frsbog_mim_v20_0330.pdf

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T L - H D U "

^

:J V'

Copied from

"The Saturday Evening Post"

of April 19 , 1924.

A

FIFTY-YEAR CRISIS

IN

AGRICULTURE

"by

Garet Garrett.

I t i s proposed that we shall have i n this country a successful agriculture

without i t s ancient means - that i s to say , without either slave labor or peas-

antry.

Conscience h a s abolished slave labor. I t i s forever p u t away. As fo r

peasantry, we care

not fo r i t . The

word associates with

Old

World drudgery,

"Shall

th e American

farmer

b e

reduced

to the

condition

of the

European peasant?"

asks t h e pol i t ica l rhetor ic ian . % answer a l l with on e voice "No "

This i s what t h e psychologist calls a reaction. Few stop t o examine what

"peasantry" means. The sound i s wrong. I t makes u s think of Russia or the Ba l -

kans; we pass lightly over France an d Germany, where peasantry, though i t hurts

th e

back, does offer

on e

sweet reward.

The

name

of

that reward

i s

security.

Wars, revolu tions , economic di sa st er s pass; th e peasantry survives, like a tree,

through th e seasons. I t appears that we do not esteem security. Or perhaps we

take i t f o r granted. At any rate, we sa y "NoJ" We point with pride to the

fact that although

th e

y i e l d

p er

acre

i s

much lower

i n

this country than

i n

Europe

t h e

y i e l d

per man is

higher.

To

explain this

we

keep

in our

minds

the

picture o f the American farmer, n ot bending h i s back, not tending a few acres

intensively, b u t s i t t i n g on h i s plow with eyes to s ee h i s prairie domains

stretching to the horizon, commanding mechanical energy. That i s th e American

way.

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u

1.

- 2 -

Nevertheless, agriculture without slave

or

peasantry presents difficulties

which

a re y e t

unsolved.

We

hardly know what they

a r e ,

never having defined

them thoughtfully.

I t has

been possible

f o r a

long time

t o

conceal them. They

could very easily

b e

concealed

a s

long

as new

land

was to be had for the

trouble

of

taking

i t -

virgin land that increased

i n

value from

th e

f irst stroke

of the

ax and was prodigal in giving. And i t could be further concealed a s long a s

th e cost of production continued to f a l l , a s i t d id f o r many years, even where

t h e f irst richness of the so i l had been taken. I t continued t o f a l l for two

reasons - the use of improved implements and the method of special izat ion.

The Rising Costs of Agricultural Production

But now the land i s a l l accounted fo r ; a l l owned. There cannot be any such

improvement upon existing implements a s these represent upon t h e scythe ahd

f l a i l . And specialization already h as been carried t o t h e point of e v i l , Thus

costs are r i s ing . They have ri se n enormously f o r reasons that a r e permanent.

And now concealment begins to be much more troublesome.

Agriculture i n this country was at f i r s t of two ty pe s. There was the plant-

er type, re st in g upon sla ve labo r. The planter crops were such a s rice, tobacco

an d

cotton.

The other was the individual ist ic type - heroi c, romantic, al le go ri ca l.

With a few rude tools, a gun, h i s team an d wagon, a bushel o f seed, a bag of

sal t and a new wi fe , t h e pioneer entered t h e wilderness, l at er t h e surveyor found

him in a log cabin, proprietor of the solitude, surrounded by increa se . Others

came and bought him out; he went on to do it aga in. Then the se others , having

further improved t h e land, sold i t again and followed th e original soil breaker.

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- 3 -

When they overtook him he sold an d went on. So wave after wave.

We can

remember

it who

were

not

there.

The

straining

o f the

wagon gear

through th e l i s ten ing s t i l lne s s o f forest, nameless terrors, th e pungency of

hut

harness,

th e

odors

o f

evening

an d

frying food

on the

river bank,

th e

sweet-

ness of coarse fa re , storm, st ar l ig ht , morning, boundless expect ati on, and news

and rumor even there. Always someone had gone before; news was coming back.

The place o f eminent desire was not Boon's Lick. The perfect valley was just

discovered farther on . Then th e great anxiety whether i n taking what was here

one had not missed what rumor said vt&s there.

Speculation i n Land a Century Ago

"Scarcely," says a contemporary writer - 182 6 - "has a family fixed itself

and enclosed a plantation with th e universal fence - sp l i t ra i ls la id in the

worm trail,

or

what

i s

known

in the

north

by the

name

o f

Virginia fence

-

reared

a suitable number o f l o g buildings, i n short, achieved t h e f i r s t rough improve-

ments that appertain

to th e

most abso lute ne ce ss it y, than

th e

assembled family

about t h e winter fire begin t o talk about th e prevailing theme - some country

that h a s become th e rage a s a point of immigration. They o f f er the ir farm fo r

sale an d move away."

Sell ing out on the third or fourth wave, t o people who bu il t roads a s they

came, who brought hardware, better tools and f locks, and who meant t o stay, gave

those restless homesteaders

t h e

capital they required

to go on

wit h.

Speculation i n land was already t h e national mania.

Flint, writing

h i s

Recollections

i n

1326,said: "During

my

residence

i n

Missouri th e rags f o r speculating i n their lands wa s a t i t s h ighes t . 1 hav©

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of t en

b e ^ n a t

collections where lands were

a t

sale

f o r

taxes

and by

orders

of

t&e

cour t ,

and at

otner time s, whan the re were vo lun tar y sa le s

a t

auction*

The

zeal

to

purchase amounted

to a

frenz y- Land spe cula tors co nst itu ted

a

pa r t i cu -

l e r pa r t y . I t required prodigious efforts to become adroit. The speculators

had a peculiar kind of s lang di al ec t , appropr iate t o thei r profess ion, and when

they walked about, i t was with an a i r o f solemn thoughtfulness, a s though they

were t . ie people an d wisdom would d i e witn them. A very large t ra ct of land was

cried by th e sher i f f f o r sale when I was present , and the only l imits and bounds

given were that i t was thir ty miles north of S t . Louis. A general laugh r a n

through t h e crowd assembled a t the courthouse door. But a purchaser soon appeared.

. . .

Families were constantly arriving, many

of

them polite

and

well- informed,

and

they

e

going

on to

these tracts , which, portrayed

b y t h e

interested surveyor

and speculator , and as ye t only p a r ti a l l y explored, were to be their home.

Never have I seen countenances suffused with more interest or eagerness than i n

c i r c l e s

o t

trus descript ion, where

t h e

comparative beauty

and

advantages

o f d i f -

ferent sect ions

of

trie country,

c r t ^ e

beet s i tes

f o r

location, were

t h e

themes

of

conversation.

No

doub t many

of

tnese speculations were dishonest*

No

subject

i s

more susceptible

of a l l t n e

a r t s

of

cheating, because

in no

point

i s i t so

impossible

t o

disprove advantages, which vary with

t h e

imagination

of him who

contemplates them."

-but, as ne adds , tn ere wjre moments of r e t r i b u t i o n . The speculators a t

that time overstayed trieir market, as one says i n Wail S t r e e t . Land va lu es took

a mighty fall and many o.t them vsre^ ru in ed . The t r ac t of land lying somewhere

tnir ty miles north

o f S t .

Louis

was for a

time perhaps unsalable*

N o t f o r

long.

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Less than

t e n

years later,

in 1835.

a

survey

'm y

made

f o r a

railroad

i n

I l l i -

nois from t h e steamboat landing a t Alton through Brown

1

s Prairie by Carlinville

and Otter Point t o Springfie ld, a distance o f seventy mi les . Merely th e survey.

