views of American agriculture underwent a transformation from the semi-mystical center of a individualistic way of life, into a full-blown capitalist business enterprise. While the results in the countryside often proved wrenching, and destructive of local cultural traditions and lifeways, by 1929 the mainstream of agriculture in the United States had become corporate and modern.
1 G. Harold Powell, "Address on Cooperation in the Distribution and Marketing of Farm Products Before the Scientific Staff of the Department of Agriculture," USDA, Bureau of Markets and Crop Estimates, Washington, D.C., 6 Oct. 1921, n.p., Bureau of Plant Industry (BPI), U.S. Department of Agriculture (USDA), National Archives (NA); G. Harold Powell, Annual Report of the General Manager of the California Fruit Growers Exchange, 1921-22, Sunkist Records Center, Ontario, Calif.
2 Powell, Annual Report, 1922. Powell initiated Americanization programs, and provided year round residential housing for Exchange workers, most of whom were poor immigrants from Mexico.
3 The editors of Riverside City and County Illustrated (Riverside: Trade and Commerce Pub. Co., 1895), Riverside Municipal Museum Collection, claimed that the Bradstreet Index identified Riverside as America's wealthiest city per capita in 1895.
4 G. Harold Powell, Letters From the Orange Empire, ed. Richard G. Lillard (Los Angeles, Calif., 1990), 1-26, 34, 37. Powell to Bailey, Riverside, California 8 Jan. 1905, 21/1/84, box 13, Cornell University Archives (CUA); Galloway to Powell, 31 May 1905, BPI, USDA, NA. Powell boasted to his wife Gertrude that "You can hardly appreciate how much this means as there is no class of people in the east who approach the orange growers in intelligence and large business affairs." Letters, 37.
5 Articles of Incorporation of the Southern California Fruit Exchange, 1895, Sunkist Records Center, Ontario, Calif., 1. SCFE Board Minutes, 21 Oct. 1895, Office of the President, Sunkist Growers, Inc., Sherman Oaks, Calif.
6 Articles of Incorporation of the California Fruit Growers Exchange, 27 March 1905, Sunkist Records Center, Ontario, Calif. Capitalized at a modest $10,000, the CFGE sold one share of stock each to the thirteen directors, at $100. The rest of the stock subscription went to local member associations and district exchanges. The incorporation papers defined the mission of the CFGE "to act as agent for, and representative of Fruit Exchanges and other kindred corporations . . . in the packing, picking, handling, marketing, shipping and selling of oranges, lemons . . . and all other California grown products . . . to engage in a brokerage, factor and commission selling business . . . to engage in a shipping business . . . transportation business . . . to perform all such other business operations as are germane or incidental to the purpose above mentioned" (3).
7 This discussion of the marketing mechanism of the Exchange is condensed from G. Harold Powell, "The California Fruit Growers Exchange," The California Citrograph (20 May 1915): 12-13c; Charles W. Holman, "Keeping Faith with the Consumer," Technical World Magazine, 20 (Dec. 1913): 531-537, 618; James H. Collins, "Marketing California Citrus: Sales Methods That Dispose of 30,000 Cars," The Country Gentleman (29 Jan. 1916): 198; Collins, "The Biggest Marketing Exchange: California's Citrus Organization and Its Manager," The Country Gentleman 81 (15 Jan. 1916): 3-4, 132; and Powell, "Revolving the Consumer's Dollar Backwards," California Citrograph (Jan. 1916): 10-11.
8 Powell, "The California Fruit Growers Exchange," The California Citrograph (20 May 1915): 12.
10 On the packer trusts and the modern business enterprise, see Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 391-401; U.S. Bureau of Corporations, Report of the Commissioner of Corporations on the Beef Industry, 3 March 1905 (Washington, D.C., 1905). Mary Yeager Kujovich, "The Refrigerator Car and the Growth of the American Dressed Beef Industry," Business History Review 44 (Winter 1970): 460-482, provides one of the best accounts of the rise of the packer oligopoly.
