NEW DEAL: FIRST PHASES 4 01 



speculative commodities such as wheat, cotton, and corn much more than 

 it did the prices of milk, hogs, beef cattle, poultry, and other nonspecula- 

 tive commodities that were sold primarily on the domestic market. Then 

 there was the fact that inflation raised the prices of things the farmers 

 bought. If anything, the farmers could expect "controlled inflation" to 

 raise farm prices and in this way to lighten the burden of debt and taxes, 

 but this by itself could not close the gap between agricultural and non- 

 agricultural prices. 



The depreciation of the dollar had some significant effects on commodi- 

 ties like cotton, tobacco, and grain, which were influenced by the foreign 

 market, but hardly any on those that were governed chiefly by local con- 

 ditions. Late in October the American dollar was worth only 64.4 cents 

 in terms of French, Dutch, and Swiss moneys. Speculation in commodities 

 like wheat and cotton, along with the depreciation of the dollar, had a 

 brief stimulating effect on wheat and cotton prices. During the brief reces- 

 sion the prices of these items dropped sharply, but they resumed their up- 

 ward climb in September and October. On the other hand, the prices of 

 products sold chiefly in the domestic market did not advance greatly, ex- 

 cept in cases like potatoes in which the supplies were greatly reduced. In 

 October, 1933, beef-cattle prices were about as low as they were in March, 

 and in terms of gold and purchasing power they were decidedly lower. 



The domestic price of wheat reacted differently from that which was 

 based on the British currency. Beginning early in April and continuing 

 into the third week of July, the price of wheat in Chicago in terms of 

 the dollar rose 84 per cent. Wheat prices in Chicago during the fourth 

 week of October were 48 per cent higher, in terms of the dollar, than 

 they had been during the first half of April, but in Liverpool they were 

 ii per cent lower than they had been during that same period. 



In 1933 Wallace had something to say about raising the price of gold 

 and the likely effects of such a policy on farm prices. It would not, he felt, 

 have any great effect for some time on livestock and dairy prices, which 

 depended more on payrolls in the United States than on foreign markets. 

 Still, he ventured to predict that raw-material prices would rise to the 

 extent to which the gold in the dollar was reduced. Also, he believed that 

 what favorable influence our monetary policy would have on cotton and 

 wheat could not continue if the foreign countries reduced the gold con- 



