in providing continuous up-to-date information on supplies and prices, and in regulating the conditions under which commodities were sold, stored and processed. From 1870 to 1900, output increased at a rate of about three percent a year. From 1900 to 1935, the rate dropped to about one percent per year. This decrease reflected the decreasing supply of new land and relatively unfavorable prices for agricultural products, particularly from 1920 on. Until World War I the farmers' market seemed to be limited only by their ability to produce. The farmers who opened up the Mississippi Valley during the 19th century were able to sell more wheat, cotton, corn, and hogs because of the new means of transportation coming into use. The railroad and the steamship allowed them to become specialists in foodstuff and fiber production in a large area. The tremendous growth in population between the Civil War and World War I from the combination of a high birth rate and the arrival of 200,000 to 800,000 immigrants annually provided a growing market. The American farmer was also producing for what seemed to be an inexhaustible foreign market. This market was made possible by the fact that the United States needed heavy investments from Europe in resources such as rails and transcontinental roads which were repaid by the shipment of foodstuffs to Europe. During the frontier period, American farmers had special advantages in international trade. Free or low-cost land in the Mississippi Valley which was adapted to the use of large-scale agricultural machinery made it possible for farmers in the United States to compete on a favorable basis with European producers who grew their produce on small acreage of high-cost land. This emphasis upon commercial agriculture which came with the Civil War, however, made the farmer dependent upon prices. A post-Civil War depression was marked by farmers joining together in an attempt to secure legislation-the Granger movement. Later, in the 1890's the Populists called for inflation and a program of loans on farm products. From the late 1890's to World War I, farm prices increased faster than the prices of goods purchased by farmers, so agriculture enjoyed a period of relative prosperity. The rapid rise in farm prices during the period preceding the outbreak of World War I resulted from the acceleration of industrialization and urbanization. A fast growing population in the cities provided markets for farm products at a time when the rate of agricultural production was leveling off. High prices and the lack of virgin land for development led to sharply increased land values. This period of relative prosperity for agriculture has often been called the golden era of American agriculture. Agriculture's period of peacetime prosperity was followed by an unprecedented period of wartime inflation. Farmers reacted to the high prices and the exhortations to produce food to win the war by plowing up some 40 million acres of land not cultivated before, and by buying more land and motor-driven machinery for large scale production. Farm land was heavily mortgaged to provide funds for the purchase of additional land and labor saving machinery. With prices and land values soaring, increased mortgage debt caused little concern. The index of farm prices rose from 100 in 1914 to 221 in 1919. Gross farm income rose from an annual level of about $7.5 billion in the period 1910–1914 to $17.7 billion in 1919. The valuation placed on all farm lands and buildings rose from $35 billion in 1910 to $66 billion in 1920. The war prices were worked back into the farmers' production costs. When the war boom broke in the fall of 1920 and agricultural prices fell precipitously, production costs did not drop. Heavy fixed charges on farm debts and increasing taxes and freight rates became an intolerable burden. Caught in a disastrous cost-price squeeze while the rest of the nation continued to prosper wheat growers blamed speculators and the importation of low-cost Canadian wheat. The major farm organizations maintained that price losses were due to "bear propaganda" or to "gambling in farm products." Acting on the theory that speculative manipulation was the cause of price declines, farmers organized crop withholding movements to thwart the speculators. When wheat withholding actions proved unsuccessful, farmers turned to the more formal organization of cooperative marketing associations as a remedy. The agricultural depression could not be cured by curbing the speculators nor by voluntary marketing organizations because its cause involved fundamental changes in international relations and in the American economy. The United States had changed during the war years from a debtor to a creditor nation. Instead of sending our agricultural surpluses abroad to pay our debts to Europe, we were in the position of receiving surpluses from Europe in repayment for war debts. But higher tariffs were keeping out European goods at the same time the United States was demanding repayment of debts. The combination of debts and tariffs made it difficult for Europe to buy from the United States. European purchases were made possible only by a series of private loans. Funds for loans to foreign nations were soon attracted by the boom in the New York stock market. The problem was compounded by the