George N. Peek

George N. Peek

George Nelson Peek, the son of a farmer, was born in Polo, Ogle County, on 19th November, 1873. He attended Northwestern University from 1891 to 1892, but did not graduate.

In 1893 Peek joined the Deere & Webber Company. At the time the company was the leading manufacturer of agricultural machinery in the world. Peek soon showed he had a shrewd business mind and by 1901 he had been promoted to the role of Vice President of the John Deere Plow manufacturing division in Omaha, Nebraska.

In 1911, he was named President of the Deere & Company subsidiary in Moline, Illinois. During the First World War he became involved in the War Industries Board (WIB) where he met Brigadier General Hugh S. Johnson. Peek was very impressed with Johnson and wrote to a friend: "He was a lieutenant only a year ago; is a young man and one of the most forceful, active fellows I have met. Unless I am greatly mistaken in the man he will bring about vast improvements in the War Department."

Peek was appointed President of the Moline Plow Company in 1919. The following year he appointed Johnson as his assistant general manager at a salary of $28,000 a year. John Kennedy Ohl, the author of Hugh S. Johnson and the New Deal (1985), has argued: "The partnership was a dangerous mix of volatile personalities. Both had supreme confidence in their own abilities, and neither could tolerate opposition to his own views. Neither liked to lose an argument, and both relied on force rather than tact to win the day. A strain in the relationship was certainly predictable."

During the First World War the agricultural industry in the United States experienced fast growth as a result of the conflict in Europe. By 1920 the European countries began to recover and curtailed their agricultural imports. That summer the prices of agricultural products dropped sharply. Hugh S. Johnson wrote in his autobiography, The Blue Eagle from Egg to Earth (1935) that he found himself in a company saddled "with a new, heavy high-priced inventory, an enormous debt, and a portfolio of farm paper that had always therefore been regarded as 'sound as wheat in the mill,' but which now turned into worthless chaff by millions."

Peek and Johnson developed a plan for government aid to the industry. In January 1922, they sent their proposal, Equality for Agriculture , to the Secretary of Commerce Herbert Hoover and the Secretary of Agriculture Henry Cantwell Wallace. They warned Hoover and Wallace that if it was rejected by the Republican Party the "essential principles deduced in the brief will seriously embarrass it in the coming election, if not permanently." Hoover was not impressed with the Peek-Johnson proposal and instead put forward his own plans for agricultural recovery. Members of the Democratic Party did like the plan and Senator Thomas Walsh of Montana wrote to his colleagues in December 1923, that "the farmers of my state, who border on desperation, quite generally, if not unanimously, are giving their endorsement to the so-called Johnson-Peek plan for an agricultural corporation".

Peek supported the McNary-Haugen Farm Relief bill that proposed a federal agency would support and protect domestic farm prices by attempting to maintain price levels that existed before the First World War. It was argued that by purchasing surpluses and selling them overseas, the federal government would take losses that would be paid for through fees against farm producers. The bill was passed by Congress in 1924 but was vetoed by President Calvin Coolidge.

In April 1927, Hugh S. Johnson left Peek to work for Bernard Baruch, one of Wall Street's best-known financiers. The two men continued to work closely together and during the 1928 Presidential Election they opposed the Republican Party because of the actions of Coolidge. After the election of Herbert Hoover Peek campaigned against his proposed Federal Farm Board.

Peek worked as an advisor on agricultural policy to Franklin D. Roosevelt during the 1932 Presidential Election. He joined a team that included Johnson, Rexford Tugwell and Henry A. Wallace. Wallace and Tugwell were both impressed with a plan put foward by M. L. Wilson, a professor of agricultural economics at Montana State Agricultural College. Wilson's idea was called the domestic allotment plan. Farmers who agreed to limit production would be rewarded with "allotment payments" which would supplement the income they received for crops on the open market. Its main purpose was not to subsidize farmers but to control production.

