The Real Issue 



ing 



By Earl C. Smith 



I HIGHLY appreciate the privilege of 

 talking to the farmers and business 

 men throughout Illinois about what 

 must be done by all of us to restore and 

 maintain permanent prosperity on the 

 farms of the country and while so doinjt 

 to form a sound basis for the general 

 welfare of the citizens of the United 

 States. 



If we are to properly understand the 

 problems of the present hour, we must 

 take into consideration the many factors 

 that have developed since the days of 

 the World War. Taken together these 

 many factors constitute a combination 

 of developments that are entitled to and 

 must receive our consideration. We are 

 prone to forget the happenings of yes- 

 terday, a year ago or five years ago. We 

 must revive in our minds the many 

 things we have known but have forgot- 

 ten, if we are to get a proper perspec- 

 tive of conditions of the present day. 



It was immediately after the United 

 States entered the World War that the 

 then President Wilson made three great 

 appeals to the American people. He 

 called upon the mothers of the country 

 to give the flower of the American 

 home — their boys to constitute an army 

 which was destined to move to foreign 

 soil, for the purpose, we were told, of 

 saving the world for democracy. Indus- 

 try was called upon to run 24 hours 

 a day to provide munitions of war. 

 Farmers were urged to produce all pos- 

 sible food as a first essential of win- 

 ning the war. The mothers responded, 

 industry responded and the farmers re- 

 sponded to these great appeals. 



^- ' 40,000,000 Acres i.A. :./ 



Forty million acres of additional land 

 were put under the plow. With the close 

 of the war, the output of American in- 

 dustry and particularly its agriculture, 

 was found greatly over-expanded beyond 

 possible requirements of markets, both 

 domestic and foreign at profitable price 

 levels. Prices of all commodities fast 

 declined. Through some reduction in the 

 production of industrial products and 

 through, in part, subsidizing exports, in- 

 dustrial prices were stabilized; while in 

 agriculture, farmers continued to produce 

 and with each succeeding year, larger 

 production resulted in lower prices and 

 a steady decline in the gross farm in- 



come of the country until 1933. This 

 decline is best understood when one con- 

 siders the farm income of the nation 

 was approximately nineteen billion dol- 

 lars ($19,000,000,000) in 1919 as com- 

 pared to approximately four billion dol 

 lars ($4,000,000,000) in 1932. 



Farm buying power was destroyed, 

 which resulted in the closing of factories 

 and millions of workers turned into the 

 streets to constitute an army of uncn? 

 ployed. Throughout this period, only 

 about 10 per cent of the farmers of thf 

 nation were organized to cope with thi~ 

 situation. This comparatively few pre 

 sented a program calling for governmei- 

 tal assistance in curtailment or control 

 of agricultural surpluses. Their pro- 

 gram was known as the McNary-Haugeii 

 Bill in 1926, 1927 and 1928. This pro 

 gram called for an equalization fee col- 

 lected from each unit of the commodity 

 at the first point in transportation or 

 processing, and the revenue thus col- 

 lected to be used to subsidize export of 

 surpluses in foreign markets. With its 

 defeat through pre.sidential veto, the 

 farm problem became more acute through 

 yet lower farm prices, and the lowest 

 farm income on record. 



Foreign Markets Go 



In addition, international intrigues, 

 foreign embargoes, changing rates of 

 exchange and other factors destroyed 

 foreign markets for the surplus products 

 of American farms. 



It was because of these conditions 

 that thinking farmers, through their 

 organization, suggested the principles of 

 the Agricultural Adjustment Act. There 

 is yet much confusion as to the intent 

 and purpose of this Act. In a sentence, 

 it is merely to make possible the injec- 

 tion into agriculture of business prin- 

 ciples long used by American industry, 

 namely, intelligent adjustment of pro- 

 duction to the demands of markets- at 

 ] rofitable price levels. 



This program cannot be justly charged 

 with destroying food any more than in- 

 dustry v^hich limits its output can right- 

 fully be charged with destroying produc- 

 tion. Clareful study by the director of 

 Research of one of Chicago's industries, 

 discloses that production of farm imple- 

 ments in the years 1931 to 1933 declined 

 80 per cent from the production of 1928, 



EARL C. SMITH 



1929 and 1930, and prices of agricultural 

 implements were largely sustained. The 

 same study reveal.s a reduction of 80 

 per cent in motor cars manufactured in 

 the United States, w.th a price decline of 

 only 16 per cent. Cement production 

 was cut 65 per cent with the price declin- 

 ing only 18 per cent. Iron and steel 

 production was reduced 83 per cent, the 

 price only 20 per cent. 



63 Per Cent Drop 



On the other hand, the production 

 of agricultural products declined only 6 

 per cent with a resulting 63 per cent 

 reduction in price. 



These comparative facts prove thi- 

 .soundness of intel.igent crop adjustment 

 to market demands. 



In addition, actual experience re.-'uh- 

 ing from the initial effort of two years 

 to .secure reasonable adju.stment in pro- 

 duction of basic farm products prove" 

 the correctness and soundness of this 

 business principle in agriculture. One 

 has only to remember and compare tiie 

 prices of corn, hogs, wheat, tobacco and 

 cotton in 1932 with those of 1934 and 

 '.35 to fully realize the results obtained. 

 Without exception, the adjustment of 

 production of these commodities has 

 resulted in more than doubling the 

 prices received by farmers for these 

 products. In total, national farm income 

 has been raised nearly three billion dol- 

 lars, but is yet below the rightful share 

 of national income farmers should and 

 will receive when the price level of farm 

 products through continued adjustment 

 of production reaches a level of parity 

 with the prices of industrial products 

 and the standard of American wages. 



One has only to read the financial 

 pages of our metropolitan papers to wit- 

 ness the improvement in general indus- 

 trial conditions as reflected in increased 

 (Continued on page 11) 



OCTOBER. 193.1 



