Poor Boys at the Hoedown: One Hundred Years of Nebraska Farmers Union, Unauthorized and Unabridged, Part Two

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Read Poor Boys at the Hoedown: One Hundred Years of Nebraska Farmers Union, Unauthorized and Unabridged, Part One

By Sally J. Herrin, Ph.D.

Arguably, the single greatest accomplishment of the Nebraska Farmers Union has been our founding of the vast majority of the co-ops of this state. Creameries and grain elevator cooperatives dominated early days, but through the 1920s and ’30s and on, nearly anything families needed to farm or ranch, fuel, garden, or keep house was available through some nearby local or through the Farmers Union State Exchange stores in Omaha and across the state. No-frills warehouses, the exchanges prefigured modern big-box stores—but the profits were returned to the patrons instead of to outside investors like Wal-Mart today. The success of the cooperative model operated exactly upon the principles of ordinary business in the economy of the time, as today, with this single great exception—no untoward profit had (or has) to be generated. Each cooperative was created to serve its patrons, ordinary people who owned it through investment and patronage.

More so than any other single political movement, the cooperative movement bloomed across the Great Plains, unstoppable. Cooperation was the real prairie fire. One local reporting in our state newspaper, the Nebraska Union Farmer, declared in 1914, “I am afraid to say how much business we did this month, except to say it was in six figures.”

Nebraska Farmers Union has organized between four hundred and five hundred distinct cooperative businesses since 1911. Much of the early heavy lifting was done by the first NeFU president, C. H. Gustafson, and by L. S. Herron, the first editor of the Nebraska Union Farmer. Gustafson, a farmer from near Mead, Saunders County, joined in NeFU 1913 and was our first state president. Elected to the Nebraska Legislature in 1911 and 1913, Gustafson was an excellent parliamentarian and speaker. He ran the Union from his farm, while Herron manned the NeFU office in Omaha.

1911—C. H. Gustafson helped pass the Nebraska law permitting cooperatives. Local co-ops sprang up across the state.

1914—The Farmers Union State Exchange opened to sell machinery, fencing, seed, feed, paint, fuel, coal, salt, twine, hardware, work clothing, shoes, boots, groceries, and school supplies. The exchange purchased in car lots and stored inventory in a warehouse. Savings to patrons included discounts for cash and for quantity, freight savings, and low overhead of the warehouse, as opposed to the showrooms and storefronts of ordinary businesses, similar to big-box stores today.

FUSE membership did not automatically include NeFU membership. It was a separate stock company. Town people could purchase goods at the exchange, at lesser discounts than members. Only FUSE members were eligible for patronage dividends. Gross sales were $60,000 in 1914. In 1916 that figure was $1,000,000, growing to $3,000,000 in 1919. Operating capital was kept below $100,000, and surplus was distributed as a percentage based on patronage.

Explosive growth and statewide demand meant reorganization in 1919, when branch stores opened in Central City, Hastings, Norfolk, Osceola, Prague, Scribner, Talmage, Tekamah, West Point, and Wilber. About this time members debated making NeFU membership a requirement for FUSE membership, but no action was taken. This precedent would prove disastrous decades later and create the Achille’s heel whereby the political opposition could attack NeFU by drying up our co-op income stream.

1916—The first FU Co-Operative Creamery was organized in Fremont. It was an enormous success and expanded in the 1920s, with Gustafson’s urging, to open plants in Superior, Aurora, and Fairbury. SUPERIOR brand butter was sold around the region. Farmers Union creameries paid three to four cents a pound more for butterfat than nonunion creameries, plus patronage dividends of two to three cents a pound. Herron called this the co-op “check-mate” against the creamery trusts.

1917—Gustafson also drove the creation of the Farmers Union Livestock Commission, to hold down terminal marketing costs and help members market their livestock more effectively. The commission opened on April 1, 1917, in the Omaha Stockyards without prior approval of Omaha Livestock Exchange, which initially balked at the move. Despite early struggles, a 38 percent patronage dividend was declared for the first business year on 2,186 car lots of cattle. The commission opened agencies in St. Joseph, Missouri, in August 1917 and in Sioux City, Iowa, in 1918, both of which became regional exchanges.

The impact of the FU Livestock Commisson was enormous and is credited by many for creating the economic margin that saved many livestock Nebraska producers through the difficult 1920s.

