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April 5, 1924 



Tbe DBbou Agricnllural Asaodation Reoord 



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Pa«c 3 



HERE'S WHY WE ARE FOR McNARY-HAUGEN BILL 



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This IS the Letter that 

 Rainey Wrote to Thompson 



--■ • .' . Washington, D. C. 



I March 12, 1924. 



Hon. S. H. Thompson, 

 Illinois Agricultural Association, 

 60S South Dearborn Street,- ' : . '■ 



Chicago, Illinois. ' 



My dear Mr. Thompson : 



I am in receipt of your communication in the matter of this 

 McNary-Haugcn bill. I am studying the bill now. It contains 

 many most objectionable features. 1 think if it passes it will be 

 vetoed by the President. 



I am a farmer, and live on my own farm, and farm it my- 

 self. I am also a member of the Farm Advisory Committee of 

 fifteen, appointed by our Illinois State University, and am there- 

 fore much interested in this subject. 



I started out with the intention of supporting this bill, if pos- 

 fiiDle, for the reason that Farm Organizations were endorsing it. 

 But. the more I study it, the less I think of it. I am assuming that 

 the Illinois Agricultural Association in a matter as important as 

 this is to agriculture, has thoroughly studied the question before 

 committing itself to the proposition, and before the Association 

 reached the conclusion to "hereby request, urge, insist, and demand 

 that our Representatives in Congress earnestly, unqualifiedly, and 

 actively support and vote for this emergency relief measure and use 

 all their influence and power to secure the enactment of this mea- 

 sure at the earliest possible date " 



Insists on Answers 



The Illinois Agricultural Asso- 

 ciation, therefore, has so thor- 

 oughly committed itself to this 

 measure, that I feel that I am en- 

 titled to be advised by you repre- 

 senting the Association as to some 

 of the proposals in the bill, which 

 seem to me to be exceedingly ob- 

 jectionable. I am anxious to have 

 your views as to the matters 

 which I will attempt to outline. 

 Inasmuch as the matter may come 

 up very soon, and Inasmuch as 

 you speak for the Illinois Agricul- 

 tural Association, I am therefore 

 urging and insisting that you fur- 

 nish me a discussion from your 

 viewpoint of the matters I suggest 

 below at the earliest possible mo- 

 ment: 



L Asks 25 Qnestlons 



i. The bill proposes an issue 

 of "scrip" which will evidently 

 not be less In amount than |200,- 

 000,000 or 1300,000,000; and if 

 the bill is made to apply to all 

 the commodities enumerated in 

 the bilt the issue of "scrip" may 

 amount to several times that 

 amount. The only thing we know 

 definitely about this issue, as to 

 Its value, is that it will never be 

 worth its face. It will not on its 

 face purport to be legal tender, 

 but it can be passed from hand to 

 band just as a coupon bond Is 

 passed from hand to hand. 



(a) Under the above circum- 

 stances, will it not in reality oper- 

 ate to bring about a period of ex- 

 pansion in our currency? 



(b) An issue of "scrip" of this 

 kind may amount to as much as 

 one-fifth of our present circulating 

 medium. Would not its issue in 

 the amounts I have indicated, or 

 even in smaller amounts, in effect 

 increase our circulating medium 

 without increasing in the least our 

 gold base? 



(c) Do you think farmers would 

 be satisfied with a "scrip" issue 

 in part paytnent for their wheat, 

 which will have an indefinite val- 

 ue, and which may have no value? 



SpecnUitive Valoe 

 2. Inasmuch as the "scrip" In 

 question can be passed from hand 

 to band, and inasmuch as it is re- 

 deemable In the hands of the ul- 

 timate bolder when the time 

 comes to redeem, will it not al- 

 ways have a speculative value; 



and is it not likely to be quoted 

 in Bucket Shops and similar 

 places; and will not its vague 

 and unsettled values have a de- 

 moralizing effect on agriculture 

 and commerce generally in the 

 United States? 



What Abont Livestock Industry? 

 3. When the law is applied to 

 the Livestock industry, as it will 

 be, will not the law make It neces- 

 sary for the Government to go in- 

 to the business of slaughtering 

 and packing food animals? Can 

 you think of any way by which, 

 under this bill, the entry of the 

 Government into this great indus- 

 try — one of the greatest in the 

 world — can be avoided? 



(a) It could be avoided, of 

 course, by resorting to the primi- 

 tive methods of long ago and ex- 

 porting food animals alive. Would 

 you advise that the Government 

 resort to this obsolete method? 

 What would the effect on agricul- 

 ture be if we turned back the 

 clock of progress In marketing 

 and handling food animals and 

 resort to these methods aban- 

 doned so long ago? 



(b) Have you any idea as to 

 what Immediate investment the 

 Government would be required to 

 make in Packing Plants, Stock 

 Yards, Terminals, etc.? 