post-war movement of European nations toward self-sufficiency in food. Tariff and quota barriers were raised to protect home food production. Some of the barriers were raised in retaliation against postwar increases in American tariffs. American farm products also came into competition with products from virgin low-cost land opened up, during World War I, in Canada, Australia and Argentina. As a result of these factors, agricultural exports declined more than 50 percent from a total of $4,107,158,753 in 1919 to $1,883,315,000 by 1922. Shrinking export markets were accompanied by shrinking domestic markets due to the sharp drop in immigration resulting from postwar immigration laws. Changes in American eating habits were also cutting down on the market for wheat producers. Per capita consumption of wheat had dropped from 5.6 bushels when World War I started to 4.6 bushels during the 1920's. Replacement of horsepower by machine power released some 35 million acres of land for the production of crops for market. These various factors which curtailed the farmers' market came at a time when production had reached new heights due to wartime expansion in cultivated acres and to technological improvements. The first legslative remedy to redress the lack of balance between agriculture and industry was to raise farm tariffs. When increased tariffs failed to bring price increases for an agriculture producing large exports, new solutions were sought. Many proposals were debated. Finally, in 1929, Congress passed the Agricultural Marketing Act, which was to aid in the orderly marketing of surpluses. It failed to stem the price decline, in part at least because it had no means to control production. On May 12, 1933, the Agricultural Adjustment Act was signed by the President. Its goals were to alleviate the financial plight of the farmers and to adjust farm production to needs. Declared unconstitutional, it was replaced by the Soil Conservation and Domestic Allotment Act of 1936, and the Agricultural Adjustment Act of 1938. Farmers who were willing to control their production were offered price supports for the crops they did produce and were offered direct payments for complying with the production adjustment programs. The programs provided for withdrawing some land from production through both renting and purchase, for encouraging soil conservation practices, for diverting surplus commodities into industrial and relief uses, and for promoting the export of surpluses. Beginning in 1938, the allotment of a specific number of acres upon which a farmer might grow a particular crop was supplemented by marketing quotas. Under this plan, after farmers had voted to approve the program, each farmer could sell only specified amounts of a particular commodity. Implicit in production adjustment is the idea that production may be adjusted upwards as well as down to meet particular needs, and that products under price support loan might be stored to meet future emergencies. At the time of Pearl Harbor, for example, the United States had enough wheat in storage to supply all anticipated domestic demands for two years. These reserves proved to be a valuable asset. During World War II, the production adjustment programs were changed to secure greater quantities of food. The levels at which prices would be supported were increased for major crops, and several new commodities were brought under price support. Farmers were assured that these support prices would continue for two years after the war. Payments of various types were made to secure increased production. Acreage allotments and marketing quotas were removed for most crops. Land which had earlier been withdrawn from production was once again farmed, and it was found that land in the conservation programs was more productive than it had been earlier. Thus, production adjustment programs helped the United States meet war requirements and postwar relief needs. New agricultural technology had been accumulating during the 1920's and 1930's, but farmers had been slow to adopt it due to low prices for farm commodities and the high costs of purchased inputs. During the war, shortages of various types had delayed technological change, but by the end of the war, American farmers were moving into a second agricultural revolution. When the war ended farmers were in their most favorable economic position since the beginning of the twentieth century. Farm debt was at a minimum. Many farmers had reserves to invest in new technology once supplies became available. Continuing demand at favorable prices encouraged investment, while the price support programs offered some assurances regarding price levels in the near future. Discovery of the "package of practices" concept during the war greatly increased the productivity of agricultural inputs. The accumulation of new knowledge through research and its dissemination to a body of increasingly well educated farm operators continued at an ever accelerating pace. Continued high nonfarm employment and wages encouraged farm mechanization. The result of this combination of circumstances-economic incentives, technology, education, and availability of inputs-has made North America the world's bread-basket at a time when famine threatens in many areas. The price support program is being used to some extent