And

people were seized with

th e

delusion that there would soon

be no

more farm

land on that pr ai ri e, only c i t i e s . Farms i n a state o f rude development a s

farms were immediately laid out in town l o t s . Imaginary town s i t e s were so ld on

Tmbat a re s t i l l t o t h i s day only very good farms. A panic fo ll owe d. Always a s

a thing of course th e panic followed. Yet never d id the value o f land go back t o

where i t was^Fantastic values disappeared; permanent values steadily and amaz-

ingly increased, and t h i s h as never stopped.

Plenty, Famine

an d

Panic

What occurrid on the I l l ino is pra ir ie h as been occurring ever since, not

a s a ra ti on al -procedure but as an expression of the pioneer mentality, with i t s

restless, excitable imagination, i t s love of adventure, i t s ruling phantasy of

wealth

by

luck

an d

discovery,

an d i t s

aversion

t o

slew repetit io us t o i l . Brief-

l y , t h e mentality o f the gold seeker. We know i t . There i s l e s s or more of i t

i n a l l o f u s .

So far from ever having sought to control or rat ional ize th is sp ir i t , the

Government

h a s

encouraged

i t .

There

h a s

never been

but one

national land policy.

That

was and is to

exploit

t h e

land.

in

hy not?

The

land

- i t i s th e

land that

makes u s ri ch There was nothing else to Teegin with.

It was in order t o bring value quickly to th e land that th e Government made

enormous grants

of the

public domain

to the

railroad builders;

and on the

part

of the builders to create an d capture that value was the great inc en t ive . Many

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—6-"

of the early railroads were conceived a s settlement projects on a. magnificent

scale- A rai lro ad might be laid down on the prairie almost as fas t as a team

could walk; and then th e only problem was to ge t people i n fa st enough from the

Old

World.

The

increase

in the

value

of the

land

was

expected

to pay fo r

every-

thing, even

the

fa i lures

and

disappointments,

and

ult imately

i t d i d .

When

it was no

longer necessary

t o

subsidize railroad building with grants

©f

land

the

Government found something else

to do .

There were va st areas

o f

arid land s. Agriculture did not need these lands - not then. I t does n o t need

them

now. Yet th e

impulse

to

exploit them

was

i r r e s i s t i b l e - Enormous sums

e f

money have been spent

to

reclaim them

by

irr igat ion.

But

irrigated land,

a l -

though very productive,

i s

cost ly .

I t may be a

good investment

f o r

such

as

mean

to

practice intensive farming

on

small acreage.

But the

element

of

speculation

i s n o t

present.

The

majority pass

i t

over

and

take instead

the

free, unirrigat-

ed land beyond, where th e hazards a re steep but where something yo u become p o s -

sessed

o f for

nothing

may

make

you

suddenly rich.

Of this 3. notable instance has just occurred . When a. vas t tract of semi-

arid land called the Montana, triangle was opened fo r settlement there was a

frantic rush to seize i t . A motley of adventurers, speculators and people with

neither capital nor experience, whom the blind earth hunger moved, and also

a. great many farmers from Iowa., I l l i n o i s , Missouri a-nd South Dakota, where land

had become dear - they a l l crossed th e beautiful irrigated Milk River Valley,

and established themselves on that d r y , high bench beyond, where land was free

and where nothing had ever grown but bu ff alo gra ss. Over an area half th e size

of

Iowa eighteen thousand habitations, seventy towns

and

vi ll ag es , schoolhouses,

banks and elevators popped out of the ground.

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Anc , note

#

nobody knew whether or not that land would farm. The Government

txât threw i t open f o r set t lement d id no t know, th e ra i l roads that brought the

people d i d n o t know, t h e Agricultural College of Montana d i d n o t know; and of

course th e people d id no t know. They would have to f ind o u t . They pl an ted

wheat*

I f t h e

land would grow anything

i t

would grow wheat;

a n d ,

besides, wheat

growing

i s t h e

true American

way of

explo i t ing

th e

v i r g i n s o i l .

I t i s

more

e x -

citing than placer mining,

and

much less laborious.

This semiarid land d i d a t first yield wheat i n a prodigious manner * After

two freak years of plenty it was valued a t f i f t y d o l l a r s an acre-; you could borrow

twenty-five on i t - Af te r tnre e freak, years of bad weather i t f e l l t o te n o r f i f -

teen dol lars

an

ac re , Then

tr ,e

panic* Montana

now is

dealing with

t h e

conse-

quences

,

They wi ll pa ss .

The

Agr icu ltu ral College

i s

teac hing people

how

s a f e -

l y t o grow wheat there, on a d ic ing pr inc ip le , so t h a t i f you ge t one crop i n

three

you

come

o u t

ahead. That land neê r again wi ll

go

back

t o

buffalo grass .

I t probably could n o t happen as a matter of b io log i ca l f ac t , f o r i t i s said that

once

th e

na tura l

sod is

broken

th e

grass will

n o t

r e tu rn .

B u t f o r

economic rea*

sons i t i s forbidden t o hapi en . The land was no t and is not needed f o r wheat.

There is a. ruinous su rpl us of wheat* Yet there a r e those towns, t h e e leva tors ,

th e

investment which cannot

b e

permitted

to

pe r i sh .

To

support

i t t h e

people

must

be

kept

on th e

s o i l .

To

t h i s

end

sha l l

be

employed

a l l t h e

resources

of

agricultural knowledge; even, i f necessary, public funds.

Now the po in t . I t i s t h i s ; If by "peasantry" we sh all agree to mean, n o t

uncouth rust ic i ty bu t a manner of taking root i n t h e s o i l f o r special love of i t ,

t h e pa ins tak ing cu l t iva t ion of small holdings with t h e labor o f t h e family and a

high degree of self-containment upon t h e la nd, then American ag ri cu lt ur e i s

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""V br '

largely free

o f i t .

Actually

i t

does exist.

The

cases

a r e

innumerable.

But

i t i s n o t

ch ar ac te ri st ic . What

may be

called

th e

American idea

o f

agriculture

i s

somewhat

a s

follows:

First, that

i t

shall

be a t

leas t

a s

profitable

a s

industry

or

business

f o r

a l l who are

wi l l ing

t o

engagd

i n i t ;

Second, that

i t

shall

not be

more laborious than ind ustr ial l i f e ,

f o r i f

i t i s

people will leave

i t ;

Third,

and for the

same reason, that

i t

shall enjoy

a s f a r a s

poss ible

a l l

t h e benef i ts o f c i t y l i f e and be compensated f o r those i t i s obliged to do with-

out;

Fourth, that

i t

shall

b e

e f f i c i e n t ,

a s

business

i s , a n d

produce primarily

a

money crop.

Our

Unique Idea

of

Agriculture

There i s almost no thought of a country l i f e se l f -su ff ic i ng i n virtue of

satisfactions beyond

t h e

reach

o f

c i t i e s ,

a

rural culture self-regarding

i n i t s

own

environment. When

you

speak

o f i t

people

do not

know what

y o u a r e

talking

about. Farming

i s

understood

to be a

business,

not a way of

l i v i n g

one

might

prefer

to any

other.

This American idea

o f

agriculture, altogether unique

i n t h e

world,

was

never stronger than

a t t h e

present time.

I t

controls

a l l o u r

ways

o f

thinking.

The

power

o f

education

i s

behind

i t . The

Government f i r s t

and

last spends

great sums

o f

money

i n

support

o f i t . ^ e

adopt

i t

unawares. Consider

now how i t

i s t h e

fashion

t o

speak

o f

agriculture. Farming

i s a n

unscientific term,becoming

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obsolete*

We

speak, ins tea d,

o f th e

wheat industry,

o f the

cattle industry,

of the

dairy industry,

o f

overhead, fixed charges,

n e t

income, quantity

p r o -

duction and turnover.