(c) What would the effect of 

 the entry of the Government be 

 into the packing business upon the 

 great packing Industry we now 

 have in the United States? 



(d) How would the Govern- 

 ment's entering into an industry 

 of that kind, involving perhaps 

 the expenditure of billions of dol- 

 lars in railroad switches, termin- 

 als, yards, packing plants, cold 

 storage warehouses, refrigerator 

 cars, ett.. etc., be financed? 



(e) Would you finance it by is- 

 suing "scrip"? 



(f) Would you finance it by a 

 Federal bond issue? 



(g) If by a Bond Issue, would 

 you Issue tax-free bonds? 



Asks Abont Bond Issue 

 (h) What effect would a bond 

 Issue of this kind have upon our 

 market at the present time, when 

 Government 414 Per Cent Bonds 

 are not yet selling at par? • 



(I) Would it not have the effect 

 of still further depressing on the 

 market the value of bonds now 



I. A. A. A nswers Rainey 



Under date of March 12, 

 Congressman Henry T. Rain- 

 ey of Illinois, Twentieth Dis- 

 trict, addressed a long letter 

 to President S, H. Thompson 

 of the I. A. A., stating that 

 the McNary-Haugen bill con- 

 tains many objectionable fea- 

 tures, prophesying that it 

 would be vetoed if passed, 

 asking 25 questions about the 

 bill and Insisting upon a dis- 

 cussion of the bill from the 

 standpoint of the association. 



Mr. Rainey's letter was re- 

 leased to the public press, it 

 was broadcasted over the 

 Chicago Board of Trade Ra- 

 dio Station and it has been 

 given wide distribution in a 

 printed form. 



Herewith is the full text of 

 Mr. Rainey's letter and our 

 answer. 



in the hands of citizens of the 

 United States? 



(j) What interest rate would 

 you make? If a 4 ^ Per Cent 

 Government Bond will not sell at 

 par now, what rate would j-ou ex- 

 pect to make these bonds in order 

 to get purchasers to take them at 

 par? 



(k) If you make a higfier rate 

 than 4 M Per Cent, would it not 

 still further decrease the market 

 value of our outstanding itsues? 



Escpenses Increasing 



4. In view of the fact that the 

 expenses of the Government are 

 continually increasing; that all 

 classes of Government employees 

 are demanding, and will receive 

 very soon, largely increased com- 

 pensation, is It not time to keep 

 the Government out of business 

 as much as possible, especially 

 when that business will involve 

 an additional Indebtedness of the 

 Government and more interest tor 

 tax payers to pay? 



5. Do you not think the vague, 

 indefinite method of maintaining 

 a price level provided for In this 

 bill is unworkable and imprac- 

 ticable, and that in the end tbe 

 farmer will be the greatest suf- 

 ferer from its imposition. If It 

 should become a law? 



What About Wool? 



6. The bill applies to wool. 

 When we Import more than half 

 our requirements of wool, how 

 can a ratio price affect wool, the 

 object of this bill being essentially 

 to take care of our exportable sur- 

 plus, and by obtaining the very 

 best world price for our export- 

 able surplus keep up the domestic 

 price? In the matter of wool, 

 however, we have no exportable 

 surplus. We use twice as much 

 wool as we produce. 



7. Would not the ratio price 

 of cotton be now below the pres- 

 ent price? Under these circum- 

 stances, what benefit would cot- 

 ton derive from this bill? 



8. Please explain how this bill 

 can be arranged so as to apply to 

 hogs and cattle in such a way that 

 the farmer will be benefitted to 

 any degree by its application. 



9. IS it not true that It Is in- 

 tended that the bill have no real 

 application, except as to wheat? 



10. If wheat Is to be the only 

 product upon which the law will 

 operate. Is it not true that the re- 

 maining products are put Into tbe 



(Continued on paie 4) 



"And Here is Thompson's 

 Answer-The LA. A, Stand 



' I J Chicaoo, III. 



Honorable Henrv T. Rai!*e|, j ■ March 31, 1924. 



House of Representative J'Tl . , 

 Washington, U. C. I ' ' 



My dear Mr. Rainey : 



Your letter and memoraodum of March 12, 1924, are at 

 hai^. We are in full concurrence with your conclusion that 

 ' ' farmers of the countrj- are in a desperate condition : ' ' that 

 ■ ''agricultitre is in a deplorable condition." We note your in- 

 sistence that we reply immediately to your attack »in the Me- 

 N'ary-Haugen bill, an insisttncc which you base on the assiinip- 

 tion that we "have studied the question and are expert in these 

 matters" but qualified by your fears that the eoniBuinieations 

 .vou have received from farm bureaus are inspire<i by the offi- 

 cers of this association sincei they are "all couched in practically 

 the same language." 



