Acreage & Allies

Dec. 25 was nearly half a year away, but last week AAAdministrator Chester C. Davis told U. S. wheat farmers just how good they would have to be if Santa Claus was going to keep on visiting them:

1) They must sign contracts promising to plant wheat acreage for the next four years of any size that AAA may fix within a range of 75% to 100% of their 1930-32 average.

2) Specifically, they must hold their acreage for 1936 down to not more than 85% of their 1930-32 average.

There was just one drawback: Mr. Davis foresees the possibility that before the end of the next four years, the U. S. Supreme Court may decide that there is no Santa Claus. In the event of such a decision adverse to AAA, he announced,

"The Government, in fairness and honesty, would pay, and legally would be bound to pay [farmers] in full for their compliance up to that time, but not beyond that time."

No Santa Claus? Last week 18 meat packers headed by Armour and Swift got injunctions in Chicago forbidding the Government to collect hog processing taxes. In Virginia, P. Lorillard (Old Golds) and Philip Morris opened suits against tobacco processing taxes. In Detroit, Denver and Kansas City Federal judges restrained the Government's tax collections. Processing taxes on wheat, corn, hogs, cotton, tobacco were contested. A temporary injunction against the operation of the Bankhead Cotton Act was issued in the Texas courts. All told, AAA found itself facing 705 court challenges, which meant that 705 processors were eager to maintain before the law that the Christmas gifts farmers have been getting do not come from Santa Claus, that processing "taxes" are but white whiskers to conceal the fact that one group of citizens are putting thieving hands into the pockets of another group.

One reason for these numerous challenges was that the NRA Supreme Court decision hinted that AAA might also be unconstitutional. Another reason was the attempt made to have the AAAmendments before Congress (see p. 10) include a provision to forbid suits for recovery of processing taxes even if illegally collected. The courts, as well as the litigants, were stirred to action by the prospect that suits for recovery might be forbidden. Said U. S.

District Judge Merrill E. Otis in Kansas City, granting a temporary injunction to a group of millers and packers: "It is said that Congress is about to pass a law, and the President will approve it, whereunder the doors of the courts of justice will be closed to those whose money and property unlawfully have been taken.

"With humiliation it must be confessed that there is basis for this apprehension. . . .

"This temporary injunction will issue for the purpose of allowing time for the court properly to consider the constitutional question involved and to ascertain whether a taxpayer's present right to sue at law to recover taxes illegally exacted from him will be taken away by Congress." No Christmas? To have its income from processing taxes cut off would prove a knock-out blow to the Roosevelt farm policy. The packers suing in Chicago alone pay taxes of some $95,000,000 a year. All told, processing collections reached $495,000,000 in fiscal 1935. Under its old contracts with farmers, AAA has to complete its benefit payments regardless of whether processing taxes cease.

Last week AAA was counting on farmers as allies to help save it from that misfortune. Since farmers naturally want Christmas presents in their stockings, whether AAA gets their presents from Santa Claus or from highway robbery is a secondary question. Therefore last week farmers and AAA were working hand in glove to discourage legal attacks upon processing taxes.

In Washington AAAttorney Seth Thomas declared sadly that he thought many a processor would be ruined if he instituted a suit and lost because the Government would then clap on tax penalties and bleed him severely. In western Kansas farmers did their part to discourage tax suits by declaring a boycott on a milling company. A group of Texans headed by Clifford Day, who led the farmers' march on Washington last May, went to Washington with expenses paid by AAA and returned home: 1) to stir up farmers to fight the Bankhead Act injunction; 2) to start a farm movement to reduce tariffs in retaliation against manufacturers who refused to share governmental favors with agriculture. This tariff opposition, said AAAdministrator Davis, was quite "natural," thus tacitly approving a bill introduced by Senator Murphy of Iowa to have the President reduce tariffs if AAA proved unconstitutional. Franklin Roosevelt at a press conference reflected with satisfaction that tariff opposition by farmers showed that they appreciated AAA, was a natural expression of their worry that AAA might be destroyed.

Finally AAA approved a resolution providing $150,000 for a Federal Trade Commission investigation of processors' profits --a scandal hunt which might do much to discourage suits to prevent the collection of processing taxes.

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