11 Holman, "Keeping Faith with the Consumer," 537; for a sample of an early sales code, see Confidential Instructions to Representatives of the California Fruit Growers Exchange (Los Angeles, Calif., 1911), 29-30. "The following is a sample wire: 'Koodoo gourdiness bromate smith gorgonize cimolite jones lexicon two cacuminate black one catadrome williams lexicology three dispread four disprince five disprison.' Which translated reads as follows: 'Ship promptly at prices quoted F.O.B. California $2.00 Stag Navels Smith, $1.75 Royal Navels Jones; we will require the following for next week's shipment to be sold delivered, two Artesia Navels Black, one Quail Navels Williams; we will require the following for next week's shipment, in addition to F.O.B. and diverted orders specified: three extra fancy navels, four fancy navels, five extra choice navels.'" Confidential Instructions to Representatives of the California Fruit Growers Exchange, 29-30. This document and others are housed at the Sunkist Records Center in Ontario, Calif.
12 Albert J. Meyer, History of the California Fruit Growers Exchange, 1893-1920 (Ph.D. diss., Johns Hopkins University, 1950), 208-228. In 1910 alone, the FGSC sold more than $2 million in supplies to member packing houses, essentially at cost.
13 See Articles of Incorporation, 27 March 1905, Sunkist Records Center, Ontario, Calif; and a broadside from the new CFGE, "Co-operative Marketing of California Citrus Fruits by the California Fruit Growers Exchange and Its Predecessor the Southern California Fruit Exchange," 1 July 1907, 4 pp. This broadside said that the CFGE was organized "upon lines materially differing from any other co-operative organization, all the details had to be worked out with extreme care and caution." Also see W. W. Cumberland, Cooperative Marketing: Its Advantages as Exemplified by the California Fruit Growers Exchange (Princeton, N.J., 1917), 145-46.
14 Cletus E. Daniel, Bitter Harvest: A History of California Farmworkers, 1870-1941 (Ithaca, N.Y., 1981), 32-34. Daniel's first chapter, "The Erosion of Agrarian Idealism," is especially significant to the premises and conclusions of this study. The literature on California agricultural labor is vast and growing. It includes works from a variety of historical and theoretical perspectives. The basic ethnic makeup of this massive labor force has been in order, first Chinese, second Japanese, and third workers of Mexican descent. Certainly, Anglo-Americans and others have worked in the citrus industry in California, but they have represented only a minority since the 1880s.
15 On the rise of the modern managerial corporation and the coming of twentieth century capitalism, see Chandler, The Visible Hand, and Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, Mass., 1990). Martin J. Sklar advances a superb social historical analysis of the capitalist class that executed the corporate remaking of the American political economy during the Progressive Era in his The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics (Cambridge, Mass., 1988). See pp. 2-13 for his theoretical assumptions. Chandler and Sklar guide this work in important ways. On Roosevelt and Wilson, see George Mowry, The Era of Theodore Roosevelt, 1900-1912 (New York, 1958), and Arthur S. Link, Woodrow Wilson and the Progressive Era, 1910-1917 (New York, 1954). On the Zeitgeist of efficiency and the effect of Frederick Winslow Taylor's ideas on the Progressives, see Samuel Haber, Efficiency and Uplift: Scientific Management in the Progressive Era, 1890-1920 (Chicago, Ill., 1964). For the best recent analysis of Hoover's agricultural policies, consult David E. Hamilton, From New Day to New Deal: American Farm Policy from Hoover to Roosevelt, 1928-1933 (Chapel Hill, N.C., 1991).
16 Sklar, The Corporate Reconstruction of American Capitalism, 1; Chandler, The Visible Hand, 455-468, and Scale and Scope, 221-224.
17 See David B. Danbom, The Resisted Revolution: Urban America and the Industrialization of Agriculture, 1900-1930 (Ames, Iowa, 1979), 22, 29. Danbom's arguments are paralleled closely by those of Roy Scott, The Reluctant Farmer: The Rise of Agricultural Extension to 1914 (Urbana, Ill., 1977).
18 L. H. Bailey, The Country Life Movement in the United States (New York, 1913). William L. Bowers, The Country Life Movement in America, 1900-1920 (Port Washington, N.Y., 1974), 69. Important contemporary Country Life monographs on various aspects of the "rural problem" include, among others, Kenyon L. Butterfield, Chapters in Rural Progress (Chicago, Ill., 1908) and The Country Church and the Rural Problem: The Carew Lectures at Hartford Theological Seminary, 1909 (Chicago, Ill., 1911), Sir Horace Plunkett, The Rural Life Problem of the United States (New York, 1910), Charles Otis Gill and Gifford Pinchot, The Country Church: The Decline of its Influence and the Remedy (New York, 1913), H. W. Foght, The American Rural School, its Characteristics, its Future, and its Problems (New York, 1910).
