Chapter 6: Yellow Springs, Ohio

A project of the Schumacher Center for New Economics   |   The Autobiography of Bob Swann


Chapter 6

Yellow Springs, Ohio—Work with Arthur Morgan

While we were in Philadelphia, Arthur Morgan sent me a letter confirming his original offer that I work with him in Yellow Springs, Ohio. So Marj, baby Barbara, and I left to begin a new life in Yellow Springs. My work with Morgan, however, didn't last even a year. He really needed an administrator to manage the office and plan conferences, skills I didn't have. Marj worked in the office, too, and was much more useful than I. She continued to work as she was able, considering we had a second child on the way.

Marj and I had been living in an apartment above Arthur Morgan and his wife, Jane. From there we moved to a friend's house—into the back porch, which I had remodeled into living quarters. The porch was my first design and construction project, the pay for which was over two years' free rent. Our second child, Judy, was born while we were there.

While I was in prison a fellow CO had introduced me to the architectural drawings and photographs of buildings by Frank Lloyd Wright. Ever since, I had a strong desire to go into home design and construction. (Even while in prison I had managed to get on the construction crew. which had the added advantage of enabling me to go outside the prison walls and breathe the fresh air of freedom.) After completing the porch I got a job as carpenter with a local contractor. From then on I learned by doing, with very little instruction. Later, another local carpenter teamed up with me, and we took on contracts for a wide variety of jobs.

Yellow Springs itself had many interesting features. Morgan, with his interests and foresight, encouraged several small industries to locate there, making the town a unique and attractive place to live—a model of his concept of what can be accomplished in the small community. His sons, Ernest and Griscom, also played an important role in building Yellow Springs. Ernest Morgan created a small company that made bookplates and then turned the business into a cooperative in which each employee owned a share of stock. Together with his father he created a Yellow Springs local currency during the Depression and helped other communities follow their lead.

I insert here part of an article, "The Bucks Start Here: Alternative Currencies and the Coming Welfare Disaster" by Paul Salstrom, a co-worker from my Polaris Action days in Voluntown, Connecticut. Paul wrote the article for the Fall 1997 issue of Appalachian Journal. The article, which quotes a speech given by Arthur Morgan on November 9, 1933, reveals an interesting reason why Morgan left the Tennessee Valley Authority and returned to Yellow Springs to set up a small nonprofit organization, Community Services, to show how small communities could work.

Over 65 years ago, when Arthur E. Morgan first arrived in east Tennessee to chair the fledgling Tennessee Valley Authority, he found a widespread scarcity of cash money in the rural areas that the New Deal agency was created to serve: "A survey of one mountain county reported, as I recall, that the average cash income per family was about fifty dollars per year." Because "the habit of barter had disappeared," Morgan wrote, and because "a money economy prevailed . . . the farmer could not go to the dentist because he could not pay his bill. The dentist could not have leaky plumbing repaired because he had no money to pay his bill. The plumber could not buy fruit and vegetables, the farmer could not hire labor, etc., and a very large amount of local productive capacity was idle . . . ." (Arthur E. Morgan, typed manuscript, "Vagaries: Number Two: Local Economy in the TVA," in archives of Community Service, Inc., Yellow Springs, OH.)


On November 9, 1933, Morgan delivered an ill-fated speech in Ferris Hall at the University of Tennessee at Knoxville. As Franklin D. Roosevelt's point man for reviving the economies of small communities in the upper Tennessee River Valley, he was seeking allies who were willing to participate actively in practical ways. In his November 9th speech, Morgan outlined three complementary ways that local Appalachian communities could plausibly improve their economic condition. First was what we now call "smokestack chasing"—trying to attract industries to relocate. Morgan mentioned that Kingsport, Tennessee, had prospered after the Eastman Company in the early 1900s had located a major printing plant there. But most big companies then had (and still have) many equally viable options: "The Eastman Company is perhaps not making any more money [in Kingsport] than it would have made in a similar town in Maryland. It is getting its raw materials nearby, but it could get them in other places as well." (Arthur E. Morgan, "Group Industries: Problems and Their Solution," TVA Technical Library, Knoxville, TN, Arthur E. Morgan holdings)


The second way that Appalachian communities could improve their economic condition, Morgan said, was through products and services which were locally or regionally specific and which therefore could not be duplicated in most other places.


