Evening Star Newspaper, March 28, 1933, Page 6

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SMITH SAYS FARM PRICES MUST G0 UP Senator: Explains; Provisions of Pending Bill in Radio Forum Address. Farm ¢ genavally is to prosp Democrat, or South ht in an address in the Radio Forum, arrangad by and broadcast over a coast- network of the Natfonal | casting Co. | nator Smith, chairman of the Sen- | Acticulture ’ Committee, _explained forts teing made to accomp'ish o5 represented by the farm relief bill which has pasied the House and is bef e prices must advance if the | r, Senator | - bill, Senator Smith | s 1y to cotton, and d to restrict production, while ame time com ting _the under an arrangement by which | t from the sale of the | held by the Government. | scctions of the measure m produce generaly and em- y two princi One of these is | of land by the Government | duction and the other to in- prices by g the manufac- T of raw mate Text of snuhe Address, text of Senator Smith's address farmer he v ince the terrific market in 1929, 1 de panic and crash of the stock i in a nation- n unprecedented loss in values, efforts have been made by Congress to relieve the situation. The values of securtties of all kinds de- p drastically that our trans- our banking system nsurance companies were tened with failure. s situation, Congress | is known as the Re- uction Finance Corporation with b tal of two billion dollars. heped that by ‘thus liquifying assets of these institutions tide of depression would be the situation did not im- itinued until it reached e when the moratorium 4. As a result of hasing power amongst the 2ployment has reached ap- . Various measures were some of them were passed, of relieving the tragic con- he condition of labor erially changed. Bills d looking towards the the banking situation and | now conceded by all question that before any { can come, before pros y a degrec may be. restored, must be a radical advance in com- prices. especially in the prices of products. More than a_third of ion of the United States are dependent upon the farm for | ood and from’ the proceeds | farm for their purchasing power. | cts have suffered more in price levels than perhaps e commercial article. As an tion of what loss in value farm | we suffered: in 1929 the cotton erica brought one billion five million dollars: in 1931 a crop nately the same size brought d million dollars. In other the price fell from an average 1 18 end 20 cents per pound to nd 6 cents per pound. Wheat suf- tic drop in price. From hel it fell to an and 30 cents per ® produc including grain of all description, truck condition unparalleled in country. In 1929 the | irm crops was $8,900,- $3,000.000,000. | be seen that such & n five and six billion dol- | asing power, Tesulted in x alone to farmers them- s, but to every institution in Amer- | The production of the field is the duction of wealth in this coun- | « production of the flelds, of the of the mines are the only from which real wealth 15 de- | A profitable price to these means ition of wealth, or the dis- | on of money rather, amongst the | 1d this in turn makes possible | and distribution of manu- cles. Hence, the restora- erative prices on these is absolutely necessary for a on of prosperity in this country. to this end, there has been intro- duced 1gress a bill known as the bill. It has passed the i 1s now pending before the Synopsis of Farm Bill. my purpose to give a synopsis of | Title I of this bill relates en- | on. Title I is the bill I d in the preceding Congress. | passcd _both ses but was not | by the Pr The public is I r with this. Cotton a unique position among agri- products. The amount of cot- eds domestic consump- ge of 55 to 60 per cent on crop is exparted. Americ hes about 70 per cemt of all the cotton consumed outside of | America. On account of the depression, the resulting under consumption has| raused the accumulation of a surplus | at that its presence makes prac- impossible any substantial in- | in price until this surplus shall iced. The Government has ed some two and a half or three on bales which it now has virtually l in its possession. Title I of the bill now pending before the Senate author- | izes the Secretary of Agriculture to sell | on credit to the cotton farmers this cot- ton in lieu of their producing a like amount. Accordi to the Agriculture Department the present price of cotton s from $30 to $35 a bale below the cost of production This plan proposes that the Government sell to a farmer a cer- tain per cent of this cotton under a& contr with him that he will reduce his production this year a like per cent. To illustrate, a farmer who produces ! 