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April S, 1924 



The niinois Agricultural Anodation Record 



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Page S 



Thompson Refutes Arguments 

 AgainstMcNary-HaugenBill 



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(Continued from page 3) 



In short, the effect of the bill 

 to increase price would increase 

 the credit obligations in the money 

 market, but the increase would be 

 eminently sound because the in- 

 creased value would proportion- 

 ately increase the basis of that 

 credit. The effect of the issue of 

 scrip as part of the price would 

 tend .^o limit the increase and 

 whether it did or did not your ob- 

 jection is without merit — even al- 

 most without coherency. 



\-a Viiwordiy Ohjeclion 

 If you object to the raising of 

 the price of agricultural products 

 to a fair e.\chanj;e value (no high- 

 er) and base, your objection on 

 the ground that it would increase 

 qlrculative media, then there is no 

 more to be said. But since we 

 »11 admit that the present price is 

 less than cost of production, your 

 opposition would reduce to this — 

 that you advocate taking the 

 farmer's crop away from him at 

 less than its fair value because. 

 to do otherwise, would increase 

 the circulation of evidences of 

 credit granted. We regard this 

 objection as unworthy it not im- 

 moral and we feel sure that, on 

 careful thought, you will abandon 

 it. 



Mucli Smaller Iliitlo 

 Regarding the matter from an- 

 other point of view, the bill es- 

 tablishes a corporation with power 

 to buy and sell export products. 

 It authorizes this corporation to 

 emit its obligations in a very much 

 smaller ratio than that employed 

 by industrial corporations in fi- 

 nancing their operations. To the 

 extent that any debtor emits obli- 

 -gations of such sundries that they 

 may pass from hand to hand as 

 negotiable paper, he is increasing 

 the media of commercial exchange. 

 Such is the ordinary and salu- 

 tary customs of the commerce of 

 the United States. Such, but in 

 much smaller proportion than is 

 common jn Industry, would be the 

 custom of this corporation. This 

 latter custom is sound commercial- 

 ly and financially and the objec- 

 tion to it on the ground that It 

 "expands the currency" is merely 

 • brave banner of words signifying 

 nothing. 



Wonld Parmer Object 

 You ask whether farmers would 

 be satisfied with a scrip issue in 

 part payment for their wheat? If 

 a farmer who now receives $1.00 

 a bushel for his wheat, for ex- 

 ample, has the choice of receiving 

 tl.55, 45 cents of the Increase be- 

 ing in cash and 10 cents in scrip, 

 will he refuse the 45 cents because 

 .the 10 cents is not in cash? We 

 think the question answers itself. 

 Speculative Valne 

 You ask if the scrip will not 

 have a speculative value. Of course 

 It will have a speculative value. 

 Wheat has a speculative value and 

 the speculation in scrip will have 

 precisely the range of uncertainty 

 that wheat now has — no more and 

 no less. It may be quoted in buck- 

 et shops and similar places just as 

 wheat is quoted — no more and no 

 less. 



What boots it to the farmers 

 or indeed to any other citizen that 

 this is so and why should it have 

 any more "demoralizing effect on 

 agriculture and commerce gener- 

 ally" than the speculative element 



in the value of wheat, corn, cotton, 

 live stock, meat products, oil, or 

 any other commodity of com- 

 merce? 



"A Terrifjing Monster" 

 Your third numbered paragraph 

 partakes of the method of him 

 who constructs a terrifying mon- 

 ster and thpn adds to the gaiety 

 of the nations by girding on his 

 armour, attacking it fiercely and 

 boldly and cutting it to pieces. 



You say that when the law is 

 applied to the live stock industry 

 it will ffliake it necessary for the 

 government to go into the business 

 of slaughtering and packing food 

 animals and you want to know 

 how this enormous inv'estment is 

 to be financed, whether we have 

 any idea of the amount of the in- 

 vestment, how the government 

 could enter into so complicated an 

 industrial operation. 



