from 



YOUR RESEARCH DEPARTMENT 



•|. 



I > 



What arc food subsidiesr' 



l-'ood subsidk-s, or consumer siihsi- 

 liics as they are sometimes called, are 

 grants or expenditures of public funds 

 in order to provide artiticially low re- 

 tail food prices. 

 Do consumers need food subsidies/ 



Most consumers do not need food 

 subsidies bc-causc their incomes have 

 increased far more than has the cost 

 of living. This is shown by virtually 

 all of the official t;overnment reports, 

 as well as by reports from private re- 

 search organizations. 

 How much has the cost of 

 living increased? 



About 2i per cent, as compared with 

 the five years 1935-.^^, according to 

 the United States Department of Lalx>r. 

 Some items, like food and clothing, have 

 gone up more than _ l per cent, and 

 others, such as rent and fuel, have in- 

 creased less. The increase up to Septem- 

 ber 1943 for each item is as follows:^ 

 Food 37.4^Y 



Clothing 32.5':^ 



House furnishings -<i.3^r 



Rent ^.0</, 



Fuel, electricity and ice ".""//• 



Miscellaneous 17.0^^ 



Average, all items -3.9^r 



Reliable priv.ite studies, such as those ^ 

 of the National Industrial Conference 

 Board, show practically the same in- 

 creases as the Department of I.ab^r. 

 Hotv much have consumer , 



incomes increased!-" 



Consumer incomes have pr.ictically 

 doubled since 193^-39, according to of- 

 ficial government reports. Virtually 

 every known measure of the income of 

 individuals or groups shows increases' of 

 2^ to 200 per cent. The principal meas- 

 ures of consumer income in the United . 

 States and the per cent of increase snown 

 by each up to September are as follows: 

 Average weekly earnings of factory 



workers 8')''; 



Total non-agricultural income I ICf 

 Total wages and salaries 1 iKr 



Coal mining (bituminous) 



payrolls ^ X8^f 



Total factory payrolls - 228^f- 



These figures are all based on the re- 

 ports of the Department of Labor and 

 other government agencies, as published 

 in the official "Survey of Current Busi- 

 ness." These figures are not disputed, 

 but are simply ignored, by those who 

 advocate food subsidies. Note that total 



JANUARY, 1944 



non-agricultural income has im reased 



more than four times, and total wages 



and salaries nearly six times, as much as 



the cost of living. 



Hotv about the income of 



"tvhite collar" workers/ 



Precise information on this point is 

 not readily available, since w.ige rates 

 are usually summarized by industries 

 rather than by occupations. It is known, 

 of course, that some in this group have 

 had little or no increa.se m income. Col- 

 lege professors and others especially 

 attached by training and experience to a 

 particular position have had the least in- 

 crease in incomes. On the other hand, 

 common observation shows that many 

 families in the "white collar" class have 

 experienced substantial increases in in- 

 come. Such increases have come as a 

 result of rapid "promotions." by ijhang 

 ing employers, by changing occupations, 

 by working.-more hours per week, and b) 

 the employment of more persons per 

 family. 



Should general consumer subsidies he 

 provided on account of the 

 fixed income families/ 



C^onsider these facts - lotal wages 

 and salaries h.ave increased 1-4 1 per cent 

 since 1935-39. To the exact extent th-it 

 the incomes of some families have in- 

 creased less than tliis, the iniomes "J 

 "tbers hate increMeJ wore. It is foolisli 

 to attempt to help the relatively few fixed 

 income families by attempting to provide 

 subsidies for all families, most of which 

 have had increases in income of from 

 two to five times as great as the increase 

 in the cost of living. 

 What can be done to help the 

 fixed income families/ 



They can he helped in three wavs: 

 ( 1 ) by taking positive steps to control 

 the basic causes of inflation. (2) by in- 

 creasing their wages, or (3) bv provid- 

 ing subsidies or relief especiallv lor this 

 group alone. 



Are food subsidies necessar) for 

 inflation control/ 



Economists have studied and discussed 

 the subjects of prices anci inflation for 

 many years, but there is virtually no 

 basis in economic literature for the ilaim 

 that food subsidies are either essential 

 to, or effective in, inflation control. For 

 example, in 1910 Dr. C. (). Hardy, of 

 the highly respected Brookings Institu- 

 tion, made and published in book form 



a comprehensive [irice i.oiitrol stuciy, 

 \V artime ( ontrol of Prices" at the re 

 cjuest of the War Department. Although 

 Dr. Hardy listed and dismssed seven 

 steps necessary to control prices, he did 

 not include food subsidies among them. 



Anc'iliir outstanding authority. Pi* 

 fessor 1:. \\ . Kemmerer of Princetoftri 

 University, in his recent lxx)k, "The 

 ABC of Inflation." lists six basic types 

 of inflation controls, but he does not in-j 

 elude food or consumer subsidies. Pro- 

 fessor Kemmerer does recommend retail 

 sales t.ixcs. which are the exact op[x)sitcs 

 of consumer subsidies. 



Food subsidies are neither ntxessar)' 

 nor helpful in inflation control. On the 

 contrary, they are inflationarv' in them- 

 selves, since they increase the national 

 debt, increase the amount of money in 

 circulation, and put more money into 

 people's pockets to be used for bidding 

 up prices in legitimate stores and in 

 black markets. 



WiU food subsidies prevent labor from 

 asking for. and getting, large 

 wage increases/ 



As shown above, wages have already 

 increased a great deal. This trend will 

 certainlv continue, llie spokesmen for 

 organized laKir have supjxirted tood sub 

 sidies primarily as a means of obtaining 

 wage increases. S''l '/in- Lihoy nnn'ti 

 (p'litSiHJi: I'll: proiiiiuJ In drop JemuilUf 

 tor higher u.t^ei if ff'"J i»hi/Jri'i .ti\ 

 i<'ii!iiuuU. On the contrary, the demands 

 for wage increases have greatly increased 

 since last spring, when the aelniinistra- 

 tion began its subsidy progr.un. 

 Vi'hat are the principle reasons for 

 farmers' opposition to food subsidies'/ 



farmers are opposed to general food 

 siibsidRs because: 



(1) llicv iiurease the national debt. 



(2) Ifiev arc inflationarv in effect. 

 ( s) They are unjustifieel from the 



eonsumer stand]T)lnt. 



( i) I hcv will increase the burden of 

 taxes in postwar years. 



C^) They are subject to the most un 

 desirable political abuses. 



(<>) They tend to establish low stand- 

 ards ot values for larni j^roiiucts. 



i~) Ihev lead to the socializ.ition of 

 agriculture and other industries, 

 and 



(K) They deny to farmers the right 

 to receive the full value of their 

 rroducts in the market places. 



