When reading Grapes of Wrath by John Steinbeck, one is painted a picture of corporate abuses over helpless people who are finally saved after years of struggle by the government. Steinbeck blames banks and the invention of the tractor and other machinery for displacing thousands of “Okies” who were no longer needed to attend to the crops. He also describes a scene where the California farmers destroyed their oranges and other goods in front of the starving people because no one had the money to buy the products. I will do my best to address these points and explore the reality of the economy during the Great Depression.

Contrary to popular belief, the problem in the eyes of government and corporations was not high prices, it was low prices. Corporations blamed low prices on evils such as “unfair competition” and claimed their “profits weren’t protected.” In response to these complaints, Franklin Roosevelt started the first of many “New Deal” government interventions by creating the National Recovery Administration (NRA) in 1933. The first administrator of the agency, Hugh Johnson, called it “the greatest social advance since the days of Jesus Christ.”

The NRA essentially centralized businesses and industries into regulatory cartels. Large businesses suddenly had the power of law to declare “codes of fair competition” and eliminate “destructive competition.” This led to the formulation of price floors and minimum wage laws, meaning that if a business offered a lower wage to employees or lower price to consumers than the industry’s standards they would be fined and/or imprisoned. A famous example is that of Jacob Maged, a New Jersey tailor who charged 35 cents for pressing a suit, 5 cents below the 40 cent minimum established by the NRA. Only when he agreed to follow the NRA standards did he avoid a $100 fine and a 30 day jail sentence.

Such a law diminishes creativity in start-up businesses, provides a de facto monopoly to the larger players in an industry, and establishes what large businesses consider “fair competition”: no competition. Without free competition and fluctuation of prices and wages, the individual people are inevitably the ones who are most impacted in a negative way. Mandatory higher wages destroy jobs for lower-skilled workers, and mandatory higher prices obviously prevent people from buying goods they especially need during a depression. In other words, the NRA was preventing the market from readjusting its labor and goods to the productive areas of the economy in the name of “fair competition” and other terms created by businessmen looking to use government to protect their profits.

The NRA was just the beginning of the attack on low prices. Many farm goods such as wheat and cotton were experiencing large drops in prices as the recession and depression worsened. Government believed the problem was overproduction, which they then believed led to prices that were too low, putting a strain on businesses. It is worth noting that the economists who actually predicted the Great Depression strongly recommended against the policies pushed through by the Roosevelt Administration.

In an attempt to “stabilize” farms and food prices, the Agriculture Adjustment Act was passed in 1933. The basic goal of the newly formed Agriculture Adjustment Administration (AAA) was to pay farmers to reduce their crop area and output. This, the AAA and Roosevelt Administration believed, would bring stability to the economy by raising prices to their so-called appropriate level. Oklahoma is the initial setting of the Joad family in Grapes of Wrath, so we’ll stick with Oklahoma figures for now.

In Oklahoma in 1933, 87,794 cotton farmers plowed under acres of their already-growing fields for a total payment of $15,792,287 from the federal government.

In 1934, Oklahoma pig farmers received more than $4 million to slaughter a portion of their sows and younger pigs.

In 1934 and 1935 wheat farmers were paid nearly $14 million to reduce their acreage. What’s ironic is just years earlier in 1917, under the watch of Herbert Hoover at the Food Administration, the government paid farmers an artificially high $2-per-bushel of wheat to expand the production of wheat for the efforts of World War 1. First government subsidized the unnatural growth of wheat (causing a major wheat bubble and artificial reallocation of farmers’ resources in the Midwest), and less than 20 years later government was paying farmers to stay away from wheat and do absolutely no farming on their land.

In the entire U.S., production of other products like milk and butter decreased approximately 30% thanks to the new federal subsidies.

It was this process that played the single greatest role in landowners getting rid of their tenants in Oklahoma, not some far off mysterious bankers as Steinbeck portrays in Grapes of Wrath. Another major factor was that the federal subsidies did not reach the smaller family farms in Oklahoma, which provided a double-whammy to the small farms with the artificially higher prices that came with the food destruction. Basically, large farms were paid to do nothing and even destroy their crops, which increased prices and diminished competition artificially, which in turn led to the eventual decline of small farms (who were often bought by the larger subsidized farms) as well as the removal of many tenants of the larger farms.

