Page Fourteen 



THE I. A. A. RECORD 



t- 



the theory that all that part of the 

 crop which is consumed at home should 

 be sold at the world price, plus the 

 tariff, and that the domestic surplus 

 should be dumped on the foreign mar- 

 ket for what it will bring. One means 

 proposed for doing this is the so-called 

 equalization fee, by which the loss on 

 the dumped surplus would be borne by 

 the farmers. Another is the debenture 

 plan by which the loss would be borne 

 by the United States Treasury. Other 

 plans for doing the same thing are pro- 

 posed. They seek the same objective of 

 tariff benefit, and involve the same 

 program of dumping the surplus. 



Another suggestion is that the Fed- 

 eral Farm Board should purchase on 

 the market a large volume of wheat, 

 say 100,000,000 bushels, and thus in- 

 crease the price. 



Not Temporary 



If it were a situation, suddenly cre- 

 ated, and temporary in character, the 

 powers of the board in recognizing a 

 stabilization corporation, to deal with a 

 surplus might legitimately be brought 

 to bear. But it is not a sudden emer- 

 gency. It has resulted from continuous 

 overproduction -and consequent cumu- 

 lative increases in the iupply of wheat. 



The cure for this condition is not 

 to be found in the purchase of large 

 amounts of wheat by the stabilization 

 corporation. Such a course would not 

 reduce the visible supply of wheat by 

 a single bushel. It would not reduce 

 world or domestic stocks of this wheat 

 by a single pound. It would, on the 

 other hand, gather into one mass, a 

 vast amount of wheat, which, always 

 present, and all the more threatening 

 because massed under one control, 

 would hang as a dead weight over the 

 market and prevent the free rise in 

 ' prices which we fully expect will nor- 

 mally occur. 



To test the effect of such a purchase, 

 let it merely be asked — what would the 

 stabilization corporation do with it? 

 That question is present with us now 

 as to wheat already owned by the cor- 

 poration — but unanswered. The cor- 

 poration cannot dump it upon the do- 

 mestic market without entirely dislo- 

 cating the existing marketing and 

 distributing machinery of the country, 

 and it will not do so. Destroying it is 

 unthinkable. 



How Dump It? 



Nor can it be dumped on the foreign 

 market. Even if the prohibitive tariffs 

 (such as Germany's 97c per bushel, 

 France's 85 c, Italy's 86c) could be met 

 and overcome, it would destroy for 

 present purposes the foreign outlet for 

 the crop now coming to market. It 

 would inevitably reduce the world 

 price. But more final and forceful 



than either of these considerations is 

 the fact that every foreign nation has 

 a farm problem of its own. Every 

 wheat importing nation is trying to 

 stimulate its own production and to in- 

 crease its own independence of imports. 

 Consequently many of them already 

 have an anti-dumping law. 



By these laws, whenever any nation 

 attempts to sell, in the market of an- 

 other, any commodity at a price less 

 than it is sold for at home, a tariff 

 equal to the difference in selling prices 

 becomes immediately effective. Thus 

 would a debenture or equalization fee 

 be immediately checkmated. In some 

 cases the penalty is even more drastic. 

 This is the final and insuperable obstacle 

 to any scheme of subsidy which con- 

 templates dumping the surplus at a 

 price lower than the crop sells for in 

 the home market. 



We Protect Ours 



We in the United States properly 

 protect our own markets and our own 

 producers from the demoralization of 

 foreign dumping by just such a law. 

 What would our American wheat farm- 

 ers say if Argentina or Canada at- 

 tempted to dump on our markets at 

 prices lower than they accepted at 

 home? Even if there were no anti- 

 dumping laws, all schemes which are 

 based on dumping the surplus at a loss, 

 and making the loss back on domestic 

 sales are fatally defective. The equal- 

 ization fee plan and the debenture plan 

 are, at bottom, subsidies. The only 

 legitimate object of a subsidy is to in- 

 crease production, and greater produc- 

 tion is the inevitable result. But we 

 are already overproducing. That is the 

 cause of our distress. To stimulate 

 more production by subsidies of any 

 kind, or under any name means a larger 

 surplus, a further depression of the 

 price and increased distress at home. 



Cure Not Overproduction 



I can understand how a man might 

 be such a glutton as to be happy in 

 "digging his own grave with his teeth." 

 I can see how an occasional honey bee 

 might become so intrigued by the 

 sweetness or the stickiness of its own 

 product as to fall bodily into the mass 

 and be "embalmed in its own honey." 

 The spectacle of farmers working from 

 daylight till dark and increasing their 

 expenses in order to create a vast sur- 

 plus in which to inter themselves and 

 their families would be easy to under- 

 stand if it occurred only occasionally. 

 But it is a matter of annual recurrence. 

 Each year the mountainous surplus is 

 piled higher. Each year the depression 

 goes lower. It is time we understand 

 that the cure for overproduction is not 

 more production. 



Proponents of the equalization fee 



and of the debenture argue that these 

 are devices for equalizing tariff bene- 

 fits. The underlying objective of the 

 tariff is to protect the home market for 

 home producers, to keep our own people 

 employed and to avoid measuring 

 American standards of living against 

 those of other nations. 



Agriculture has the opportunity to 

 obtain tariff benefits. The government 

 cannot and does not attempt' to force 

 tariff benefits upon any industry. All 

 it can do is to provide the rate of duty. 

 It is then the province of each industry 

 to accept or to decline the protection. 

 If its production is less than the do- 

 mestic market, it can get the benefit 

 of the tariff. If it elects to produce 

 for and to sell on the world market, it 

 loses the protection of the tariff. Wit- 

 ness the automobile industry. The tariff 

 merely offers the protection — take it or 

 leave it. 



Agriculture No Exception ; 



In all this agriculture is no exception. 

 For wheat, we have a large measure of 

 tariff protection offered us — 42c per 

 bushel. We are already over-expanded. 

 We have over-produced, and we are 

 over-producing. If we want the bene- 

 fit of that 42c per bushel, all we have 

 to do is to bring our production down 

 to domestic needs. It is there for us — 

 take it or leave it. 



The answer to farm distress caused 

 by over-production is not more produc- 

 tion. More production means merely 

 more problems, lower prices and greater 

 disaster. Anything which stimulates 

 production, call it equalization fee, de- 

 benture or what not means larger and 

 larger surpluses coming more and more 

 into competition with foreign surpluses, 

 produced on cheap land by cheap labor. 

 This is not tariff equalization. This is 

 a cheap chimera of political promise 

 which defeats iis own ends. The only 

 answer to over-production is less pro- 

 duction, balancing our crops against 

 market demands, producing only such 

 an amount as we can sell at a price 

 which covers cost of production plus a 

 profit. j 



Another Objection 



I hold another objection to both the 

 equalization fee and the debenture. 

 They are attempts to write political 

 answers to economic questions. The 

 problems of American agriculture are 

 not political problems. The problems 

 of the farm are economic, and if solved, 

 will be solved in the realm of eco- 

 nomics. After ten years of blind fol- 

 lowing political will-o-the-wisps, only 

 to find ourselves bogged down at the 

 end, it is high time that we forget 

 political schemes and political remedies 

 and meet plain economic problems on 

 an economic basis. .-• •• -i • ' ■ 