You advert to this same argu- 

 ment elsewhere as though wheat 

 were to be sold to millers only 

 at Jhe domestic price, thus pre- 

 venting them from exporting flour, 

 even as you think the bill would 

 prevent the packers from export- 

 ing meat products because they 

 could not compete with the lower 

 foreign prides. 



>Ii.sconstrue<l Bill 

 In all this you have simply mis- 

 construed or neglected to read the 

 bill. The latter is quite possible 

 since the objection appears else- 

 where. The bill would not create 

 any mechanism at all. 



Is there anything complicated 

 or difficult in commissioning ex- 

 isting grain, cotton, meat or mill- 

 ing companies to buy a product 

 until price reaches a certain fig- 

 ure? Is there anything imprac- 

 ticable in commissioning the same 

 or others to sell to export a cer- 

 tain quantity of the products pur- 

 chased? Individual operators do 

 this daily, single handed and 

 alone. Is there anything complex 

 or difficult about allowing the 

 owners of existing mechanism a 

 commission to manufacture cer- 

 tain products for export, a differ- 

 ential representing the loss in ex- 

 port sales, and charging same to 

 the corporation to be absorbed by 

 the scrip fund? 



Not Government Dep't 

 You seem to forget that it is not 

 a department of the government 

 that is entering these operations. 

 It is only a corporation similar in 

 nearly all respects to an industrial 

 corporation which has been per- 

 mitted by the government — as all 

 corporations must be permitted by 

 state or national government — to 

 carry on certain operations. 



You entirely overlook the fact 

 that it does not have to duplicate 

 one single bit of existing machin- 

 ery and that it will utilize exist- 

 ing machinery with the least dis- 

 turbance to present methods and 

 customs that It Is possible to imag- 

 ine. 



\ot Vague or Indeflnite 

 You ask whether we do not 

 think that the "vague, indefinite 

 method of maintaining a price 

 level provided for in this bill is 

 unworkable." There Is nothing 

 vague or indefinite about the 

 method proposed. Indeed, math 

 ematlcs could scarcely be more in- 

 cisive, emphatic and accurate. You 

 fear that the farmer will suffer by 



a restoration of his price levels to 

 their pre-war exchange values? 

 He is suffering enough now in all 

 conscience and if you will be kind 

 enough to point out one head of 

 suffering imposed by the bill, we 

 promise to "consider it with the 

 greatest care. 



You are quite correct in saying 



that as long as we import wool, the 



tariff alone can be made to give 



the wool grower araiile protection. 



Hasn't Studied Cotton 



We are amazed as to your in- 

 quiry as to "what benefit cotton 

 would derive from this bill." We 

 conclude that you have not given 

 much time to the study of the his- 

 tory of cotton. Do you know that 

 the tariff operates on the producer 

 of a crop of which we export a 

 surplus as a subsidy o* industry at 

 his expense? Do you know that 

 this tact was the economic cause 

 of the Civil War inaugurated by 

 the cotton exporting South against 

 the protected industrial North? 



One need go no further back 

 than three years to find the time 

 when the price of cotton was far 

 below this pre-war exchange value. 

 If the boll weevil and the parsi- 

 mony of nature have, for a brief 

 time, cured this situation, surely 

 you would not advocate bringing 



Congressman Has 

 Fears that Bill 



will be Ruinous 



(Continued from page 4) 

 reference to this method of pay- 

 ment, the farmer can only defi*- 

 nitely know that he will never get 

 the agreed price for his products. 

 He can never know what the price 

 will be. It does not appear to me 

 now from the study I have so far 

 given the question that this mea 

 sure will appease the unrest which 

 prevails today in agricultural cir- 

 cles, and if it does not have that 

 effect, it will only increase the 

 farmers' suspicions and his dis 

 trust of his Government and its 

 agencies. 



