South Dakota’s socialist experiment

The last couple months revealed a gap in my education: South Dakota history. Granted, I know the basics — the Homestead Act, sod homes, Indian tribes and treaties, the railroads, agriculture, the Dirty Thirties, meatpacking, credit cards. But I’ve never had a South Dakota history course and it became apparent when I learned South Dakota toyed with what most would consider socialism.

This fall I was reviewing materials in the Peter Norbeck papers in the State Archives. I realized I didn’t know much about Norbeck, governor from 1917 through 1921 and U.S. Senator from 1921 to 1936, so I bought a copy of his biography. While Norbeck was a Republican like all but one of the prior governors, I was shocked by his political views and legislative accomplishments as governor.

Norbeck was a Republican a la Teddy Roosevelt and Robert La Follette. “Trust buster” Roosevelt’s support for progressive reform grew during his presidential term (1901-09). About 18 months after leaving office, Roosevelt gave the so-called “New Nationalism” speech. In it, he observed that lack of government restraints helped “create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.” He said such fortunes should be allowed “only so long as the gaining represents benefit to the community. This, I know, implies a policy of a far more active governmental interference with social and economic conditions in this country than we have yet had, but I think we have got to face the fact that such an increase in governmental control is now necessary.” Within two years, he split from the Republican Party to form and run as the presidential candidate of the Progressive (“Bull Moose”) Party. La Follette would form a new Progressive Party and be its presidential candidate 12 years later.

Peter Norbeck

Peter Norbeck

Although Norbeck always was a Republican, he certainly wouldn’t be considered one today. The 1917 legislative session, the first of his gubernatorial terms, reflects his progressivism.

That legislature proposed a constitutional amendment allowing the state to own and operate “proper business enterprises” and to own stock in corporations. Other proposed constitutional amendments embraced state ownership of specific types of businesses: hydroelectric plants, coal mines, a cement plant, hail insurance, grain elevators and warehouses, and flour and meat-packing businesses. Norbeck supported all of them, although he was admittedly lukewarm on the grain, flour and meat-packing enterprises. Even prior to becoming governor, Norbeck promoted creation of a state rural credits system. He largely wrote the law passed in 1917. It allowed a Rural Credits Board to borrow funds on state credit and then, using real estate mortgages as security, make direct loans to farmers at interest rates of no more than five percent.

Norbeck’s support for direct state involvement in the economy is clear. As noted in a book on South Dakota leaders, his actions were “a shift in South Dakota politics to the ideological left[.]” The shift was such that voters approved all of the constitutional amendments in the 1918 election. (Although a workers’ compensation act also passed in 1917, not all the days’ popular ideas look good today. Thanks to the growing eugenics movement, the legislature also passed a bill “for the Prevention of the Procreation of Idiots, Imbeciles and Feeble-Minded Persons.” It allowed the state’s “Home for Feeble-Minded persons” to determine whether residents should be allowed to “procreate.” If not, they would be sterilized.)

A 1918 Norbeck campaign pamphlet reflects his accord with Roosevelt’s ideas. Norbeck argued that the state being in certain areas of business wasn’t socialism. “Where men attempt to extort an unreasonable profit,” Norbeck wrote, “it is the business of government to step in and regulate it and where the regulation can be best had by government ownership and operation, this plan should be adopted.”

In addition to the rural credits system South Dakota would have a state hail insurance program, would buy a coal mine (located, ironically, in North Dakota) and toke steps toward a state cement plant, which began production in late 1924. Norbeck embarked on a massive road construction program and the state funded a survey of possible hydroelectric dam sites on the Missouri River — nearly 30 years before the Pick-Sloan Plan would lead to federal construction of Missouri River dams.

The thought of a Republican governor advocating government business ownership is beyond imagination today. Ultimately, though, only the cement plant, sold at the end of 2000, was a success. Due in part to malfeasance by its treasurer and an agricultural depression after World War I, the rural credits system was shut down after 6½ years. By then, it had loaned $45 million and borrowed $47.5 million. When finally liquidated, it cost taxpayers $57 million.

The state bought the coal mine for a total investment of $185,000 (approximately $2.6 million today). It was sold in the midst of the Depression for only $5,500, although that disregards what state institutions saved buying coal below market rates. The hail insurance program was abolished in 1933. The state ultimately paid just under $279,000 in debt ($4.7 million today), although backers claimed farmers saved $7.5 million in insurance premiums between 1919 and 1929.

I can’t help but wonder if these expensive failures helped lock South Dakota Republicans and politics into conservatism. Legislators and the public felt burned and it was easy to condemn analogous ideas by saying, “Not only is this socialism, look what it cost!” It certainly discredited progressivism in the party that enacted Norbeck’s programs and which dominates state government to this day.

“In spite of his flirtation with state socialism while he was governor, [Norbeck] never embraced its basic theories and strongly opposed ‘radicalism,'” writes his biographer. Norbeck’s actions can speak for themselves. But who today would believe South Dakota dabbled with state socialism while Republicans held the governorship and more than a two-thirds majority in each house of the legislature? It boggles the mind.

Actually [Norbeck] was a New Dealer before Franklin Roosevelt’s era.

Gilbert Fite, Peter Norbeck: Prairie Statesman

4 comments to South Dakota’s socialist experiment

  • Chuck Raasch

    This is impressive research, Tim.

  • Kevin Woster

    Good stuff, Tim. In a time when Dennis Daugaard isn’t considered Republican enough for some members of his party, it’s hard to determine how far right the line has shifted, ,or where it’s headed. If I’d ever seen the language in that pre-1920s bill on the developmentally disabled, I apparently pushed it from recollection. The eugenics question lives on, however, in a nation where the vast majority of fetuses determined to have Down Syndrome are aborted.

    • Tim

      Gee, Kevin actually reads my blog! I thought my post was long enough as it was but a post on mandatory sterilization is on my blog list of things to do. Briefly summarized, the state was afraid of getting sued so it never really used the 1917 law. Involuntary sterilization of the “feeble-minded” and “insane” did occur after the legislature vested jurisdiction in county “boards of insanity” in 1925. We didn’t repeal our compulsory sterilization law until 1974!

  • Democrats in SD were the conservative party. Some of those running the party even in the 1960s were still very conservative. They were still closet anti-FDR and anti-McGovern. But for the most part, there has been a nearly complete flip in political parties in SD. Our conservatism must have something to also result from weather and hard knocks living on the windy prairie. Merry Christmas & Happy New Year.