Evening Star Newspaper, August 18, 1929, Page 22

CONNALLY UPHOLDS PYPORT DEBENTURE Demands “Square Meal” for Agriculture, in Radio Forum Address. . (Continued From First Page.) ury will issue him a certificate for one- half of the tariff rates and he can tender that certificate at the customs- house in payment of tariff duties upon s, P will raise the price of farm prod- ucts, Senator Connally contended, stimulating competitive buying between exporters and domestic buyers, who will be forced to meet the exporters’ price. He explained that the plan would not take any money out of the Treasury, but would intercept customs duties on their way to the Treasury. Summing up the case, Senator Con- nally said the farmer’s economic ills are fundamental and cannot be cured by “dieting.” He asserted that agriculture is “tired of eating at the second table after other industries have “rfid their appetities,” and the farmer has had enough of “hot air and sunshine,” need- ing now “a little service himselt.” Senator Connally’s speech in full follows: Connally’s Address. Ladies and gentlemen of the radio audience: In view of the wide discussion of farm relief in the press, in Congress, on the stump, in college debates and around the stove in every country store in the Union it would seem that the term “farm rellef” would suggest something definite and concrete. It is the sad but simple truth that such is not the case. Agriculture is sick. The symptoms of the patient are apparent. Yet the doc- tors cannot agree upon the remedy or treatment. The Government of the United States, however, is committed to some form of legislative relief. Both major political parties have made officlal pledges to furnish relief. It is acknowledged that agriculture 1s not upon a plane of economic equalily with other industries in the United States. In recognition of this fact the latform of the Republican party made ts pledge to the American farmer in the following words: “The vigorous efforts of this adminis- tration toward broadening our_exports market will be continued. The Republi- can party pledges itself to the develop- ment of measures which will place the agricultural interests of America on a basis of economic efiunmy with other industries to insure its prosperity and success.” Cites Proof of Drepression. As affording substantial proof of the depression of agriculture it may be shown that the farm po{:llflon of the United States at the beginning of 1929, according to the annual estimate of the Bureau of Agricultural Economics of the Department of Agriculture is the smallesy for the past 20 years, and in all probability for the past 30 years. On January 1, 1910, the farm population was 32,076,960 and on July 1, 1929, it was 27,511,000. In the bureau’s survey for July, 1929, it is shown that, taking the 1910 to 1914 period as a basis of 100, the prices paid by farmers for commodities ‘used in living rose from 98 in 1910 to 162 in 1928. His production commodity costs rose from 98 in 1910 to 146 in 1928, Farm wages rose from 97 in 1910 10 169 in 1928, His taxes increased from 100 in 1914 to 254 in 1926. For the same period, the average of 30 items of farm products rose from 103 in 1910 to 139 in 1928. Against this the prices paid by farmers for commodities bought rose frome 98 to 156. The ratio of prices received to prices paid declined from 106 in 1910 to 90 in 1928, or about 15 per cent. The bureau’s survey of farm yeturns showed & slight increase for 1928 over 1927. Reports from 11,851 owner-operated farms in all parts of the country show an average net re- turn of $1,33¢ for 1928, as compared with an average return of $1,290 on 13,859 farms in 1927. The average size of the farms reporting for 1928 was 284 acres, with an average investment of $15,417. No tenant farms were includ- ed. Receipts less cash expenses aver- aged $1,090, in addition to which the farmers used hame-fnwn food products at an average of $260 at farm prices. The value of fuel and house rent was not reported. The total expenses do not include any allowance for the labor of the farmer and his family. A net yeturn of $1,334 on a $15,000 farm in- vestment and on the labor of an entire farm family is rather conclusive evi- dence that the farmer is not on a plane of economic equality with industry. Buys on Inflated Domestic Market. ‘ Efforts to give rellef by some device #0 make the tariff effective on farry roducts have been based upon the fact hat the farmer must buy in an arti- ficially inflited domestic market, while e must sell his products in a world- free highly competitive market. This s undesirably true in the case of those crops of which we produce a surplus above domestic consumption. The most notable are cotton and wheat. In the case of farm products of which we produce less than the domestic con- sumption, the protective tariff can be made effective in some riggree. The tariff cannot ie' made effective on exportable nur?iuses. ‘The surplus, undér the necessity of export, must meet in the world market the competi- tion of similar articles wherever pro- duced. The exportable surplus reacts upon the domestic market and forces down the price to approximately the world level. ‘The farmer's production costs have wvastly increased. 