J^o'>^ AHEAD 



WITH a succession of record-break- 

 ing harvests, American agriculture 

 has met imperative wartime de- 

 mands for increased production of 

 foods, fats and fiber. Farmers have 

 done a magnificent job and are con- 

 tinuing to carry on. During World 

 War I American agriculture increased 

 food production about 10 per cent, 

 largely in wheat. During the present 

 war the increase has amounted to 

 about 30 per cent and has been spread 

 over a greater variety of products (no- 

 tably soybeans, milk, hogs, poultry, eggs, 

 canning crops, and hemp), all needed 

 in our wartime economy. And this in- 

 crease was made over a high peacetime 

 output, one which had resulted in 

 granaries full to overflowing in the 

 immediate prewar years. 



This record poses some real problems 

 as we look ahead to postwar adjust- 

 ments in agriculture and to agricul- 

 ture's relative position in our national 

 economy. It seems reasonable to be- 

 lieve that demand for most agricultural 

 products will remain reasonably high 

 during the demobilization period and 

 so long as lend-lease and rehabilitation 

 aids are extended to war-torn coun- 

 tries. At the same time there will 

 likely be inflationary pressures on prices 

 of manufactured consumer goods of 

 most kinds. This will be the probable 

 result of the backlog of unsatisfied de- 

 mands and the difficulties which in- 

 dustry will experience in changing over 

 from production of war materials. 



If all price controls were removed as 

 soon as the fighting is over, agricultural 

 prices would likely experience a tem- 

 porary upswing along with the general 

 price movement. But this upswing 

 would be only temporary, because agri- 

 culture has no domestic backlog of 

 demand and because its foreign outlets 

 will most certainly be severely cur- 

 tailed after the government stops its 

 activities in foreign relief and rehabili- 

 tation. 



In the meantime layoff of millions of 

 war workers and demobilization of our 

 armed forces will cause a significant 

 amount of unemployment which, even 

 if only temporary, will materially affect 

 the domestic market for the higher 

 priced food products. Fo6d wants not 

 satisfied on a day-to-day basis do not 



constitute a backlog of demand as do 

 the unsatisfied wants for most other 

 items of commerce. Hence if price 

 restrictions are removed too soon, the 

 exchange position of agriculture would 

 likely deteriorate rapidly in relation to 

 that of urban industry. 



Agriculture in Strong Financial 

 Condition 

 At the beginning of World War I 

 the price of land and the prices of 

 agricultural products averaged slightly 

 higher than at the beginning of World 

 War II. Prices of agricultural products 

 advanced at about the same rate during 

 the two wars but the price of land rose 

 much higher during World War I than 

 it has risen thus far in World War II. 

 Farm mortgage debts also increased 

 rapidly during World War I until by 

 1920 they were double the 1910-1914 

 average, and they continued to rise for 

 four or five more years. 



During the present conflict mortgage 

 debts have consistently decreased, even 

 though there has been a significant in- 

 crease in the price of land. American 

 agriculture had not fully recovered 

 from the collapse that followed World 

 War I, when the stimulating effect of 

 present war began to be felt. There- 

 fore, farmers have not forgotten the 

 early twenties and the desperate thir- 

 ties. Instead of capitalizing most of 

 the wartime income in increased land 

 values and contracting huge debts as 

 they did during the last war, they not 

 only have reduced their debts but 

 have also accumulated billions of sav- 

 ing in the form of war bonds and more 

 abundant operating capital. 



This war, however, is not over. 

 And it was during the latter part 

 of the last war and particularly in 

 the months immediately following 

 it that the most disastrous infla- 

 tionary movements in land prices 

 occurred. Many farmers during 

 that period contracted debts which 

 resulted in the loss of their life- 

 time savings. 



Danger of General Inflation 

 The temptation to conform more 

 closely to the pattern of action fol- 

 lowed during the last war becomes 

 greater as savings accumulate from war- 

 time prices and wartime wages. Not 



Deem H. P. Rusk 

 U. oi L College o( Agriculture 



only are farmers more generally than 

 ever before in A-1 financial condition 

 but also a much larger number of peo- 

 ple in all walks of life have accumu- 

 lated significant savings. In so far as 

 this accumulation represents a backlog 

 of unsatisfied demands, it constitutes a 

 very real threat of inflation. A further 

 rise in prices of some consumer goods 

 is probably inevitable. But if all price 

 controls and all forms of rationing are 

 suddenly ended at the close of the war 

 and if this pent-up demand for goods 

 is allowed to press freely on the price 

 structure before compensating increases 

 in production of consumer goods can 

 take place, then inflation of a dangerous 

 sort is likely to occur. 



Factor for Stability 



On the other hand, this backlog of 

 consumer demand can be one of the 

 most important contributions to a stable 

 postwar economy. It can help to bring 

 about reasonably full industrial employ- 

 ment for years to come if holders of 

 wartime savings are willing to spend 

 freely to meet their needs as consumer 

 goods become available. They must 

 insist on getting their money's worth, 

 however, if their expenditures are to 

 make the maximum contribution to full 

 employment. 



Of course, it may be argued that 

 getting your money's worth depends 

 as much upon the value of money as 

 upon the price of the goods. In fact, 

 the worth of money depends upon 

 many factors, not the least important 

 of which is the degree of confidence 

 which peoole have in the stability of 

 their national economy and this gov- 

 ernment's fiscal policies. . . . But our 

 government has followed a reasonably 

 sound fiscal policy in financing this 

 war, and confidence in the value of 

 the U. S. dollar is justified. Further- 

 more, continuance of national policies 



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I. A. A. RECORD 



