The Case History of Wheat

I

THE American people have a 57-billion-dollar farm investment in land, buildings, implements, and livestock. This investment is spread over almost seven million farms inhabited by approximately 32 million people. We who live in the bread- and meat-producing West believe that a flourishing economic condition cannot be attained permanently for the nation until these 32 millions are reasonably fortunate. We contend that the road back to a sound prosperity for all the forty-eight states must start from the farm.

Today Agriculture is sick. She complained as long ago as 1920, grew decidedly worse in 1929, and has been rallying and relapsing since. To diagnose her case, we should, among other things, study her case history. Because of space limitations this article will not attempt a study of all farm commodities, but will be confined chiefly to wheat, which will provide a fairly accurate index of the condition of other crops.

To begin, we will examine the price trends of the last seventy years. These will show the average prices to the average farmer for each period as calculated from the statistical reports of the United States Department of Agriculture. The price levels for the seventy years align themselves into five groups: —

Analyzing these groups further, we find that during the 1870-1881 period the price of wheat fell below a dollar for three different years, but that the prevailing price was above a dollar. During the thirty-four years of the 1882-1915 period, the level of prices at no time reached a dollar and the lowest point was 49 cents in 1894. Within this period came the hard-times decade of 18901899, during which the average price was 65 cents. The year 1916 is omitted because it was a transitional year between 96-cent wheat in 1915 and $2.05 wheat in 1917. The war boom lasted only three years and was followed by dollar wheat again through the 1920’s.

During the depression period of the 1930’s, wheat rose above a dollar only in 1936, when it was quoted at $1.03 to the farmer. The year 1932 brought us our all-time low of 38 cents. After the high point of 1936, the price declined again, leveling off at 55 cents during 1938 and for the first eight months of 1939. Owing to the European War and drouth, the price again rose in September 1939, and the year closed with wheat at 82 cents, which resulted in an average for the year of 68 cents. It is conceivable that another general war will once more bring back two-dollar wheat in the 1940’s, but farmers do not desire a boom at so frightful a cost.

In our table we have calculated the average price for 1930-1939 at 72 cents, but the statistical tables do not take into consideration the gold deflation of 1934. Should we take the value of gold into account, then the average for the 1930’s would be 53 cents, 12 cents below that of the hard-times period of the 1890’s.

Farm prosperity, however, cannot be reckoned wholly in terms of prices. The medico-politicians who have been prescribing panaceas for the restoration of agricultural health are agreed that the five-year pre-war period was a golden era. The average price of wheat for those five years was 88 cents. At that time a bushel of wheat could buy a Sunday shirt of a certain standard of quality. But while wheat has gone down, shirts have gone up. Last August three bushels of wheat were needed to buy a shirt of the same quality.

The medico-politicians assert that by restoring the purchasing power of agricultural commodities to that of the prewar years — 1909-1913 — a healthy economic condition will be restored to farming. Therefore all the chief prescriptions written for Agriculture since 1920 have had as their purpose the restoration of pre-war parity. As the time for the 1940 election draws near, political speakers of both the major parties tour the agricultural districts promising parity. They intone that word ‘parity’ with the same affectionate unction that an old-time medicine vender of my childhood days always used when mentioning that greatest of all elixirs in his pharmacopeia — Sagwaw, the secret prescription for which he obtained from a Kickapoo Indian.

Congress gave Agriculture her first dose of Sagwaw in 1929, and that happens to be the year in which prosperity for 32 million people began to decline most rapidly. We therefore have reason to suspect a relationship between the bilhon-dollar medicines we have borrowed money to buy and the relapses which have beset our patient.

II

First of the series of farm cure-alls was the McNary-Haugen prescription, which was designed to raise prices to parity through getting rid of surpluses in agricultural commodities. This was to be done by dumping the surpluses upon the world market for any price they would bring. Thus would be created a domestic shortage and higher prices. The McNary-Haugen idea was debated for two years before it passed Congress in 1927. It was vetoed by President Coolidge and is important here only because of the argument used by Coolidge in his veto message. He asserted that the remedy was worse than the disease and that it would defeat its own objectives.

He warned not only against McNaryHaugenism, but against all such schemes. Nevertheless Congress, in 1929, enacted the Agricultural Marketing Act, sponsored by President Hoover. This act provided for the creation of farm coöperative associations to be financed by the government through a revolving fund. Farmers were invited to join these coöperatives, which would handle the commodities of members and hold them off the market until prices rose to parity. Farmers were asked to cut their acreages voluntarily and thereby reduce surpluses.

I need not recite the details of how the farmers produced more instead of less, how vast stores of commodities accumulated in warehouses and served to depress the markets, how wheat prices fell to 38 cents a bushel, and how in the end the coöperatives went into receiverships and the government lost its revolving fund. Of course the defenders of the Agricultural Marketing Act tell us that the depression was to blame, but, since agriculture suffered more than anything else, is it not possible that the act may have been a contributing cause to the depression?