Xeeds Foreign Market 

 It seems to me that what the 

 farmer needs most of all are con- 

 suming units abroad for his prod- 

 ucts who are able to pay a price 

 for his surplus, which will enable 

 the American farmer to obtain a 

 living wage on his farm. Under 

 an unfortunate leadership, this 

 country has abandoned its rela- 

 tions with other natiotiff and is 

 pursuing a policy of Isolation. 

 Whenever we abandon our policy 

 of isolation and assume those 

 world responsibilities which are 

 ours, and do our part toward 

 quietiiTg the distrust of each other 

 which prevails among nations 

 which consume our surplus food 

 products, then we will have done 

 much in the matter of restoring 

 that confidence to food-consuming 

 nations, which will enable them to 

 engage again in industry and earn 

 the money with which to pay the 

 prices they ought to pay for our 

 surplus. 



It seems to me now the "scrip" 

 issues provided for in this bill 

 constitute a "fiat" currency not 

 dreamed of before- since the 

 capitalistic period commenced in 

 the world by any considerable re- 

 sponsible group in any commer- 

 cial nation in the world. 

 Very truly yours, 



HENRY T. RAINEY, 

 Member of Congress. 

 20th District Illinois. 



all other farmers within the pro- 

 tection of the tariff but leaving 

 the cotton farmer in his old in- 

 equitable position. As to any 

 crop, at any time that its domestic 

 price is above pre-war exchange 

 value, the corporation simply 

 would not function. 



Amemis Tariff f<ir Fanner 

 The bill should be res;arded as 

 an amendment to the tariff law 

 acting promptly and effectively for_ 

 the protection of the farmer of 

 any product whenever he needs 

 protection and remaining dormant 

 whenever he does not. At present 

 the cotton farmer does not need 

 the protection of the bill but it 

 will be there for his salvation 

 when he does. 



Hogs and Cattle 

 You ask us to explain how this 

 bill can be arranged so-as to ap- 

 ply to hogs and cattle. We have 

 already done -So in the answer to 

 your apprehAision lest the govern- 

 ment be involved in a Jfreat indus- 

 trial operation and it you have 

 paid any attention at all to hear- 

 ings of the bill you have already 

 been fully answered. 



You ask whether it is not true 

 that it is the Intention of the bill 

 to have no real application except 

 as to wheat. «nd suggest that the 

 remaining products are put into 

 the bill for political purposes only. 

 Bill .Means What It Sayn 

 The answer is that the bill 

 means just what it says, and. in- 

 sofar as it restores equality to ag- 

 riculture. It will have a most im- 

 portant political bearing. Con- 

 cerning your suggestion that other 

 ;product8 were included only to 

 deceive, you are quite wrong. But 

 suppose that the bill was intended 

 onl.v to relieve the wheat farmer 

 at this time. Since it will relieve 

 him. why should you object? Why 

 should anybody object? 



Is it not true that the sugges- 

 tion that the bill would apply only 

 to wheat cannot honestly be con- 

 sidered as an objection to the 

 merits at all but must be branded 

 tor what it is — a piece of political 

 claptrap, intended to arouse the 

 Jealousy, the envy, and the oppoei- 

 tion of those who. if sufficiently 

 deceived and Incited, might feel 

 that, if there were no salvation for 

 them they would see to it that 

 there should be no salvation for 

 anyone else. Is this statesman- 

 ship? Is t^is your meaning? 

 Other Legislation 

 You ask whethenthe farmer has 

 benefitted from any legislation 

 thus far passed in his behalf and 

 especially whether he has benefit- 

 ted from the higher tariffs on ag- 

 ricultural products. The difference 

 between the measures you mention 

 and this bill Is that they were 

 not based on economic analysis ad- 

 dressed to the true cause of the 

 farmers' trouble. 



You will have great difficulty in 

 demonstrating that such is the 

 case with the McNar>*-Haugen bill 

 H Is the only measure yet proposed 

 which has any bearing on the real 

 cause of the agricultural depres- 

 sion which it meets fairly at ever}' 

 point, effectually corrects and be- 

 yond any possibility of doubt; 

 would immediately be effective to 

 restore the pre-war exchange of, 

 the products to which it is* applied. 

