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The uniform bill-of-lading accompanied by the Federal marketing vouchers will, in the opinion of traffic experts, establish a perfect barrier against export grain being used for domestic consumption, yet permit of very flexible operation. No extra work is involved and physical separation of the commodity is not necessary. The vouchers determine the physical separation at its final disposition. Ordinary buying and selling without physical movement does not require the presence of these vouchers. However, domestic and export quantities may be exchanged just the same as now through trading in marketing vouchers.
The marketing and shipping control method described above, with the 3-point handling between those involved (one of whom is a Federal agent) in the sale of any crop, is commonly known in business practice to be a difficult situation to negotiate with fraudulent intent.
It should be remembered, for example, that the surplus on wheat is only 10 percent or 15 percent of total production, and it is probable that very little export grain will move off farms except as bona fide export buying demand asserts itself. Any tendency toward illegal traffic would only be on the small export surplus in the channels of trade. If 10 percent of all this surplus was mishandled, which is unlikely, it would only factor 1 percent to 142 percent of the total production, Probably an equal or greater degree of irregularity exists respecting any laws in this country (we cite as a particular example evasion of gasoline taxes) which has never been suggested as reason for not having them.
Cotton, where surplus (export) constitutes such a large part of the total, is the one commodity where bale identification makes it extremely simple to physically designate and keep separate domestic and export quantities in a thoroughly effective manner.
There are many reasons for assuming that in a farm community this law will be enforced and observed. It should be remembered that in a farm community each farmer is acquainted with the acreage yields and character of his neighbor. Farm hands, harvest hands, threshers, and others are intimately acquainted with each farm's operation. There is a limited opportunity for dishonesty as to crop total production because of the practical limitations within small bounds of acreage production and yield, which crop yields are largely a matter of common knowledge and are made a matter of public record.
The enforcement of any law in a community depends upon the sentiment that exists toward that law in the community and the moral sanction that it enjoys. It is hardly conceivable that an agricultural people, having passed through the vicissitudes of recent years, will have anything but a most wholesome respect for this law which is established for their own protection and preservation. Moreover, men who work and toil with a reasonable and just return for their effort are, in the vast majority of cases, honest.
V. PROVISIONS OF THE PLAN CAN BE ENFORCED UNDER EXISTING AGRICULTURAL MARKETING ACT BY FARM BOARD AS Now CONSTITUTED, Which Has AUTHORITY TO DEAL WITH THE AGRICULTURAL INDUSTRY IN A MANNER SIMILAR TO INTERSTATE COMMERCE COMMISSION CONTROL OVER RAILROADS
The plan is legal under the Constitution of the United States. A complete legal brief on its constitutionality in its every aspect has been drafted. This brief also completely covers the Agricultural Marketing Act.
Congress, in the enactment of the present Agricultural Marketing Act of June 15, 1929, which created the present Federal Farm Board, and granted to it authority amounting almost to plenary powers, declared:
“It is the declared purpose of Congress, in passing this bill, to (1) place the industry of agriculture on an economic plane with other industries, (2) to minimize speculation, and (3) to stabilize prices.”
This plan meets all three of the “declared purposes of Congress.”
Establishing minimum prices on basic agricultural crops, on the same relative price level as other industries, accomplishes the first declared purpose. The minimizing of speculation by prohibiting marketing these commodities below their averaged cost of production is assured. National domestic proration and minimum price determination stabilizes agricultural prices within reasonable limits, so as not to cause “undue fluctuations in the domestic price” as was further declared in the Agricultural Marketing Act to be one of the purposes of the bill.
The acts and actions required under this plan, when analyzed, are exactly the things we have been doing in principle in industry, other than the agricultural industry, for years.
PRESENT MARKETING SYSTEM IS CONFISCATORY In the broadest sense, the transportation, trade and exchange, or sale of commodities between the industrial sections of our people and the agricultural sections of our people is interstate commerce. In the case of the basic agricultural commodities, markets in which they are sold are public markets entirely without the control or representation of agricultural interests and should be subject to some kind of regulation for the public good.
Such uncontrolled public marketing, for the basic agricultural products of this Nation, has resulted in the establishment of prices so far below cost of production as to have brought on bankruptcy for agricultural producers, amounting to confiscation of property; and it was this palpable error that Congress desired to correct by the passage of the Agricultural Marketing Act.
We have fixed rates at law for utilities and railroads. These rates comprehend both the minimum and maximum principles of price determination-a maximum rate or price that protects the public, and a minimum rate or price that protects the capital investment and income therefrom.
