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1 Mi' 



The niinoM Agricultural AModation Record 



May S. 1924 



Objections and Answers to the McNary-Haugen 



May 



Here are the Stock 

 Objections to the Bill 



There is opposition to the bill, 

 but it seerfis to be based in part 

 on iDsuffleient information as to 

 the purposp. principle, and op- 

 eration of the proposed corpora- 

 tion, and in part, of course, on 

 partisan antipathy or individual 

 interest. It is highly important 

 that each objection be ^(ated 

 fairly, an^wpred fully and *thU8 

 disposed of. 



— 1 — 

 "The bill is ■|>a(enwlistic,' (or 

 *coinniuniKlic,' or 'nulical,' or 

 'l>oliticall,r unMmnil.')" 



This objection is otherwise 

 worded "The government ought 

 not to interfere in business, 

 especially not In favor of any 

 class." 



The government has already 

 "interfered" in favor of every 

 other class^ when it passed the 

 taritr. Ky that act it insured an 

 .American price hifther than the 

 norlil price to every cla-os in 

 .America except the producers of 

 ex|»ort cri>ps. 



A condition now arrives, due 

 to world depression and the con- 

 sentient multiplied spread be- 

 tween American and other prices 

 when the burden thus pressed 

 upon the farmer, of paying a 

 high protected price for what he 

 buys and accepting a free trade 

 world price for what he sells, 

 becomes too heavy to bear with- 

 out bankruptcy because it forces 

 him to sell at a loss. The 'Mc- 

 Nary-Haugen bill simply removes 

 this burden and erases this in- 

 equity. It does not favor the 

 farmer. It merely brings him to 

 equality of favor wi^h the re- 

 mainder of the poptllation. It 

 does not favor, it abolishes dis* 

 fan>r and puts him on an equal 

 plane with industry. 



The Tariff wall had two great 

 breaches. It did not stop the in- 

 flow of cheap labor and therefore 

 did not protect labor. We have 

 cared that by immigration re- 

 striction. It did not protect the 

 farmer on export crops. We must 

 now cure that by the McNary- 

 Haiigen bill. 



This bill should be regarded 

 simply as an amendment to the 

 Hamilton Doctrine of protection 

 rendered necessary by a violently 

 distorted world condition. 



Perhaps tUe Tariff is paternal- 

 istic but, having afforded this 

 kind of protection to two-thirds of 

 our people, at the expense of the 

 other third, what kind of «ood 

 faith is it to refuse e.sactly the 

 same protection to the other 

 thind on the pleas of "individual- 

 ism?" Who has the cynical au- 

 dacity to say that what is the 

 sound foundation rock of our 

 ecoaomie policy for industrial 

 . New England is communism for 

 Iowa? Are we repentant of the 

 "political unsoundness" of the 

 ^tariff and the immigration re- 

 strietion? The pious penance is 

 to repeal them, It^Hcertainly 

 not to segregate their ri^ benefit 

 to two-thirds of the population 

 and. then flaunt "economic ortho- 

 doxy" as a reason for refusing 

 them to the other one-third. 

 Suck is not piety. It is scurvy 

 hypocricy. We are not repent- 

 ant. We adhere to our belief in 

 the principle of protection. But 

 so to adhere we cannot apply it 

 to industry and deny it to agri- 

 culture — certainly not on the 

 argument of anti-paternalism. 

 That would add larceny to hypoc- 

 ricy and neither can long en- 

 dure as a national policy. 



By this bill the government 

 does not "interfere In business". 



It permits a corporation to. com- 

 bine fariii products tor export 

 sale just as the Edge and the 

 Webb-Pomerene bills now permit 

 industry so to combine. The 

 "Government" itself does nothing 

 but give the corporation a start. 

