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Labor Contracting in Turn-of-the-Century California Agriculture

Published online by Cambridge University Press:  11 May 2010

William S. Hallagan
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Extract

During the course of U.S. economic development, the institutions used to organize agricultural labor have undergone interesting and sometimes puzzling transformations. The transitions from wage contracting to tenancy observed in the post-bellum South and in nineteenth-century Iowa have been studied extensively.2 This paper evaluates the relatively neglected transition from wage labor to tenancy that occurred in the California fruit orchards during the period 1900–1910.3 Before 1903 Chinese and Japanese orchard workers were organized via the padrone system of wage labor, but in an abrupt series of events there ensued a shift into tenancy so dramatic that by 1909 contemporary observers noted that virtually all orchards were under tenant control. The fact that the new tenants were recent Japanese immigrants prompted investigations by the Immigration Commission as well as other agencies so that this particular shift into tenancy is documented in greater detail than those occurring in the South and in Iowa.

Type
Articles
Information
The Journal of Economic History , Volume 40 , Issue 4 , December 1980 , pp. 757 - 776
Copyright
Copyright © The Economic History Association 1980

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References

1 Steffens, Lincoln, “California and the Japanese,” Colliers, 57 (March 25, 1916), 2Google Scholar.

2 Tenancy in the post-bellum South is analyzed in Higgs, Robert, Competition and Coercion (Cambridge, 1977)Google Scholar; Ransom, Roger and Sutch, Richard, One Kind of Freedom (Cambridge, 1977)Google Scholar; Reid, Joseph, “Sharecropping as an Understandable Market Response: The Post-bellum South,” this Journal, 33 (March 1973), 106–30Google Scholar. Tenancy in nineteenth-century Iowa is discussed in Bogue, Allan, From Prairie to Cornbelt: Farming on the Illinois and Iowa Prairies in the Nineteenth Century, (Chicago, 1963)Google Scholar; Winters, Donald, Farmers Without Farms (Westport, Conn., 1978)Google Scholar.

3 A notable exception is Higgs, Robert, “Landless by Law: Japanese Immigrants in California Agriculture,” this Journal, 38 (March 1978), 205–25Google Scholar.

4 For a discussion of these arguments see Reid, “Sharecropping as an Understandable Market Response,” 112–14.

5 Cheung, Steven, The Theory of Share Tenancy (Chicago, 1969)Google Scholar.

6 Reid, “Sharecropping as an Understandable Market Response,” 126–27.

7 Higgs, Competition and Coercion, p. 45 and Ransom and Sutch, One Kind of Freedom, p. 96.

8 Hallagan, William; “Self Selection by Contractual Choice and the Theory of Sharecropping,” Bell Journal of Economics, 9 (Autumn 1978), 334–54CrossRefGoogle Scholar, and Winters, Farmers without Farms, p. 107.

9 This section draws heavily from U.S. Commission of Immigration, Immigration in Industries, vol. 2 (Washington, D.C., 1911), p. 25Google Scholar; Millis, H. A., The Japanese Problem in the United States (New York, 1915)Google Scholar; Steffens, “California and the Japanese”; Duffus, R. L., “California Irridenta,” The Nation, 108 (April 12, 1919), 550Google Scholar; Cross, Ira, A History of the Labor Movement in California (Berkeley, 1935)Google Scholar; Fuller, L. V., “The Supply of Labor as a Factor in the Evolution of Farm Organization ill California,” unpublished Ph.D. dissertation, University of California, Berkeley, 1939Google Scholar, and Fisher, L. H., The Harvest Labor Market in California (Cambridge, 1953)Google Scholar.

10 Cross, A History of the Labor Movement in California, pp. 61–3

11 U.S. Commission of Immigration, Immigrants in Industry, p. 16.

12 “Colored” labor agencies would contract to deliver black workers from the South: males for $15 per month, females for $10, boys for $9.50, and girls for $5. Fisher, The Harvest Labor Market in California, p. 24.

13 “Underbidding of the Chinese and white men was the method used by the Japanese to gain a foothold in the various districts. In one community where the Chinese were paid $5 per week the Japanese first worked for 35 or 40 cents per day in the early nineties. In another locality the price for work done by the Japanese by contract was first estimated on a basis of 45 cents per day as against $1 for Chinese.” See Millis, The Japanese Problem in the United States, p. 111

14 Under the padrone system the boss was an agent specializing in monitoring the application of labor. The Japanese boss was the manager of a labor firm along the lines described in Alchian, Armen and Demsetz, Harold, “Production, Information Costs, and Economic Organization,” American Economic Review, 62 (Dec. 1972), 771–95Google Scholar.

15 U.S. Commission of Immigration, Immigrants in Industries, p. 374.

16 Ibid., p. 598.

17 Ibid., p. 42.

18 U.S. Bureau of the Census, Twelfth Census of the United States Agriculture 1900, vol. 6 (Washington, D.C., 1902), pp. 62–3Google Scholar; and Thirteenth Census of the United States, Agriculture 1910, vol. 5 (Washington, D.C., 1913), pp. 644–47Google Scholar.

19 Bureau of Labor Statistics of the State of California, Thirteenth Biennial Report (Sacramento, 1908), pp. 127–47Google Scholar.