We fix tariffs at law which, in effect, establish the minimum price at which the domestic manufactured product is sold. If a minimum price for basic agricultural products, which protects the domestic price against the application of the world foreign price on these commodities, is unconstitutional, then the tariff which protects domestic production from foreign production and importation is likewise unconstitutional. For either of these issues, the legal answer under constitutional law must be the same.
During the war we arbitrarily fixed prices on certain commodities, at law. Among them wheat was fixed at $2.20 a bushel (two times the normal pre-war price) and steel at a price many times the normal pre-war price. It it is constitutional to do such things at one time, it is fully as constitutional at another time, particularly when on a far more equitable basis.
Finally, this plan is constitutional because it involves no discrimination or injustice between all producers in marketing or selling basic agricultural crops. The minimum prices, at which these various crops may be sold, are determined by an impartial fact-finding body and are based on the average relative cost of producing these different commodities, plus a fair profit. The application of this plan is confined to the basic indispensable, nonperishable clothing and food crops, the manufacture or production of which must be protected and encouraged if we are to survive.
VI. TARIFF PROTECTION OF THE AMERICAN MINIMUM PRICES Obviously, foreign cotton or grains are not needed in this country with our agricultural industry in its present difficult situation.
It is obvious that, with our own carry-over, we need no foreign wheat; that, regardless of tariff, so long as we produce a surplus without price regulation on the national consumption, the price of the small percentage of surplus would continue to regulate the price of the wheat domestically consumed.
The plan provides that there shall be no grains carried on the common carriers of our Nation for domestic consumption, unless it be domestically produced grain and that no miller shall grind into flour any wheat for domestic consumption that is not American-produced wheat which has been certified by the American producer thereof as a part of his proration under the law; or else that a sufficient tariff shall be maintained so as to effectively prohibit foreign grains and grain products from coming into this country below a certain price that will be probably not more than 10 percent higher than the American minimum price to prevent undue price inflation. In connection with cotton, wool, and flax, the same principle as to tariff would apply.
VII. REMOVES UNITED STATES GOVERNMENT FROM THE BUSINESS OF TRADING
IN AGRICULTURAL PRODUCTS, RESTORES THE BUSINESS OF HANDLING THESE COMMODITIES TO NORMAL CHANNELS OF TRADE, BUT FORBIDS TRADE BELOW PRODUCTION Costs
Under this plan the Federal Farm Board would divest itself of the $500,000,000 revolving fund. The Federal Farm Board, by proceeding to sell its present holdings in wheat and cotton at the stabilized minimum prices and by disposing of not more than 3 percent of such holdings each month in the domestic market, could recover most of its losses. The normal functions of the Board of Trade,
the Cotton and Livestock Exchanges and the farm cooperatives, are retained, and no change is made in the present marketing methods of cattle, dairy products, and other perishable farm commodities.
There is every reason to believe that low prices for other farm products and other basic commodities are a sympathetic reflection of the general decline in prices. With the stabilization of these basic products and the return of prosperity, other agricultural prices will reflect a decided improvement.
Hogs sold will be covered by Federal market voucher given to purchaser, and all grain fed to hogs by the producer thereof is recorded and deducted from the producer's annual domestic prorate disbursement when hogs are sold. If producer's domestic prorate is totally disbursed the sale of hogs will not be validated until next annual prorate. We know within close limits the average amount of grain necessary to fatten 100 pounds of hog. Common experience indicates what the reasonable minimum feed to hogs, under given conditions, should be. Here, again, the common honesty of the average farmer will insure a reasonably accurate result. Any small difference ultimately involves only a fraction of a percent of the total surplus over the domestic prorate on grains and be insignificant in the total result.
The present United States Government regular hog census will be made semiannually and bulletined to post offices. It follows that no producer will feed stabilized domestic wheat to hogs at the domestic value. The plan thus stabilizes both the production and the price of hogs at the same time. The setting of any minimum price is neither contemplated nor necessary.
It is interesting to note here the experience of France with a similar agriculturalindustrial equation. France is probably the most self-sustained nation of Europe, and one of the wealthiest. Economic conditions are quite similar to our own. The French nation is in sound financial condition and with less unemployment than any other of the large nations. Does the secret of the difference between conditions in the United States and France lie in the fact that France has always been solicitous of her agricultural class and has taken every precaution for its welfare? The national government and the municipalities control public marketing (especially on perishables) in a manner unknown in this country. The agricultural population of France is the most prosperous agricultural people in the world.
