Factory Payrolls 



and Farm Income 



By Gen. Robt. E. Wood*; 



PE31HAPS more than other business 

 men I can appreciate the farm 

 problem. Sears, Roebuck and 

 Company have for fifty years done 

 business on a national scale with the 

 farmers of the nation, north, south, 

 east and west. For twenty years our 

 mail order sales have approximated 2% 

 of the annual gross farm income. As 

 the farmer prospers, so do we prosper; 

 as his income falls, so does ours. 



Looking at our customers, we see the 

 farm picture. Dealing on a large scale 

 in practically every known manufac- 

 tured article, we get an excellent pic- 

 ture of the whole manufacturing in- 

 dustry of the U. S., with the exception 

 of the food industries. We can see the 

 relation between the two — the farm and 

 the factory — and the effect of the loss 

 of farm income. Concretely expressed, 

 gross farm income dropped from $12,- 

 000,000,000 in 1929 to $5,200,000,000 in 

 1932; our total sales from $443,000,000 

 in 1929 to $278,000,000 in 1932. But our 

 mail order sales (made primarily to 

 the farmers) dropped from $240,000,000 

 in 1929 to $105,000,000 in 1932. Our 

 purchases of goods from manufacturers 

 decreased from $283,000,000 in 1929 to 

 $178,000,000 in 1932, a decrease of 

 $103,000,000. 



What did that mean? It meant the 

 practical disappearance of profits to 

 the manufacturer as an employer, and 

 continuous lay-ofiFs, reductions in hours 

 and wage rates of ■wages to the em- 

 ployees in manufacturing plants. Ex- 

 pressed in figures, during this terrific 

 decrease in farm income in the period 

 1929-1932, factory wages declined from 

 $111,621,000,000 in 1929 to $5,022,000,000, 

 an almost exact parallel with the de- 

 crease in farm income. 



Not only was this true in these three 

 years but it has been equally true 

 sinc^ 1923; for the past ten years, the 

 amount of gross farm income and fac- 

 tory payrolls has been almost identical. 



Factory employees comprise a little 

 less than one-third of the gainfully 

 employed in the U. S. There are 

 nearly 6,000,000 people employed in 

 retailing and wholesaling. Payrolls in 

 distribution have almost the same re- 

 lation to farm income. In our own 

 stores in the wheat, corn and cotton 

 belts, store sales vary exactly with the 

 income of the farmer around the town. 

 which is the trading area, and as store 

 sales decline, so does the payroll. 



In a town m Texas, our sales 

 dropped from $227,000 in 1929 to 

 $114,000 in 1932; in a town in the wheat 

 belt the sales dropped from $226,000 

 in 1929 to $150,000 in 1932; in a town 

 in the com belt the sales dropped from 

 $211,000 to $147,000. Payrolls in these 

 stores also dropped. 



We have all heard the question — 

 Which comes first, the chicken or the 

 egg? Did factory and store wages de- 

 cline because of the decline in farm 

 income, or did farm income decline be- 

 cause of the decrease in factory wages? 

 I believe all the weight of evidence 

 shows: that industrial wages and pay- 

 rolls are almost wholly dependent on 

 farm income. 



The U. S. is the foremost industrial 

 nation in the world, it is likewise the 

 leading agricultural nation of the 

 world. There are 6,000,000 farms, but 

 the small town storekeeper, doctor and 

 lawyer are just as dependent for their 

 income on agriculture as the farmer 

 himself. The population classed as 

 rural — towns of 2500 and under — 

 amounts to 53,000,000 or approximately 

 40% of our population, and all of this 

 population may be said to be directly 

 dependent on agriculture. Not only the 

 population of the small town, but also 

 the bulk of the population of other 

 larger towns and cities in the territory 

 west of the Mississippi are dependent 

 on agriculture, for there is little manu- 

 facturing in this section. 



You frequently see the statement 

 that farmers constitute scarcely 25% of 

 the gainfully employed, but this state- 

 ment does not tell the story, for 40% 

 of our ponulation is directly dependent 

 on agriculture, and the other 60% of 

 the population is indirectly dependent 



•Prflrtllenf of nean. Roehnrk nn4 CVl. 



Gen. Wood, born tn 1 S7fl st Knn«a9 Oty. w»- 

 eraduated from West Point In lOOfl and Btartpd 

 hii army career as a yonne tientenant at Camp 

 Afslnnibolne. Montana. A nhort time later he 

 entered the Panama Canal Senrioe where from 

 1908 to 1915 he rose rapidly an snperlntendent 

 and qnartermaster in ^harre of diptrlbntlon of all 

 rappllea. He eerred as director with the Panama 

 Railroad and SteamsMp Line, became chairman 

 of the board. In 1915 he left the army to be- 

 come assistant to the president of the DiiPont 

 Company. In 1917 he entered t»ie army srain aa 

 major and was appointed reneral purchaalnr 

 officer with the Emerrency Fleet Corporation 

 He croBsed to Europe as a colonel with the Rain- 

 bow division of infantry, bnt soon was trans- 

 ferred to England as assistant to General Atter- 

 biiry. director of the Army Transport Serrlce. At 

 the close of the war, he entered hnsiness arain 

 with a larce merchandialnp company and In 1P24 

 went to Sears. Roebnck ap vice-president In charre 

 of retail ttorea and factory operatlont. He he- 

 came president In 11*211. 



GENERAL WOOD 

 "/ see no crime in the farmer doing the 

 same thing." - 



on agriculture as the source of primary 



wealth. 



All our new wealth comes from the 

 soil, the farm, the mine and the forest. 

 Manufacturing processes it and adds 

 wealth to it. but the bulk of it origi- 

 nates on the farm. Farm prices and 

 farm income ultimately and largely 

 determine the purchasing power of the 

 United States. 



Cities like Dallas, Minneapolis and 

 Kansas City feel at once the imjjact 

 of loss of farm income. Short crops or 

 low farm prices or both, are immedi- . 

 ately felt in those cities. But the 

 industrial E^st, New England, and the 

 Middle Atlantic States have been slow 

 to realize the effect of farm income on 

 their welfare. In the last analysis, the • 

 salary of the bank clerk in New York 

 City will ultimately come to the level 

 of cotton, wheat and corn prices. If 

 the depression had continued, the 

 worker In New York and Boston would 

 have come to a level in wages and 

 salaries of five cent cotton and ten 

 cent com. 



What is not generally realized by our 

 bankers and industrialists is that the 

 bulk of the world's population is still 

 engaged in the production of basic 

 com. .nodities, of the tillage of the soil. 

 There are only three great indu.strial 

 nations besides the United States — 

 Germany. England and Japan, and in 

 the latter the farm population out- 

 numbers the industrial population. In 

 a broad sense, the factnries of the 

 world are dependent for their markets 

 fCortinii^ff' on phcp f) 



rANUARY. 193fi 



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