You further fear that thene farm bureaus who are now writlne 

 members of Congress in favor of the bill have not studied the ques- 

 tions involved, haVe not reaiched conclusions for themselves, but 

 are, on the contrary-, victims ef propaganda, impliedly ours. You 

 complain that the whole demand for your support reeolves itself 

 into a wish that you should act as a rubber stamp. 



You lay great stress on the similarity of language In all conjraqnl- 

 cations received by you in favor of this bill. 



Is it pertinent to inquire wheth- 

 er you have seen the letter signed 

 (and presumably composed)' by 

 Sydney Anderson to Mr. Sel\ig of 

 Crookston, Minnesota? That let- 

 ter also attacks the McNary-Hau- 

 gen bill and,; as shown in a reply 

 to Mr. Anderson, seems to be 

 based largely on the special inter- 

 ests of millera and grain men and 

 to be opposed to the Interes^ of 

 farmers. 



Extraordinary Similarity 



We ask whether you have seen 

 this letter l)ecause we, on our side, 

 wonder whether yon have studied 

 the question addressed by your 

 letter or whether you have merely 

 accepted the conclusion of some 

 other analyst. It must be remark- 

 ed that there is an extraordisary 

 similarity, not only between the 

 language in your letter and that 

 of Mr. Anderson's but also in the 

 general plan, of your letter, its 

 heads of argument, its conclusion, 

 its misinformation and its obvious 

 source of inspiration. 



Can It be possible that you. are 

 consoriing more with the special 

 interests opposed to the bill tlian 

 with the basic underlying interest 

 of American agriculture which is 

 simply another way of saying" the 

 interests of the general American 

 public? 



We ask these questions before 

 we answer yours (and in the same 

 communication in which we do 

 answer yours) merely that we may 

 stand on even ground in this dis- 

 cussion. There must be some dis- 

 semination of information and ar- 

 gument to tbe farmers of this 

 country In respect of the measnree 

 being considered at Washington 

 In their t>ehalf, otherwise their 

 needs must be left entirely at the 

 mercy of ' those whose interests 

 may not In all things lie parallel 

 with theirs and who have better 

 methods than they of presenting 

 to Congress of a particular point 

 of view. 

 'Rapidly Crystallizlni; Opinion 



But it has not been our olj- 

 servation that the outstanding in- 

 divIduallBt of our national com- 

 munity — the American farmer — 

 takes his ideas ready made from 

 the hands of any man. The com- 

 munications you and other ton- 

 gressmen are receiving from the 

 broad face of this country in in- 



creasing number reprecent a rapid- 

 ly cr>*stallizing opinion, based on 

 the equity of a claim which we 

 shall attempt to ditciiss more in 

 detail in the latter paragraphs 

 of this letter. If this l>e a repre- 

 sentative government, then we dt> 

 think that a member of Congress 

 ought to record the impressions — 

 not of a particular association 

 —but of the constituents who 

 chose him to represent them. 



With these few words explain- 

 ing our general point vf view on 

 the more critical assertions of your 

 letter, we will proceed to consider- 

 ation of its argument. 



Qoestlon Alrooat RidtcidotM 



You first ask whether the scrip 

 proposed by the lIcNary-Haugen 

 bill will not operate to "expand 

 our currency." If the sense yon 

 are attempting to import Into the 

 discussion (that it is a government 

 issue, not based on gold) the 

 question is almost rfdiculous. In 

 the last paragraph of your letter 

 you make your meaning clear 

 when you call It "flat money" — 

 you are dealing in technical terms 

 with no knowledge of their Intend- 

 ment. The scrip is only evidence 

 of a right to participate In a res- 

 idue, by its very terras of less 

 value than the face amount of the 

 scrip. 



Currency is an obligation to 

 pay a stated face amount — flat 

 money is paper stating: a value 

 plus a law requiring its acceptance 

 at that value. This ecrlp is tbe 

 direct antithesis of either. TTiere- 

 fore both of your suggestions of 

 "inflation" and "flat" hardly merit 

 a serious answer. The scrip Is not 

 a government issue in the first 

 prace, l>eing of unnamed and nn- 

 ceriain value it is not even "ne- 

 gotiable paper." Specifically the 

 answer to your ill-considered and 

 ill-informed question is "No. ' 

 Scrip Offseu Expansion 



To an extent, all i-alues upon 

 which credit is based operate to 

 "Increase our circulating media," 

 which is quite another thing. A 

 higher price for any agricultural 

 product would operate, pro toiifo. 

 to do this. The fact that a portion 

 of the increase in price is repre- 

 sented by scrip of less than face 

 value would tend to offset the ex- 

 pansldn that would eorur If tbe 

 entire; price were paid in cash. 

 (CoatiDued oa page S) 



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