Monster in Motion

For eight years under Harding and Coolidge the Republican Party in Washington talked long and loud about farm relief but passed no major bill.

Three months after entering the White House, Herbert Hoover signed his Federal Farm Board bill which he called "The most important measure ever passed in aid of a single industry." The Farm Board lost U. S. taxpayers hundreds of millions of dollars trying to buck the law of supply & demand, ended its days last month in discredit and failure.

Nine weeks in the White House, Franklin Roosevelt last week called his farm friends around him and signed a monster farm measure of his own. Most radical experiment so far in the New Deal,' this bill not only bulged with dictatorial powers over the nation's food supply, from farmer's field to consumer's kitchen, but also was packed with the dynamite of currency inflation. By its terms the Government could levy unlimited taxes, subsidize countless producers, lease untold millions of acres, put processors out of business, issue billions of greenback dollars--all in a colossal attempt to raise the prices of hogs, wheat, corn, cotton, rice, tobacco, and dairy products to the 1909-14 level. Farmers and financiers alike held their breath to see how it would work.

An immediate by-product of its enactment was the nipping of a Midwest farm strike called for the following day by Milo Reno.*

President Roosevelt's first concern was to get into immediate operation under Farm Credit Administrator Henry Morgenthau Jr. the new law's mortgage refinancing section. Two billion dollars worth of Federal Land Bank bonds, with 4% interest guaranteed by the U. S. Treasury, were to go to mortgage creditors in exchange for their frozen farm paper calling for 6% or 7% or 8% interest. The mortgage debtor, in turn, would make a new deal with the Land Banks, with interest at 42% and easier terms of repayment. As a matter of "public duty and private interest" President Roosevelt appealed to creditors to abstain from foreclosing on mortgaged farms until the new relief machinery could get started.

It was easier to put the farm bill on the statute books than it was to put it into practical operation. Secretary of Agriculture Wallace seemed all at once overwhelmed by the magnitude of his job and the obstacles that lay ahead. Newsmen detected a note of "realistic pessimism" in his outline of plans. Acreage leasing to reduce production was out of the question for this season because spring planting was nearly completed. All 1933 wheat was in the ground, as was 68% of the cotton. Secretary Wallace was not one to advocate deliberate crop destruction.

A serious lack of funds also threatened the law's Domestic Allotment provision, due to the fact that President Roosevelt had inadvertently tied his own hands in the international field. Money to pay farmers to cut their crop production and thus boost prices was to have been raised by a tax on processors of wheat, cotton, corn, rice, hogs, tobacco and dairy products. To be effective domestically such a tax had to be counterbalanced by special tariff increase. Thus if a 2-c- per Ib. tax was placed on butter, 2-c-would have to be added to the regular butter duty to prevent importers from underselling the U. S. market. But President Roosevelt had agreed without reservations to a general tariff truce, accepted last week by seven powers and offered to 58 more, as a preliminary to the World Economic Conference in June (see p. 19). To apply the processing tax and the compensatory tariff would, he felt, break the truce. Thus income with which to operate one of the major features of his farm program was temporarily cut off.

But Secretary Wallace, with the aid of George Nelson Peek of Illinois and Charles John Brand of Minnesota who were appointed co-administrators last week, was ready to proceed cautiously with the other price-upping provisions of the law. His first step called for a series of Washington conferences with the producers and processors of each basic commodity to shape up an operating program on marketing agreements. If most millers consent to buy wheat from growers at $1 per bu., Secretary Wallace can suspend the anti-trust law to sanction such a bargain. If a minority group of millers refuse to join the agreement and try to beat wheat down to 80-c-, Secretary Wallace can, under the law. coerce them into line by suspending their Federal licenses as processors and penalizing them $1,000 each day they continue without a license. Said he: "I want to rub the noses of the people in each industry in the facts and allow them to determine the methods we shall use. In that way we'll keep our skirts clean and make them share the responsibility with us."

-Still larger last week loomed the possibility that the farm bill may never need to be brought into full play to raise commodity prices to the 1909-14 level. Talk of inflation had started a price rise which inflation itself might well finish. Nature also swung in behind the Administration's efforts when the Department of Agriculture last week estimated the smallest winter wheat crop since 1904 (see p. 45).

*Unaffected was last week's independent milk strike in Wisconsin where irate producers stopped dairy trucks, emptied milk cans into ditches, pommeled non-strikers. In Chicago milk prices jumped 1-c- per qt. Without a strike New York dairymen achieved the same results through the State Milk Control Board.

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