 At no place in your argument 

 do you contest this effect. - In: 

 other words, here U a bill, the es- 

 sense and purpose of which i« to 

 raise the price of farm products 

 no higher than to an equitable 

 parity with the price if other, 



products, and yet, tn liscussinc 

 this bill, you eptirely overlook that 

 fact and content yourstfrVnh a 

 repetition of the unsOund and 

 -alarmist objections that fiave thu« 



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far characterized the (imposition 

 to the bill. 



Mliy Include R) (T 

 You ask us to explaii why the 

 bill does not include ii its pro- 

 vision ryi-. oats and barley, and 

 you say that in the cointries to 

 which we sxport wheat, i ye is used 

 interchangeably and thai the price 

 of wheat is affected by the prir. 

 of rye. 



The answer to your question is 



tanother question. Why i hould rje 



be included? The bill will not 



(Change the price of wh< at in the 



'foreign market nor wii It affect . 



the relative consumptionl of wheat 



and rye in that market, j In order 



that operations be not tto greatl> 



complicated, the bill, mkking us*- 



of the knovtJedge that] the price 



of rye is a complcMiie|it of ttte 



price of wheat, contents ^teelf with 



addressing wheat for tite simple 



reason that it is unnecessary to 



include other small graitis. 



"(breaking Old .^rg^menl*^ 

 You a.sk whether by falsing th*- 

 price of farm products to corr<*s- 

 {»ond with the price of all com- 

 liiodities we will not bejcompelled 

 to raise the commodity inde^ and 

 if we do that, you assert that we 

 can never pet prices va^o ahjusi- 

 nient with the basic r^tio jirice. 

 We recognize this crefcking old 

 argument and we know Its source. 

 A rise of 20 points Intthe wheat 

 index raises the general priCe in- 

 dex 1 point, and the lejiser prod- 

 ucts have a fraction. of |hifi effect. 

 Considering an examplfl in which 

 the figures are taken f4r conven- 

 ience of computation, we shall sup- 

 pose that the wheat indtx and the 

 general price index bptli stand 

 at 100. The bill passes land raises 

 the wheat index to 1J50 This 

 would raise the general index 2.6 

 to 102.5. This would! raise the 

 wheat price again to 15t.75 which 

 in turn would raise tl|e general 

 price index but only a Very small 

 amount this time— .Ifij'S points 

 or to 102.6875. I'p I goes the 

 iWheat index but only by, .28125 on 

 this calculation. whicl| in turn 

 raises the general pric4 index^ a« 

 amount so small that it would not 

 be considered— .0140 or to 102.7015. 

 "Silly Galmlatlotis" 

 On the next calculation the in- 

 crement in the general |>rice index 

 would be only .00105 and since 

 only two decimal point! are com- 

 puted the terrifying prbcess is at 

 an end. The argument is scholas- 

 tic — "how many angels, can stand 

 on a needle's point?" li one cared 

 to carry on tliese silly calculations, 

 he would find that, whereas restor- 

 ation of wheat to its ilre-war ex- 

 change value would raile the gen- 

 eral price index 2.5 joints, ten 

 thousand subsequent calculations 

 made on this nonsensical argument 

 would not raise it ank>ther half 

 point and every sabseqient calcu- 

 lation would carry the increment 

 another decimal point nearer zero. 

 In other words, the incnement rap- 

 idly becomes inflnitefimal and 

 would be disregarded ,)n practice 

 on the third calculation. 



Present Prices Mean Loas 

 But in order to get a *iew of the 

 morals of all these arguments, 

 suppose it were literallt' true that 

 restoration of fair exchange value 

 to agriculture would raise the cost 

 of living salwtantially. Pre-war 



(Continued on pMct 6^ 



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