19 Western fruit growers received special mention by the Commission. In its discussion of monopolies detrimental to farmers, the commissioners cited the problem of "waterlordism" and the crying need to preserve access to irrigation supplies in the arid regions of the West. "Farm life in the irrigated regions is usually of an advanced type due principally to the small size of farms and the resulting social and educational advantages, and to intensive agriculture." An outcome of the proper development of the arid regions by "irrigation may be a distinct contribution to the improvement of the country life of the nation." Bailey, Report of the Commission on Country Life, (New York, 1917), 71. California orange growers, practicing commodity production, were at that moment marching in lock-step with the Chairman's principal disciple, G. Harold Powell.
20 Worthy Overseer T. C. Atkeson of the Grange responded as a representative of Country Life antagonists: "I confess that so much talk about 'betterment' and 'uplift' in connection with the farmer class makes me just a little bit weary. Suppose we try a little of the 'uplift' business upon our senators, congressmen, and legislators, governors, trust magnates, stock gamblers, railroad wreckers, and rich malefactors It might be well for the National Grange to appoint a 'Commission on City Life' . . . to report on the conditions of city life and 'what needs to be done.' . . . The farmers of the United States are all right, and the only thing that 'needs to be done' is to give them a 'square deal' before the laws of the land, and they will work out their own salvation in their own healthy and manly way." Quoted in Danbom, The Resisted Revolutions, 85.
21 Danbom, The Resisted Revolution, 41-42.
22 Theodore Roosevelt, The New Nationalism (New York, 1910). Also see the work of Country Life Commissioner Butterfield, Chapters in Rural Progress, 14-15.
23 Danbom, The Resisted Revolution, 74. According to Pete Daniel, "[t]he sources of the present agricultural structure date to the nineteenth-century notion that American farms should utilize labor-saving implements and that science should rule every sphere of rural life. Agriculture schools, the USDA, and state and local agriculture programs all stressed modernization and science. This program was but the cutting edge of a larger plan to force all farmers into commercial agriculture. Liberty Hyde Bailey ... set forth his dream: 'There will be established out in the open country plant doctors, plant-breeders, soil experts, health experts, pruning and spraying experts, forest experts, recreation experts, market experts, and many others,' he accurately prophesied. 'There will be housekeeping experts or supervisors.'" Pete Daniel, Breaking the Land: The Transformation of Cotton, Tobacco, and Rice Cultures since 1880 (Urbana, Ill., 1985), 291.
24 President Roosevelt to L. H. Bailey, 10 August 1908, in Report of the Commission on Country Life, 41-43. Embedded in the President's letter was a long quotation from a speech he delivered in May 1907 at the Michigan Agricultural College Semi-Centennial. Bailey himself had written that speech for Roosevelt outlining the conditions in agriculture upon the insistence of Gifford Pinchot. See also, Danbom, The Resisted Revolution, passim.
25 Bailey, The Country-Life Movement in the United States, 57: "The best example I have seen of the development of determination and fine social brotherhood is in the making of the Panama Canal. The making of the Canal is in every sense a conquest. It is a new civilization that the 40,000 or 50,000 folk are constructing down there. . . ."
26 For biographical material on Jenks, see "Jenks, Jeremiah Whipple," The Twentieth Century Biographical Dictionary of Notable Americans, Rossiter Johnson, ed., vol. VI, (Boston, Mass., 1904); and Dictionary of American Biography, Dumas Malone, ed., vol. V, (New York, 1932), 52-53. Clarence Wunderlin, Jr., Visions of a New Industrial Order: Social Science and Labor Theory in America's Progressive Era (New York, 1992).
27 Sklar, The Corporate Reconstruction of American Capitalism, 282. See Proceedings of the National Conference on Trusts and Combinations, Under the Auspices of The National Civic Federation, Chicago, 22-25 Oct. 1907 (New York, 1908), 148-156 for Jenks's summary to the assembly on the status of investigations into trusts and combinations. For a fuller analysis of the National Civic Federation and its influence in shaping the corporate political economy in the first years of this century, consult James Weinstein, The Corporate Ideal in the Liberal State, 1900-1918 (Boston, Mass., 1968). A view of the NCF from labor's side may be found in David Montgomery's Fall of the House of Labor: The Workplace, the State, and American Labor Activism, 1865-1925 (Cambridge, 1987, 1989), 259-290. The NCF concluded that organized capital and organized labor should negotiate binding contracts. They believed binding contracts would rationalize the markets and eliminate the violent clashes that were hurting them both in the pocket book and public opinion. On Jenks, the NCF, and labor, see Wunderlin, Visions of a New Industrial Order.