to guide farmers into the production of food needed for shipment abroad. However, some economic problems of American agriculture remain. The Congress of the United States during the 1960's has endeavored to construct a program of managed abundance so that resources used in agriculture can be effectively channeled into the production of those commodities needed at home and abroad in quantities to meet effective demand. This includes aid to densely populated developing countries which are deficient in domestic food production. În 1966, self-help in striving to develop a more adequate agriculture has been made a condition for receiving food aid from the United States. Another continuing economic problem in American agriculture is the problem of achieving for the farmer a level of living comparable to that of his urban counterpart. During the 1930's, economists in the Department of Agriculture developed a measuring stick, called "parity" for measuring the relative economic position of the farmer. Simply stated, parity is the ratio of the prices paid by farmers for nonfarm inputs and consumption goods to the prices farmers received for farm commodities in the market place. This is compared with the ratio of these items in a base period. After World War II the formula was revised, using a later base period and taking some account of changes in productivity. By this measure, American farmers have only enjoyed economic equality during periods of war and immediate postwar relief and rehabilitation programs (see chart). More recently another standard, parity of income, has been developed. It provides a more realistic measure and also shows that farmers do not enjoy economic equality. However, United States farmers are much less economically disadvantaged than farmers in most developing countries. As is true everywhere else, there is a wide range in economic well-being among farmers. Since the 1930's, the United States has had special programs to help disadvantaged farmers. Perhaps the most well-known and widely copied is rural supervised credit. There are subsistence farmers who produce very little for the market. When such farmers receive credit, they need guid ance in using it to raise their long-term productive capacity. In supervised credit programs, farmers are first helped to develop farm plans and budget capital inputs to carry them out. Agricultural advisers are made available on a continuing basis to help with the solution of problems as they arise. Traditionally, disadvantaged farmers in the United States have been more numerous in the Southeast- -a legacy of a one-crop economy and slavery. Several economic incentives have combined in the period since World War II to produce a renaissance in agriculture there. One is the widespread acceptance by farmers of alternative land uses. Cotton acreage declined by nearly one-half between 1949 and 1965. Soybeans, corn and vegetables are grown as alternatives to cotton on cultivated acreage. Farmers can shift from one to the other, depending on price forecasts and comparative advantage. In commercial farming, such flexibility provides the opportunity to avoid loss of income % OF 1910-14 300 200 100 % OF PARITY 150 100 50 0 1910 * MONTHLY DATA. AINCLUDES INTEREST, TAXES, AND WAGE RATES. ANNUAL AV. DATA, 1910-23; U. S. DEPARTMENT OF AGRICULTURE 1970 NEG. ERS 809-67(1) ECONOMIC RESEARCH SERVICE due to price fluctuations. Some income stability for producers of tree crops, fruits and nuts, is provided through government programs which not only provide price supports, but also deterrents to overexpansion in production. Much of the poorer land, formerly tilled, has been converted to pasture. The production of beef cattle, dairy products and poultry have become important industries supported by increasing domestic and foreign demand. The tremendous exodus of labor from agriculture to industry, both within the region and to other regions, has also helped to restore the viability of agriculture in the Southeast. In recent years, as capital inputs in commercial farming have risen, the opportunities for the disadvantaged farmer to climb the agricultural ladder have decreased. It is now recognized that many of these farmers can never become commercial farmers. Although the economically deprived are only about 20 percent of the United States population, Americans feel that the perpetuation of want in the midst of plenty is intolerable. Consequently, programs are now underway to provide more opportunities for the poor through education and training and through the dispersion of industryespecially into rural areas with dense populations and low agricultural potentials. In summary, American farmers have increased their productivity largely because of economic incentives, backed by research and educational facilities. The first and one of the most important was the opportunity for most farmers to acquire ownership of the land they tilled. Second, the development of markets, including transportation facilities, was vital if farmers were to be able to obtain economic rewards for increased production. Third, the industrialization of America, financed in considerable part by agricultural productivity, offered farmers the opportunity to obtain manufactured goods they needed and wanted. Finally, a production adjustment program has brought |