These fatally flawed policies monopolized large farms and forced many farmers to leave the state, most choosing to go to California and the Southwest. Steinbeck places the majority of the blame on corporations, but he failed to see that the corporations would have been powerless without the force of government. Both the NRA and AAA were ruled unconstitutional by the Supreme Court in 1936, but many similar policies have remained in place up to the present day.

Basic economic common sense tells us that you cannot create wealth by destroying wealth. If this were the case you’d have Apple destroying most of its iPods, Chipotle would demolish its burritos, and more businessmen would probably be following this practice. However, it is plain common sense that assures and convinces us that you cannot expand your wealth by voluntarily destroying your goods. This is what Steinbeck blames California farmers for doing, but there is no historical evidence that suggests farmers sprayed kerosene on their oranges and dumped their potatoes in the rivers. The only examples of farmers destroying their crops are those who were paid to do so by the federal government.

A question is worth asking: if, as Steinbeck wrote, farmers did destroy their oranges and potatoes because no one could afford to purchase them, why not sell them for even 1/2 cent a piece? The loss would be far less than actually paying people to harvest the goods, only then to proceed to physically destroy them all. Such a bogus event would not benefit the farmer, the workers, or the consumers. The farmers would be better off not growing those crops at all or simply giving them away, rather than expending even more resources on hiring guards and people to destroy the food.

John Steinbeck is a fantastic writer but, as with many writers, he has a flawed or incomplete view of the real economic world. People are not helpless peons when given the ability to make their own choices, start their own businesses, and live their lives as they see best. The attempt at a planned economy during the Great Depression did not reduce unemployment or diminish the impacts of the economic correction as expected or hoped. It is a prime example and vital reminder of the destruction that is bound to occur when a select few are empowered to control, manipulate, and implant their vision of a perfect society on the rest of the people.

So what does the term “wealthy” actually mean?

If you google “define wealth” you get “the state of being rich and affluent”or “having a plentiful supply of material goods and money.”

I feel these definitions miss the true meaning of the term completely.

The word “wealth” is derived from the old English word “weal“, which is synonymous with well, as in well-being.  What makes you wealthy is  what increases your well-being.

Therefore, to be “wealthy” doesn’t mean just money or possessions to me.

To me, my prime source of wealth is my life and health. Without a state of good health, life is pretty rough.

Closely following this is my family and friends. Without them, life would not nearly be so interesting and fun.  My overall wealth would be severely lessened.

Now, of course, I am NOT saying that material possessions and money are worthless. Having these can also increase your well-being. It is also true that each individual will define their own concept of wealth – what truly makes them wealthy – themselves.  Each definition is different, just like a fingerprint.

Personally speaking, I could stare at a pile of gold I own – or turn it into a house, car and land – and quite possibly I would not feel an iota wealthier. However, I do know this – I am poorer than the lowliest street sweeper without my health and my loved ones.

I will close with a quote from Ludwig von Mises, American citizen and writer from the Austrian school of economics to describe the moral importance of money.

“What we have to realize is this: Every kind of human arrangement is connected in some way or other with money payments. And, therefore if you destroy the monetary system of a country or of the whole world, you are destroying much more than simply one aspect. When you destroy the monetary system, you are destroying in some regards the basis of all interhuman relations. If one talks of money, one talks about a field in which governments were doing the very worst thing which could be done, destroying the market, destroying human cooperation, destroying all peaceful relations between men.” (photo license)

Let the Establishment be on notice. Even if I fail, there will be many more following the footsteps of Mises, Hazlitt, Paul, Bastiat and Rothbard in the coming years and decade to come.

And those that do will all know the true meaning of wealth, and we will seek to return the money power to We the People – where it belongs – or die trying.

Jake Towne is running for U.S. Congress in eastern Pennsylvania’s 15th district in 2010. Prior to returning home, he had been living in Shanghai as an engineer in the semiconductor industry for over 3 years. As part of defending liberty and championing the Constitution, Towne is offering the citizens in his area a novel form of accountable government called “Our Open Office.”