28 David F. Houston, Eight Years with Wilson's Cabinet, 1913 to 1920; with a Personal Estimate of the President, vol. I, (Garden City, N.Y., 1926).
29 For a view of Powell's life see the following sources: Obituary, "George Harold Powell," Cornell Alumni News, (2 March 1922); Lawrence Clark Powell, An Orange Grove Boyhood: Growing Up in Southern California (Santa Barbara, Calif., 1988), although limited in content about G. Harold Powell, this little book is valuable for its personal insights; also "G. Harold Powell, 1872-1922," Fifty Famous Farmers, ed. Lester S. Ivins & A.E. Winship (New York, 1924), 167-178, a Country Life Movement oriented publication; "G. Harold Powell, General Manager, California Fruit Growers Exchange," Those Who Have Achieved in the Citrus Industry, The California Citrograph (June 1921): 201-203, 295-296, written just six months prior to Powell's death; and Dictionary of American Biography, vol. 15, 1935, 145-46.
30 Powell to Bailey, 17 April 1912, CUA, Bailey Papers: "Dear Professor Bailey: I stay in Southern California. I was elected General Manager of the California Fruit Growers Exchange today and take the place next month."
31 "Dear Gertrude: I spoke to a fine crowd yesterday on the invitation of the Secretary (Houston). He invited a number of Senators and Congressmen, a number of outside economists, the bureau chiefs and about twenty department people to hear what I had to say about the new Marketing Division. Rockefeller's representative, Dr. Butterick, was there and a number of the Southern Educational Board. The talk seemed to make a hit. The Secretary said he would be glad if I would take charge of the work, and Dr. Butterick said they would add to the salary from the Rockefeller funds if I would do it. I thanked them kindly. The Secretary has read the book (Cooperation in Agriculture) all through and spoke of it." Powell to Gertrude Powell, 30 May 1913, Powell Family Papers (PFP), UCLA.
32 G. Harold Powell, Cooperation in Agriculture (New York, 1913), 5-6.
33 Ibid., chapter 1.
34 Lillard, in Powell, Letters from the Orange Empire, wrote: "The lives of some women and men, certainly Powell's life, are all of a piece. His family was quaker and prosperously rural. His grandfather and father grew apples on Hudson Valley farms near Ghent. His father, (a close ally of L. H. Bailey), who lectured and wrote on pomology and floriculture, founded the New York State Agricultural Service, and took charge of the New York State Exhibit in the Agricultural Building at the World's Columbian Exhibition in 1893 in Chicago (as well as the state's Farmers' Institutes)." See 'also Forrest Crissey, "The Crop Scout," The Saturday Evening Post (Nov. 1910): 24-27.
35 See Robert Welles Ritchie's interview with Powell, "The Religion of Cooperation," The Country Gentleman, 85, (4 Sept. 1920): 13, 41.
36 L. C. Powell, An Orange Grove Boyhood, 41-42: "My father's parents wintered with us for varying periods Grandpa Powell with his white sideburns and gentle face always deferred to his wife Marcia. She had a reputation as a determined Quaker prison reformer, including Sing Sing, and in cleaning up the worst saloons. She did her best with me on quiet evenings when I lay sprawled reading by the fireplace She would put down her reading and demand, 'Lawrence, will thee stop snapping thy gum!'" . . . "[my father's sister] Elizabeth Powell Bond (Aunt Lizzie to us) spent her life in service at Swarthmore, finally as dean of the college." Aunt Lizzie's favorite chapel service talk at Swarthmore was "Cooperation: The Will of God. . . ." Powell kept a copy with him all his adult life. It is now stored with the Powell Family papers, Coll. # 230, UCLA.
37 Consult Joan Hoff Wilson, Herbert Hoover: Forgotten Progressive (Boston, Mass., 1975), 6-30; 48-53; 58-101.
38 For definitions, see Chandler, Scale and Scope, 16-17; David Teece, "Economies of Scope and the Scope of the Enterprise," Journal of Economic Behavior and Organization 1 (Sept. 1980): 223-247; and John C. Panzar and Robert D. Willig, "Economies of Scope," American Economic Review 71 (May 1981): 268-272. As Chandler indicates, however, these studies deal with production, not distribution.