A high tariff on wheat was enacted in France in 1929 to prevent dumping of foreign wheat on the French market. A minimum price of $1.50 per bushel, for French grown wheat, was established by law. The net subsequent result has been that French-grown wheat has sold nearer the high tariff level price of $1.81 a bushel than the $1.50 price level, and other agricultural products are on a similar high level. While setting this high price on wheat may have been advantageous to France in encouraging domestic production, it would appear, under normal circumstances, that French agricultural products are pegged too high. It is just as wrong in principle to have the price of agricultural products too high in proportion as it is to have them sold too low in proportion, although the results, from excessively low prices as we have had in this country are extremely disastrous.
VIII. No POSITIVE PROVISION IS MADE FOR RESTRICTING PRODUCTION OF THE
INDIVIDUAL OR OF THE NATION AT LARGE, BECAUSE THIS IS Both UNNECESSARY AND WITHIN LIMITS UNDESIRABLE
Highly variable, favorable or unfavorable, growing conditions make it, except on an individual voluntary basis, impracticable to control surplus through regulation of production. Because of these variations in production we must raise more than enough of food and clothing crops in order that we have a sufficiency of these commodities. It would be unsound not to raise a surplus. Any surplus constitutes protection for us. The income for the sale of this surplus for export, however low the price may be, is beneficial to the income of the Nation, if some farmers choose to raise the surplus.
The plan provides that if any producer of these commodities makes affidavit (on prescribed form which will be a public record on file at his post office) as to the average production and acreage sown to these basic crops on any farm during the last five years (1927-1932) which filed statement will be used as a composite basis on acreage and production to credit the producer for curtailment of crops in any year (sworn to in affidavit form) below the 5-year average. This adjustment shall be made by adding to the actual production of that year the percentage of curtailment before calculating and applying the national domestic prorate;
provided, however, that the actual yield per acre does not exceed the yield declared in the 5-year average. In effect this provides that any producer may elect, at his own option, to raise crops for domestic consumption only.
This provision takes away the motive for surplus production on the part of a very great percentage of producers and will constantly tend to bring our actual production in line with our domestic consumption. In the event any shortage of production develops, this provision can be rescinded any one year by proclamation.
To those who say there may be some minor inequalities under this plan, we answer in the language of Justice Holmes in a decision by the United States Supreme Court:
It is the usual last resort of constitutional arguments to point out shortcomings of this sort. But the answer is that the law does all that is needed when it does all that it can, indicates a policy, applies it to all within the lines, and seeks to bring within the lines all similarly situated so far and so fast as its means allow.”
This plan will insure 95 percent of all we can ever hope to accomplish in the equitable control of production and marketing of basic agricultural crops.
IX. SURPLUS PRODUCTION OF THESE BASIC AGRICULTURAL COMMODITIES, OVER
THE NATIONAL DOMESTIC PRORATE, SHALL BE IMPOUNDED ON THE FARM OR SOLD FOR EXPORT
Surplus is sold for foreign market through regularly licensed dealers who can accept such products for export sale under definite regulations. We are not concerned with the price the farmer gets for any portion, or all, of the surplus.
The plan provides that a producer with a surplus any one year, may make affidavit as to the curtailment of acreage and production in the following year, in proportion of bis surplus. Such surplus shall then be added to the following year's declared production by the producer thereof, against woich adjusted figure the annual domestic prorate shall apply.
X. ACCOMPLISHES ECONOMIC EQUALITY BETWEEN Basic AGRICULTURE AND
OTHER INDUSTRY There is imperative need for restoring prosperity to the agricultural industry, as the first ordered step forward to prosperity for other industry. No thinking person will deny the fact that 30-cent wheat and 5-cent cotton on the farm or patch represents bankruptcy for agriculture.
Agriculturists are the only producers or manufacturers whose products are sold regardless of the cost entering into their production and at market prices in which they have no voice. The agriculturists are also placed in the position where they must buy supplies they need from other industries at prices that are fixed at higher levels than their own, and without any consideration as to agriculture's ability to pay. Such a situation is a manifest absurdity—uneconomic-unjust-ruinous for the country. This vicious system would wreck any business attempting to operate under similar conditions, the same as it has wrecked the business of agriculture.