100 bales of cotton. takes 50 bales of this Government cotton and reduces his production to 50 bales; thus when the | Fall comes when cotton is sold he will | have the normal amount to sell, namely | 100 bales, 50 bales of which the Go ernment has furnished at a price far below the cost of production and the 50 bales which he has produced. When the Government disposes of the 60 bales allotted to the farmer the Goverriment deducts the aggregate amount that the cotton represents at the price it was sold to the farmer plus the necessary overhead since the date of purchase and remits to the farmer whatever profit there is. Under this plan, if carried essfully, the surplus will be re- two and a half to three mil- lion bales and production will be re- duced by a like amount. The great in- ducement to the cotton farmer to avail himself of this plan is that he gets a per cent of his crop already made below the cost of production and whatever material advance in price may result from the reduction of surplus and pro- duction, will be clear gain to him witl out any loss whatever and will relieve the government of the danger of tr ing to dispose of this cotton on the market with the possibility of another average crop being added to the al- ready burdensome surplus. This plan has been practically unanimously en- dorsed by cotton men from producer to manufacturer. In handling this propo- sition it requires practically no appro- priation by Congress. I confidently believe that had the Government purchased the = surplus wheat and cotton a year ago and of fered it to the farmers in lieu of pro- duction as provided in my plan, it voug have been means of relieving the st Bon and possibly obviated the dis- !aster that has occurred. 'that in le Carolina | 8 SENATOR SMITH. —Star Staff Photo. This is Title I of the bill. Title 11 of the bill is complex. This title was prepared by the Department of Agriculture and was introduced as prepared, for consideration by the House of Representatives and the Sen- ate. 1 will here read the declaration of policy as appears in the bill: “Declaration of P “Section 2. It is hereby declared to the policy of Congress (1) To establish and maintain such balance between the production and consumption of aggicultural commodi- ties, and such marketing conditions therefor, as will re-establish prices to farmers at a level that will give agri- cultural commodities a purchasing power with respect to articles that farmers buy, equivalent to the purchas ing power of agricultural commodities in the pre-war period, August, 1909- July, 1914; and 2) To approach such equality of purchasing power by gradual correction of the present inegualities therein at s rapid a rate as is deemed feasible in view of the current consumptive de- mand in domestic and foreign mm'kel: “(3) To protect the consumers’ in- terest by readjusting farm production at such levels as will not increase the percentage of the consumers’ retail ex- penditures for agricultural commodit or products derived therefrom, which is returned to the farmer. above the percentage which was returned to the farmer in the pre-war period, August, 1909-July, 1914 There are two principles involved in Title II, namely, the leasing of land by the Government to reduce produc- tion, and the other, the so-called allot- ment plan, to increase prices by taxing the processor, which means, of course, the manufacturer of raw material. I shall attempt to outline as clearly as may be these two principles. 1 per- sonally feel that the bill would be more effective and with more uni- versal approval if of the two principle in Title II, that the allotment and licensing feature were eliminated and the leasing principle applied. However. I shall anelyze the two as fairly as I may for the benefit of the listening public. One is a reduction of acreage or production by le 1% of lands by the Government, the farmer to be paid for ‘the acreage leased to the Government It is not clearly defined in the bill what shall be the character of the land thus leased, I mean by the character of the land, the so-called marginal land or lands that are relatively highly produc- tive. It is to be assumed that the Sec- retary of Agriculture in leasing these {lands would see to it that only such land should be leased as would by their removal from production decrease prop- erly the production of the commodity sought to be reduced. In order to ob- tain funds to pay the farmer for lands thus leased it is proposed under the leasing provision of this title to levy and collect what is known as a process- ing tax, that is, that every processor or manufacturer of farm products shall pay a tax, which tax shall be regulated by the Secretary of Agriculture under his estimate of how much money in | the aggregate shall be needed to pay for | the lands thus leased. Agents are then supposed to survey the different lands used in the production of different crops and enter into contracts with the land- owners for the leasing of these lands. The owner of the land is to be allowed to plant on these leased lands such | crops as do not enter into market