Factory Payrolls and Farm 



Incomes 



(Continued from page 5) 



^ 



on the raw material producers of the 

 world, and world factory payrolls as 

 well as those in the United States, rise 

 and fall with the rise and fall of the 

 income of the basic raw material pro- 

 ducers of the world. 



Great Britain is essentially a great 

 trading, manufacturing and financial 

 nation. Its own agriculture is negli- 

 gible, but British manufacturers sell to 

 the raw material producers of the 

 world outside of the U. S. When Aus- 

 tralian wool. New Zealand dairy prod- 

 ucts, Malay States rubber, and Bolivian 

 tin fell in 1931 to unheard of depths, 

 the manufacturers of England received 

 few orders, their business fell off, and 

 in England, as in the U. S., manufac- 

 turing payrolls declined and unem- 

 ployment increased. It has been the 

 fixed policy of the British Government 

 for the past three years to increase the 

 price level on basic commodities. There 

 has been a substantial advance in those 

 commodities, and employment and pay- 

 rolls in England have risen steadily since 

 1931. 



Manufacturing payrolls in the U. S. 

 have risen and are rising, and thoy are 

 rising about in proportion to the rise in 

 farm income. Yet if the cost of living 

 rises faster than wages or payrolls, there 

 is no real gain to the industrial worker. 

 If many of the metropolitan papers, par- 

 ticularly in the industrial East, are to be 

 believed, such is the case. However, the 

 facts do not bear it out. True, there 

 has been a very decided increase in the 

 costs of certain foods, particularly of 

 those commodities most affected by the 

 great drouth, but the sum total of the 

 items that go into the cost of livine of 

 the ordinary worker have increased rel- 

 atively little. In December 1929. that in- 

 dex stood at 171.4. in June of 19.33 at 

 128.3, in July of 1935 at 140.2, 11% 

 above the low, but IS'/r below Decem- 

 ber, 1929. You cannot have your cake 

 and eat it. It did verv little good to the 

 industrial-worker in Detroit to hav» pork 

 ebons low in 1932. for he was either out 

 of work or working very short hours at 

 a very low rate of pay. In 1935, pork 

 chops have risen, but the worker's cost of 

 living has not risen in anything like the 

 proportion to the increase of his income 

 from 1032 to 1935. In our catalogue we 

 have a nretty reliable index of our own. 

 I am familiar with its pricing, and I 

 know, without reference to any theoret- 

 ical indices, that th" advancp in prices 

 since the sprine of 1933 has been small, 

 and not anywhere in proportion to the 

 rise in income. 



In the spring of 1933, the position of 

 American agriculture as a whole, was 

 desperate. With a farm mortgage debt 

 of over $8,000,000,000, heavy interest 

 charges and heavy taxes, with the index 

 of farm prices down to 43.6 from 104.9 

 in 1929, American agriculture was at the 

 bottom of the depression. Many thousands 

 of farmers were on verge of bankruptcy 

 and foreclosure action had already been 

 taken against other thousands. The 

 first remedy applied was a monetary one 

 — we went off gold and the dollar was 

 devalued. In two months, cotton went 

 from 6.35 to 8.95 cents per pound, wheat 

 from 45 to 75 cents, corn from 24 to 46 

 cents and wool from 17 to 24 cents. Pre- 

 cisely the same effects had been pre- 

 viously felt in other countries leaving the 

 gold standard, particularly in great ag- 

 ricultural producing countries like Aus- 

 tralia, The Argent'n-^. Canada. \ew 

 Zealand, and Denmark. South Africa, the 

 greatest gold producer of the world, went 

 off gold because the pressure caused bv 

 staying on was too great for its agri- 

 culture. 



Not enough credit has ever been given 

 to this first and very important act of 

 the present administration. The farm or- 

 grnizations had and have a far better 

 understanding of the influence of th-> 

 drastic decline of the price level, and of 

 the influence of a fixed price of gold on 

 that price level than the great majority 

 of bankers and industrialists. Further- 

 more, the influence of that step is still 

 at work, and will continue to be felt in 

 the future. I feel certain that there will 

 continue to be a slow but gradual rise 

 in the price of world basic commodities. 



The AA.A was passed on May 12. 1933. 

 Prices of basic commodities continued 

 to rise rapidly until the fall of 1933. 

 when they became more stable. Between 

 the AAA and the great drouth of 1934. 

 farm surpluses were pretty well elimi- 

 nated. 



The Farm Credit Administration has 

 been doing a splendid and wise job in the 

 refunding of farm mortgages. Farm 

 taxes have dropped from $601,000,000 

 annually in 1929 to $400.onn.000 in 1934. 

 interest charges from $682,000,000 in 

 1929 to $500,000,000 in 1934. a total de- 

 crease rf nearly $400,000,000 in fixed 

 charges annually within the space of five 

 years. The farmer has been gaining at 

 both ends, in a rise in prices for his 

 products and in a dec''ne in h's fixed 

 charges. While the gross farm income 

 is still one-third below the 1929 f'eure. 

 the difference is not ?s great as appears 

 from the face of the figures. 



The farm problem should not be a 

 political problem, though from the na- 

 ture of our institutions, it is bound to 

 get into politics. It is primarily an eco- 

 nomic and a social problem. 



From the economic side, when a coun- 

 try is almost equally divided between 

 manufacturing industry and agriculture, 

 there is bound to be a farm problem 

 when there is a high protective tariff. 

 If there were no tariff, there would be 

 relatively little justification for farm 

 aid from the economic side. This is a 

 fact that the manufacturers of New 

 England and the Middle Atlantic States 

 have persistently ignored. 



Now, I do not believe you can elimi- 

 nate the tariff without causing very 

 severe injury to the whole body of in- 

 dustry. As long as there are the pres- 

 ent great differences in living standards 

 between the workers of the different 

 races of the world, you cannot withdraw 

 this protection to the American manu- 

 facturer and his employees. You may 

 modify the tariff but you cannot elimi- 

 nate it. On the other hand, as long as 

 a great body of our farmers have to ex- 

 port their products and sell in a world 

 market, you must have an AAA or some 

 method of giving an equivalent of tariff 

 protection to the farmer. This was what 

 the McNary-Haugen Bill attempted to 

 do, and political history has been 

 changed by the twice repeated veto of a 

 New England president. 



Now, I do not believe the AAA is per- 

 fect. Mistakes in policy and mistakes in 

 fdministration have been made, which 

 were bound to occur in a new instrument 

 operating on such a large scale. But the 

 AAA served a great and useful purpose 

 in the agricultural crisis of 1932 and 

 1933. Furthermore, it has taught co- 

 operation and some unity of effort to 

 the great mass of 6.000,000 individual- 

 istic farmers, who were at a serious dis- 

 advantage between well organized in- 

 dustry on the one hand and highly or- 

 ganized labor on the other. 



But the AAA cannot remain static; 

 it must be changed as conditions change, 

 and the conditions of today are not 

 those of 1932 and 1933. 



The Brookings Institute has recently 

 completed its studies of economic con- 

 ditions in the U. S. While I do not agree 

 with all of their conclusions, I do believe 

 firmly in their main premise, which is, 

 that it is the main function of capitalism 

 to produce and distribute goods to the 

 people at the lowest possible prices, con- 

 sistent with fair profits and fair wages. 

 As we advance in technology, we must 

 give the people the benefit of lowered 

 prices. If manufacturers or merchants 

 succeed in this, the people give them a 

 reward, which is called profits, if 

 capitalism does not accomplish this, it 

 is not entitled to a reward. 



(Continued on page 12) ... '. > 



10 



I. A. A. RECORD 



