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Pace 6 



The Illinou Agricultural Anociation Record 



April 5, 1924 



"No Shadow of Evidence'*— S. H. Thompson 



f 



Export Plan is Simply j 

 I Justice for Farmer— LA A. 



(Continued fmm page 51 

 exchange value means, only- cost 

 plus a very small profit or no pro- 

 fit at all. Present prices mean a 

 loss to the fanner on every pound 

 and bushel sold. 



Argument for maintenance of 

 the present condition is simply ar- 

 gument for taking the farmer's 

 crop away without paying cost for 

 it^"lustifled" in this case by a 

 desire to keep the cost of living 

 down. Nearly every one of these 

 arguments strips to a similar mo- 

 tive. The McNary-Haugen bill 

 will pass not only because it is 

 sound and right but because the 

 opposition to it is unsound and 

 wrong. xo Difflcnlty 



Your next question as to where 

 the ratio price is to be applied we 

 shall answer simply by referring 

 you to the operation of the United 

 States Grain Corporation during 

 the war. There is no difttculty here 

 any more than there is in the pres- 

 ent system under which, as you 

 know, the farmer farthest from 

 terminals receives the least for his 

 crop. Exactly the same answer 

 applies to your question as to the 

 grades which represent the values 

 for the basic ratio price. 



Your apprehension about the 

 miller has also already been an- 

 swered. Flour or pork are as 

 much exportable Surplus of wheat 

 and swine as the raw material 

 and the bill recognizes this and 

 provides for it. The corporation 

 win absorb the difference between 

 the domestic and the export price 

 of wheat and swine purchased on 

 the domestic market and sold as 

 flour or pork for export. 



Nothing to Do with Case 



It is quite true, as you say, that 

 the consumption of wheat in the 

 United States fluctuates slightly; 

 that wheat is harvested somewhere 

 in the world every month in the 

 year, but like the flowers 'that 

 bloom In the Spring, these astute 

 observations have absolutely noth- 

 ing to do with the case in point 

 and your remarks that it will no^ 

 be possible to estimate months In 

 advance the questions of produc- 

 'io'h, surplus and foreign price and 

 lerefore that it will be impossi- 

 ule to establish a ratio price, are 

 equally inappropriate. 



The ratio price of any of these 

 products is established at any 

 time simply by determining the 

 ratio which the price bore to the 

 general price index before the war 

 and tlien computing what price 

 would bear the same- ratio to the 

 general price indes, at such time. 

 The questions you ask have noth- 

 ing to do with this computation. 

 Doubtless you did not get your 

 mentor's question and what you 

 are trying to ask Is how It will be 

 possible to compute the proportion 

 of price to be paiid in scrip. It 

 would be possible,^ for example, to 

 take the widest jrange of price 

 variation in experience, though it 

 will not be necefsary to do so. 

 Even If that exti!eme precaution 

 were thought necessary, the net 

 result would be (hat the farmer 

 would get a very much greater 

 price for his product in cash than 

 he gets now and a considerable 

 addition to that increase as soon 

 as the actual loss were deter- 

 mined. 



How Many employees? 

 You ask how ifany employees 



the new corporation will hire and 

 whether there' will not be many 

 thousand. There will not be many 

 thousand. The expense of oper- 

 ation win not' be great. You are 

 proceeding on what some one has 

 told you the bill means. We have 

 already shown you that the bill 

 does not put the government into 

 industrial operations. 



Your question as to whether 

 scrip does not present a splendid 

 opportunity for speculation, we 

 have already answered. Your 

 further question as to whether it 

 does not present an opportunity 

 for fraud is not very important 

 and we doubt whether it was in- 

 tended to be very helpful. The 

 question goes to excellence of ad- 

 ministratifin of the law and not to 

 the merits of the law. Your only 

 observation on this head that is 

 worthy of an answer is whether 

 the penalties provided are sufli- 

 cient to prevent fraud. You speak 

 as though the only penalties 

 against fraud and crime in the 

 United States were to be found 

 under this bill. Of course you 

 know better. 