I t

sha l l

"be

said, f i r s t , that

i f in any

country

on

earth th is idea

may be

realized, here

i s

that country)

and,

moreover, that

t h e

extent

t o

which

Ameri-

can

agriculture

h a s

been already urbanized, spe cia liz ed, in du st ri al iz ed , could

not be

imagined anywhere else.

I t h a s

more plumbing, more au to mo bi le s, more

scientific data, more news, more contact with t h e cities, more excitement, more

att ent ion , shorter hours

and

less drudgery than

any

other agriculture

in t h e

world,

now or

ever before. -Great numbers

o f

farmers

keep

the ir fami l ie s

i n

towns. A&ny

go to

Florida

or

Cal i fornia

f o r t h e

winter .

I n

their preoccupation

with

the one

money crop, whatever that

may b e ,

they of te n negl ect

t o

produce

the ir

own

foo d. They inc rea sin gly

buy

their food,

a s

city people

do , and th e

same kinds.

Taking i t t h e country over, 40 per cent o f the food eaten on the farms i s

n o t produced on the farms. I t i s n o t that they sell grain f o r cash and buy

f l o u r or bakers' bread, n o t that they sell hogs f o r cash and buy hams and bacon

and

lard from

th e

Chicago packers

b y t h e

trainload; they

buy

garden vegetables,

pota toes , fr ui ts , canned goods, j e l l i e s , milk, butte r, eggs, cheese

and

poultry.

In

Missouri , Iowa, Minnesota, North .Dakota, South Dakota, Nebraska

an d

Kansas

t h e

average farm produces le s s than

60 per

cent

o f

what

i s

eaten there,

and i n

Worth Dakota alone t h e average farm buys more than ha lf that i s eaten o n i t s

own tab le ; and t h i s runs up to 100 per cent, t h e farm i n that case producing

no food a t a l l f o r i t s ow n table - nothing bu,t cash wheat to be hauled away t o

t h e el ev ator . Thus farmyard drudgery i s avoided - no milking, no slopping the

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- l o -

pigs

>

no hoeing, no chores a t a l l , a nd only ninety o r a hundred d ays * work in the

year*

a

e l l , i f such i s t h e American idea and i t tends to be re al iz ed , then what i s

tn e

problem?

I s i t t h a t

progress

i s n o t

rapid enough?

Are we

in p a t i en t

? No *

The problem h a s many as pe ct s. Tot all y i t derives from t h e fact that th is

type of ag r i cu l tu re i s always i n trouble* It ,p as se s from on e c r i s i s to another

and is chron ical ly i n need of being saved* Just now i t i s pro posed, among other

things, that t h e Government shall lend money to those farmers i n t h e Northwest

who have failed to r a i se th e i r own food «- money with which they s h a l l buy milch

cows, jvigs and chickens i n order that they may get in

the

way of feecBng them-

selves « This measure i s obviously false t o

th e

idea , and is jus t i f ied on ly on

th e ground of an emergency* I t i s what might be called a step backward toward

peasantry# Indeed , many of those proposed to be helped regard i t i n that l ight*

They

do no t

want

t o

milk cows

an d

slop pigs-

A l l

they want

i s a

high price

f o r

wheat*

So the

problem

i s

complicated,

And

there

i s

endle ss confusion from

t h e

fac t

that nobody wants t o give u p t h e idea* Nobody wants to admit that i t tends t o

defeat i t s e l f • This i t does in an inevitable manner ̂

The Great Land Boom.

Exploit ing new lands f as te r than they a r e needed h a s th is result , that there

i s always a. po te nt ia l food surplus* I n that case, with agriculture on a money-

crop basis* what i s bound t o happen? A p r o f i t i s k i l l e d i n t h e rush t o se ize i t *

Millions

of

farmers with

an

"uncontrollable impulse increase their production

of

th e

cash crop that happens

to be

pr of i t ab le . Then

t h e

potential surplus becomes

actual and everybody i s l e f t i n t h e lurch.

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Such being

th e

case ,

o r , i f i t i s

true,

a s a l l

professors

of

farm economics

prove by their figures, that agriculture under th e American idea does not pay, then

what keeps i t going? Roughly, the answer i s that what f l oa t s i t and ha s floated i t

a l l these years i s the increase in the value of land.

How

now?

A

r iddle .

I f

there

is no

pro f i t

i n

agriculture

why

does

th e

land

increase i n value? , -

The explanation i s n o t simple. To begin, -Alien the professors o f farm economics,

either t.iose

of the

Government,

o r

tnose

of the

states, demonstrate

by

s t a t i s t i c s

the

absence of prof i t i n agriculture - nay, the actual loss i n i t - they take this year

or la st year alone. Land val ues, i nt er es t, taxes , rent s, a l l a s they a r e , i t i s

true - agriculture does not pa y. The farmer i s lucky to make wages. But i f land

values, interest, taxes

and

rent were still what they were fifteen

or

twenty years

ago there would be a p ro f i t . This means that th e p r o f i t s o f agriculture are t o a

r

very great extent absorbed by the increase in the value of the land; or , to say i t

another

way, the

earning power

of the

land

i s

capitalized

i n

advance, just

as a

Wall Street stock that pays

no

dividend

may

r i s e

in

antic ipation

of one, and

then

stop rising, even decline a. l i t t l e when th e dividend i s decl ared . There is no

gain from buying i t afterward; there i s only a small return on the investment,

and the

risk, "besides., that

th e

dividend will

be

discont inued. That

i s

what

h a p -

pens to land. I n special years, with high prices, i t s earning power runs up; then

i t i s valued accordingly and people excitedly b u y i t . Then pric es f a l l and its

earning power declines; so also i t s value.

There

i s

always

th e

expectation

of

th i s . Land booms come

and

come again.

They are not a t a l l confined to new experimental lands.

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In 191S and 1919, a f ter th e Armi stice , there was the wildest "boom i n Western

f&ro land that has occurred since the raw prairie days* I t represented t h e capi-

t a l zavi on. i n land values of the high wartime prices f o r agricultural produce*

Iowa land values

had

been

f o r a

generation

th e

first example

i n

s t a b i l i t y .

In 1900

i t could be said that they had once doubled i n th ir ty ye af s. Nothing mercurial

there* They doubled again

in t h e

next

t e n

years with

th e

r i se

in the

average price

o f a l l crops; and that had already made them rather dear - so dear that one of the

oldest mortgage-loan companies

i n

Chicago pulled

out of

Icwa

and

went into Texas

lands, Then suddenly between 1910 and 1919 they doubled again# People l o s t th ei r

heads* They dealt

i n

farms

as in

blue-sky mining stocks, selling them, buying

them back, s e l l i n g them a.gain.

A man i n

Lincoln township sold

h i s

farm

at $2)0

an acre* bought i t back a t $270, and sold i t again a t $42^• Those Iowa farmers

who sold out in 1919 at values calculated on the basis of two-dollar wheat and.

twenty-cent hogs,

got the

prof i t

- not

from

the

preceding

t e n

years

but

from

the

neat ten years o f Iowa agriculture.

And there a r e y e t other reasons why the value of land rises faster than the

prof i ts

of

agriculture.

One i s

that innate earth hunger

of

people vtiaich

has the

strength o f in st in ct . Another i s t h e certa inty that people w i ll continue to mul-

t iply until th e bowl i s f u l l and running over*

Anyhow i t i s a fact that in proportion as the American idea of specialized

money cropping i s realized agriculture becomes an extra-hazard0us occupation,

chronically somewhere

i n

trouble-

I t i s a

fa ct , also , that

so

long

as the

land

continues to be exploited, in the characteristic Western manner the only natural

restraint upon overproduction will

be

loss*

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This means that

a s you

have marginal railroads, marginal mines, marginal

factor ies ,

so you

will have marginal farms

and

marginal farmers.