 It creates no new governmental 

 bureau or department. It simply 

 permits a great agricultural cor- 

 poration, organized -in the only 

 way it can be organized, to go 

 into the market and buy and sell, 

 thus correcting an insufferable 

 condition. But the corporation 

 creates no new mechanism. ' It 

 utilizes existing agencies for man- 

 ufacture, storage, transportation, 

 purchases and sales. It operates 

 merely as would an individual 

 buying and selling in the ex- 

 changes. The farmer's agents 

 (officers of the corporation! act 

 for him and at his expense — not 

 at government expense — in pre- 

 cisely the same way the ofSclals 

 of an industrial corporation act 

 for its stockholders. The gov- 

 ernment as such does nothing. 

 The farmer pays every cent of 

 expense and bears every risk of 

 loss. He asks neither favor nor 

 funds of anyone, except the orig- 

 inal capital of the corporation 

 which will be returned intact to 

 the Treasury of the United States 

 at the expiration of the emerg- 

 ency. 



—2 — 

 **Economic ills cannot be solved 

 by Le^slative remedy." 

 This is almost ridiculous. Leg- 

 islative enactments affecting com- 

 merce are nearly all economic 

 phenomena. If it was an eco- 

 nomic ill that America, before 

 protection, was simply a reservoir 

 of raw material, the doctrine of 

 protection, expressed as a legis- 

 lative remedy cured that ill. If 

 it was an economic ill that hordes 

 of aliens incapable of absorption 

 threatened our labor market after 

 the war, legislative enactment 

 cured that ill. If it was an eco- 

 nomic ill that the states under 

 the Articles of Confederation 

 could not exist as a Federal unit, 

 the Commerce clause of the Con- 

 stitution and the myriad statutes 

 enacted undei* it stand as refuta- 

 tion of the objection. As has 

 been repeatedly stated herein the 

 .McNary-Haugen bill seeks no new 

 invasion of the economic field; 

 it proposes only a restoration of 

 a nice balance between agricul- 

 ture and industry which has been 

 shattered by many prior inva- 

 sions — the tariff, the Adamson 

 law, the Esch-Cummins Act, the 

 restriction of immigration, etc., 

 etc. 



Such platitudes are unworthy 

 of consideration unless their ap- 

 plication to the matter in contro- 

 versy be shown and there is no 

 application of this creaking fal- 

 lacy to the point in question 

 here. 



"The proposetl lncrea.se in price 

 -. will in turn raise the general 

 price index. This will auto- 

 matically raise the price of the 

 product. This will a^ain raise 

 the general index and so on. 

 The bill starts a vicious circle 

 of price raising until the cost 

 of livini; will gradually rise (o 

 inftnity," 



The slightest examination will 

 show that this terrifying abjec- 

 tion is without foundation in 

 practice, though it has actually 

 been seriously argued by men 

 otherwise reputed for unusual in- 

 telligence. Consider wheat as an 

 example. 



A rise of 20 points in the 

 wheat index raises the general 

 price index 1 point. Considering 



an example in which the figures 

 are taken for convenience of 

 computation, we shall suppose 

 that the wheat index and the 

 general price index both stand at 

 100. The bill passes and raises 

 the wheat index to 150. This 

 would raise the general index 2.5 

 to 102.5. This would raise the 

 wheat price again to 153.75 which 

 in turn would raise the general 

 price index but only a very small 

 amount this time — .1875 points 

 or to 102.6875. Up goes the 

 wheat index but only by .28125 

 on this calculation, which in turn 

 raises the general price index an 

 amount so small that it would 

 not be c<m.sidere<l — .0140 or to 

 102.7015. On the next calcula- 

 tion the increment in the general 

 price index would be only .00105 

 and since only two decimal points 

 are computed the terrifying pro- 

 cess is at an end. The argument 

 is scholastic — "how many angels 

 can stand on a needle's point." 

 If one cared to carry on these 

 silly calculations, he would find 

 that, whereas restoration of 

 wheat to its pre-war exchange 

 value would raise the general 

 price index 2.5 points, ten thou- 

 sand subsequent calculati^ons made 

 on this nonsensical argument 

 would not raise it another half 

 point and every subseqiient cal- 

 culation would carry thK,^incre- 

 ment another decimal poinOieac^ 

 er zero. In other words, the 

 increment rapidly becomes in- 

 finitesimal and would be disre- 

 garded in practice on the second 

 calculation when it becomes less 

 than one-fifth of one per cent. 