Most Amazing Observation 



Your eighteenth observation is 

 one of the most amazing that has 

 come to our attention. You say, 

 "There are frauds in every depart- 

 ment of the government so far 

 investigated, and civic honesty 

 seems to be at a discount. Even 

 cabinet members are bribed and 

 when conditions are as above in- 

 dicated, is it not unwise to create 

 another department such as con- 

 templated in this bill, and with a 

 large personnel of ofScials, all of 

 whom would be subjected to un- 

 usual temptations In the matter of 

 bribes?" 



This objection seems to say that 

 you are convinced that the whole 

 machinery of government ought to 

 be thrown over because it is rot- 

 ten to the core. Such a sweep- 

 ing conclusion puts our mind in 

 doubt as to the conservatism of 

 the balance of your argument. We 

 have not seen any evidence of 

 fraud "in every department of the 

 government so far investigated" 

 and we do not believe that "civic 

 honesty is at a discount." 



"You . are Inaccurate" 



You are inaccurate when you 

 say that the bill creates another 

 department with a large person- 

 nel of ofSclalS. You are inacur- 

 ate when you say that the bill 

 offers unusual temptations in the 

 matter of bribes. If you mean 

 that bribery could affect the de- 

 termination of the ratio price, you 

 are wrong. 



The ratio price is determined 

 under the bill by a mathematical 

 operation and it is beyond the 

 power of any person to affect it 

 by an act of discretion. If you 

 mean something else, you onght 

 to say what you mean because the 

 bill offers no. more opportunity 

 for bribes and speculation than is 

 offered in any private corporation 

 or any other enterprise, public or 

 private, of which we are aware. 

 No Attempts to Fix Food Prices 



You ask whether, during the 

 period of the war and since then. 

 It is not true that every sort of 

 experiment In government control 

 of food products has been tried In 

 this country and abroad. The an- 



swer is "No." We would like to 

 have you give us one Instance of 

 any such attempt except, perhaps, 

 the Brazilian coffee valorizations, 

 some of which have been very 

 successful. There jvere no at- 

 tempts by this government to fix 

 food prices during the war. There 

 were certain minimum prices 

 guaranteed to produce production 

 and we fear that you have com- 

 pletely contused and misunder- 

 stood the war-time operations of 

 this and other nations. 



What Alternative Has He? 



You ask whether bills thus far 

 passed have not resulted merely in 

 "increasing the overhead of farm- 

 ers by giving them more entic 

 ing opportunities for borrowing 

 money." We might ask what al- 

 ternative the farmer has. He Is 

 operating at a loss. He has only 

 two choices — to give up his farm 

 or attempt to carry it against a 

 hope in the future. He can do 

 the latter only by borrowing 

 money. What do you propose 

 that he do?'" 



You ask us to call your atten- 

 tion to a single Instance in the 

 world of a satisfactory mainten- 

 ance of price of food products over 

 a considerable period of time. We 

 gladly hasten to comply — the 

 American doctrine of protection as 

 applied to every food product ex- 

 cept those of which we export a 

 surplus. 



Supply and Demand 



You ask whether It Is not true 

 that the only way to maintain a 

 price is to have a buyer willing 

 and able to take everything offer- 

 ed at the price specified. The 

 answer is "yes," and the more 

 supply exceeds demand, the lower 

 the price. When supply equals or 

 about equals demand, price is us- 

 ually cost of production plus a 

 profit. Supply and demand with- 

 out some qualification mean noth- 

 ing or next to nothing. The de- 

 mand for a product is all that Is 

 asked for at a certain price. The 

 demand for a product at a low 

 price is greater in quantity than 

 the demand at a high price. 



The McNary-Haugen bill re- 

 moves from the domestic market 

 by a skimming process, all of the 

 product for which there Is no de- 

 mand at the pre-war price rela- 

 tionship. When this is done, you 

 will find, beyond any question of 

 doubt, that the domestic price of 

 any of the products affected by 

 the McNary-Haugen bill will bear 

 the pre-war relationship to the 

 general price index. The bill does 

 not suspend the law of supply 

 and demand. It utilizes it. The 

 bill will have the effect of creating 

 a situation In America where we 

 shall have buyers willing and able 

 to take everything offered at the 

 price specifled^that price a fair 

 one. During these years, have you 

 heard of anyone refusing to take 

 or eat our farm prodQCts. Demand 

 has been avid. It is price that we 

 lack. 