1In earlier times we possessed large areas of virgin and cheap lands. The increase in land values constituted the farmers’ profits. Values Nave ceased to climb. They have de- clined. Fertility of soll has deteriorated, ‘with consequent expense of fertilizer and added labor costs in its use. . What were once regarded as luxuries have Decome necessities and have increased the farmer’s expenses without propor- tional increase in his returns. Under the transportation act, freight rates, both on what the farmer sells and what he buys, have radically increased. Btate and local taxation has mounted rapidly within the last two decades. Farm lands are visible property. The tax gatherer can easily Z;caie them. Syricultural States are 4he “nauen ‘of taxation. Roads, #chools and public improvements cost mmore than formerly. e degree of rellef may be secured through revision of State tax laws by placing alarger Proj of taxation on 'intangibles and income-producing sources of rev- ‘The wide use of automobiles ways and the cost and the same ought not be borne chiefly by local taxing units. ~Another difficulty lies in the fact that millions of farmers, each conducting s separate agricultural unit, cannot be effectively organized as Industry is highly organ- 1zed. tely Ml"m pro- duction to demand. Much of its oper- ating costs can be reduced by slowing production. The farmer, He must go on producing from year. m"mnmm of ducers are active compet with each other. Un r?.henrfl!ormglm of farm relief competitive condif among farmers will continue in-some degree. ln-‘llu- of Co-ops Is Handicap. Co-operative marketing associations of farmers haye been organized in an effort to give the farmer greater mar- keting power. However, relati smell number of farmers within suc] arganizations has so far made it im- n '31- mmmtyol major 5 ‘ence on el cTops. bills considered by Con- SENATOR TOM CONNALLY t Texas, seated before a microphone of the Columbia Broadcasting Co., over [ which he broadcast an appeal for the farmer in The Evening Star's National Radio Forum last night. ‘He urged the adoption of the export debenture plan, which was defeated in Congress when the farm relief bill was under consideration. —Star Staff Photo. gress in recent years were in theory intended to make the tariff effective on farm products and to provide him with a better marketing system. The Mc- Nary-Haugen bill sought to maintain the” domestic price above the world price by the exclusion of foreign im- ports, and through the purchase of the domestic surplus and exporting it abroad and dumping it on the world market at whatever price could be obtained. The losses sustained through foreign sales | were to be recouped by an assessment | of a fee or tax upon each unit of farm products produs in the United States. The fatal objection to the McNary- Haugen plan was the equalization fee. It was urged with great force that the fee without any limitation in amount could not legally be levied by the board. During the presidential campaign of 1928 the present administration prom- ised to call a special session of Con- gress to enact a farm relief bill. The administration measure has been en- acted by Congress, a farm board ap- ted and is now engaged in admin- tering the act. Plan of Relief Is Outlined. ‘The plan of the measure, briefly stated, is the creation of a Farm Board of nine members, including the Secre- tary of Agriculture, and to place at the disposal of this board a revolving fund of $500,000,000 to aid in the mar- keting of farm products. Its operations are practically restricted to making loans to co-operative marketing asso- clations of capital with which to con- duct their operations. It relates only to the marketing phase of farm relief. Commodity stabilization corporations may be organized by co-operative so- cleties to purchase, store and market agricultural products. The board may not directly purchase, store or market commodities. However, such commodity stabiliza- tion corporations may not only handle the products of the members of the co- operative socleties which own and con- trol them, but they may go into the open market and engage in the general “Zenith” purchase and sale of the particular commodity. It is proposed to have created a stabilization for each major farm com- modity. The Farm Board at a meeting in Chicago on July 26 and 27 conferred with officials of farmers’ grain co- operatives with a view to the organiza- |tion of a farmers' national grain cor- poration. The creation of such a cor- poration with a capital stock of $20,- 000,000 is planned. The co-operative so- cleties and farmer-owned and farmer- controlled co-operative institutions for the marketing of crops are to own and control it. It is to be eligible for loans under the farm rellef act. The cor- poration will havé authority to provide central marketing facilities and sales services for the handling and distribu- tion of all types of wheat and other grains on behalf of its stockholding members. It may conduct stabilization operations in open grain market with the approval of the Farm Board. It will havs power to buy grain from its member stockholders and sell the same for its own account. It may lease, pur- chase or construct storage and other facilities. It may make loans to co- operative companies and pools to finance the products of farmer members. -It is also provided that no liability shall rest on the stockholding members beyond the value of their stock subscriptions. The general purpose of the corporation will be to supply a cengal national mar- keting organization for all farm co- | operative societies whose