com- petition with other staple agricultural crops. He can, however, plant such | crops if they are for his individual or farm use. The amount of land esti- mated to be under cultivation in Amer- fca is 350 million acres. It has been suggested that the amount necessary to be leased or taken out of cultivation would be 50 or 60 million acres. There- fore, the aggregate amount of taxes to be levied and collected from the pro- cessor would be an amount sufficient to pay rent on this amount of land. Just what amount would be the | rental per acre is not specified in the bill. This, of course, would be at the discretion of the Secretary of Agri- culture. This plan is based on the idea | that it is necessary to reduce produc- | tten to the point where the law of sup- ply and demand may the more fully op- erate. It seems to be the universal opinion that a reduction in production | is essential to the recovery of farm prices. The Allotment Plan. The second principle is what is known as the Allotment Plan. This plan provides that there shall be a tax levied on the processor or manufacturer sufficient ultimately to bring the price of farm products domestically consumed up to parity that existed between farm prices and the price for commodities that the farmer has to buy that existed between 1909 and 1914. This tax levied and collected frcm the producer shall be added to the price that the farmer is | now receiving for his products, thus giving him for that part of his products domestically consumed a price repre- | senting the parity that existed between | what he sold and what he bought be- | tween 1909 and 1914. To illustrate, if cotton during the p-riod selected for | parity bringing 12!, cents, a tax | 5 | would be laid upon the processor which, | ted, added to the of ‘cotton, would of cotton domes- when levied and coll present current price bring that portion tically consumed up to cents. The exportable surplus, of course, to be dis- posed of, if disposed of, at the world's price of cotton. The present price of cotton is around G cents per pound, therefore, the ultimate tax upon the processor would be around 6 cents per pound or $30 per bale for such cot- ton as is domestically consumed. This is the purpose of this proposed legisiation. The bill, however, provides ving and collecting this tax | to attain the ultimate object, due re- | gard must be given to the effect that such a tax and such a rise in the price will have upon the consumption of the | product. In other words, it proposes | to take care of, as well as may be under the circumstances, the consumer. Also, | due consideration must be given in fix- | ing these allotments to wage scales, | employment and unemployment in the cities. Also changes in the consump- tion of the agricultural commodity it- self and other commodities. Third, as indicated above, evidence derived from | statistical studies of supply and demand | for previous periods. which indicate the | change of consumption of the com- | | fective - | Thus, it would be seen, that the object modity which would normally occur in | consequence of a particular change in the cost of processors or consumers. Fourth, every relevant data as to changes in the cost of living of con sumers, consumers’ buying habits, and current and prospective conditions per- tinent to determining the probable ef- demand for the commodil is to attain the parity indicated in the | years selected for this parity, 1909 to | 1914, subject to the conditions affecting such parity as are indicated in the con- | ditions set forth. In the case of wheat, the parity indicated would be 90 cents | per bushel, that is, the processors of wheat would be taxed to the amount | of the difference between the present price of wheat and 90 cents per bushel for that part of the wheat crop which is domestically consumed, subject. &' course, to the same factors that I have enumcrated above. As previously set forth, in order to effectuate the prin- ciple of this allotment, the Secretary of Agriculture is empowered to enter into marketing agreements with processors, associations of producers and other agencies engaged in the handling, in the current of interstate or foreign commerce of any agricultural com- modity or product thereof after due no- tice and opportunity for hearing to in- terested parties. He is also authorized at his discretion: “(3) To issue licenses permitting processors, associations of producers, and other agencies to engage in the handling, in the current of interstate or foreign commerce, of any basic agri- cultural commodity, or preduct thereof, or any competing agricultural com- modity or product thereof. Such licenses shall be subject to such terms and con- ditions, not in conflict with existing acts of Congress or regulations pursuant thereto, as may be necessary to elim- e unfair practices or charges that prevent or tend to prevent the effec- tuation