Will It Increase Acreage? 



You now ask another question 

 that amazes us because we do not 

 believe that you would ask it if. 

 you had given careful reflection to 

 Its real meaning and the Inequi- 

 table position in which it automa- 

 tically places Its proponent. "If 

 the fixed price is high enough to 

 do the farmer any good, will It not 

 have the effect of Increasing the 

 acreage?" 



In the first place, there Is noth- 

 ing so attractive about a pre-war 



price relation (reduced, be It re- 

 membered, by the loss on export) 

 as to persuade anybody to increase 

 acreage. This Is not a measure to 

 inflate price. It is only a measure 

 to stop loss. 



Penalizes Overproduction 



In the second place, the effect 

 of increased production to reduce 

 price will be far more certain and 

 emphatic than it is now. The 

 hold-back in scrip will be direct- 

 ly proportioned to the surplus, 

 and will be the most significant 

 warning against inflated produc- 

 tion that could be well imagined. 



In the third place, the pre-war 

 price relationship crystallized the 

 pre-war acreage. Only that re- 

 lationship is proposed. Logically 

 only that acreage will ensue and. 

 because we .have a considerably in- 

 creased population since then, at 

 least that acreage should be main- 

 tained. And if the argument be 

 "Even so; let them keep the pre- 

 war acreage but do not restore the 

 pre-war price relation" (and it is 

 only to this that the argument 

 can reduce) then it Is a bold, bald 

 argument in favor of depriving 

 agriculture of all profit — an ar- 

 gument Immoral, unworthy and 

 unutterable. 



Who Cares If It Does? 



In the fourth place, who cares if 

 it does Increase production? Not 

 the American people for, no mat- 

 ter how great the surplus, price to 

 them can never rise above the pre- 

 war relationship by that cause, 

 and, under the bill, will never fall 

 below. The only person who Is 

 Interested in the harmful effect 

 of increased production is the 

 farmer. He and he alone stands 

 the loss on surplus. 



But how much is he affected? 

 Let us take the most extreme case. 

 Suppose restoration of pre-war 

 prosperity (scant enough In all 

 conscience) should raise produc- 

 tion to the extreme limit of rea- 

 sonable possibility — 1,200,000,000 

 bushels of wheat for example. 

 Suppose we consider 900,000,000 

 a normal crop and 600,000,000 a 

 normal domestic consumption. 

 How does this hellish fault affect 

 the farmer? He is the only one 

 concerned. 



Today without the bill and the 

 swollen surplus he would get, let 

 us say, $900,000,000 for his crop 

 - — M.OO per bushel. 



How It Would Work 



With this bill and the increased 

 surplus he would get $1.50 for 

 the domestic consumption, $900,- 

 000,000. For the 600,000,000 

 bushels of surplus he would get 

 only $600,000,000 — $1,500,000,- 

 000 for the whole crop as against 

 $900,000,000 today — $1.25 per 

 bushel for 1,200,000,000 bushels 

 against $1.00 per bushel for 900,- 

 000,000 bushels — an increase of 

 66-2-3 per cent in income, 25 per 

 cent in unit price, and since the 

 unit cost of the larger quantity 

 would be far less than that of the 

 smaller, an increase considerably 

 above 25 per cent in net profit. 

 The public would not suffer by 

 so much as one cent In the price 

 it paid but It would be gainer by 

 an increase of some $600,000,000 

 in national Income and increase in 

 national wealth. 



The whole argument of Increas- 

 ed production due to the McNary 

 bill Is a scarecrow. As a matter 

 of fact the co-relation of American 

 ycrop quantities would prevent 

 such Increase In price and the 

 great good fortune Just related. 



The production of a 600,000,000 

 surplus by reason of this bill is 

 a Wild dream and It it were not 

 so, as just shown, it would be too 

 good to be true. 