The

marginal

producer

i s one

whose costs

are

hi$2, whose efficiency

is low, and

whose place-

ment:

in the

scheme

i s

perhaps disadvantageous.

In

good times

h e

makes

a

l i t t l e

money,

i n

fair times

h e

e x i s t s ,

i n

worse times

he

loses

or

goes bankrupt.

As applied to agriculture this coldblooded thought i s shocking. We almost

cannot accept i t . As to a. coal mine or a. railroad i t i s a l l right . There econom-

ics may rule . In the s t a t e of I l l i no is there a r e above a hundred marginal coal

mines. When pr ice s are high they open up and add their production to the total ,

thereby li mi ti ng everybody's pro fi ts ; when prices f a l l they shut

up

again.

We

do not care. The spectacle of an idle coal mine does n o t move u s sentimentally.

We

regard

i t ,

indeed, with sat is fa ct io n.

I t

represents insurance against extortion

Yet the spectacle of an idl e farm saddens u s . We react emotionally. I t i s a. hu -

man tragedy. Here someone h as tried to get a living from th e s o i l and fa i led .

Conclusion: There i s something wrong in a. country where on e cannot get a l iv ing

from the so i l .

The Wheat-Raising Machinist

"Here i s a case," says a Montana banker. "A man came to me only th e other

day

saying

he

didn't believe

h e

could stick

i t out. He had not

been able

to

make

a l iv ing f o r h i s family. He was running behind. Another poor year would fi n i s h

him.

Then

h e

would have

to go

back

to h i s job in

Minneapolis, where

he was

making

eight dollars

a day a t h i s

trade.

He was a

machinist.

Now

what

are you

going

ti-

de ? If

something isn't done right away that

man

wi ll have

to

abandon

h i s

farm;

and

there

a r e

hundreds, thousands like

him."

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But now consider what th is case represent s. I t i s one of numerous cases,

fa ir ly typical .

A

machinist

i s a-

product

of

technical training.

He

applies

h i s

s k i l l to s t e e l . The resu l t i s a machine, and machines are in great demand. The

world cannot g e t enough o f them. Only a few nations can produce them. I f we

are thinking to produce 9 surplus of anything f o r sale abroad , then l e t i t b e a

surplus

of

machines,

f o r

they comcrand

a.

high price

- the

price

of

high craft skill

What

ha s

this machinist done?

He ha s

deserted

the

task

o f

machine making

and

gone

to

Montana

t o

ra ise wheat. There

i s

already

to o

much wheat.

I t i s

produced

in

surplus by the least rewarded , the least developed labor in the world - i n Egypt,

i n

India.,

in

Argentina.,

i n

thirty-dig^t different countries , in

a l l o f

which wages

and standards o f l i v i n g are lower than they are here. Mow fancy an American ma-

chinist

, man of h i s

technical s k i l l , worth eigh t,

t e n ,

maybe f i f t e e n do lla rs

a

day, pu tt ing himse lf in to competition with that kind of labor? I n doing so he

adds

h i s

moiety

to the

world's surplus

o f

wheat

and

then complains that

h e

cannot

make a. l i v i n g . He i s rea l ly no t interested in any of t h i s . He was no t a. farmer

to begin with; he i s not a farmer now. What moved him was the thought o f getting

a

farm

f o r

nothing

- a

wheat ranch

i n

Montana that would make

h im

rich.

If you

t e l l him there is a. sure way to get a l i v i n g f o r himself and family on the farm,

that

he

needs

a.

garden, some f ru i t t ree s, milch cows, pig s

and

chickens,

he

will

say: "OhI That isn't what I came cu t here to do . That means work every day in

th e year. I 'd rather go back to n§r trade."

Yet even a banker asks what shall b e done t o keep this man on the land,

thereby thinking, a s most of us do, without reflection, that i f he ha s to abandon

h i s farm i t wil l be a tragedy, and that many such trag ed ie s portend a. social d i s -

aster. Most

o f

that thinking,

o r

f e e l i n g ,

i s

great nonsense. Neve rthe less ,

i t i s

very general and i t s consequences are amazing.

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For

more than f i f t y years

our

po l i t i c a l l i f e

h as

bean tormented

b y t h e e f -

fort

to put

profit into agriculture

— to do i t by

edict

or

economic stratagem

-

notwithstanding

the two

facts already developed

-

namely, that

t h e

cease less

e x -

ploi tat ion

of

land creates

the

potent ia l i ty

of a

ruinous surplus

and

that

the

only natural restraint upon overproduction i s loss*

Panaceas of the Past

In t h e last year of the Civil War wheat was $ 3 o 0

a

bushel, other things i n

proportion* High pr ic es held

f o r

another year, just

as

they

did

through

1919>

and

land values increased

in the

same

way,

everybody going into debt

to buy

more

of i t , as i f the

laws

of

gravity

and

reaction

had

been suspended forever.

In the

next year

th e

collapse began,

and

agricultural commodities declined

f o r

nearly

thirty years.

So did th e

products

o f

industry

i n a

parallel manner,

and for the

same reason

-

namely, excessive

and

uncontrolled production;

b u t i t i s

agricul-

ture we now speak o f .

The

f i r s t

two or

three years

of th e

fall were

th e

worst, because that

was

th e

most violent part

of i t and

because also

i t

caught

th e

farmers heavily

i n

debt

f o r

land

th e

earning power

and

value

of

which

had

been calculated

on war

prices*

In the

decade from

1870 to 1280 the

production

o f

wheat more than doubled.

That would seem

a

fairly obvious reason

f o r i t s

decline

i n

price*

But

that cause

was disregarded; every other reason was imagined - many reasons that d id not exist.

There followed

i n

order

t h e

Grange movement,

th e

Farmers* Alliance,

t h e

Populist

Party and Bryanism, The means whereby i t was proposed to restore a pr o f i t to

agriculture, excessive production notwithstanding, were mainly these:

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- 1 6 -

CoOperative selling;

Cooperative buying;

Low freiât rates;

Piat money;

Free silver.

Cooperation was tried on a very ext ens ive scale* There was something i n i t

i f i t could be well managed, b u t i t seldom was; and t h e most there was i n i t was

only

the

middleman's profit,

and

that

was not

enough

to

make agriculture profit-

able* Railroad rat es were reduced by

l a w

in the agricultural states and the

principle of state regulation o f railways was established. Nor did that make

agriculture profitable, f t made hardly any di f ference at a l l , except to the r a i l -

roads.

Tb.a

consumer,

n o t t h e

producer, pays

th e

freight

i n

gene ra l. What

the

producer pays is a. geographical pe nalty, governed by h i s distance from t h e point

o f consumption. Fiat money and fr ee s i l ve r were never tri ed . Both proposals were

abandoned , no t that t h e farmers believed i n them l e s s b u t f o r t h e reason that a l l

a t

once agricultural-commodity pr ic es stopped f a l l i n g

and

began

to

r i se .

This happened between

1895 and 19 00 , Why i t

happened need

not be

discussed.

I t wi l l b e enough to say that t h e products o f both agriculture and industry, h a v -

in g fallen together f o r nearly thirty years, stopped falling together and began

rising together. The causes were general over the whole world. The universal

evi l of low pr ic es , which int ern ationa l commissions had been investigating in a

f u t i l e manner, suddenly vanished. Wants enormously in cr ea se d. Demand began t o

catch

up . And i f t h e

products

of

industry advanced faster than

the

products

o f

agriculture

in the

next twenty years, which apparently

was the

case, that

was ow-

ing to the fact that basic industry stopped exploiting i t s resources in the

pioneer spirit and found ways to rationalize production, a s agriculture never d id .