39 G. Harold Powell, "Cooperation in the Handling and Marketing of Fruit," Yearbook of the USDA, 1910 (Washington, D.C., 1911), 391. Compare this statement with Jeremiah Whipple Jenks, The Trust Problem (New York, 1900), chaps. 1, 2, & 3 on competition and combinations.
40 Powell, "Cooperation in the Handling and Marketing of Fruit," 393.
41 Ibid., 396.
42 "[J]ust as the consolidation of capital in other industries is necessary for its own protection. . . . Things must be done in a large way if the fruit grower is to deal on the same level with the combinations of capital with which his product comes in contact at every step from the orchard to the consumer." Powell, "Cooperation in the Handling and Marketing of Fruit," 390-391.
43 Powell, Cooperation in Agriculture, 7, 36-39; Powell, "Fundamental Principles of Co-operation in Agriculture," Circular No. 222, University of California, College of Agriculture, Agricultural Experiment Station (Oct. 1920). Alfred D. Chandler, Jr., The Visible Hand, 6-8.
44 Powell, Cooperation in Agriculture, 36-39.
45 Ibid., 8-9, 212. On monopoly and regulation, from point of view of Jenks and the NCF, see Proceedings of the National Conference on Trusts and Combinations, Chicago, 22-25 Oct. 1907 (New York, 1908), 148-156; and Jenks, The Trust Problem, "Competition and Monopoly," 56-76, and "Legislation," 212-226.
46 Powell, Cooperation in Agriculture, 12-13.
47 Ibid, 23.
48 Jenks, The Trust Problem, 8-9; Powell, "Cooperation in the Handling and Marketing of Fruit."
49 Journalist Walter Woehlke captured the character of Southern California orange growers in an article written for Sunset magazine in 1911. Woehlke observed that "the orange-grower is not a farmer. . . . He is a specialist in citrus fruits, a manufacturer whose raw material, soil, water and sunshine, is transformed into the finished product by living trees instead of machinery." In fact, Woehlke argued, the grower is really "a business man whose mode of living, whose pleasures, recreations and intellectual pursuits are identical with those of other business and professional men living in suburban homes. . . . "Walter E. Woehlke, "In the Orange Country: Where the Orchard is a Mine - The Human Factor Among the Gold-bearing Trees of California," Sunset 26 (March 1911): 263. The tenor of Woehlke's article accurately caught the anti-rural bias of these early twentieth century California growers. Fugitives from Eastern banks, corporation board rooms, and law courts, many in their ranks saw themselves as suburban businessmen, not as farmers.
50 J. Eliot Coit, Citrus Fruits: An Account of the Citrus Fruit Industry with Special Reference to California Requirements and Practices and Similar Conditions (New York, 1920), 10-11. Coit's impressionistic conclusions concerning the ideology and origins of California citrus growers match those of other eyewitnesses, such as lawyer-turned-journalist Carey McWilliams, and Robert Glass Cleland, a noted California historian. See the reprint of Carey McWilliams' book, Southern California: An Island on the Land (Salt Lake City, Utah, 1979), and Robert Glass Cleland, California in Our Time, 1900-1940 (New York, 1947), p. 162.
51 See B. M. LeLong, A Treatise on Citrus in California (Sacramento, Calif., 1888).
52 As one example, see Pacific Fruit World, April 8, 1905, PFP, box 30, UCLA.
53 "Report on Keeping and Shipping Qualities of Citrus Fruits," by G. Harold Powell, before Farmers' Citrus Institute, Riverside, California, 7-8 April 1905, BPI, USDA, NA.
54 During the winters of 1905, 1906, 1907, and 1908 Powell lived in Riverside with his family. Each year, Powell's fame and influence grew as his mutually advantageous relationship with the fruit men of California solidified. Powell, in turn, garnered support for the Department of Agriculture as a result of the "money values" his methods were bringing to the industry.