members are engaged in the production of grain. There is no doubt that the organiza- tion and efficient management of such a corporation will have considerable in- fluence in stabilizing the wheat market and improving marketing conditions generally. On July 31 members of the Farm Board met representatives of cotton co- operative societies at Baton Rouge to discuss the cotton situation. Repre- sentatives of some of the cotton co- operative societies are now in Washing- the an %m already e above that of . When the administration desires to aid the manufacturing indus- tries it does not “a better mar- d | keting systegy,” it gives them a higher on, the receive the benefits Congress intended under the farm relief act. Federal Farm Board can render the cotton growers a great service by &fi:&nnmtm alt on}:c o‘;“ ‘cotton m; lon corporations. for the purpose o handling the 1929 crop. Out of the revolving fund of $500,000,000 the board should set aside a. fund sufficient to properly finance such stabilization cor- porations in order that they may be able to_ enter the cotton market im- mediately, or whenever necessary. One of the functions of the Farm Board is to supply leadership and organization in the fleld of farm relief. The great mass of farmers are not organized into co-operative societies. Ho"}’le':a l:lt cot- e the lopt a broad and liberal policy with relation to the hand- ling and marketing of the cotton crop. The value of the cotton crop of the South is at least $1,500,000,000 annually. More than half of the total yield of cotton is exported to foreign.lands. The United States produces 60 per cent of the world's supply of cotton. It ought to be able to 50 control the price as to maintain it at a fair and just figure. ‘With 60 per cent of the world supply in his hands the cotton farmer ought not be at the mercy of a forced mar- ket controlled by those who buy. It will require ample capital, good busi- ness judgment and accurate knowledge of the world market to render the neces- sary aid in stabilizing the cotton mar- ket. The cotton farmer is entitled to this service. Of all the branches of agriculture cotton has derived the least benefit from the Government. Cotton farmers have never received any benefit from the tariff, but have borne the burdens of the tariff on other industries. | is In hard times they have never received Government ald. They have furnished the United States with one of its chief export commodities. The Federal Farm Board should set up stabilization cor- porations to aid the cotton producers. It ought to be done and it ought to be done now. ‘The Farm Board has an- nounced that co-operative socleties handling wool and societies handling other commodities are to organize simi- lar stabilization corporations to market their respective commodities. No Loans to Individuals. ‘The farm reliéf act only deals with the marketing problem. It deals with that only_through the co-operative so- cleties. The board will not directly engage in the purchase, storage or sale of farm products. It will not make loans to individual farmers. The farmer who is not a member of a co-operative will receive only an indirect benefit through the improvement of the general market situation. The act touches only the marketing problem. It does not deal with the fundamental question of giv- ing the farmer the benefit of the tariff on his exportable surpluses. That is necessary if agriculture is to be placed “on a basis of economic equality with other industries,” as pledged in the presidential campaign of last year. With a perfect marketing system, farm prod- ucts of which we produce a surplus must still compete in the world market. Congress is now considering a tariff bill for the relief of industry generally. provided growers of cotton cannot |be the expense of the consumer. “Loans to co-operatives” deal in manufactured products will not meet the situation. The farmer alone must be contented with a board “to help the farmer help himself.” ‘When the farm relief bill was pend- ing the “debenture plan” was proposed as an amendment. The Senate adopted the amendment over the vigorous pro- tests by President Hoover and Secretary of the Treasury Mellon. On a record vote it was defeated in the House, in leeormumdmee with plans of the adminis- ‘What is the principle of the export debenture plan? That plan is based uj the theory that since the farmer must sell his good: in a world-free tive market he should in theory lowed to exchange in that market manufactured goods and bring them back into the United States duty free. But in order to obviate the mechanics and the practical obstacles which woul be met in such process, it provides that when he exports his products the Treas- ury will issue him a certificate for one- half of the tariff rates and he can ten- der that certificate at the customhouse in payment of tariff dutles upon im- ported goods. ‘Turning the Tariff Around. What is that, except turning the tariff around? What is the tariff for? The tarift arily is a device for raising the price. facturer a tariff on his "H”m Why not give the farmer a tariff on his ex- ports? If it is fair to give the manu- facturer a bounty, why is it not fair to give the farmer half of that tariff re- bate or bounty, if you please, upon the i‘xmmn of his products to foreign If & manufacturer cannot compete in the domestic market with importations, we give him an import tariff in order that