of the declared policy and the restoration of normal economic condi- tions in the marketing of such com- modities or products and the financing thereof. The Secretary of Agriculture may suspend or revoke any such license. after due notice and opportunity for hearing, for violations of the terms or conditions thereof. Any agency engaged in such handling without a license as required by the Secretary under this section shall be subject to a fine of not more than $1,000 for each day during which the violation continues. “(4) To require any licensee under this section to furnish such reports as to quantities of agricultural commodi- | ties or products thereof bought and sold and the prices thereof, and as to trade practices and charges, and to keep such systems of accounts, s may be neces- sary for the purpose of this act.” Quotes Text of Bill. In order to carry out effectively the provisions of this principle, I quote the exact text of the bill in this respect: “The Secretary of Agriculture is authorized, with the approval of the President, to make such regulations with the force and effect of law as may be necessary to carry out the powers | vested in him by this act.” Still further quoting: “The Secretary of the Treasury | is authorized to make such regulations | as may be necessary to carry out the powers vested in him by this act, in- cluding regulations, with the force and effect of law establishing conversion, factors for any commodity and article processed therefrom to determine the | amount of tax imposed with respect |l- For a Limited Time—Henderson Offers— Custom-Made Davenports At Extremely Low Prices Your choice of Either Davenport Strictly Custom Made Davenports. We’ve Ever Been Able Each davenport represents the very highest type of con- Cushions are filled struction. of piece filled with black South American horseh ing lasting satisfaction. May be had in a selection of plain and fi.und materials in various colors. We suggest your immediate investigation of this wonderful value . . , Typical of the many now found here. James B. HENDERSON FINE F#RNITURE 1108 G St. N.W. e | n qnounr “The action of any of- ficer, -employe or agent in determining the amount of and in making any rental or benefit payment shall not be subject to review by an officer of the Government other than the Secretary of Agriculture and the Secretary of the Treasury.” y. The bill provides that the Becretary of Agriculture may appoint such officers and etoployes, subject to the provisions of the classification act of 1923 and acts amendatory thereof, and such experts as are necessary to execute the func- tions vested in him by this act; and the Becretary may make such appointments without Tegard to the civil service law or regulations. Thus, it will be seen the broad and drastic powers given the Secretary of Agriculture and the Secre- tary of the Treasury to administer this act. The allotment plan also provides that in order to protect the farmer and the processor there shall automatically be placed, in addition to the tariff then existing on that product, an increase in such tariff equal to the tax imposed upon the processor. To illustrate, if the tarif on wheat is 42 cents per bushel and then the tax imposed upon the processor, in order to raise the price of wheat to the proper parity, is 48 cents per bushel, then the tariff on im- ported wheat becomes 90 cents per bushel. Where there is no tariff on an article thus taxed, a tariff shall be levied equal to such tax. To illustrate, if there is no tariff on upland cotton and the tax should be 4 or 5 cents per pound, then the tariff on such cotton imported would be 4 or 5 cents per pound, or $20 or $25 per bale. In relation to the allotment provision as to cotton it might be well to indicate what would be the result of the appli- cation of this principle at the present time on the average price of cotton. If 50 per cent of the cotton is consumed |at home and 50 per cent exported, then the average would be the $60 per bale for that domestically consumed and $30 per bale for that exported, which would be an average of $45 per bale, or 9 cents per pound, less, of course, incidental ex- penses and factors affecting consump- tion. This, of course, if realized would add something to the value of cotton as compared with the present price, but would be totally inadequate to relieve the situation. 1 have tried to give a fair synopsis of the pending legislation. I congratu- late the public on having the splendid medium of the radio for information | from those who are engaged personally as their representatives in framing leg- islation. The Modern Corporation Property A 4 4 444 4 4 ] and Private by A.A.BERLE and G.C.MEANS “More worth stadying than the assembled literature of *all the technocrats, com- munists and orthodos econ- omists combined.” —N. Y. 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