55 "[T]he most encouraging part of the work is that a large number of the packing house men are applying the results of the work as rapidly as they are given out. . . . We have been handling large quantities of fruit again this winter and have the same splendid support from the growers, shippers and transportation companies. We're sending a car a day to New York some of the fruit in each having been handled in various ways. The investigation will show that a large proportion of the losses in transit are due to the handling of the fruit before it is shipped. The encouraging part of the work is that the various interests put into operation the results as fast as they are demonstrated. Some of the large shippers have practically eliminated the losses from decay this year." Powell to Galloway, 19 March 1906, Riverside, Calif., BPI, USDA, NA. Also, Powell to Bailey, 10 March 1906, Bailey Papers, CUA. By 1908, fully 90 percent of packing houses in the state had been remodeled along the lines provided by Powell; Powell to Galloway, 24 Feb. 1908, BPI, USDA, NA.
56 G. Harold Powell, "Field Investigations in Pomology," USDA, Bureau of Plant Industry, 7 June 1907; PFP, #230, box 30, UCLA.
57 Ibid. By the time Powell became leader of the California Fruit Growers Exchange in 1912, his full recommendations for reorganization had been put into effect. See Powell, Cooperation in Agriculture, chaps. 2, 4, 7, 8, & 9. What is more, Powell's status, in the eyes of the major grower interests of the State, led to the first of a number of tantalizing offers he was to receive to leave government service for private industry. In 1907, E. A. Chase tendered an offer to sign with the National Orange Company. Powell discussed this with B. T. Galloway but decided to remain with the government. Powell to Galloway, 8 May 1907, BPI, USDA, NA. In the 1910 Yearbook of Agriculture, Powell insisted that: "It is a fundamental necessity that the members be held together by a contract or a provision in the by-laws which give the association the exclusive right to pick, pack, haul, grade, mark, and sell the fruit of its members . . . or to supervise or regulate these operations under rules made by the association"(398).
58 See John Henry Reed's address to the Pathological Institute, "Secure Best Results from Scientific Investigations," reprinted in The Los Angeles Times, (3/19/08). Powell's definitive report on the decay problem of oranges appeared as "The Decay of Oranges While in Transit from California," Bulletin #123, USDA, BPI (Washington, D.C., 1908), which identified blue mold as the pathogen responsible for infecting oranges damaged through rough handling and clipper-cuts.
59 Memorandum to the Board of Directors of the California Fruit Growers Exchange, 1912, by B. A. Woodford, Woodford Collection, Riverside Municipal Museum, 6.
60 Chandler, Scale and Scope.
61 Meyer, History of the California Fruit Growers Exchange, "Conclusion," 293-300; Powell, Annual Reports, 1921-22.
62 Meyer, History of the California Fruit Growers Exchange, 258.
63 Ibid., 264. "Such a large organization naturally gives opportunity for big talent to develop, and the work is now old enough to have men trained in its employ who have come up through many departments. It also affords opportunity for ambitions youths who wish to learn the business. Almost every occupation in connection with the Exchange has its objective promotion. Throughout all its operations a spirit of democracy pervades, and a feeling of permanency exists." Holman, "Keeping Faith with the Consumer," 535.
64 Meyer, History of the California Fruit Growers Exchange, 268. Meyer cites Exchange Board Minutes, 1 Sept. 1920.
65 The Exchange lemon shippers founded the Lemon By-Products Company in 1915, joined in 1922 by the Orange By-Products Company. See Heritage of Gold: The First 100 Years of Sunkist Growers, Inc., 1893-1993 (Van Nuys, Calif., 1993), 37-72, and the Annual Report, 1922.
66 See Powell's Annual Reports, 1914-1922. Copies are housed at the Sunkist Records Center, Ontario, Calif.
67 See G. Harold Powell, "The Cost of Distributing the California Citrus Crop From the Producer to the Consumer," The Western Fruit Jobber 1 (April 1915): 23-31, and "Revolving the Consumer's Dollar Backwards', California Citrograph (Jan. 1916): 10-11. These reports presented the findings of Powell's two year empirical investigation of the costs of distributing citrus fruit from the grove to the consumer. The results allowed him to effectively deflect the criticism coming from dissident growers and packers who sought other remedies to the marketing woes of 1915 and 1916. See Collins, "The Biggest Marketing Exchange: California's Citrus Organization and Its Manager."
68 Meyer, History of the California Fruit Growers Exchange, 172.
69 Powell, Annual Reports for 1915, 1916, 1917.
70 See the Annual Report, 1920.
71 Holman, "Keeping Faith with the Consumer," 535; Collins, "Marketing California Citrus," 198; and Meyer, History of the California Fruit Growers Exchange, 176.