When Roosevelt won the election Peek hoped to become United States Secretary of Agriculture. However, this position went to Wallace. Bernard Baruch, an old friend, persuaded Roosevelt to put Peek in charge of the Agricultural Adjustment Act (AAA), a government organization that paid farmers not to grow crops and not to produce dairy produce such as milk and butter. The money to pay the farmers for cutting back production of about 30% was raised by a tax on companies that bought the farm products and processed them into food and clothing.

The objective of the AAA was for a reduction in food production, which would, through a controlled shortage of food, raise the price for any given food item through supply and demand. The desired effect was that the agricultural industry would once again prosper due to the increased value and produce more income for farmers. In order to decrease food production, the AAA would pay farmers not to farm and the money would go to the landowners. The landowners were expected to share this money with the tenant farmers. While a small percentage of the landowners did share the income, the majority did not.

On 27th July, 1933, George N. Peek appointed Frederic C. Howe the head of the Consumers' Counsel. Peek later recalled that the appointment of Howe and Jerome Frank, the AAA's general counsel was "one of the two big mistakes he had made setting up the AAA." John C. Culver has argued: "Frank was liberal, brash, and Jewish. Peek loathed everything about him. In addition, Frank surrounded himself with idealistic left-wing lawyers... whom Peek also despised." Howe and Frank associated with other left-wing members of the Roosevelt administration. This included Adlai Stevenson, Alger Hiss, Hope Hale Davis, Lee Pressman and Gardner Jackson. Peek claimed that the AAA "was crawling with... fanatic-like... socialists and internationalists."

Peek was was adamantly opposed to the production quotas, which he saw as a form of socialism. The authors of American Dreamer: A Life of Henry A. Wallace (2001) have argued: "Crusty and dogmatic, Peek still seethed with resentment over Wallace's appointment as secretary, a position he coveted. Moreover, Peek had no use for the domestic allotment plan, which was the heart of the AAA program." To Peek the plan represented "the promotion of planned scarcity" and according to his autobiography, Why Quit Our Own? (1936), he was "steadfastly against it" from the outset.

Peek also clashed with Hugh S. Johnson who was the head of the National Recovery Administration (NRA). This organization allowed industry to write its own codes of fair competition but at the same time provided special safeguards for labor. Section 7a of NIRA stipulated that workers should have the right to organize and bargain collectively through representatives of their own choosing and that no one should be banned from joining an independent union. The NIRA also stated that employers must comply with maximum hours, minimum pay and other conditions approved by the government. Employers ratified these codes with the slogan "We Do Our Part", displayed under a Blue Eagle at huge publicity parades across the country, Franklin D. Roosevelt used this propaganda cleverly to sell the New Deal to the public.

Peek warned Johnson in a letter on 17th July, "any fixation of minimum wages and maximum hours" in farm-related industries, "even though the labor involved is urban labor, is bound to have its effect upon the prices which we are seeking to obtain for the farmer for his production of basic and other agricultural commodities." John Kennedy Ohl pointed out: "Peek was even more hostile toward the blanket code in the recovery board meetings. He told the board that if processors had to pay the higher wages required by the code, they would make it up by paying lower prices to the farmer, thereby impeding agricultural recovery. Johnson exploded at Peek's implication that NRA was undermining the agricultural recovery program. Like small boys arguing in the schoolyard, they jawed at each other... The following weeks brought no agreement between Johnson and Peek. Johnson suggested that Peek draw up a list of agricultural and food industries that might be exempted from the blanket code until August 15, 1933. But Peek rejected the suggestion; in turn, he asked Johnson to continue to deal with agricultural and food industries on the basis of the executive order of June 26."

In letters, Peek asked Johnson to go slowly and to give detailed study "to the relation of increased labor costs to increased prices to the farmer and to the market." Peek also enlisted the leaders of most of the nation's large farm organizations to press Johnson to go slowly and chastised him for failing to "readily recognize the purpose of our act (AAA) and my present effort to equalize the differential between agriculture and other industries." Johnson, however, would not relent, arguing that he could not "be moved" to grant exceptions to the blanket code "by unsupported statements of exaggerated fears."