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- 17 -

I t was no ac t of Congress that saved American ag ri cu lt ur e through a l l that

heartbreaking decline i n prices that "began in 1S6S and continued f o r nearly

thirty years. Nor di d low freight rates save i t . N or would fi a t money have

saved i t . I t was saved by i t s own way with necessity.

That which

h as

been called

th e

American idea

o f

agriculture

was not so

strong then;:it had not been developed . What there was of i t was put aside.

Those farmers

who

could paid

o f f

their debts; those

who

couldn't were foreclosed

upon; then they started again

on

de fl at ed land . They grappled wi th

th e

s o i l .

They produced their own food , dressed i t themselves, an d supplied th e v i l lage

demand. They bought nothing they could make

or

produce

f o r

themselves,

or do

without. On t h i s lo ng curve o f falling prices came into being a generation o f

farmers who would sooner want than borrow, who regarded debts with terror, who

thought signing

a

note

was a

step with

th e

s h e r i f f . They never could understand

what they saw on a rising price curve where t h e next generation lived.

Borrowing i n Falling Markets

They were right an d sound in their feeling about debts. On fa l l in g prices

i t i s disastrous t o borrow. I t takes always more and more to pay back, until a t

l a s t

you are

ruined.

I f

when wheat

i s a

dollar

a

bushel

you

borrow

a

thousand

dollars, that represents

a

debt

of a

thousand bushels

o f

wheat.

But i f

wheat

f a l l s t o f i f ty cents th e debt i s doubled. You need two thousand bushels to pay

i t o f f .

Precisely th e opposite i s true i n a time of ri si ng pr ic es . Then i t takes

l e s s And l e s s of your labor and produce to pay back what you borrow. I f when

wheat i s a dollar a bushel you borrow a thousand do ll ar s, that agai n represents*

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- 1 3 -

a thousand bushels o f wheat, But i f wheat rises to two d o l l a r s a bushel the

debt i s halved. You need only f i v e hundred bushel s t o p a y i t off*

Between 1895 and 1900 prices began to r i s e , and they rose f o r more than

twenty years, n o t un in te r rup ted ly , of course, b u t a s t h e t ide r i ses* Old farmers

whose wisdom was that o f t h e fa l l ing pr ice curve saw the young men going into

debt, and prophesied their ruin. But t h e young men es cape d. They borrowed more

and more; they bought land with borrowed money and gave t h e i r notes a t t h e bank

f o r working ca pi t al • Their land inc reas ed i n value and their notes d i d n o t worry

them# I f they could no t pay them o ff one year they renewed them and waited f o r

a

better crop

o r

better prices*

Now suddenly a great discovery occurs. The pe r f ec t so lu t i on i s a t hand.•

The way to p ut

p r o f i t

i n

ag r i cu l tu r e

i s t o

give

i t

c r ed i t , p l en ty

of

c r e d i t

-

cred-

i t such as any other business gets. Th e farmer sha ll be f inanced . He sha l l do

business a t t h e bank. He sh al l have banks spe ci al ly adapted t o h i s uses and

needs.

Comparative marketing i s n o t f o r got ten. I t i s a l l t h e h a t t e r . The reason

why i t

never succeeded

i s

that

i t

never

was

properly f inanced.

I t

wanted credit-

Th e

master

k e y i s

c r ed i t

-

c r ed i t

to buy

land with, credit

to buy

implements with,

c red i t t o sow and harvest with, credit with which t o hold one

1

s crops f o r a fa i r

price instead of s e l l i n g them away t o t h e speculator*

This became of a sudden th e ruling theme* For f i f t e e n y ea rs no man spoke

sympathetically t o t h e f armer ^s case wit hout saying tha t above a l l else what h e

needed was c r ed i t - cheap credit , long-time credit , short-t ime credit , honorable

credit, special forms of credit determined by the special problems o f h i s indus-

t r y .

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- 1 9 -

Consent

was

unanimous. Never

had

human contradiction

h i t

upon

a

more

s e -

ductive panacea. There was plenty o f i t . I t was cheaply dispensed. The pa t-

ient clamored f o r i t .

So the farmer was financed. Yea, how he was financed

The amount o f credit that h as been placed a t the ca l l of agriculture i n

t h e

la s t

t e n

years cannot

be

de fi ni te ly calcula ted. There

is no

f igure

t o e x -

press

i t .

Nobody knows

how

much

i t i s . A

former secretary

o f the

Treasury

e s -

timated that th e amount provided for by Federal legislation alone - by that on -

ly - was f ive b i l l ion dol lars .

First o f the credit agencies under th e jur isdic t ion o f the Federal Govern-

ment came th e Federal Reserve System with twelve regiona l banks. The functions

of

these twelve regional Federal Reserve Ban ;s were mainly

two - to

mobilize

the y

gold resources

o f the

country,

and to

male credit more elastic, more Equitably

access ible t o everybody by lending money cu t of one great reservoir, through

those twelve Federal Reserve Ban* s , to private banks, which i n turn should lend

i t t o

private borrowers.

For the

farmer

i t

worked li ke t h i s :

If he

went with

h i s note to th e small-town bank and asked t o borrow on i t and the small-town

bank had no money of i t s own to lend, i t could s t i l l take t h e farmer's note,

send i t t o th e nearest one of the twelve Federal Reserve Banks and get the money.

Farmers Filled by Credit Kindness

But

that

was not

enough.

It was

soon found that

th e

rules under which

the

notes

c f

merchants

an d

manufacturers were taken

a t the

Federal Reserve Banks

were to o narrow f o r t h e farmer. Therefore th e rules were relaxed i n h i s favor,

so that a farmer's note had Tore time and grace a t a Federal Reserve Bank than

an y other.

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— 2 0 -

And

that

was not

enough.

The

farmer needed credit

f o r

what

he was

doing

-

y e s . And he

could

get i t . But he

needed credit also

f o r

what

he was

going

to

do. So Congress created th e Federal Farm Loan System, with twelve regional Fed-

eral Laitt Banks to he launched where necessary, with government credit; and the

purrose o f these banks was to lend money t o national farm-loan ass oci ati ons ,

which

i n

turn should lend

i t t o

farmers

fo r th e

purchase

of

agricultural land,

fo r th e

equipment

and

improvement

of the

land

and to pay off o ld

mortgages.

Any

ten or

more natural persons could form

a

national farm-loan association; more

than forty-four hundred have been formed. The same law authorized th e creation by

private persons of joint-stock land banks, under t h e supervision of the Government,

such banks t o sell debentures up to f i f teen t imes th e amount of their capital , and

lend th e money on land.

S t i l l not enough. In March, 1 9 - 3 , Congress passed th e great Agricultural

Credits

A c t ,

creating twelve Federal Intermediate Credit Banks,

to be

established

"alongside of but organically independent of the twelve Federal Land Banks,

n

each

with a capital of five million dollars provided by the United States Government,

These intermediate credit banks lend money f o r "agricultural purposes" f o r p e r -

iods o f s i x months t o three years.

The same a c t provided also f o r national agricultural credit corporations t o

lend money f o r "agricultural purposes" direct t o farmers, an d national agricul-

tural rediscount corporations to take over from pr iva te banks loans that have

already been made f o r "agricultural purposes."

These are the agencies created by Federal legislation:

Federal Reserve Banks;

Federal Land Banks;

Joint-stock land banks;

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- 2 1 -

National farm-loan associations;

Federal Intermediate Credit Banks;

National agricultural credit corporations;

National agricultural rediscount corporations.

These agencies have placed

i n th e

la s t

t e n

years,

by an

estimate

o f a

former

Secretary o f th e Treasury, five billion dollars of new credit a t th e disposal o f

agriculture.

And

t h i s

i s by no

means

a l l . The War

Finance Corporation,

a

banking concern

set up during the war to finance war a c t i v i t i e s - owned by the Government and fur-

nished with government capital - has been converted into an agency f o r extending

government credit direct t o agriculture.