And then Morgan launched into his third possibility for improving Appalachian economic life, a set of suggestions that got him into big trouble. He described several layers of business and financial obstacles that would block the path of any small community which attempted to revive its economic health by simply producing what its own residents needed. The obstacles, he said, were the "deeply worn channels of trade, almost all leading into and out of the big business and industrial centers." But, he continued, I believe that to a certain limited degree this region might well set up its own local economy. It can produce its own goods and deal with itself. But if a region is going to build up a new economy by making things it needs at home, it will in a limited sense have to build up a whole economy and not a fragment of an economy. . . . I would build a cooperative of some sort. I would have a central purchasing organization, a central sales organization, a distributing organization, and I think I'd have that cooperative organization have its own tokens of credit, - a sort of local money. (Emphasis added) One year earlier, in the fall of 1932, Arthur Morgan had been instrumental in issuing a local currency in Yellow Springs, Ohio, where he had long been president of Antioch College (and where he also owned a printing shop). But Arthur Morgan's Knoxville proposals were anathema to both of his fellow TVA directors, Harcourt Morgan and David Lilienthal. They not only outvoted him in TVA meetings, thereby scuttling his idea, but Harcourt Morgan used Arthur Morgan's proposals in that November 9th speech to discredit him in Washington, D.C. In 1933 when Franklin Roosevelt launched the first U.S. federal entitlement programs, one of his other first acts was to discourage any further issuing of community-based "scrip" currencies like the one Arthur Morgan had helped launch in Yellow Springs, Ohio, in 1932. Roosevelt shared a top-down worry that America's monetary system might get democratized out of the government's control (Richard Douthwaite, Short Circuit: Strengthening Local Economies for Security in an Unstable World, Dublin, Ireland: Lilliput Press, 1996, p. 99.) Many years later, Arthur Morgan wrote about what happened: Harcourt Morgan . . . did not hear all of the talk and did not discuss it with me, but made a public statement about it in Washington that received nationwide publicity. He reported that I proposed a separate money system for the Tennessee Valley. Today [the early 1970s], after nearly forty years, that statement is still presumed to be historically correct in published studies. (Morgan, The Making of the TVA, p.58) Morgan was eventually convinced that this uproar formed a major component of what led to his ouster from TVA in 1938. The full text of what Arthur Morgan actually suggested in November 1933 has never been published, though I reproduced the entire text of the speech as an appendix to my 1988 dissertation, "Appalachia's Path Toward Welfare Dependency, 1840-1940"(Brandeis University). Arthur Morgan himself later penned his own summary of those now-notorious local currency proposals: I suggested that individual small communities or a few working together, set up a local credit exchange, with exchange credit coupons, to relieve this terrible paralysis of local economic capacity. The limited legal money earned by sales or services outside the community could be used for paying taxes, buying refrigerators, or for sending the young people to college. There is a saying in economics that "bad money drives out good." That is as it should be. The "bad money" [a local currency] would stay at home to do the local economic chores. The good money (legal) would then be freer to go abroad for taxes, plumbers' and dentists' supplies, and for college education. Such a program might stimulate the general economy by making legal tender move more easily where only it would serve. (Morgan, "Vagaries," p. 17. Revised version in Morgan, The Making of TVA, pp. 58-59.)


My reason for retelling this TVA drama is not its historical interest but rather the aptness and potential utility of Morgan's alternative-currency vision as a hedge against the changes being wrought right now by the Welfare Reform Act of 1996.

While living in Yellow Springs we were introduced to the Circle Pines Center, a cooperative adult-education camp in Michigan. I had heard of the place through the same CO who introduced me to Frank Lloyd Wright's work. Although we never lived there, we made many lasting friendships with the members. Circle Pines was founded by Dave Sonquist and another organizer from the Farmers Union, a Midwest organization with roots in the Populist movement of the 1920s and 1930s. The founders organized the camp with the Danish folk school as a model. It attracted social activists from Chicago, Detroit, Yellow Springs, etc. The idea was to bring social-activist educators together to teach and inspire others to go out and be active in their communities. The folk schools in Denmark, dating back to the 1800s, educated a whole generation of social activists who created the most dynamic producer and consumer cooperative system in Europe, which still exists today. Denmark can be cited, like Switzerland, as an example of Leopold Kohr's thesis that small countries function more successfully than large ones.

Each family member of the camp owned a share of stock in the corporation. A full-time director was appointed, and elections to the Board of Directors were held every year, according to the democratic principle of one person, one vote. During camp season the program included workshops for parents and supervised activities for the children, with folk dancing for everybody in the evening after dinner. Folk dancing is the heart of Circle Pines activity. It's where my youngest daughter, Carol, began her career, which has led her into advanced forms of dance. These were the activists of the period who created consumer coops, cooperative housing projects, and cooperative credit unions.

One of these cooperative housing projects, outside of Detroit, had been designed by Frank Lloyd Wright before the war for members of the United Auto Workers. The use of rammed earth and bermed earth made for a very low-cost design. The Wright design, with its low cost also because of the self-help factor, appealed to me. With self-help a single family house could be built for $10,000. Unfortunately the design was never carried out, but another project designed by Wright for a cooperative group just outside of Kalamazoo, Michigan, was underway. That was in 1948. As it happened, a member of Circle Pines, Louis Gosho, a Japanese American and CO, had a contract to build one of these houses and invited me to join him. The project was just what I was looking for, so I moved near Kalamazoo, Michigan—dragging my wife and children, who were not eager to leave Yellow Springs.

We had in fact developed strong ties to Yellow Springs. One of these was with a local peace group we had helped organize around the study of nonviolence as a means of solving civil-rights issues. One of its members was Coretta Scott, who married Martin Luther King, Jr., a few years later. In fact, Cory, as we called her, did baby sitting for us while she was attending Antioch College. Marj was a leader in organizing this group, having already been a member of CORE (Congress on Racial Equality) and with experience in nonviolent actions to protest discrimination, such as sit-downs in restaurants. This, of course, was long before the 1960s sit-ins by students in the South.

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©2001 Robert Swann