April 5, 1924 



The Illinois Agricultural Association Record 





Page 5 



— Why Should You Object? ''-I. A. A. 



Thompson Refutes Arguments 

 AgainstMcNary-HaugenBill 



4. 



\ 



(Coiitinue<i 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 to limit the increase and 

 whether it did or did not your ob- 

 jection is without merit — even al- 

 most without coherency. 



.\n Viiworlliy Ob.iec(ion 



If you object to the raising of 

 the price of agricultural products 

 to a fair exchange value (no high- 

 er) and base . your objection on 

 the ground that it would increase 

 circulative media, then there is no 

 more to be said. But since we 

 all admit 'that the present price is 

 less than cost of production, your 

 opposition w^ould 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 if not im- 

 moral and we feel sure that, on 

 careful thought, you will abandon 

 it. 



Mnch Smaller Ilatlo 



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 band 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 in 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 

 a brave banner of words signifying 

 nothing. 



Would Fanner Object 



You ask whether fanners 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 

 11.55, 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 A'aloe 



Ton 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 



A 



in the value of wheat, corn, cotton, 

 live stock, meat products, oil, or 

 any other commodity of com- 

 merce? 



".V TeiTif.vinR Monster" 



Your third numbered paragraph 

 liartakes of the method of him 

 who constructs a terrifying mon- 

 ster and then 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 t}ie law is 

 applied to the live stock industry 

 it will make it necessary for the 

 government to go into the business 

 of slaughtering and packing food 

 animals and you want to know 

 how this enormous investment 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 the 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 prices. . 



Misconstrued 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 diflicult 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 overlbok 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. 



Not Va«nie or Indefinite 



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- 

 eniatics could scarcely be more in- 

 cisive, emphatic and accurate. You 

 fear that the farmer will suffer by 



■X.:. 



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, w^e 

 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 ample protection. 



Hasn't Sludie<l Collon 



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 wiiich we export a 

 surplus as a subsidy o* industry at 

 his expense? Do you know that 

 this fact 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. 

 It 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 

 wilt be Ruinous 



(Continued from page 4) 

 reference to this method of pay- 

 ment, the farmer can only (Jefl- 

 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 nie 

 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 it it does not have that 

 effect, it will only increase the 

 farmers* suspicions and his dis- 

 trust of his Government and its 

 agencies. 



Needs Foreifni 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 natiofiff and is 

 pursuing a policy of isolatioa 

 Whenever we abandon our policy 

 of Isolation and assume those 

 world responsibilities which are 

 ours, and do our part toward 

 quieting 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 "flat" 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 othef farmers within the pro- 

 tection t'of the tariff but leaving 

 the cotton farmer in his old in- 

 equitable position. .\s to any 

 crop, at any time that its domestic 

 price is above pre-war exchange 

 value, the corporation simply 

 would tiot function. 



.\ineiifls Tal^ff f€»r Fanner 



The bill should be regarded 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 



Y'ou ask us to explain how this 

 bin can be arranged so as to ap- 

 ply to hogs and cattle. We have 

 already done so in the answer to 

 your apprehension lest the govern- 

 ment be involved in a great indus- 

 trial operation and if you have 

 paid any attention at all to hear- 

 ings of the bill you harte already 

 been fiilly 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, and suggest that the 

 remaining products are put Into 

 the bill for political purposes only. 

 Kill Means Wluit It Says 



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 

 products Were included only to 

 deceive, you are^quite wrong. But 

 suppose that the ^ill «vas intended 

 only 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 

 for what it is — a piece of political 

 claptrap intended to arouse the 

 jealousy, the envy, and the opposi- 

 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 this your meaning? 

 Other LefTislation 



You ask whether thj farmer has 

 benefitted from any legislation 

 thus far passed in ^is 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 McNar5--Haugen bill. 

 It is the only measure v-et proposed 

 which has any bearing on the real 

 cause of the agricultural depres- 

 sion which it meets fairly at every 

 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 is a bill, the es- 

 sense apd purpose of which Is to 

 raise the price of farm products 

 no higher than to an equitable 

 parity with the price of other 



m 



.Itroducts, and yet, in discussing: 

 this bill, you entirely overlook that 

 Ifact and content yourself »i;h h 

 fepetition of the unsound and 

 Alarmist objections that have thus 

 kar characterized the o4ipositio«i 

 ko the bill. ' 



I Wiy Include ISye? j 



You ask us to explain why th|e 

 >ill does not include in its pro- 

 isi<jn rvf. ofts and barley, and 

 \tO\i say that in the countries to 



trhioli we export wheat, rye is used 

 n«erchangea*)ly and that the price 



f wheat is affected by the pricw 



f rye. 

 The answer to your question is 

 another question. Why ffiould r>V" 

 be Included? The bill will not 

 thange the price of wheal in the 

 foreign market nor will it affect 

 the relative coneuniptiop of wheat 

 and rye in that market. In order 

 that operations -be not loo greatly 

 poniplicaled. the bill, making uw 

 of the knowledge that the |>rip<' 

 of rje is a complement of ihe 

 tprlce of wheat, contents itself with 

 iaddressing wheat for the simple 

 ■reason that it is unnecessary 

 anclude other small grains. 



"t'reaklnd Old .%rKumem* 

 I You ask whether by raising the 

 price of farm products to corres- 

 {l>ond with the price of all com- 

 jmodities we will not be compelled 

 tto raise the commodity index and 

 iif we do that.' you assert that we 

 lean never get prices into adjust- 

 iment with ,the basic ratio price. 

 'We recognize this creaking old 

 {argument and we know^its source. 

 A rise of 20 points In the wheal 

 Index raises the general price in- 

 jdex 1 point, and the leaser prod- 

 jucts have a fraction of this effect. 

 Considering an example in which 

 fhe figures ariP taken for conven- 

 ience of computation, we sliall sup- 

 iiose that the wheat index and the 

 general price index both stand 



ft 100. The bill passes and raises 

 he wheat index to 150. This 

 •would raise the general ipdex 2.5 

 ko 102.5. This would raise the 

 wheat price acain to 153.75 which 

 tn turn would raise the general 

 |)rice index»but only a very small 

 lamount this time — .1875 points 

 br to 102.6875. Up goes the 

 Jwheat Index but only by .28125 on 

 this calculation, which in turn 

 raises the general price index an 

 ■mount so small that it «vould not 

 be considered— .0140 or to 102.7015. 

 "Silly Calralallons" 

 On the next calculation the in- 

 crement in the general price index 

 •would be only .O0fO5 and since 

 lonly two decimal points are com- 

 muted the terrifying process is at 

 n end. The argument is scholas- 

 'P — "how many angels can stand 

 n a needle's point?" If one cared 

 o carry on these sillv calculations, 



te would find that, whereas restor- 

 tion of wheat to its pre-war ex- 

 thange value would raise the gen- 

 (eral price index 2.5 iKJints, ten 

 thousand subsequent calculations 

 tnade on this nonsensical argument 

 ^ould not raise it another half 

 point and every subsequent calcu- 

 lation would carry the increment 

 another decimal point nearer zero. 

 tin other words, the increment rap- 

 idly becomes infinitesimal and 

 Would be disregarded in practice 

 |on the third calculation. 



Present Prices Mean Loss 

 But in order to get a view of the 

 Imorals of all these arguments. 

 Suppose it were literally true that 

 reatoration of fair exchange value 

 to agriculture would raise the cost 

 of living substantially. Pre-war 



(Contiaufd o* past 61 



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