Peek's main objective was to raise agricultural prices through cooperation with processors and large agribusinesses. Other members of the Agricultural Department such as Jerome Frank was primarily concerned to promote social justice for small farmers and consumers. On 15th November, 1933, Peek demanded that Henry A. Wallace should fire Frank for insubordination. Wallace, who agreed more with Frank than Peek, refused.

Peek became completely disillusioned with the Agricultural Adjustment Act (AAA). He wrote in his autobiography, Why Quit Our Own? (1936): "There is no use mincing words... The AAA became a means of buying the farmer's birthright as a preliminary to breaking down the whole individualistic system of the country." However, it was clear that President Franklin D. Roosevelt supported Wallace over Peek.

In December 1933, Wallace accompanied Roosevelt on a visit to Warm Springs. Peek seized the opportunity to announce a half-million-dollar plan to subsidize the sale of butter in Europe. Peek's action was intended as a declaration of independence, but Rexford Tugwell, acting secretary in Wallace's absence, took it as insubordination. Tugwell wrote in his autobiography that "it was becoming obvious that if we did not get rid of George Peek, he would get rid of us." He said this to Roosevelt and it was agreed that Peek should be moved from the AAA.

A few days later, Wallace made a speech where he said the dairy program had been a failure. Although he did not make reference to Peek, it was clearly a comment of his policy at the AAA. John Franklin Carter commented: "That is the coolest political murder that has been committed since Roosevelt came into office." Peek resigned from the AAA on 11th December, 1933. The same day, President Roosevelt named Peek his Special Advisor on Foreign Trade.

President Roosevelt created the Export-Import Bank of Washington by executive order on 2nd February, 1934, and named Peek president of the bank. Once again Peek found it difficult to work with colleagues and after clashing with United States Secretary of State Cordell Hull, he resigned on 2nd December, 1935.

Peek retired to California. He rejoined the Republican Party, and in 1936 he told his old friend, Hugh S. Johnson, that he intended supporting Alf Landon in the 1936 Presidential Election. Johnson told him he was acting more out of anger over his own personal treatment by Roosevelt than a rational assessment of the facts. Peek replied that "I haven't the same confidence you seem to entertain in getting a square deal for agriculture from those whom you yourself have branded Communists."

In September 1936, Peek bitterly criticized Roosevelt in a radio address. Johnson responded later that month in a speech over radio station KYW in Philadelphia. Deriding Peek's argument that the Republicans were now the salvation of farmers. Johnson argued: "Farmers will not go from the man who rescued them back to the men who ruined them - no, not even to gratify the wounded pride of a man who once served them valiantly."

George Peek died at his home in Rancho Santa Fe on 17th December, 1943.

Primary Sources

(1) John Kennedy Ohl, Hugh S. Johnson and the New Deal (1985)

Most of the ideas in Equality for Agriculture were Peek's, while Johnson was responsible for the language. They believed that the farmer's trouble lay in the operations of the protective tariff. By being able to control its output and withhold surpluses from the market, industry was able to guard against the price-depressing effects of over-production and receive "the full tariff differential over world price" for a product. Agriculture, meanwhile, was unable to control its output or withhold surpluses from the market. Thus the domestic price for a product in which the United States produced a surplus, despite the tariff, was forced down to the world level. The result was an inequality for agriculture: Farmers received world prices for their products but had to pay protected prices for the industrial goods they purchased. To obtain equality for agriculture, Peek and Johnson declared, the tariff had to be made effective so that farmers received a fair-exchange price for their products. The fair-exchange price, or parity, as it came to be known, was defined as "one which bears the same ratio to the current general price index as a ten-year pre-war average crop price bore to the average general price index for the same period." The ratio price would be computed each year and protected by a fluctuating tariff. The price-depressing surpluses would be disposed of by a government-sponsored corporation that would buy up the surpluses at the ratio prices and dump them over the American tariff wall at world prices. The losses incurred by the corporation would be recouped by charging farmers an "equalization fee" on each bushel or pound of a product sold.