72 Powell, Annual Report, 1914-1916.
73 Consult Powell, Holman, and Collins as cited earlier.
74 Heritage of Gold, 71 and Annual Report, 1921 and 1922.
75 Powell, Annual Report, 1920-22, Sunkist Records Center, Ontario, Calif.
76 Meyer, History of the California Fruit Growers Exchange, 172-183; Annual Reports, 1921-22.
77 Powell, Annual Report, 1916, 12.
78 Collins, "Marketing California Citrus," 198. "The Exchange has gotten great prestige among the jobbers by its advertising campaign. Its standing is entirely different than before being regarded now as the leader in the citrus business. Recently a certain fruit jobber suddenly began buying Exchange fruit exclusively. As he had never bought any before we were interested to know what caused his change of heart. It developed that at a meeting with his salesmen he asked their opinion as to what could be done to increase orange sales. With one voice, they replied, 'give us Sunkist as a talking point'." "One Italian said to me recently, 'Your advertising is no help, they all want Sunkist any way.' I thanked him." Don Francisco, "How 'Sunkist' Is Put Over," California Citrograph (June 1916): 6.
79 Annual Reports, 1921-22; C. Daniel, Bitter Harvest, chap. 1 & 2.
80 See the memoirs of Houston, Eight Years with Wilson's Cabinet, for a first-hand view of the New Freedom legislative program as it applied to agriculture.
81 Sklar, The Corporate Reconstruction of American Capitalism, 328-332. George Farrand, General Counsel of the Exchange, declared in reflection of Powell's perspective on the FTC: "Much objection has been made to this inquisitorial power of the Commission, but it seems to me that if the Commission is to obtain any respect in the business world, it must necessarily be given power to get at the facts. The power to investigate without the power to compel disclosure would be worthless legislation." "The Federal Trade Commission Act and the Clayton Bill," Copy of Remarks of George E. Farrand to the Board of Directors of the California Fruit Growers Exchange (11 Nov. 1914), BPI, USDA, NA.
82 Powell, Annual Report, 1917; Powell, "Revolving the Consumer's Dollar Backwards," California Citrograph (Jan. 1916): 10.
83 Meyer, History of the California Fruit Growers Exchange, 181.
84 Powell served from July 1917 to Feb. 1919 as Chief of the Perishable Foods Division, with sporadic visits to California on leave to attend to Exchange business. See Powell, "Policies and Plan of Operation - Perishables," U.S. Food Administration (USFA) (April 1918); USFA, NA, RG 4, Suitland, Md. For an insider account of the Food Administration, see William Clinton Mullendore, History of the United States Food Administration, 1917-1919 (Stanford, Calif., 1941). David M. Kennedy, Over Here: The First World War and American Society (New York, 1980) 117-126, offers insight into Hoover's approach to the complex problems of domestic food supply and support for the allies. For the best recent interpretive account of Hoover's farm policy, with a review of the Food Administration, see Hamilton, From New Day to New Deal, pp. 26, 30-31, 64.
85 Hamilton, From New Day to New Deal, "The Federal Farm Board," 50. Hamilton's dissertation provides the fullest discussion of the FFB and its cooperative marketing policies. Norman's work also relied on FFB papers that are no longer extant, thus making it indispensable for the study of the agency.
H. Vincent Moses, Ph.D., is curator of history, City of Riverside, California, Municipal Museum. Since 1980, he has served as chief historian for the general plan and initial development phase of California Citrus State Historic Park in Riverside. His primary expertise lies in the application of the new social and rural history frameworks in museum exhibition. He is skilled in the collection and interpretation of Southern California's diverse cultural landscape. Dr. Moses is author of several museum publications, including Life in Little Gom-Benn: Chinese Immigrant Society in Riverside, 1885-1930, Nuestros Antepasados; Riverside's Mexican American Community, 1917-1950, and The Machine Maker: Joseph L. Hunter's Revolution in Aluminum Manufacturing. His most recent journal article appeared in the spring issue of California History as "The Orange Grower is Not a Farmer: G. Harold Powell, Riverside Orchardists, and the Coming of Industrial Agriculture, 1893-1930." He completed his dissertation, The Flying Wedge of Cooperation: G. Harold Powell, California Orange Growers, and the Corporate Reconstruction of American Agriculture, 1904-1922, at the University of California, Riverside where he has also served as adjunct assistant professor for Museum Interpretation.
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|Author:||Moses, H. Vincent|
|Publication:||Business History Review|
|Date:||Jun 22, 1995|
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