Argument Reacts 



The argument reacts upon Itself 

 in another way. Every fair person 

 must admit the farmer should 

 have a fair exchange value for his 

 product. If he Is to have it. It 

 will be a price equal to or greater 

 than that obtained for him by the 

 McNary-Haugen bill. On the ar- 

 gument suggested by the question 

 you ask, however, If that price is 

 attained it must increase the 

 acreage. In other words, you are 

 in the position of saying that while 

 you yearn for a fair deal for the 

 farmer you can't give it to him 

 because it would increase the 

 acreage given over.,to the particu- 

 lar crop in question. 



In your next paragraph you 

 bring forth the arguments contain- 

 ed in the resolution of the Okla- 

 homa Wheat Growers' Associa- 

 tion. 



"Truly Pitiful" 



It is truly pitiful to read that 

 resolution because it reveals how 

 grievously these gentlemen have 

 been deluded by someone who has 

 much to answer for. The resolu- 

 tion starts by saying, "The act 

 carries with it all of the features 

 necessary to arbitrary control of 

 the prices of farm products • • • 

 The object of said bill Is to flx and 

 control prices * * • and the act 

 provides for a small commission 

 or corporation with complete pow- 

 er to attempt to set aside the law 

 of supply and demand." 



Of course the gentlemen who 

 voted the resolution earnestly be- 

 lieved these words were true, but 

 some person who advised them 

 must have known that there is 

 not a vestige of truth in them. 

 The proposed corporation would 

 fix nothing. It can only buy up 

 the surplus. In doing this It can 

 continue buying only until the 

 product in question raises to a 

 price that bears the same relation 

 to the general index that the pre- 

 war price bore. 



No Power to Fix Prices 



Since the general index fluctu- 

 ates precisely with the condition 

 of business In the country, the price 

 of the product considered will also 

 so fluctuate and no power is given 

 by the bill to anybody to fix and 

 control prices. The resolution 

 goes 9h to say that the bill would 

 add to the expense of marketing 

 and thus to show that whoever 

 "sold" the idea of these resolu- 

 tions to this group of farmers led 

 them to believe that this supposed 

 added cost would come out of the 

 already low price they now re- 

 ceive for their products. 



He omitted to show them that 

 if the added cost of marketing is 

 anything at all, it comes otat of an 

 added price of about 50 cents a 

 bushel for their product. In other 

 words, the resolutions themselves 

 demonstrate that the signers 

 thereof were deluded and cozened 

 into thinking and saying (hat the 

 effect of the bill will be to de- 

 crease the price of their product 

 to themselves. No wonder they 

 signed the resolution. 

 Misinformed 



This delusion is further demon- 

 strated by another amazing sen- 

 tence, "The public cannot afford 

 to pay more." When we reflect 

 that the public is paying less than 

 cost of production, no fair mem- 



(Concluded on page 7) 



April S, 1 



beEt 



(Cob 



ber of the 

 to say that 

 pay more a 

 would mak 

 We can on 

 farmers w 

 more llkel] 

 to the natu 

 effect of tt 

 Should 



You asl 

 Congress ii 

 cultural < 

 important 

 — reach sii 

 conclusion! 

 in no real 

 should do. 

 course wh; 

 sound and 

 sider the 

 greatest m 

 can be ac< 

 Justice to a 

 circumstan 

 do think t 

 "demand t 

 gress from 

 ocaily and 

 vofl for th 



■?ou ask 

 in an equiv 

 fact that w 

 to restrict 

 McNary-H£ 

 raises the 

 have giver 

 McNary-Hs 

 and It was 

 advice ma 

 others and 

 are mindei 

 will never 



We have 

 question a 

 Nary-Haug 

 governmer 

 The answf 

 reasons sti 



, Is 



Your ne 

 appropriat 

 it does pii 

 the grain 

 engage in i 

 We shall 

 to escape 

 your mind 

 governmeD 

 i.iequity o 

 not, as oc 

 to do a sii 

 In other s 

 precedent? 

 The pre 

 when we 

 omitted tl 

 tlon. The 

 omission. 

 It is a seq 

 first seque! 

 gave laboi 



, agricultun 

 of a wlntr 

 know, this 



, protective 

 that must 



' of agricull 



, whole Uni 



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classes eq 



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. thing to h 

 another s 



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 suggestion 

 should als 



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...„^L-. 