But in order to get a view of 

 the morals of all these argu- 

 ments, suppose it were literally 

 true that restoration of fair ex- 

 change value to agriculture would 

 raise the cost of living substan- 

 tially. Pre-war exchange value 

 means only cost plus a very small 

 profit or no profit at all. Present 

 prices mean a loss to the farmer 

 on the average of every pound 

 and bushel sold. Argument for 

 maintenance of the present con- 

 dition is simply argument for 

 taking the farmer's crop away 

 without paying cost for it — 

 "justified" in this case by a de- 

 sire to keep the cost of living 

 down. Nearly every one of these 

 arguments stoops to a similar 

 motive. The McNary-Haugen bill 

 will |>a.ss not only because it is 

 sound and right but because the 

 op|>osition to it is immoral, un- 

 sound and wrong. 



— 4— 



"The bill Is a price flxinK measure 

 and the whole history of eco- 

 nomics stands as an argument 

 against such 'valorization,' " 



"Price fixing" is the attempt 

 to prescribe prices by an arbi- 

 trary exercise of human discre- 

 tion. It is palpably unsound be- 

 cause the discretion that "fixed" 

 price has no power over the ele- 

 ments that make price. Nothing 

 could be farther from this defi- 

 nition than the McNary-Haugen 

 bill. It is the exact antithesis of 

 price fixing. The essence of the 

 bill <<s not the clause limiting by 

 a definition of price relationship, 

 the power of the corporation to 

 go into the market and buy. The 

 essence is the power to buy. If 

 the power in the latter clause 

 were not limited in some very 

 powerful and effective way, the 

 corporation could continue to buy 

 until the domestic price rises to 

 $5.00 a bushel. It would sell 

 about the same surplus at $1.00 

 a bushel and raise the farmers' 

 income to fantastical figures. 

 The price clause is not a grant 

 of power. It is a limitation of 



power. Its purpose is not to 

 "raise prices to an artificial 

 level." It is to maintain them 

 at an equitable level. 



The bill merely says to the 

 farmer "We recognize that you 

 are not getting a square deal. 

 We will give you a square deal. 

 You can go into the market and 

 buy till you get a square deal — 

 and not one Instant longer. The 

 measure of a square deal is a 

 domestic price for your product 

 equal to Its pre-war purchasing 

 power. Purchasing power changes 

 constantly In precise relation 

 with the general price Index. 

 Therefore you can keep on buy- 

 ing, at any time, until the price 

 of your product bears the same 

 relation to the general price in- 

 dex at such time as it bore be- 

 fore the war." Thus far you 

 may go and no further. 



So there is no price fixing. 

 There is only limitation of power. 

 Even that is not a fixed limita- 

 tion and it is as far removed 

 from human discretion as it 

 would be possible to remove it. 

 The general price index fluctu- 

 ates constantly with the condition 

 of business in the country and 

 the limit of the power to buy 

 fluctuates with it in mathemati- 

 cal accuracy. Since no man or 

 combination of nien can control 

 or affect the fluctuation of that 

 ndex, no man can control or 

 affect the limit of that power. 



Since there Is nothing remotely 

 resembling price fixing in the 

 bill, all the anti-price fixing 

 arguments must be dismissed as 

 wholly Inaiiplicable. 



— 5 — 



"The increased price will prompt- 

 ly make matters worse by in- 

 creasing production." 



The effect of Increased produc- 

 tion to reduce price will be far 

 more certain and emphatic than 

 it is now. The hold-back in par- 

 ticipation certificates (scrip) will 

 be directly proportioned to the 

 surplus, will be known and will 

 be the most significant warning 

 against inflated production that 

 could be well imagined. 



The pre-war price relationship 

 produced the pre-war acreage. 

 Only that relationship is pro- 

 posed. Logically only that acreage 

 will ensue and, because we have 

 a considerably increased popula- 

 tion since then, at least that 

 acreage should be maintained. 

