

where reductions could be made without 

 seriously curtailing essential services. 

 Many millions in savings were eflFected, 

 yet very few of us have noticed any harm- 

 ful curtailment in government activity. 

 This should certainly indicate that even 

 more drastic reductions would be ap- 

 propriate. 



A third victory for farmers was the 

 passage of an appropriation to initiate an 

 active research program under the Agri- 

 cultural Research and Marketing Act. 

 This legislation provides for an enlarged 

 research program in production and mar- 

 keting problems affecting all phases of 

 agriculture. Advisory committees have 

 been appointed and preliminary proposals 

 submitted. Your organization has ex- 

 amined these suggested research projects 

 and finds that most of them d^ with 

 production problems. We have strongly 

 urged that greater emphasis be placed 

 upon research in the fields of marketing 

 and distribution. 



Agricultural and the National 

 Economy 



Agriculture is keeping pace with all 

 Other segments of our national economy 

 in technical improvements and eflFiciency. 

 As a result, production is at the highest 

 level in the history of America. We 

 have reached these new heights of pro- 

 duction despite the fact that the percent- 

 age of the population employed on farms 

 has steadily declined. However, even 

 after these shifts in population, agricul- 

 ture remains today the most important 

 single industry in our economy. The 

 welfare of the farmer has considerable 

 bearing upon the prosperity of all other 

 groups in our nation. Conversely, agri- 

 cultural prosperity depends upon a sat- 

 isfactory level of consumer income. 



Realizing the complexity of this sit- 

 uation and faced with the necessity of 

 helping to formulate an improved long 

 time farm program, your organization 

 appointed a statewide committee of out- 

 standing farmers to give careful study to 

 the problems of future policy. This 

 Economic Study Committee has com- 

 pleted its work and has presented its re- 

 port. This report will be distributed to 

 the counties in the near future for the 

 consideration of the leadership. In ap- 

 proaching any problem on which there is 

 such a divergence of opinion, it would 

 be impossible to reach complete accord. 

 Despite the fact that many of us will 

 disagree with some of the conclusions of 

 this Committee, I am sure that all will 

 agree that the realistic thinking and dis- 

 cussions which this report will generate 

 among farmers will be worthwhile. Bear 

 in mind that it is a committee study for 

 consideration only and that it is not in- 

 tended to reflect the official position of 

 Illinois Agricultural Association. 



Is There a Need for a Farm 

 Program? 



We are living under a rather effective- 

 ly controlled economy in America today. 

 With governmental aid and encourage- 

 ment, practically all business, industrial 

 and labor groups are regulating and con- 

 trolling their production in order to 

 maintain the prices of their products. 

 Agriculture is one of the few groups 

 which has consistently followed a policy 

 of abundant production. Even under the 

 production controls of the AAA, farmers 

 reduced their total production by only 

 5 per cent while industry with voluntary 

 methods cut their output approximately 

 50 per cent. If industry and labor could 

 and would continue production regard- 

 less of price level, there would probably 

 be little need for special farm programs. 

 There is nothing to indicate that indus- 

 try and labor are ready to abandon their 

 past policies. 



Farmers have turned to government 

 for aid in solving two very important 

 and persistent problems during the last 

 three decades. In the first place, the 

 wide fluctuations in the genersil level of 

 farm prices have resulted in ruinous 

 "boom and bust" cycles. Farm prices 

 fluctuate more rapidly and to greater ex- 

 tremes than do the prices of most other 

 commodities. This condition alone de- 

 stroys the stability of the industry. The 

 second major problem is the chronic 

 disparity which has existed between farm 

 prices and non-agricultural prices. This 

 disparity has persisted even during pe- 

 riods of relatively high prices and has 

 resulted in an unfair division of the na- 

 tional income, with agriculture's share 

 reduced below an equitable proportion. 

 With these things in mind, let us turn 

 to a consideration of some present prob- 

 lems and proposals. ■ 



Inflation and Price Cycles 



The present price inflation is simply 

 the current manifestation of the problem 

 mentioned previously — the extremely 

 wide fluctuations in price levels. A brief 

 historical record reveals that farm prices 

 move up and down very closely with the 

 price level variations of all commodities 

 and of consumer purchasing power. One 

 of the most important steps toward per- 

 manent improvement of agriculture's eco- 

 nomic condition would be some plan to 

 eliminate the wide fluctuations in general 

 price levels. Therefore, when we look 

 for a cure for inflation, we are also look- 

 ing for some method of securing greater 

 general stability of prices and of con- 

 sumer purchasing power. 



Farmers have been thinking about this 

 problem for a long time and are in some- 



what general agreement as to a prograiu 

 for action. The first and most impor- 

 tant need today is for full production by 

 all groups — industry, agriculture and 

 labor. Agriculture has already demon- 

 strated its willingness to maintain produc- 

 tion. We do not want to go back to the 

 specific acreage control practices of the 

 past, yet we are realistic enough to know 

 that we may be forced to follow that 

 route unless labor and industry are will- 

 ing to produce abundantly. Many present 

 restrictive practices whether encouraged 

 by law or by industry-wide agreements 

 should be abandoned by labor and indus- 

 try. Again I repeat, there seems to be 

 no indication that these groups are ready 

 to give up these production control de- 

 vices. 



Governmental monetary and fiscal pol- 

 icies have a marked effect upon price 

 levels. Let me cite a simple example. 

 Our dollar bill, which would buy 280 

 pounds of shelled corn in 1932 will pur- 

 chase only 23 pounds of the same com 

 today. In other words, the value of the 

 dollar in terms of com has fluctuated 

 from 280 pounds down to 23 pounds. 

 It should certainly be possible to devise 

 some method or create some agency that 

 can regulate the value of money to pro- 

 vide greater stability than now exists. 



Price level peaks and pits could be 

 somewhat leveled if government spend- 

 ing policies were more judiciously 

 planned. During periods of high prices, 

 governmental spending should be re- 

 duced, public construction delayed and 

 federal debts reduced. The people should 

 be encouraged to defer spending. The 

 present leadership of farmers in con- 

 tinuing the purchase of government sav- 

 ings bonds is a good example of how 

 the people can cooperate in fighting in- 

 flation by deferring spending. 



Foreign trade policies have consider- 

 able effect upon the general level of 

 prices as is well illustrated by present 

 conditions. Your organization has sup- 

 ported the principles of the reciprocal 

 trade program with the conviction that 

 price level fluctuations could be modified 

 if there were more freedom of exchange 

 between nations. However, farmers 

 should have a voice in the determination 

 of the reciprocal agreements aflfecting 

 their products. 



Elimination of the long standing agri- 

 cultural price disparity would do much 

 to help maintain a high level of con- 

 sumer purchasing power. Agriculture is 

 the largest customer of labor and indus- 

 try. 



These are some of the fundamental 

 remedies which all of America needs to 

 use to help bring about a correction of 

 some of the recurrent price cycle disasters. 



(CottlinueJ on page 41) 



JANUARY, 1948 



39 