In addition t o what t h e Federal Government h as done, th e states have been

a t th e

same time dispensing credit

t o

agr icu lt ure . They,

t o o ,

have created farm-

loan systems and farm-credit boards; they have sold tax-exempt bonds on the public

credit and loaned th e money t o farmers at low rates of interest .

And above everything else there occurred a wild multiplication o f private

banks in the agri cul tur al di st ri ct s, under both national an d state charters,

whose principal business was to. lend money t o farmers on their notes and who com-

peted with on e another fo r th e pr iv i lege o f doing s o . Any few natural persons

with

a

l i t t l e money could star t

a

bank.

In the

Northwest area, called

th e

Ninth

Federal Reserve D i s t r i c t , more than f i f t y nati onal banks were chartered by the

Comptroller c f the Currency a t Washington over th e protest of the Federal Reservg

Bank a t Minneapolis. There were already to o many new and inexperienced banks, ae

th e Federal Reserve Bank a t Minneapolis knew; but the man then Comptroller of the

Currency

a t

Washington said that

i f

people wanted banks they should have them.

So farmers became their own bankers; they could give credi t t o themselves.

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-"22r*

Never since credit

was

invented

had

agriculture

s o

mach

of i t .

Never

b e -

fore

i n a l l t h e

history

o f

banking

was the

farmer

so

much financed.

And

with

what results?

There

i s

again

a n

acute crisis

i n

agriculture.

I t i s th e

worst that

has

occurred i n th i s generation . Farmers by the tens o f thousands - the Department

of

Agriculture says

b y th e

hundreds

of

thousands

- are

los ing

or

have already

lost their property, their lands

and

chattels ,

by

forfe i ture

t o

creditors

and

by the foreclosure of mortgages. In the Nocthwest area alone - Minnesota, Mon-

tana, North Dakota

an d

South Dakota

-

where occurred

an

expansion

o f

credit

p e r -

haps greater

i n a

re la t ive sense than anywhere e l se , more than fi v e hundred

banks

a re

shut

up

because

th e

farmers cannot

pay

their notes.

The War

Finance

Corporation

h a s

been dispatched

to the

scene with more credit.

An

extraordinary

credit corporation h a s been formed by private bankers of the East and the Middle

West,

a t the

instance

o f the

Government,

to go to the

re l i e f

o f the

Northwestern

banks.

There

i s

s t i l l

no

lack

o f

cr ed it . That

i s not the

trouble.

The

d i f f i c u l t y

i s t o f in d anything su it ab le upon which to grant cr ed it . Farms, li ve st oc k,

chattels, commodities

i n

storage

a re

already mortgaged

f o r

more than they

a re

worth.

Mortgaged

to th e

Hilt

And you

have this spectacle

to

ponder: Those bankrupt money croppers

o f

t h e

Northwest, with neither means

of

their

own no r

credit

a t th e

bank with which

to buy the chickens, pigs an d milch cows they need i n order to be able t o feed

themselves,

are to

have money

out of th e

United States Treasury

f o r

this purpose,

and at the

same time

a

large mortgage-loan company

i n

Minneapolis, having bought

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-23-

an d

sold Northwestern farm mortgages until

th e

taag hurs t, makes

a

street-window

display

of

Imperial Japanese Government

p er

cent bonds. There

i s a

good

d e -

mand f o r them. They a r e se l l ing . I s the word o f the Japanese Government then

better security than Northwestern farms

an d

chattels?

No. The

explanation

i s

simply that

t h e

Northwestern farmers,

who

desperately need

t h e

money that

Min-

neapolis investors

a r e

putting into Japanese bonds, have nothing l e f t

t o

pledge.

They have borrowed more

on

their farms

an d

chattels than those farms

an d

chat-

tels would bring

i f put up for

sale

a t

auction.

Here

now an

interrupti on. sha ll

b e

reminded that this crisis

i n

agricul-

ture

i s

owing

to th e

headlong fall

i n

prices.

Yes. The

f a l l

i n

prices

was a

cause.

But i t was the

last cause.

I f the

farmers

had not

been extravagant with

credit before,

i f

they

had not

mortgaged their property above

i t s

ears

in the

days

of

exuberance,

i f i n

North Dakota they

had not

used

i t t o

hold wheat

f o r

three dollars

and

f i f ty cents

a

bushel when they might have been selling

i t f o r

two dollars, i f they had not behaved a s if the day of payment had been abolished

by

ed ic t, there would s t i l l have been

a

c r i s i s ,

no

doubt,

but not the

kind

of

cr i s i s

i t i s .

There would have come lo sses ,' di sa ppoi ntment s,

•

hard times,

but

no

avalanche

of

bankruptcy, pul li ng down banks

by the

hundreds. Credit

is a

thing you can u se only once, Having already used i t they could n o t u s e i t again

t o

ease themselves down

a s

pri ces f e l l away.

Not

only th at . Jus t when they

b e -

gan to need credit f o r reasons beyond their control, and when they had nothing

l e f t

to

pledge

or

mortgage,

the day of

payment arriv ed. That they already owed

was due and

payable.

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-24- •

The farmers say they were deflated i n a "brutal manner by the banks. Par-

t i cu lar ly

do

they

say

th i s

in the

Northwest, where

now the

consequences

a r e

most

acute. To th i s th e fa i lure of more than five hundred banks i n Minnesota, North

Dakota, South Dakota and Montana- i s a f a i r ly convincing answer. Banks that are

brutal save themselves . These

d i d n o t .

Fi rs t they loaned

t o o

freely; then they

did not demand payment i n time. They are not denounced f o r having loaned too

free ly , nor for having renewed farmers

1

notes beyond prudence instead of requiring

them to be paid; they are denounced f o r having demanded payment a t a l l . Borrow-

in g

human nature w i l l always blame mbre

th e

banker

who

demands

to be

paid than

the one who refused i n the f irst place to lend.

Danger Signals Unheeded

For a

long time before

the

f a l l

i n

prices began

i t was

notorious that much

of the credit a t the ca l l o f agriculture was be ing improperly used . There seemed

no way to stop i t . A great deal of i t was by in di re ct io n. Individual farmers

t i ed up the ir own money i n golden affairs of the imagination, especially i n land

speculation , and relied upon the banks f o r money with which t o carry on farming

operat ions. Thus, l e s s an d l e s s th e farmer financed himself with his own means;

more and more of his own capital was le f t free f o r adventure. The local banks,

unable t o take care of him, and having a great deal of their capital also tied

up in speculation or in %ad loan s, passed him on, or, rather, they passed h i s

notes on, to the nearest Federal Reserve Bank. The notes were a l l regular enough.

They were f o r agricultural purposes, according to l a w . They were th eref ore e l i -

gible

f o r

rediscount

-

that

i s to say ,

they were proper ly purchasable under

the

rules; y e t every Federal Reserve Bank knew what th e s i tuat ion w a s .

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In December, 1919> the Federal Reserve Batrik o f Minneapolis said:

"It i s

quite evident that through

th e

extravagances

of

individuals

and the

indiscriminate extension

of

credit

by

certain banks

f o r

investment

an d

specula-

tive purchases

th e

reserves held

by the

Federal Reserve Banks have been used

through an indirect process f o r purposes other than those intended and authorized

by la w . The extension o f credit f o r speculative purposes i s n o t confined t o

stocks

and

bonds alone;

but

substantial advances have been made

t o

encourage

the

movement

of

land

and for

speculation

i n

commodities.

The

Federal Reserve Bank

of

Minneapolis h as used every precaution t o eliminate such u s e o f i t s f a c i l i t i e s ,

but

in di re ct ly th ese cr ed it s have been extended, with

th e

result that

an

unwarrant-

ed

overextension

o f

credit exists.

