Billion Dollar Bonus

You can't grab money out of my pocket and transfer it to your pocket. . . . Riots are coming. . . . This is the dawn of a new day for the farmer. . . . Peanuts-- that great commodity which means so much to 18 States! . . . Calvin Coolidge would have despised this dole to the farmer. . . . We're heading straight for the rocks now. . . . There isn't enough rice grown in this country to supply a first class wedding. . . . The lamp of experience is before us. . . . God help the farmer! . . . Nobody here knows what this bill's all about. . . . It's a gigantic bonus at the expense of the consuming public. . . . The time for panaceas is past. . . . If a copy of this bill should reach Mr. Stalin in the far-off Kremlin he would be inspired with a passing feeling of professional jealousy. . . .

Amid such a hodge-podge of debate the House of Representatives last week passed, 203-to-151, H. R. 13,991--a bill "to aid agriculture and relieve the existing national emergency." What started out to be Domestic Allotment legislation of a high order ended up after six hot days on the floor as a straight price-fixing measure of which even its sponsors were not proud. Most of the ingenious economic principles devised by college professors and accepted by Democratic Big Business as a means of breaking the Depression at the farm were scrapped by headstrong politicians bent on giving their Congressional districts what they wanted.

Domestic Allotment, as approved by President-elect Roosevelt, was a proposal to make the tariff effective on U. S. produce, the domestic price of which is set in world markets by virtue of an exportable surplus. Reduced production was to be rewarded with a bounty of more than $900,000,000 distributed locally in such a way that the people of each county would watch each farmer to see that he got neither more nor less than he deserved. The bounty would be paid only on wheat, cotton, tobacco and hogs and then only on that part of the production required for domestic consumption.

Domestic Allotment, as passed by the House, also included peanuts (by one vote), rice and butter fat, thereby upsetting the "exportable surplus" theory. Efforts to put corn, blackstrap molasses, flaxseed and goats into H. R. 13,991 were beaten. Instead of leaving enforcement to each community the bill turned over the whole job to the Secretary of Agriculture and a swarm of Federal Agents whose duty it would be to watch the doings on each & every one of the 6,300,000 U. S. farms. Bounties would not be apportioned by States and then counties, but would be paid out to every farmer who said he had cut his production 20% below his five year average.

The tariff rate would not fix the excise tax. During an initial marketing period after the bill's passage, the following would become "fair maximum prices":

Wheat. . . . . . . . . . . 75-c- per bu.

Cotton . . . . . . . . . . . .9-c- per Ib.

Hogs . . . . . . . . . . . . .5-c- per Ib.

Tobacco . . . . . . . . .14 1/2-c- per Ib.

Rice . . . . . . . . . . . . .75-c- per bu.

Peanuts . . . . . . . . . . 3-c- per Ib.

Butter fats . . . . . . . .26-c- per Ib.

The Federal excise tax on each commodity, to be paid by miller, spinner, packer or processor, and passed on to consumer, would be the difference between the "minimum price" and the actual market price. Thus, if wheat was selling at 50-c- per bu., the miller's tax would be 25-c- to give the grower his 75-c-.

During the 1933-34 crop year "minimum prices" were to be replaced by 1909-1919 farm commodity averages correlated with industrial prices over the same period, thus theoretically giving Agriculture price-parity with Industry. Sample complexity: the index figure of hog prices was to be linked with the Federal Reserve's index figure of factory employment. The excise tax on each commodity would not be stable but, at the order of the Secretary of Agriculture, would fall as prices rose, rise as prices fell.

Critics of H. R. 13,991 had the upper hand during the House debate. Its friends, armed with votes, made no spirited defense, beyond the hopeful prediction that it would somehow up commodity prices. Texas' Marvin Jones, chairman of the Agriculture Committee whose measure it was, warded off attacks with this query: "If you don't favor this, what form of farm relief do you favor?"--and no good answers were forthcoming. Of the lack of enthusiasm behind H. R. 13,991 he cried: "Did you ever see any enthusiasm in a sick room? Did you ever watch a blood transfusion? There's no enthusiasm there. It's too serious. We must have a blood transfusion to save the farm situation."

With Senate action dubious and a Presidential veto certain the most solemn warning uttered outside Washington on H. R. 13,991 was that of Pundit Walter Lippmann in the New York Herald Tribune: "This bill is a package of dynamite quite sufficiently charged to wreck the Democratic party and blow up the Roosevelt administration. The opportunities for corruption are infinite. The appearance of favoritism, injustice and scandal is certain. . . . The sponsors of this bill are very naive indeed if they think that a billion dollars in taxes can be levied upon necessities . . . without provoking violent resentment in the industrial sections of the country. . . . If this bill goes into effect, Mr. Roosevelt will be in for trouble compared with which Mr. Hoover's experiences in farm relief will seem tranquil and pleasant."

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