Monday, Mar. 27, 1933
Untrod Path
"Deep study and the joint counsel of many points of view have produced a measure which offers great promise of good results. I tell you frankly that it is a new and untrod path but I tell you with equal frankness that an unprecedented condition calls for the trial of new means to rescue agriculture. If a fair administrative trial of it is made and it does not produce the hoped-for results, I shall be the first to acknowledge it and advise you.
"The proposed legislation is necessary now for the simple reason that the spring crops will soon be planted and if we wait for another month or six weeks the effect on the prices of this year's crops will be wholly lost."
With these words in a special message -- his fifth in eight days--President Roosevelt last week sent to Congress an emergency farm relief bill of staggering scope and potentiality. In an effort to beat the sun's march north it had been hastily whipped together by young, diffident Secretary of Agriculture Wallace, by alert, dapper Assistant Secretary Tugwell, by wise, bespectacled Dr. Mordecai Ezekiel, new economic adviser to the Secretary and by Frederick Lee, onetime lobbyist for the major farm organizations. At the Capitol, Representative Jones of Texas whisked it into his Committee on Agriculture, summoned his colleagues, slammed the door and settled down to mull over its complexities.
First committee room leak: the bill will cost U. S. consumers $800,000,000 per year. "But," explained Secretary Wallace, "that's only a drop in the bucket if prosperity is restored."
"A BILL to relieve the existing national economic emergency by increasing agricultural purchasing power," as it was labelled, did not attempt to do that itself but turned the job back to the President and his Secretary of Agriculture with powers so broad that few could see their limits. Like the Bank Bill and the Economy Bill, it set up general principles and authorized the Administration to execute them. For tools the Secretary of Agriculture was given his pick of Cotton Options, Domestic Allotment. Land Leasing. On him was conferred the awful power to tax. He was given permission to set aside anti-trust laws. He was given absolute control over the distribution of food from field to fork.
Since Mid-1929, farm commodity values have dropped 60%. whereas nonagricultural prices have declined only 32%. The prime purpose of the Roosevelt bill was to pull farm prices up to the same level as other prices. Commodities selected for upping: wheat, cotton, corn, hogs, cattle, sheep, rice, tobacco and milk and its products. Picked as a standard to which agricultural prices were to rise to restore their parity with industry was the average pre-War level of 1909-14. Five bushels of wheat then bought a good pair of shoes which today cost nearer twelve. Secretary
Wallace, to be successful, must even up the following prices:
Commodity Pre-War Average Feb. Average (In Cents)
Cotton (Ib.) 12.4 5.5
Corn (bu.) 64.2 19.4
Wheat (bu.) 88.4 32.3
Beef (Ib.) 5.2 3.3
Hogs (Ib.) 7.2 2.9
Butter (Ib.) 25.5 18.4
Lambs (Ib.) 5.9 4.2
All methods available for the Secretary of Agriculture to up the February averages to pre-War parity involved the payment to John Farmer of a subsidy to reduce his production, thus sending down the supply and up the price.*
Cotton Options. The first feature of the bill was an invitation to cotton growers to speculate on a rising market as a result of crop reduction. With R. F. C. funds the Secretary of Agriculture was to take over all Farm Board cotton, some 3,000,000 bales. Cotton farmers who agreed to cut their production 30% or more were to be given an option on as many bales of Government cotton as they would otherwise have grown. The option price would be whatever the Secretary paid for the Farm Board holdings. Presumably cotton prices would mount. Before Jan. 1 the cotton planter would instruct the Secretary to sell his optioned bales in the open market and he would collect as his bounty for crop reduction the difference between the option price and the market price. If the market failed to rise, the planter could let his option lapse without any liability.
Rented Acres. Another crop-cutting device, endorsed by Elder Statesman Bernard Mannes Baruch, called for the Secretary of Agriculture to lease lands which farmers agreed to leave fallow. Previous estimates were to the effect that farmers would collect about $3 for every acre they left uncultivated, though the bill allowed the Secretary to set his own rental. Conceivably a shrewd farmer could rent enough of his land to the U. S. to remain idle all year.
Domestic Allotment re-emerged by administrative decree rather than by legislative enactment in a provision for the Secretary to pay "benefits" to producers contracting to cut their output. Thus the farmer who whittles down his corn land and raises fewer hogs gets a cash bonus for his reduced hog production rather than rent on his idle corn field.
Processors Taxed. Also provided was a means of raising the millions & millions to pay farmers for better obedience to the law of supply & demand. The Secretary of the Treasury was to collect a tax, fixed by the Secretary of Agriculture, on the processing of wheat into flour, cotton into cloth, hogs into ham, corn into meal, milk into butter. This tax, which processors were expected to pass on to consumers, must "equal the difference between the current average farm price for the commodity and [its] fair exchange value"-- that is, pre-War parity. Thus the wheat processing tax last month would have been around 56-c- per bu., the cotton 7-c- per Ib., the beef 2-c- per Ib. Such taxpayers were made eligible to borrow the necessary funds from R. F. C. Processors of farm products for export were to get tax refunds. If the public tried to dodge the tax on cotton, for example, by turning to rayon, silk or linen, the Secretary of Agriculture might place a competitive tax on those substitutes.
To club processors and distributors into line the Secretary could require each & every one to take out special operating licenses from the Department of Agriculture. A miller or packer or spinner who failed to do so was liable to be fined $1,000 for each day of his disobedience. The maximum fine on farmers who broke the Secretary's orders was set at $100.
The Secretary's power to control and monopolize food distribution sprang from his authority to make agreements with producers, processors and marketers in interstate commerce. He could summon packers, order them to pay not less than 7-c- per Ib. for hogs. If the packers consented to combine to up the market price, the processing tax might be waived.
Interested Parties. The Roosevelt farm bill, so drastic in administrative possibilities, immediately precipitated, hotter than ever, familiar arguments between interested parties. As emergency measures the President's bank, beer and economy bills were practically undebatable. Farm Relief, a hard old rock on which three other administrations stuck, loomed as the first dangerous test of White House leadership. Most rural Senators and Representatives agreed that it was "a pretty good bill" but nowhere was there any red-hot belief in its magic.
Consumer Appeal. Secretary Wallace, awed by the power that was soon to be his, tried to pacify city consumers by assuring them that better times on the farms would quickly be reflected in industrial centres. Said he: "In no case will there be any gouging of the consumer. We hope to revive the Wartime spirit in everyone to put this thing across."
*Last week the Department of Agriculture estimated that spring planting of all 1933 crops was about 3% under last year.
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