EDITORIAL 



J. 



"^ 



Why Not? 



UTO MAKERS CAUTIOUS; AWAIT 

 SALES REVIVAL, " says a recent news 



headline. "There will be no headlong 



output of automobiles in the hope that they will sell. . . 

 Production will be geared just as closely as possible to 

 retail demand." 



When the farmer goes to town to buy his new car 

 this fall he will find the price fixed and he can take it or 

 leave it. Well, why shouldn't farmers approach the next 

 corn and wheat crop season with "caution," planting only 

 as many acres as they feel they can sell at a profit? What's 

 wrong about putting business principles into the business 

 of farming? 



The Chinese Did It Too 



/7^ HIS study entitled, *"The Economic Principles 

 m of Confucius and His School," (424-387 B.C.) 

 yj Dr. Huan-Chang Chen says that in China it was 

 recognized from early times that 



". . . there are two sets of interests, those of the pro- 

 ducers and those of the consumers. But nothing more 

 markedly affects the interests of both sides at once than 

 prices. Therefore, price is the great problem for society 

 as a whole. According to the Confucian theory, the 

 government should level prices by the adjustment of de- 

 mand and supply, in order to guarantee the cost of the 

 producer and satisfy the wants of the consumer. 



"Its chief aim is to destroy all monopoly so that the 

 independent or small producer can be protected on the 

 one side, and the consumer on the other. It prevents the 

 middle-man from making large profits, and gives the 

 seller and buyer full gain. It is the task of the superior 

 man to adjust demand and supply so as to keep prices on 

 a level." 



The principle of adjusting the supply and demand of 

 grain is found also in the writings of Mencius who lived 

 372-289 B.C. Dr. Chen quotes him as saying to King 

 Hui of Laing: 



"When the grain is so abundant that the dogs and 

 swine eat the food of man, you do not make any collec- 

 tion for storage. When there are people dying from 

 famine on the roads, you do not issue the stores of your 

 granaries for them. When people thus die, and you say, 

 "It is not owing to me, it is owing to the year,' in what 

 does this differ from stabbing a man and killing him, 

 and then saying, It was not I; it was the weapon' ?" 

 The principle of equalizing the price of grain ad- 

 vocated by Li K'o and Mencius was adopted into the sys- 

 tem of "constantly normal granary," Dr. Chen tells us. 

 During the reign of Han Hsuan Ti, when there were good 

 crops for many years, the price of one bushel of grain was 

 as low as five pennies. Then the farmers suffered greatly. 

 In 498 (34 B.C.) Keng Shou-ch'ang proposed that the 

 government should buy grain from places near the capital 

 instead of transporting it from the eastern provinces. By 

 the plan of Ken Shou-ch'ang, which was approved and 

 carried out by the emperor, the government saved more 

 than half the expense of transportation, and the farmers 

 got more profit. Then Ken Shou-ch'ang proposed that all 

 the provinces along the boundary of the empire should 



establish granaries. When the price of grain was low, they 

 should buy it at the normal price, higher than the market 

 price, in order to profit the farmers. 



Dr. Chen points out that "the equalization of the price 

 of grain is a very beneficial and practical scheme. It bene- 

 fits the people without cost to the state. When the price is 

 too low, though the government buys the grain at a price 

 higher than the market rate, this does not mean a waste to 

 the government. When the price is too high, though the 

 government sells the grain at a price lower than the market 

 rate, it does not mean a loss to the government. Even if 

 it should be an expense to the government the social benefit 

 is much greater than the public expense." 



These writings indicate that the problem of balancing 

 production, demand and prices is as old as civilization. 

 Protection afforded the American farmer today against 

 ruinous prices through corn and wheat loans, butter pur- 

 chases and adjustment payments is amply justified by the 

 protection the farmer affords the consumer by producing a 

 surplus. Investments being made today by the government 

 through crop loans on surpluses is a protection to the con- 

 sumer against shortage and famine prices another year. 



• Published by Longmans, Green & Company. New York. 1911. 



Centralized Farm Buying Gains 



C^y^ ©OPERATIVE purchasing of farm supplies is 

 jr^ gaining much faster than cooperative selling of 

 \^_y farm products, according to a survey conducted by 

 the Bureau of the Census. 



A cross section of farms in 40 states showed that from 

 1930 to 1938 the percentage that marketed products co- 

 operatively gained from 11.3 per cent to 15.1 per cent, 

 an increase of 34 per cent. But cooperative buying shot 

 ahead at a much faster pace, from 6.9 to 17 per cent — an 

 increase of 146 per cent. 



This contrast supports the observation frequently 

 made that there is a wider margin in the distribution of 

 things farmers buy than in the produce they sell. With 

 some notable exceptions, the handling of raw farm pro- 

 duce — not to be confused with processing — is carried 

 on within a comparatively narrow margin. The fact that 

 the retail petroleum industry, for example, has taken a sub- 

 stantial and fairly stable margin of profit as established by 

 the leading oil companies, has made it a fertile field for 

 the growth of centralized farm purchasing. 



How far will or should organized farmers go in cen- 

 tralized purchasing? 



"It is our policy to assist our members in purchasing 

 cooperatively supplies and services of outstanding quality 

 that enter directly or indirectly into the cost of producing 

 farm products," President Earl C. Smith said in a recent 

 address to Iowa Farm Bureau leaders. 



"Our institutions will add new commodities and ser- 

 vices of this character, only after mature consideration dis- 

 closes that existing margins of profit are unfair or unrea- 

 sonable. To be helpful in assisting our members through 

 every sound means to produce efficiently and to obtain sup- 

 plies and services of unquestioned quality is a responsibility 

 that the Farm Bureau cannot and will not shirk." 



34 



L A. A. RECORD 



