Agricultural Adjustment, 

 Present And Future 



By Chester C. Davis, Administrator, j 

 Agricultural Adjustment Act | 



THE Illinois Agrricultural Association 

 is an example of a successful farm- 

 ers' organization. I mention this not 

 ■imply for the purpose of paying a de- 

 lerred tribute to the Illinois Agricultural 

 Association, but as a recognition of the 

 idea of organization itself, the idea of 

 farmers working together for an agri- 

 culture that is sound and secure. The his- 

 tory and achievements of the Illinois 

 Agricultural Association stand as a 

 tribute to the organization, but they 

 carry a much broader significance to the 

 nation and to agriculture as a whole. It 

 is demonstrating the possibilities of or- 

 ganization in a nationwide effort for the 

 development of an ultimate agricultural 

 policy that will work for the national 

 economic and social good. 



American farmers had seen other or- 

 ganizations spring up around them in 

 every economic community that touched 

 their life. As they bartered their har- 

 vest in the market places these farmers 

 noted the fruits of organization that 

 came to those with whom they dealt. 

 They decided that they might work witti 

 their neighbors to meet the common 

 problem. Such a constructive alliance 

 seemed to be good- business, good stew- 

 ardship of the profession of agriculture, 

 and good citizenship. It would promote 

 Jth» national welfare to keep step in the 

 procession of progress through organ- 

 ization. 



,"> 8 Million Co-operate || 



The Agricultural Adjustment Act en- 

 abled one great step in that direction. 

 More than 3 million farmers actively and 

 voluntarily cooperating with their neigh- 

 bors and the government in a united 

 effort to achieve a balanced ag^riculture 

 is one evidence of that. It is, as has 

 been pointed out before, the grreatest co- 

 operative effort ever undertaken on be- 

 half of agriculture. 



I believe I need not discuss at any 

 srreat length before this audience the 

 conditipns that confronted agriculture 

 two years ago. Perhaps that is a chap- 

 ter in our history we would like to for- 

 get anyway. But we must pot forget. 

 We paid too dearly for that lesson to 

 forget it now. 



Let's review these conditions briefly so 

 that we will have a common starting 

 point on which to base the suggestions I 

 want to make today. 



FEBRUARY, 1935 



Just before the World War ' we were 

 still in our expansion era here in the 

 United States. We were a debtor na- 

 tion, owing money to Europe. Conse- 

 quently we were large exporters. The 

 War temporarily stimulated our exports 

 still further and we adjusted some 40 

 million acres of grass and pasture land 

 into cultivated crops to meet our effective 

 demand at that time. When the War 

 was over we did not adjust those acres 

 back into grass again. Furthermore, we 

 came out of the War a creditor nation, 

 but we did not adjust our tariffs and 

 our economic program accordingly; we 

 kept on trying to export without import- 

 ing as we had done when we were a 

 debtor. Furthermore, with the advent of 

 the auto, the truck and the tractor, our 

 horses and mules decreased in number 

 so that we lost there a market or a de- 

 mand for the product of some 30 million 

 acres of land — and we did not adjust our 

 production accordingly. We lost an ex- 

 port market for nearly as much wheat, 

 pork, and pork products as we produce 

 annttally in those great wheat and com 

 states of Kansas and Nebraska com- 

 bined, and we failed to adjust our pro- 

 duction accordingly. 



Failed to Adjust • . I 



As we look back on it now there are so 

 many, many things we failed to adjust! 



When the inevitable crash came in 1929 

 industry adjusted production with a 

 vengeance. In 1930 all industrial pro- 

 duction was cut down to 78 percent of 

 the 1929 level; the next year to only 58 

 percent; and the next year, 1932, to only 

 41 percent, a scarcity level. But agri- 

 culture sailed blindly on. In spite of our 

 lost markets both at home and abroad, 

 and in spite of pleas for reduction made 

 by the Federal Farm Board, agriculture 

 maintained a level of production 87 per- 

 cent of the 1929 level for the full five 

 years even including 1933 and 1934, re- 

 duction programs, droughts and all. 

 Even in 1934, in spite of all the reduc- 

 tion programs and in spite of the most 

 disastrous drought in our history our 

 volume of ag^ricultural production was 85 

 percent of the 1929 level. 



Some progress has been made. The 

 estimated total national cash farm in- 

 come for last year is about 20 peroent 

 more than that of 1933, and about 41 

 percent more than the farm income of 



1983 — and this healthy increase in spite 

 of the disastrous drought. 



This increase in farm income was due 

 to various factors of course, and not all 

 by any means to the Adjustment Pre- 

 gram. 



iln this livestock territory of Illinois, 

 hdfwever, a comparison between two kinds 

 of livestock, cattle and hogs, is inter- 

 esting to study in judging what efTect 

 the adjustment program, as it limits sup- 

 plies, had on this income. 



The figures which I will give you in a 

 moment are preliminary estimates for 

 the calendar year 1934 as compared to 

 the four year period 1930-33 inclusive. I 

 use that four-year period because th^ 

 average consumer purchasing power, and 

 the factory pay rolls for that period, 

 were practically the same as for the 

 calendar year of 1934. The figures as to 

 slaughter are for total live weight at all 

 Federal inspected packing plants and do 

 not include cattle bought under the gov- 



iment's drought purchase program. 



ertin 



Packers Pay More 



The comparison shows that in 1934 the- 

 cattle slaughter was 19 percent more 

 than for the average year of the base 

 p^od, or 9,266,000,000 pounds as com- 

 pared to 7,756,000,000 pounds, but the 

 money paid by the packers for these cat- 

 tle was 9 percent less, or 1421,447,000 aa 

 compared to $462,117,000. In other words, 

 the average cattleman fed and delivered 

 19 percent more cattle in 1934 and got 

 9 percent less money for doing it. 



Now, what about his neighbor, the hog- 

 man? 



The hog slaughter in 1934 was 8 per- 

 cent less than the four-year base period 

 average, or 9,624,000,000 pounds as com- 

 pared to 10,490,000,000 pounds, but the 

 money paid by the packers, including 

 processing taxes, was 5 percent more, or 

 $631,476,000 as compared to $600,288,380. 



In other words, while the average cat- 

 tleman was feeding 19 percent more cat- 

 tle his neighbor was feeding 8 percent 

 fewer hog:s — on the same priced corn, of 

 course. And yet, the packer paid 9 per- 

 cent less money to the cattleman, and S 

 (Continued on page 25) 



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