 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 depriv- 

 ing agriculture of all profit — an 

 argument immoral, unworthy and 

 unutterable. 



There will be no Increased pro- 

 duction, but to show how shal- 

 low is the argument, suppose 

 there were. Who Is hurt? Not 

 the American people, for, no mat- 

 ter how great the surplus, the 

 price will not on that account 

 rise above the pre-war relation- 

 ship. Under the bill it will never 

 fall below. The only person who 

 is interested in the harmful ef- 

 fect of increased production is 

 the farmer. He and he alone 

 stands the loss on surplus. 



The whole argument of in- 

 creased production due to the 

 McNary-Haugen bill is a scare- 

 crow. 



"It is bad precedent. If we do 

 this for farmers we will be 

 called ni>on to do it for 

 others." 



The precedent was established 

 when we enacted the tariff and 



other economic legislation which 

 omitted the farmer from protec- 

 tion. The bill merely rectifies the 

 omission. It is not a precedent. 

 It is a sequel. It is not even the 

 first sequel. The immigration 

 law gave labor its protection but 

 left agriculture still out In the 

 blasts of a wintry world. So far 

 as we now know, this is the last 

 breach in the protective wall. It 

 is a breach that must be closed — 

 not in favor of agriculture but 

 in favor of the whole nation, and 

 in common justice to the farmer. 



But even if there were other 

 classes equally prejudiced (which 

 there are not) is a precedent of 

 simple justice something to be 

 avoided? 



Not long ago industry asked 

 the right to combine for export 

 trade. It was granted instantly. 

 It has long been the custom for 

 industries to sell in export at 

 less than the domestic price. 

 Agriculture seeks no greater or 

 different privilege. The prec- 

 edents are all behind us. There 

 is no other class in like case with 

 agriculture. The McNary-Haugen 

 bill closes the last gap in our 

 protective outworks, 

 — 7 — 

 "The bill will prevent hedging or 



future trading by millers and 



grain men." 



The ratio price is a minimum 

 price — not a maximum price. 

 Any miller making a future con- 

 tract to sell flour; any grain man 

 with an eye to future delivery, 

 will have the same incentive in 

 principle as he now has to pro- 

 tect against future price fluctua- 

 tion, either up or down. Cer- 

 tainly he will have the same fa- 

 cilities and opportunities to do 

 so. It may be true that the lati- 

 tude of future fluctuation will be 

 less ample than that of the past, 

 but 'why should any miller or 

 grain dealer do otherwise than 

 applaud? The professional spec- 

 ulator and the gambler might 

 complain. This should give agri- 

 culture and legitimate business 

 no concern. 



—8 — 



"The bill will destroy the country 

 elevator." 



The country grain buyer is in- 

 terested in handling as much 

 grain as he can at a margin that 

 includes his handling costs and 

 profit. That opportunity is not 

 restricted or changed by the Mc- 

 Nary-Haugen bill. The language 

 of the proposed law requires the 

 corporation to utilize existing 

 agencies in Its operations. The 

 plan outlined can neither replace 

 nor tend to destroy the country 

 elevators which perform a useful 

 service in our present grain mar- 

 keting system. 



"The bill requires a ponderous 

 mechanism, very exiiensive and 

 administratively unworkable." 



The bill confers power to ac- 

 complish its purpose. Is there 

 anything unworkable in commis- 

 sioning existing grain or cotton 

 or meat or milling companies to 

 buy the exportable surplus? Is 

 there anything unworkable in 

 commissioning the same or others 

 to sell to export the quantity of 

 the products thus purchased? la- 

 dividual operators do this daily — 

 single handed and alone. That 

 is all there is to the operation. 

 It involves no mechanism and in- 

 curs much less expense than that 

 now incurred many times over 

 in the repeated commissions 

 reaped on speculative sales. It 

 duplicates no facilities and inter- 

 feres with nobody's business. The 

 objection is a make-weight, sig- 

 nifying nothing. 



Write Your Congressman Today Urging Him To 