The ideas in Equality for Agriculture were not original. For years farmers had realized the ineffectiveness of tariff protection for agricultural products, and the concept of parity went back at least to the 1890s. Nor were the ideas without fault. The plan totally ignored such long-range problems as reduction of costs, technical reorganization, and soil conservation. It would undoubtedly bring about increased agricultural production and steadily mounting surpluses. Peek and Johnson were also shortsighted in thinking that overseas sales would be a permanent solution to the problem of surpluses. Foreign nations would inevitably retaliate by adopting anti-dumping laws; and even if they let in increased amounts of American commodities, there was little reason to believe that they could indefinitely absorb or pay for all that Americans would have to sell. Despite its defects, Equality for Agriculture was, nevertheless, important in the evolution of American agricultural policy. For the first time, parity prices were identified as "a practical legislative goal." Moreover, by assigning responsibility for insuring parity to the federal government the Peek-Johnson plan broke "the restrictive bonds on farm thinking that held that government aid should be confined to education, credit, co-operative marketing, or regulation of business."

(2) John Kennedy Ohl, Hugh S. Johnson and the New Deal (1985)

In August 1933, Peek attempted to outflank Johnson by having Roosevelt exempt from the President's Reemployment Agreement "any industry which has to do with agriculture or any of its products." Johnson, however, effectively stymied Peek. He convinced Roosevelt that Peek's proposal was simply "a move on the part of the food chains and others who thought they would have a better chance under Agriculture." He also reminded the president that exemption of any agriculture-related industry from the blanket code would practically exempt most major industries in the nation and bring an end to the code. Even if it were possible to minimize the exemptions, Johnson added, it would not be efficacious to approve Peek's request. NRA worked at top speed, while AAA worked more deliberately; and from a psychological perspective, the first should not be geared to the latter.

During the late summer and fall of 1933, members of the Department of Agriculture attacked Johnson almost daily. Jerome Frank recalled: "All of us took a hand at it - Peek for his reason, Wallace and Tugwell and the economists for other reasons." The feud carried over to Washington social circles, always somewhat incestuous with government. One August night at a party given by columnist Drew Pearson, Johnson had "a hell of a hot discussion," which lasted for hours and took the form of a "powwow against Hugh Johnson," with Frank, Tugwell, and others from Agriculture. Though Johnson had only Robbie to back him up, he more than held his own."

On October 12, 1933, Johnson had "a fine visit" with Peek and Wallace, prompting Wallace to write to newsman Paul Anderson that "things in the official family are beginning to straighten out." Wallace, however, was too optimistic. As the NRA codes began to take effect, industrial prices climbed, forcing farmers to pay more for the products they bought. Frank, Tugwell, Mordecai Ezekiel, and others in the Department of Agriculture responded by stepping up their attacks on Johnson and NRA. Johnson retaliated by branding the farm "intellectuals" as "professors who wear the heaviest of horn-rimmed glasses." The professors hurled back such epigrams as "Johnson is a sheep in wolf's clothing."

During the last months of 1933, Johnson's feud with the Department of Agriculture centered on the marketing agreements Peek was arranging to control the quantity of commodities released for sale. In order to raise prices paid to farmers, Peek was willing to give the food processors almost any type of controls they wanted; Frank and Tugwell, however, were appalled by these agreements. In their opinion the processors owed something to the government in exchange for immunity from the antitrust laws. They also believed that there should be a check on excessive prices and unreasonable profits, ideally in the form of clauses providing for quality standards and full access by the government to company books and records. Whenever possible, Frank held up approval of Peek's marketing agreements with questions about their legality, while others from Agriculture protested them in the name of the consumer.