The Other Half of the Farm Problem 



Dr. Louis H. Bean Shows Interdependence Betw^een Farm and City 

 100 Per Cent More Industrial Activity Needed, He Says 





HE Other Half of the 

 Farm Problem," is to in- 

 crease the purchasing pow- 

 er of the low income groups in the 

 cities. 



This is the message brought to the 

 lAA convention January 28 under the 

 above title by Dr. Louis H. Bean, 

 economic adviser of the Agricultural 

 Adjustment Administration. 



Dr. Bean's talk was a brilliant ex- 

 position, supported by statistical facts, 

 of the interdependence between farm 

 and city. His talk was a plea also that 

 organized farmers and their leaders 

 broaden their outlook and co-operate 

 in plans for greater industrial produc- 

 tion, lower industrial prices, and bet- 

 ter wages for the underpaid and under- 

 privileged laborer in the city who draws 

 only from $35 to |75 per month on 

 the average the year "round. 



Bean reviewed a recent survey which 

 showed that families with incomes of 

 only $450 to $850 a year spend $40 

 out of each $100 increase in income for 

 food. Similarly an increase of $100 

 in the income of families who get 

 only $850 to $1250 a year wduld add 

 $25 to $30 in food expenditures. 

 Need Fuller Employment 



"Every farm organization," Dr. Bean 

 said, "could well afford to have its 

 leaders devote a substantial part of 

 their time not only to the problem of 

 economic well being and security in 

 the average farm home but also to the 

 ways and means of getting more in- 

 dustrial production, fuller employment, 

 more wage earnings, greater economic 

 security for city wage earners. These 

 are the two important parts of the 

 farmers' problem — • neither of which 

 can be neglected." 



The speaker expressed the view that 

 there is a vast amount of under-con- 

 sumption in America among the low 

 income groups. Some effort has been 

 made, he pointed out, by the AAA 

 to distribute surplus farm products to 

 those on relief without curtailing usual 

 consumption, "but the funds available 

 for this sound purpose are small com- 

 pared with the amount of under-con- 

 sumption that probably exists. 



"I have already pointed out that as 

 far as the unemployed without income 

 are concerned, surplus farm production 



given away free will not increase con- 

 sumption, for jobs and incomes are 

 necessary to pay for the processing, 

 transportation, and distribution costs 

 which in the aggregate bulk larger 

 than the farmers' price for the raw 

 material. Increased consumption among 

 the low income groups would help a 

 great deal, but here too, the real need 

 is for more income, which in turn de- 

 pends on fuller employment and bet- 

 ter wages .... Recent information 

 collected for thousands of families 

 shows that most families in city, vil- 

 lage and farm now spend for food be- 

 tween 27 and 43 per cent of the money 

 that goes for all living expenses. This 

 constitutes the largest single item in 

 the family budget. " 



Too Much Spread 



Bean supported the contention of 

 Mayor LaGuardia of New York the 

 previous night that the farmer gets too 

 small a percentage of the consumers' 

 food dollar. For instance, the econ- 

 omist asserted, "a 10 cent loaf of 

 bread has in it more than eight cents 

 of costs other than the cost of wheat, 

 and a dollar shirt has in it more than 

 80 cents of costs other than the cost 

 of raw cotton .... The failure of 

 many city people to understand these 

 facts brought farmers a great deal of 

 criticism .... Food costs in 1937, 

 even with the advance in prices, took 

 a smaller share of the average em- 

 ployed workers earnings than in 1929. 



"In 1929 a typical food budget re- 

 quired 35 per cent of annual earnings, 

 in 1937 only 30 per cent, and after 

 paying for the food bill the average 

 employed worker in 1937 had nearly 

 as much money left for other living 

 costs as he had in 1929 .... The aver- 

 age employed worker in 1937 really 

 had a larger purchasing power in terms 

 of goods and services than in 1929. 

 The real difficulty was in the fact that 

 in the first part of 1937 we still had 

 over six to seven million people un- 

 employed and on relief. These mil- 

 lions needed jobs a hundred times more 

 than they needed cheap food. 



"No one really benefits from low 

 food prices that mean reduced farmer 

 purchasing power for goods made by 

 city workers. Many processors are in- 

 clined to oppose the basic principle of 

 the ever-normal granary program. That 



basic principle is a more even flow of 

 farm products through the hands of 

 processors and to the markets at prices 

 that would fluctuate much less than 

 they have in the past. 



A proposal to regularize the supply 

 of farm products immediately suggests 

 the avoidance of large surpluses at low 

 prices and this immediately raises op- 

 position on the part of some people 

 because we have been taught that large 

 volume at low prices means greater 

 consumption. Some times and for 

 some commodities this is true. It is 

 particularly true for industrial products 

 but not for those farm products for 

 which the annual consumption is by 

 habit rather stable as it is in the case 

 of wheat, cotton, potatoes, and other 

 farm products. 



"Processors are interested in large 

 volume but the gains due to large vol- 

 ume are often offset by losses due to 

 falling prices and reduced purchasing 

 power of producers and other groups 

 .... Over the past 15 years for ex- 

 ample, the processors of cotton would 

 have gained from greater stability in 

 the price of cotton and the volume go- 

 ing to market. The reason is that cot- 

 ton goods manufacturers tend to lose 

 more when they process only five mil- 

 lion bales than they gain when they 

 process seven million bales; and they 

 lose more when the price of cotton de- 

 clines five cents per pound than they 

 gain when the price rises five cents per 

 pound. 



Packers Would Benefit ' 



"The meat packing industry also 

 would benefit from more stable farm 

 production and farm prices for they 

 too, tend to lose more in years of a 

 given price decline than they are able 

 to make in a year of rising prices." 



Bean expressed the opinion that this 

 country needs fully 100 per cent more 

 industrial activity if unemployment is 

 to disappear and farm prices and farm 

 incomes restored. The fact that we had 

 parity prices for farm products early 

 in 193'7, he said, was due largely to 

 the 1934 and 1936 droughts which re- 

 sulted in small crops. "If we had had 

 normal crops, parity prices even under 

 the improved industrial conditions of 

 early 1937 would not have been pos- 

 sible. 



"Increased industrial production with 



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L A. A. RECORD 