“For selfish reasons which can be ascribed about equally to industry and politics, we have created an exclusive tariff barrier around this country behind which the industrial half of our people are free to make a profit out of their activities, while, at the same time, the unprotected other half, the agricultural half, is held in bondage not only to the first half, but also the the competition of the world, as well.” (Owen D. Young, Collier's Weekly, July 1932.)
“The economic problem of this country is the problem of agriculture and labor. The farmer and the worker, and their families, comprise more than three fourths of our population. It is they who produce our raw materials and change them into finished products with the aid of machinery. It is they who buy and use the products of the machine; it is they who must also provide purchasing power if there is any purchasing power.
“The civilization which pauperizes agriculture, which exploits the farmer, commits suicide. It is doomed. An economic system which pauperizes labor, which creates a situation whereby we have 10,000,000 men unable to find employment, is on the way to economic suicide.”—(Senator Arthur Capper, Kansas Farmer, June 1932.)
“The most superficial study of the statistics reveals that while industry reached a new peak of prosperity between 1920 and 1929, the farmer met with one financial set-back after another; that he was becoming poorer and poorer; that the disaster of 1920 was followed by an even greater financial catastrophe in 1930.
“Between 1920 and 1930 more than 450,000 full owners lost their farms; the value of farm property dropped $20,000,000,000 and tenancy increased by more than 200,000. But these figures tell only part of the story, because the disaster that overtook agriculture in those 10 years was merely a prelude to what has happened since 1930."-(Bernhard Ostrolenk, New York Times, September 1932.)
This plan places the industry of agriculture on a plane with the utility interests, the railroads, and other industrial manufacturers on whose commodities rates or protective tariffs are in vogue, as described in other sections of this paper.
This plan places the industry of agriculture on a plane with labor now aided through immigration laws, compensation laws, restrictions on working hours, minimum wages, and other legislation.
This plan establishes a reasonable sale price for basic agricultural commodities. The resulting farm income should be adequate to purchase the needs of the farmer and his family in the variety and in the quantity that represent decent standards of American living and life.
In thus handling the subject of stabilized minimum prices for basic agricultural commodities, we have established a method which will never again permit the tremendous disparity which has occurred in our economic balance between agriculture and industry. This maladjustment between agriculture and other industries in the present era has been the primary cause of the present economic collapse.
It has been this factor that has made the present depression of such long duration, and that to date has been the continuing cause that must be removed, before any fundamental improvement in our economic situation can be made.
Business men, financiers, and manufacturers are now beginning to realize that the continuing cause of our present profound economic depression lies in the collapse of agricultural values and income. It is plain that business and finance cannot prosper without creating a degree of stability for the welfare of some 53,000,000 rural Americans, whose income has been dried up and whose normal purchasing power represents approximately one third of the total retail trade of the Nation.
Just as soon as thoughtful consideration is brought to bear on this question of the protection of our basic agricultural industry, it is apparent that the principle of tariff protection is involved but in a slightly different form than we have been accustomed to see it applied.
Our tariff laws are ineffective in the case of basic agricultural commodities, since we import none of these commodities (with minor exceptions) and we should, therefore, protect our domestic market against foreign market prices by the establishment of a reasonable minimum domestic price. This amounts to an inverted tariff.
Many suggestions have been made to correct this depression. Some advocate going back to the horse-and-buggy age by deflating everything in the United States on a par with agriculture. Some claim the trouble is due to the machine age and our marvelous industrial production, which has thrown our people out of work, yet the automobile industry alone employed more people than have been replaced by machinery in the whole United States in the last 25 years.
Some will oppose making any intelligent effort to change conditions, because they think natural causes will gradually rectify the situation and that the law of “supply and demand”, the never-failing panacea of superficial thinkers, will in some way operate. Others believe that in some perfectly simple manner we can lift ourselves by our boot straps, with over 10,000,000 people out of work, 15,000,000 workers on greatly reduced hours and income, and our whole rural population prostrate with mortgages, high taxes, or greatly reduced income. We are to go on with the enormous drains on Government and private funds for charity and other relief measures.
It will be argued that we are interfering with open-market procedures. To this we reply: It is time that some limits were put on speculation in this country and the human misery resulting therefrom. Others will say this is class legislation. If it is class legislation to insure justice to a group of our people who are slowly but surely being made paupers through our folly and ignorance, then, we say, let us have such legislation.
For such optimism and faulty reasoning there is no answer. We simply offer a constructive plan that intelligent, honest-thinking men and women will be able to understand and support. To those who object to any planned effort to restore prosperity we should like to say that if something constructive is not done