I f

this condtion

i s

permitted

t o

continue

i t

wil l i n time work a severe hardship upon everyone."

No

matter.

The

inverted pyramid

of

bank loans continued

t o

grow.

I t

grew

unt i l

i t

f e l l ; afte r that

i t

grew lying down. "Following

t h e

collapse

of

prices

i n

I920," says

t h e

Federal Reserve Bank

o f

Minneapolis, speaking

of the

Northwest,

banking, Federal Reserve

and Tar

Finance credits underwent

an

acute secondary

in—

. f l a t i o n , f or t h e obvious reason that farmers caught in the collapse could not

continue without immediately available resources.

No

funis were available

f o r

current operations, or to meet maturing indebtedness, except by borrowing from

th e

banks,"

In 1921 the âr

Finance Corporation came with

i t s bag of

emergency credit.

I t i s

there s t i l l .

How strange The Federal Reserve Bank of Minneapolis says one cause was too

much credit. Yet a block away i s the temporary office of the War Finance Corpor-

ation, with

an

organization made

cn the

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- 2 6 -

dpot , dispens ing more credi t . However, th e part of the War Finance Corporation

i s somewhat like that of the physician with th e violent drug addict. He mast

believe

he

will continue

to ge t i t , and a t the

same time

he

mist

h e

tapered

o f f .

The

true index

t o

what agriculture

h as

done

t o

itse lf with credit

i s a

statistical curve representing

th e

r ise

in the

farmer's annual interest changes

an d taxes. H is interest an d taxes together in 1923 were threefold what they were

in 1913•

Threefold

The

increase

i n h i s

in te re st represents what

he

"borrowed

as an

individual.

Farm mortgages more than doubled

i n t e n

years.

"The

great increase

in

mortgage indebtedness," says

th e

Howard-Moorhouse Agri-

cul tural Business Service, "came in 1919> as a result of land speculation after

th e

Armistice.

The

total amount

en

January

1 , 192 0 , has

been estimated

a t

eight

billion dollars, which

was

more than twice

th e

amount

o f ten

years prev ious. Since

1920 there h a s been a further increase of one b i l l io n dol lars, due to the funding

of

current obligations incurred during

and

just previous

t o t h e

depression."

After t h e Armi sti ce. During and just previous to the depression.

This

i s n o t

unsympathetic testimony.

The

Howard-Moorhcuse Agricultural Busi-

ness Service i s conducted by James R. Howard, f i r s t pres ident o f the American Farm

chief

Bureau Federation;

N. C.

Murray, fo rme rl y/ sta ti st ic ia n

o f the

Bureau of'Crop Esti-

mates; Lloyd

M.

Graves, formerly statistician

of the

American Farm Bureau Federa-

tion, and H. W. Moorhouse, formerly dean of the School o f Commerce of the Oklahoma

State College*

I t i s obvious that what agriculture d id with credit was to capita l ize war

prices

in the

value

of the

land.

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- 2 7 -

The increase i n the farmer's taxes represents, no t altogether, but principal-

l y , h i s

group borrowing.

I n h i s

polit ical capacity

he

adopted

th e

universal

e x -

ample an d sold enormous amounts of state, county, township an d school-district

bonds. He used th e money to improve h i s social environment, saying: "?hy are we

not ent i t l ed t o have the se th in gs too? TThy shall our children n ot have schools

a s

f ine

a s

those

t h e

c it y people' s chi ldren have?"

There i s no simple answer t o that question. I t perhaps cannot b e answered

separately a t a l l . I t t i e s up with th e whole problem of American agriculture.

The

machinist

who

leaves

h i s j o b i n

Minneapolis

to get a

free wheat ranch

i n

Montana not only thinks he i s ent i t led t o a profitable price f o r h i s wheat; h e

thinks he i s ent i t l ed t c have, out there on what was yesterday a cattle range

covered with buffalo grass, a school f o r h i s children like t h e school in Min-

neapolis.

And he

thinks this without reference

to the

fact that

in

choosing

t o

raise wheat instead of making machines he has cut himself in to compet ition with

th e

low-paid wheat-producing labor

of

Argentina, Egypt, India

and

th ir ty - f ive

other countries.

Building cn Credit

But the

farmers asked

th e

question

i n a

rhet or ica l manner on ly . They

did not

wait for the answer. The credit was handy and they used i t . They d id not build

country sc ho ol s. They bui l t ci ty schools, with baths, gymnasiums and a l l . You

cail understand

i t .

You can understand also th e disgust of the rcundheaded banker, whose bank

h a s never failed and never will, who started in l i f e with one calf and one horse,

when

he

says , "Over her e' s

a

town

o f

five hundred people that's just built

a

school that cost f i f t y - t h r e e thousand do ll ar s. They put in one of them gymnasium

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- 2 5 -

t h ings , How they wi l l hire somebody t o teach their kids basketball because

they

t

ve got nothing better to do ."

Product: Taxes.

Farm taxes per acre, taking th e country a t large, were in 1923 about 2s

times what they were in 1913- Commenting upon t h i s th e Department of Jgricul-

ture says:

"In 1913

taxes consumed

a

l i t t l e le ss than one-tenth

o f the

farmer's

n e t income. In 1923 they consumed nearly one-th ird o f i t . " Then i t adds:

"Between 80 and 90 per cent of the taxes paid by the farmer i s f o r expense

within th e county, th e larger items being schools and roads. Such taxes, t her e-

fore, a re within th e control of a majority of the people o f the county."

That i s merely to say , the farmer d i d i t t o himself . A very great por tio n

o f h i s

taxes

is now

beyond cont rol, since

i t

represents interest

on

money

b o r -

rowed - interest on county, township an d district bonds sold t o outside invest-

o rs .

In

reduction,

th e

great solution solved nothing;

i t

produced instead many

lamentable effects which were not intended. I t will take years t o efface them.

So now the sacred credit nyth i s in decl ine. I f there were symbols o f

th i s f e t i sh on which farmers could i n f l i c t the ir wrath yoti. would find them l y -

ing in the Western di tc hes igno'miniously, l i k e those pagan ra in gods th e heathen

were used

t o

hurl into

the dry

f i e l d s

so

they might

s e e f o r

themselves

how bad

th e drought was, and perhaps repent.

Ybu cannot put profit into agriculture by giving i t cr ed it . That i s s e t -

t led.

Farmers themselves now sa y, ""e don't want an y more credi t . That on e thing

h a s nearly ruined u s ,

T

7hat we want i s better prices."

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" r •

- 2 9 -

Maiy c f them indeed are suspicious of further experiments wit h cr ed it , even

such a s lending Northwestern wheat croppers money out o f the United States Treas-

ury to

s tock the ir farrryards with chickens, pigs

an d

milch cows; they suspect

that th e Government thereby begs th e issue and postpones consideration of the

true solution.

For

there

is a new

sol uti on. Everything el se

h as

been tried;

therefore this i s bound t o work.

The name of the new solution i s th e McNary B i l l . The name stands for an

idea.

The

idea

i s

price control

by

government edict.

But i t

must

not be so

s ta t -

ed . To say baldly what i t i s would perhaps defeat i t . . There i s already to o much

prejudice against th e thought of price f ixing. And because i t must not be re«c

ferred to as a scheme f o r controlling prices by edict t h e exposition o f i t by i t s

friends becomes extremely involved.

