144 TWENTY-SECOND ANNUAL YEAR BOOK— PART II 



lieve one of these two things will happen soon. Personally I have had 

 enough of government ownership and government operation of the rail- 

 road. I don't know whether you know it or not but the government has 

 already paid out to the railroads an expense account of 1,800,000,000 dollars 

 as a result of the experiment and they are not through yet. They owe the 

 railroads at least another quarter of a billion of dollars before the gov- 

 ernmental obligation is settled. 



Just a word or two more now with regard to the present condition which 

 confronts us. It is not an Iowa condition or a United States condition. It 

 is a world condition. I took luncheon the other day with the agricul- 

 tural attaches of three foreign countries and they told me that in their 

 countries pretty much the same problems are being met which affect us 

 here. It was inevitable that there be some reaction from the very strong 

 currents of action which took place during the war. I have no doubt that 

 a great deal of the trouble is directly attributable to deflation. I read 

 recently the opinion of some eminent man when the Federal Reserve 

 Bank's Act was enacted which said there was tremendous danger in the 

 act because it was an inflation act and inflation must always be followed 

 by deflation, and we certainly got the deflation. We got it too fast and 

 too hard. There is no doubt that it was shot first at agriculture, you can't 

 put your finger on the passage but I feel it was a deliberate intent to 

 strike -agriculture first, that is my own conviction, and it certainly suc- 

 ceeded. Now with regard to our prices, other industries are rapidly fol- 

 lowing the farmer on his downward course and they are coming down 

 just as far as we went down before they are through with it unless our 

 prices rapidly react. I think you will agree with me that it would be 

 better if the farmers' prices could come up to the level of other prices 

 rather than their prices be brought down to our level. 



The figures of the Bureau of Labor for the month of October which are 

 the most reliable statistics which the government has, states that the all- 

 commodity price level or index, — and by all commodity, they keep lists 

 of daily fluctuations of such things as steel and clothing and shoes and 

 household furnishings and all these things, a long list of them as well as 

 farm prices — these commodities stood at 150 points counting 100 points 

 the average of 1913 which was the last full year before the war. Agricul- 

 tural commodities stood at 119 points and that was not our farm price of 

 agricultural commodities, that was the wholesale price or terminal price. 

 Now if you subtract out of all commodities farm products and reduce out 

 of the farm products, reduce the price to the farm price for these products 

 you will find that our exchange is only sixty-five per cent as much as it 

 was before the war. That is, a bushel of our corn or our wheat or a hun- 

 dred pounds of our pork will only buy two-thirds as much of the necessary 

 things of life as a bushel of wheat or a bushel of corn or a hundred pounds 

 of pork would buy in 1913. Now that is the exchange rate, let's call it the 

 domestic exchange rate, if you please. It is the exchange rate in this 

 country between the agricultural commodities and other commodities. 

 They talk a good deal about foreign exchange and the effect of foreign 

 exchange upon prices and conditions. If you reduce our domestic ex- 

 change as represented by the farmers' buying power to terms of English 