1918—Farmers Union Co-Operative Insurance was organized. It offered actual replacement value at two cents on the dollar premium. By January 1919 assets were just under $700,000. In January 1922 FU Insurance held almost $12 million in its insurance pool.

1919—The NeFU board of directors voted in 1919 to establish a National Co-Operative Company on the Omaha Grain Exchange to handle grain from FU members. The Farmers Union Grain Exchange found itself overwhelmed by initial volume, and ultimately about fifty FU elevator associations were chartered across Nebraska, in larger towns and small, over the next few years. Fifty more existing elevators changed their charters to become FU elevators, each with its board of directors. In the early 1920s laws changed and the Omaha Grain Exchange could no longer have direct affiliation with locals, which decentralized control of grain elevators. FU elevator members saved with lower overhead costs and increased price per bushel, and many elevator co-ops sold other Farmers Union products, including lumber, farm machinery, flour, feed, salt, and so on. Scribner and Snyder FU elevators had milling operations as well.

Though Nebraska Farmers Union no longer enjoys the benefit of the checkoff, the legacy of NeFU co-op building still benefits Nebraska agricultural producers. An article in the Lincoln Journal Star, on October 23, 2013, says nine Nebraska cooperatives ranked among the top one hundred coops in the US last year, according to a report released by the National Cooperative Bank. Ranking was based on revenue: “Ag Processing Inc. of Omaha was the largest co-op domiciled in Nebraska, and the seventh largest in the country, with 2012 revenue of $4.92 billion, up from $4.36 billion in 2011… Affiliated Foods Midwest, a grocery co-op based in Norfolk, came in No. 33. It was the only non-agriculture-related Nebraska co-op on the list. Other Nebraska co-ops on the NCB Top 100 list were: Aurora Cooperative Elevator Co, 52nd; Cooperative Producers Inc. of Hastings, 54th; Farmers Cooperative of Dorchester, 61st; FCS of America of Omaha, 66th; Central Valley Ag Cooperative of Oakland, 81st; Frenchman Valley Farmers Co-op of Imperial, 88th; and United Farmers Cooperative of York, 90th.”

Saving the Family-farm System of Agriculture

Along with the cooperatives, two signal NeFU projects have proved critical to preserving the family-farm system of agriculture in Nebraska. The mortgage foreclosure moratorium that was the chief aim of the Farm Holiday Movement in Nebraska was enacted in the Nebraska Legislature in 1933 and I-300, the citizens’ initiative that became the strongest state anticorporate farming legislation ever enacted in the US, were both Nebraska Farmer Union projects that helped keep thousands of family farms afloat over the course of decades of farm income crisis.

The Farm Holiday movement was originally founded by Milo Reno, Iowa Farmers Union president elected in 1923. Reno was a potent speaker who became head of insurances in 1930. One hundred years ago farmers of eastern Nebraska and western Iowa enjoyed good times that would last a decade and more. Many had prosperous corn and hog operations, and land prices were high. When the bottom dropped out of the farm economy following World War I, these farmers had everything to lose and were quick to react when Reno called for a farm strike in 1932.

Organizing farm strikes is next to impossible, but Reno’s people worked to blockade roads into Sioux City to prevent farm products from reaching markets. Milk was dumped, swine were shot and left to rot, and discipline around the Reno Farm Holiday actions was sometimes poor, resulting in violence that alienated just about everyone. Reno was intent on raising income to farmers, just as labor groups worked to secure higher wages for town and city residents. The farm strike did not prove to be the answer, but it got the attention of regional governors and the nation at large.

Many Nebraska Farmer Union members engaged in the Farm Holiday movement. One thousand people convened in September 1932 to create the Nebraska Farm Holiday Association, where Harry Parmenter of Yutan, NeFU state vice president, was elected Nebraska Farm Holiday president and A. O. Rosenberg of Newman Grove was elected VP.

About the same time, a handful of Newman Grove area farmers organized the Holiday Association of Nebraska under the Madison County Plan. A first-person account by one of the organizers, Andrew Dahlsten, is archived at Nebraska Farmers Union. The Madison County group organized penny sales, the first in Nebraska for a young widow with seven children, to prevent farm foreclosures. By contrast with Reno groups, Madison County Holiday Association actions were nonviolent, prevailing through sheer numbers and the moral force of the crowd. Each sale was preceded by a man-to-man talk with the bankers involved, during which the will of the assembled people was made clear—only a few select men would bid. All debts were cleared, and small sums were raised to reimburse the banks for their trouble. Afterwards, everybody sang hymns and union songs.