The McNarv B i l l Analyzed

I t

begins with

a

declaration

of the

thing

to be

done

-

namely,

t o

make basic

agricultural commodities worth a s much a s in du stri al commodities when by reason

of overproduction or a surplus above domestic needs they a re s e l l ing f o r l e s s ,

The

means

by

which this

i s t o be

accomplished

are as

follows:

First ,

th e

United States Agricultural Commission

to

no t i fy

t h e

President that

there i s a surplus of wheat, fl ou r, corn, cotton, wool, ca t t l e , sheep, swine or

an y food product of cattle, sheep or swine, and that th e domestic price i s too

low. The

President thereupon

by

proclamation declares

an

emergency

t o

ex is t

i n

respect

o f

that commodity.

Second, th e United States Agricultural Commission determines what the do-

mestic price

of

that commodity ought

t o b e .

This

i t

does

by

means

of a

s ta t i s t i ca l

index number comparing agricultural products with industrial products. The price

7/17/2019 frsbog_mim_v20_0330.pdf


-30- .

s o determined i s ca l led t h e ratio price, and i t i s proclaimed a s t h e price that

by right should, and in fact shall thereafter prevail,.

Third,

t h e

United States Agricultural Export Corporation,

now f o r th e

f i r s t

time named, begins

t o

operate . This

i s a

merchandising concern,

to be

owned

by

t h e

Government, with

tw o

hundred mi ll io n dolla rs capi tal

out of the

Treasury*

At the ratio price proclaimed by the commission t h e United States Agricultural

Export Corporation will

buy up a l l the

surplus,

or any

amount necessary,,

o f

wheat

or

corn

or

ca t t l e ,

or

whatever

th e

commodity

i s , i n

order

t o

make

th e

ratio

pr ice e f fec t ive;

an d

then

t h e

surplus over domestic needs

i t

shall dump

i n f o r -

eign oarkets f o r what i t c an g e t . Both t h e amount that will have to be sold

abroad

and the

loss thereon

-

meaning

by

lo s s

th e

difference between

the do-

mestic price

and the

world price outside

-

w i l l

be

estimated beforehand.

Say

t h e

commodity

i s

wheat;

and i t i s

estimated that one-tenth

of the

wheat crop will

have to be sold abroad a t twenty-five cents a bushel less than t h e o f f i c i a l d@*

mestic price.

In

that case every farmer when

he

s e l l s

h i s

wheat will

ge t the

fu l l

o f f i c i a l domestic price, except that

as to the

one-tenth which

i s

exportable

s u r -

plus

he

shall receive

t h e

last twenty-five cents

per

bushel

in the

form

o f

scrip*

I f the

l o s s

on

what

i s

exported turns

out to be

less than twenty-five cents

a

bushel

he nay get

something

f o r h i s

scrip;

I f t h e

loss turns

out to be

more

he

l e t s th e Government worry. The scrip, yo u will understand, i s bought f o r cash

at any

post of f i ce , l ik e stamps,

and th e

post offices turn

th e

money

in to the

United States Agricultural Export Corporation.

If you are a

buyer

of

wheat

you

a r e obliged t o have scrip with which to pay the last twenty-five cents on every

tenth bushel.

I t i s

compulsory.

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Unless one is interested in the McNary Bill curiously, a s a piece of ex-

perimental mechanism,

a l l

that

one

needs

to

know about

i t i s

th i s :

I t i s a p ro -

posal

t o

employ

th e

power

and

credit

of the

Government

to

l i f t

t h e

average price

of basic agricultural products. If i t i s not meant to do that it has no point

whatever;

i f i t

were

not

meant

to do

that nobody would

b e fo r i t .

I t i s an

undertaking

to put

profit into agriculture

in

spite

of

excessive

production, in spite of the fact that t h e exploitation of land in the character-

istic American manner creates

th e

potential i ty

of

surplus

in the

f irs t place,

i n

spite

of the

fact that

th e

only natural restraint upon overproduction

i s

loss.

Even more. One comes a t las t to the complete contradiction that th e aver-

age price of agricultural products m s t b e lifted because there i s overproduction.

The

b i l l contains

i t s own

argument.

A ll

these things proposed

to be

done

a re necessary because "there exists a general emergency i n respect of agricultur-

a l commodities." And then i t declares - the bill declares - that t h e general

emergency

i s

owing

to the

existence

of

surpluses available

f o r

export"

and to

th e economic impracticability of immediately preventing th e continued produc-

tion of such surpluses."

Thought

of

limiting

'

production

i s

resentfully rejected

b y a l l

concerned,

f o r three reasons: Fi rs t, i t is too simple; second, i t i s impracticable; third,

i t i s

impossible. That

is to say,

agricultural production mast

not be

subject

to

that restraint which regulates every other kind

of

production

-

namely,

the

res t ra in t of loss.

In

North Dakota

th e

true problem

is how to

diversify agriculture-

how to

induce wheat growers

to

bother with pigs

an d

chicken*, milch cows

and

bees,

in

order to feed themselves. Necessity i s the only inducement t o which they have

7/17/2019 frsbog_mim_v20_0330.pdf


responded. One crop f o r money - that i s what they want.

Farmers a re united fo r t h e McNary Bill. The Department of Agriculture is for

i t . A l l t h e agricultural minds of Congress a re behind i t . Many more Western

business men, even bankers, than yo u might suppose a re f o r i t , on the ground that

i f i t helps agriculture, no matter how, it will help them to o. The b i l l includes

the

th e hated millers and/horned packers. I t had to do th is , f o r obviously they could

not btiy grain an d cattle from th e farmers a t the high ratio price and sell flour

an d meat products abroad a t the world price; and if they could not do this they

would hot buy from farmers more than enough to supply the domestic demand. So i t

i s provided that th e millers and packers may buy at th e high ratio price and then

sell their exportable surplus

of

flour, hams, sausages, bacon,lard,

and so., on, t o

th e United States Agricultural Export Corporation.

Are We Farmers a t Heart

And what the farmers ar e for i s not the McNary Bill a s such. They a re f o r

th e doctrine i t embodies. A b i l l by any other name that went nmch further with

the

same doctrine would

be

more acceptable.

The

doctrine

i s

that agriculture,

as i t has been and is and wants to be without change, shall be made to pay as a

matter of public policy. The marginal farm and the marginal fanner shall be

saved fo r t he sake o f a l l that structure of exploited land values, and a t th e

same time th e farmer shall be saved from drudgery an d boredom in virtue of the

great money-crop idea.

The farmer is not alone to blame. He i s perhaps th e least t o blame. His

re la t ion to the soil, wherein i t i s uneconomic, is an e f fec t , not a cause.

7/17/2019 frsbog_mim_v20_0330.pdf


- 3 3 -

The

United States Government through

th e

Department

of

Agriculture,

and the

states through their agricultural colleges, have spent vast sums

of

money

to

propagate

t h e

thought

of

money cropping,

of

specialization,

of

industrial methods

as

applied

to

agriculture,

a l l t h e

emphasis

op

production, with

a

shabby imita-

tion of city culture a t th e end . The one thing that has not been sold to the

farmer

i s

farming

- the

agr icul tural l i fe

f o r i t s

spir i tual sa t isfact ion

as a

manner of l iv ing . Do you say i t ha s not these sat isf act ioms? Then a t heart

we are not farmers. That may be i t . And y et , half of us ar e on th e farm. Of

that half of us, only about 20 per cent a re in serieus trouble. Al l the cobmo-

tion relates

t o

that

20 per

cent . They

are the

marginal people . Their costs

a r e

high, their efficiency

is low,

they have planter notions uader

a

high wage

system, an d they make th e surpl us. There i s about the same percentage of mar-

i n

ginal people in shopkeeping,/manufacturing, in any f i e ld of human ac t iv i ty . Only

i n

agriculture

i s the

question

of

their survival

a

pol i t ica l issue.

One

wonders

what would happen

to

American agriculture

i f

only

i t

were

l e t

alone.

Documents

frsbog_mim_v20_0330.pdf