he may do so. If the farmer can- not compete in foreign markets, why not give him an export tariff to enable him to compete? Alexander Hamilton suggested the ex- port debenture for certain purposes. He justified and defended it on the same theory that he advocated a tariff. . Mr. Hamilton saw clearly that a bounty on exportable ‘Was no more a bounty than a tariff on manufactured goods when it gives to the manufac- urer a higher price and extorts that Ernflc out of the pockets of the people y_force of law. The one thing that the farmer needs, and the one thing the farmer expects something that will increase his price. It {s not denled by economists that the domestic price as well as the fore! price will enhanced practically to the extent of the ex) lebenture. It will raise the price. There is no serious question about that. It will stimulate competitive buying between exporters who may receive a premium on exports and domestic buyers who will be forced to meet the exporters’ price. The plan will not take directly out of the Treasury a single dollar. It will prevent money from going into the . It will intercept customs duties on the way to the Treasury. Let us see if that be an absolutely un- pardonable sin. Whenever tariff rates are raised above a certain point the revenue derived from that article de- clines. Money is thereby shut out of the Treasury; and that is what this plan does, and nothing more. Aluminumware Is Cited. In the case of aluminum kitchen hol- low ware during the last three years under the old law, the revenue collected from duties on aluminum ware amount- ed to $619,000. During the three years under the present tariff law, carrying higher rates, the duty collected was only $228,000. Hence, the present tariff on aluminum kept out of the Treasury $391,000 that would have gone into the Treasury under normal conditions had the tariff not been increased. The debenture plan proposes to ap- rmprhu a part of the revenue derived rom a protective import tariff for the ld | mestic consumption. We give the manu- | porte benefit of domestic industries and em- ploy it to give to certain other domestic industries & similar advantage on their to give back to the farm- same cause by giving tariff benefits to other agricultural commodities. It was estimated that the debenture plan would cost not to exceed $150,000,000 annually. The Government is spending millions of dollars annually to encourage the ex- portstion of American manufactured s. Domestic freight rates are so con- structed as to give an advantage to the e:rorur of -manufactured goods. Steel shipped from Chicago to San Francisco for export costs 40 cents per 100 unds. If shipped for domestic use it costs from $1 to $1.25 per 100 pounds; from Pittsburgh to New York for export, 201; cents, and 34 for do- The rate on agricultural implements from Chicago to San Francisco for ex- port to the Chinese farmer costs $§1 f" 100 pounds. The same shipment, f for domestic consumption by Amer- ican farmers, costs $1.93. Automobiles shipped from Detroit to San Francisco for export pay $2.10 per 100, but if for domestic use cost $4.65. From De- troit to New Orleans for export $1.74 and for domestic $2,39 per 100. These discriminations in rates in favor of ex- d manufactured goods are a form of export debenture. Recently the railroads, at the request of President Hoover, reduced freight rates on grain intended for export. The reduction was nothing more nor less than an ex- port debenture. If it is sound to give an advantage. to manufactured exports, why is it unsound to give an advantage to farm products for export? Farm Labor Competition, Too. We are told by the manufacturer that he cannot compete in the do- mestic market because he cannot com- pete with the pauper labor of Europe. I suggest that every man who, out on the plains of the Dakotas and Minne- sota, raises a bushel of wheat by his toil and the sweat of his own body is competing with another man away out yonder on the steppes of Russia or on the plains of Rumania or Argentina. He is competing with the peasant and the pauper labor of the world no less | than the manufacturer who receives his bounty at the custom house. Every man in the South who goes down the hot cotton row in the Summer and produces that great staple is compet- ing with some man yonder on _the banks of the Nile and with some labor- er on a plantation in India. It we are to protect manufacturers from paupers abroad, it s unjust by the same process to create paupers at home. If it is sound to pay a bounty to protect laborers in the factory, why | is it unsound by a similar process to | protect laborers on the farm. Under the debenture plan the pay- ment of debentures was to be optional with the Farm Board. In times of stress and panic it could be applied. With the establishment of the market- ing machinery which the board is authorized to set up, and with the ex- rt debenture plan tied into that mar- eting machinery, the American farmer would have an agency of real farm relief. The export debenture plan was de- feated. It will be offered again as an | amendment to the pending tariff bill. | The country will hear more of the ex- | port debenture plan. | Farm relief will not be settled until | it is settled right. i ‘The farmer constitutes one-third of the population of the Nation. His in- | come is less 10 per cent of the national income. 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