In February 1933 more than three thousand farmers, most NeFU members, marched on the Nebraska State Capitol in Lincoln to protest the epidemic of farm foreclosures. On March 3 the Nebraska Legislature passed a mortgage moratorium that saved thousands of Nebraska family farms.

The most extreme actions by farmers, historian Shover notes, generally result from the prospect of the actual loss of the land, going back to Shay’s Rebellion of 1786–87, when distressed farmers, many veterans of the Revolutionary War, took direct action to close the courts to prevent farm foreclosures, eventually taking armed action against federal troops. Thirty farmers died.

That most terrible prospect, the actual loss of Nebraska family farms in the early 1980s, spurred the citizen’s initiative, I-300, enacted by Nebraska voters in 1982. As corporate agriculture sought to move into Nebraska, to do here what livestock consolidation had done in North Carolina and Iowa, NeFU President Neil Oxton (1922–2013) led a handful of not-for-profit and faith-based groups, including the Center for Rural Affairs, and set out to prohibit limited liability corporations from farming in Nebraska, with exception for legitimate family corporations. I-300 stood for two decades as the most effective anticorporate farming law in the US.

This simple law helped protect Nebraska family farmers and ranchers from 1982–2002, despite yearly attempts to undo its good work in the Nebraska Unicameral and many court challenges. In the end, after twenty years helping to level the playing field for ag producers in our state, I-300 was set aside by a judge—whom many observers noted should likely have recused herself—in a summary judgment that called on the so-called dormant commerce clause.

In ordinary English, summary judgment means that the judge does not even have to look at the evidence because of a theoretical trump card. In this case, that card was the dormant commerce clause, which says basically that business, like rust, never sleeps. In other words, the needs of interstate business, as is so often the case, trump the needs of all of the rest of us.

Nebraska Farmers Union members built the farm supply and marketing cooperatives over the second and third decades of the twentieth century, which allowed Nebraska farmers to carve out margins that kept their operations going through the Great Depression. Cooperatives, then as now, often anchored small Nebraska towns when other businesses dried up and blew away. The Farmers Holiday Movement in its several expressions in Nebraska, driven and led by NeFU members, was almost entirely responsible for the 1933 Nebraska Legislature’s mortgage moratorium, which saved thousands of family farms and ranches.

Like the 1933 Nebraska mortgage moratorium, the late, great I-300 did not offer a permanent solution to the problem of farm income. However, both actions were critical Nebraska Farmers Union achievements in our tireless effort to protect and preserve the family farmers and ranchers of our state.

The Nebraska Farmers Union has shaped our state’s unique cultural and political values for the past hundred years and is largely responsible—as champion of the state’s largest single industry—of Nebraska’s unique solvency through the latest economic troubles that have left every state but ours reeling, as Governor Dave Heinemann never tires of pointing out.

Public power, the Unicameral system, the Natural Resources Districts system, and local zoning (spurred largely by the Hog Wars, circa 1998) in ninety of Nebraska’s ninety-three counties have all been projects spearheaded, organized, and finally achieved through the long, hard efforts of NeFU members. Much of what we have come to think of as our unique Nebraska populist heritage was and remains Nebraska Farmers Union policy, approved at our yearly state conventions. Chances are, if you are reading this article and your family ever farmed in Nebraska, you yourself have NeFU stock in your ancestral woodpile.

Sources

Crampton, John A., The National Farmers Union: Ideology of a Pressure Group (UNL Press, 1965).

Dux-Ideus, Sherri L., “Greatest Good for the Greatest Number: L. S. Herron and the Nebraska Farmers Union Movement 1911–1945,” MA thesis, December 2001, History, UNK, dedicated to Marvin Dux.

Dahlsten, Andrew, “The Madison County Plan.pdf,” first-person account of the Holiday Association of Madison County, archived at Nebraska Farmers Union.

Nebraska Union Farmer, archived online at https://drive.google.com/folderview?id=0B-jPnzsU42gOQ2NkZzlMZm4tZlU&usp=sharing.

Shover, John L., “The Farm Holiday Movement,” Nebraska History 43: 53 ff.

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