20 This section is drawn from leases recorded at the Placer County Courthouse, Auburn, California, Placer County Leases-Agreements, Books F-M, on microfilm rolls 278–81.

21 Placer County Leases-Agreements, Book M, p. 13.

22 U.S. Commission of Immigration, Immigrants in Industries, pp. 421–22.

23 Placer County Leases-Agreements, Book J, p. 434.

24 Ibid., Book I, p. 79, and Book H, p. 480.

25 Ibid., Book J, p. 208. Here we have an example of a tying contract used to decrease the cost of monitoring the quality of the delivered contract.

26 Placer County Leases-Agreements, Book I, p. 35.

27 See Perry, M. K., “Vertical Integration: The Monopsony Case,” American Economic Review, 68 (Sept. 1978), 561–70Google Scholar; Vernon, J. M. and Graham, D. A., “Profitability of Monopolization by Vertical Integration,” Journal of Political Economy, 79 (Sept./Oct. 1971), 924–25Google Scholar; and Warren-Boulton, F. R., “Vertical Control with Variable Proportions,” Journal of Political Economy, 82 (July/Aug. 1974), pp. 783–802Google Scholar.

28 Cheung, Theory OF Share Tenancy, pp. 62–72.

29 See Williamson, Oliver, Markets and Hierarchies (New York, 1975)Google Scholar.

30 See Williamson, Markets and Hierarchies; Goldberg, Victor, “Regulation and Administered Contracts,” Bell Journal of Economics, 7 (Autumn 1976), 426–48Google Scholar; and Alchian, Armen, Crawford, Richard, and Klein, Benjamin, “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process,” Journal of Law and Economics, 21 (Oct. 1978), 297–326Google Scholar. In this paper the term “opportunism” is used to denote contract violations.

31 Commons, John R., Races and Immigrants in America (New York, 1920), p. 139Google Scholar.

32 Williamson, Markets and Hierarchies.

33 California Fruit Grower (San Francisco, June 1888 to December 1907)Google Scholar.

34 Millis, The Japanese Problem in the United States, p. 244 and Steffens, “California and the Japanese,” 6.

35 Bureau of Labor Statistics, State of California, Thirteenth Biennial Report, p. 131.

36 Ibid.

37 Hirshmeier, J. and Yui, T., The Development of Japanese Business 1600–1973 (Cambridge, MA, 1975), pp. 119–20Google Scholar.

38 Of 52 Placer County immigrants interviewed by the Immigration Commission in 1909, 23 had already migrated by 1900. See Table 1.

39 Despite the reported tight market for harvest labor in California, wage series for this market only report an average annual growth rate of 3 percent. This growth rate does not differ significantly from the rate of increase in wages for other labor markets or for the rate of increase in the general price level. The wage series for harvest labor, however, may not adequately represent the trend in earnings for orchard workers paid by piece rates. If, as argued in this paper, tight labor market conditions encourage opportunism then reported wages need to be adjusted upwards to reflect earnings gained from picking light boxes and other forms of opportunism.

40 “The market for fruit grown in California and shipped fresh has been expanding considerably of late, and shipments to foreign countries are now a regular feature.… The method of distributing California fresh fruit, which was put into operation in 1902, has proved eminently satisfactory, the distribution having been carried on in such an intelligent manner as to almost entirely do away with the fruit coming into competition with itself at points already supplied. This has been brought about through the organization of the California Fruit Distributors, which handles about 96 percent of the deciduous fruit shipped from the state.” California Fruit Grower (November 28, 1903), p. 8.

41 California Fruit Grower (April 18, 1903), p. 4.

42 This argument is developed in Hallagan, “Self-Selection by Contractual Choice.”

43 Duffus, “California Irridenta,” p. 50.

44 Jenks, J. and Lauck, W., The Immigration Problems (New York, 1922), p. 249Google Scholar.

45 In return for acting as agents for landlords in recuiting reliable tenants, the fruit companies were granted the exclusive right to market all fruit produced under the lease (that is, an exclusive dealing contract).

46 See Benjamin, Daniel, “The Use of Collateral to Enforce Debt Contracts,” Economic Inquiry, 16 (July 1978), 333–59CrossRefGoogle Scholar.

47 Fisher, The Harvest Labor Market in California, p. 69.

48 Akerlof, George, “The Market for ‘Lemons’: Qualitative Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, 84 (Aug. 1970), 488–500CrossRefGoogle Scholar.

49 Bureau of Labor Statistics, State of California, Thirteenth Biennial Report, p. 130.

50 Higgs, Competition and Coercion, p. 45. Ranson and Sutch, One Kind of Freedom, p. 96, make a similar statement.

51 This statement is supported by the accounts of loyalty between workers and bosses noted by Hirshmeier and Yui, The Development of Japanese Business 1600–1973.

52 U.S. Commission of Immigration, Immigrants in Industries, p. 429.

53 McWilliams, Carey, Factories in the Field (Boston, 1939), pp. 152–67Google Scholar. This incident led to the Wheatland Hop Riots.

54 Day, Richard, “The Economics of Technological Change and the Demise of the Sharecropper,” American Economic Review, 57 (June 1967), 427–49Google Scholar.