i 



The Farm Problem and Banking 



; and 

 way. 

 ctical 

 their 

 ough 

 ment 

 Ished 

 t the 



SMAU 

 lunty, DL 

 d wheat. 



method 

 ist year. 



NEAR 

 sped in 

 imothy. 

 on the 



r 



i(\^^^HE Farm Problem as Re- 

 ^*~^ lated to Banking*, " was 

 ^J the subject of an address by 

 President Earl C. Smith of the I.A.A. 

 before the 48th annual convention of 

 the Illinois Bankers Association in 

 Springfield, May 24. 



Reviewing the early history of organ- 

 ized farmers efforts to secure surplus 

 control and parity price legislation, he 

 showed how solutions of the problem 

 had been developed since the early '20s 

 on a non-partisan basis; how neglect in 

 solving the problem had largely contrib- 

 uted to the 10,808 bank failures from 

 1921-'33, how 2 billion dollars was lost 

 by depositors; how Alexander Legge, 

 chairman of the Federal Farm Board in 

 the early '30s and Secretary of Agricul- 

 ture Hyde were among the first to advo- 

 cate crop curtailment and a plow-up 

 campaign following the big surpluses of 

 wheat and cotton in 1930-31; and how 

 farmers themselves had largely dictated 

 the principles of the program now being 

 administered. 



Mr. Smith conclusively answered op- 

 ponents of the surplus control program 

 who have used the epithets, "regimenta- 

 tion," "dictatorship," "economy of scar- 

 city," and others in speaking of the AAA 

 of 1938. 



Inconsistent Talk 



"Inconsistently, our opponents talk 

 "economy of scarcity" in one breath and 

 in the next charge that production in 

 the non-commercial area will be greatly 

 expanded so as to defeat the program," 

 Smith said. "Well, let's look at the 

 record. According to the best available 

 statistics, corn production has actually 

 declined in the South during the past 

 five years during which we had crop 

 adjustment programs. Moreover, in the 

 wheat, cotton, tobacco and rice areas 

 where some corn is produced mostly to 

 feed horses and mules and livestock con- 

 sumed on the farm, adjustment programs 

 prevent cooperators from increasing corn 

 acreage except for use on the farm. Keep 

 in mind that corn production over most 

 of the non-commercial area has been less 

 profitable than other crops because of 

 limitations of soil, climate and other con- 

 ditions. Yields in this area are generally 

 low. A sure way to prevent the cotton 



Full copies of this address may be had free by 

 writing Department of Information, I.A.A., 608 So. 

 Dearborn St.. Chicago. 



President Smitii Discusses AAA Program 

 in Address to Illinois Bankers 



farmer from shifting to corn is to make 

 it profitable for him to grow the crops 

 he usually produces. 



"We have been hearing a great deal 

 about imports of Argentine corn and 

 selling the American farmer down the 

 river. What are the facts? It is true 

 that this country imported some Argen- 

 tine corn last year because of the short 

 1936 crop and abnormally high prices. 

 But farmers generally were not complain- 

 ing about imports, for corn was selling 

 out in the livestock areas for $1.30 and 

 more a bushel. Today we are exporting 

 substantial quantities of corn because it 

 is relatively cheap. Let's not overlook 

 the fact that we have had only three 

 corn crops in the country during the 

 past 37 years of less than two billion 

 bushels. And those three years were 

 1901, 1934, and 1936. Only one year 

 of normal weather — in 1937 — re- 

 sulted in a carry-over that was nearly 

 300 million bushels above normal on 

 April 1. 



"Some opponents of the Act would 

 have you believe that the crop adjustment 

 machinery is a political machine reach- 

 ing out into the agricultural regions of 

 the country. It is nothing of the kind. 

 The Act specifically provides that the 

 administrative authorities in the commu- 

 nities shall be selected by the producers 

 in their respective areas. Every informed 



Copf. 19}7, Kin| FrMurct 5ynJicUf, Inc , Waitd richii rnrr^d- 



"I got h«r from a moil-ordvr hovte and it's the only ploc* 

 thmH lay hvr ogosl" 



person knows that no question is raised 

 as to political affiliation when these com- 

 mittees are being selected by farmers in 

 rural meetings. 



Here's the Problem 



"As I see the agricultural problem 

 confronting the country, it is resolved 

 into this — "Shall American agriculture 

 be forced to def)end upon the law of 

 supply and demand and its free opera- 

 tion, or shall the principles of American 

 business, which in many cases, have been 

 found quite successful, be made available 

 to the greatest industry of all, that of 

 farming .-* We all witness and most of us 

 support laws that have resulted in plac- 

 ing nearly all lines of industry on an 

 artificial basis. If not resulting from 

 law, such artificial standards have been 

 reached through corporate understanding 

 and agreements that are recognized and 

 condoned by law and Government. 



"We all know that through the ex- 

 ercise of controls, understandings and 

 agreements, labor is maintaining artificial 

 standards, and in many cases indefensibly 

 out of line with price levels of industrial 

 or agricultural commodities. During the 

 past year, for example, farm prices have 

 declined 25 percent while city prices have 

 fallen only 4 percent. Yet last year farm- 

 ers produced 6 percent more total agri- 

 cultural products than ever before in 

 history. And what is the picture in in- 

 dustry.' Industrial production has fallen 

 off fully one-third. 



"I stated eleven years ago to the bank- 

 ers of Illinois that there was one of two 

 courses open to American agriculture — 

 one was to aggressively seek the repeal 

 of all laws or understandings condoned 

 by law that permitted others to main- 

 tain artificial standards. The other was 

 to seek the assistance of Government to 

 place agriculture on a basis of reasonable 

 equality with business and labor. I have 

 no reason to change that position. 



"I do not know of any responsible 

 leader of any farm organization who 

 will not gladly agree to stay away from 

 Washington and never again seek the 



JUNE. 1938 