After four years of the AMA, Congress enacted the Agricultural Act of 1933, sponsored by President Roosevelt and his advisers. A part of this act was held unconstitutional, but new measures were promptly substituted and the Agricultural Adjustment Administration has remained in effect for seven years. Under this act the restoration of parity is sought through reduction in acreages and a resultant decreased harvest, which would tend to starve the country into paying higher prices. Instead of depending on voluntary action of farmers to accomplish crop reduction, the AAA pays for not growing crops. Prior to 1933 it was customary to export our surplus, and during the decade 1920-1929 our wheat exports averaged 214 million bushels a year, including flour. But under the AAA it was planned that we should have no surplus and we deliberately abandoned our foreign market.

Since we intended to grow just enough for domestic requirements, a tariff of 42 cents a bushel on wheat and similar tariffs on other crops would prevent importation of farm products from abroad, and thus our price, theoretically, would rise above the world level to the extent of the tariff. Scarcity was attained in 1936, not through the AAA, but through drouth. In fact, we created so great a scarcity that 47 million bushels of wheat crossed the tariff wall that year to enter our markets. No such scarcity has been attained since. Owing in part to the stiff-necked farmers, who refused to curtail acreages even when paid to do so, and in part to the grace of God, who sent rains at exactly the right time to bring us an abundant harvest, the American farmers threshed 930 million bushels of wheat in 1938. It is interesting to note that the amount of land allotted by the Department of Agriculture to be seeded to wheat for 1938 was 55 million acres. The farmers, however, sowed 80 million acres and harvested 70 million.

Confronted with such a vast surplus, the Secretary of Agriculture resorted to the old McNary-Haugen prescription of dumping the surplus on the world market. He paid bonuses to exporters who would transport wheat or flour overseas and dispose of it at a loss.

Here an unforeseen difficulty arose. When America withdrew from the export market, other wheat-producing countries increased plantings of wheat in anticipation of gaining that trade. They not only produced enough to fill the void caused by American withdrawal, but produced more than enough. The world market was already glutted when we began to dump our surplus. We did manage to rid ourselves of 118 million bushels, but the dumping of that amount on an already depressed world market sent it to lower depths.

When the world market went down, ours also declined in sympathy. We therefore counteracted our own plan and proved that the McNary-Haugen prescription works against itself. Since 1938 matters have improved slightly. Drouth in the Western plains, not the AAA, reduced our 1939 harvest to 739 million bushels. We still have a burdensome carry-over, but relief is promised in 1940. A severe drouth at fall seeding time in 1939 will probably reduce the harvest in the hard-winter wheat belt, including the great wheat region of Kansas, Oklahoma, Texas, Colorado, and Nebraska, to approximately half of normal. In anticipation of a short 1940 crop, wheat has risen in price since September, owing to speculative interest.

Seven years of the AAA not only have failed to bring parity. They have not even reduced acreages, though we have paid good money out of the government treasury for this purpose. More wheat is being put into the ground today than ever before. We have even exceeded the heavy plantings of the World War years. President Coolidge foresaw this possibility, for in his McNary-Haugen veto message he wrote: —

‘To expect to increase prices and then to maintain them on a higher level by means of a plan which of necessity increases production while decreasing consumption is to fly in the face of an economic law as well established as any law of nature. Experience shows that high prices in any given year mean greater acreages the next year.’

Coolidge could have gone further. Experience also shows that farmers do not wait for higher prices to increase plantings. Even a hope of higher price results in increased acreages in anticipation. Even the hope of the passage of the McNary-Haugen bill in the 1920’s resulted in increased plantings. The Hoover farm plan and the later AAA have always stimulated plantings. In theory, cash benefits should prevent this. Let us see how well the Secretary of Agriculture takes care of those farmers who comply with his allotments and plant no more wheat than he decrees.

1. The complying farmer can place his product in storage and can borrow money against it from the government. Sometimes the government lends him more than the crop would bring on the market. For example, in 1938 the average price of wheat was 55 cents a bushel, but the government lent 60 cents. Later, when the loan matured, the farmers delivered the wheat to the government, which paid for the storage and stood all losses. In 1939 a similar condition existed during harvest time. Again the government lent more than the crop was worth. But in September the drouth and war resulted in increased prices. The farmer therefore sold his wheat in the spring of 1940, paid his loan to the government, and pocketed the profit.

2. The complying farmer also has the privilege of collecting payment for soilbuilding crops. He is paid on the average about $1.50 an acre for growing alfalfa, $2.00 an acre for growing lespedeza, and so on.

3. The complying farmer has the privilege of insuring the next year’s crop. In the fall of 1939, when drouth prevailed at seeding time and when no commercial company would insure a crop in the drouth-stricken states of the hard-winter wheat belt, the government not only stood ready to insure crops, but through local committees put on campaigns urging farmers to insure. Consequently a great many farmers seeded their wheat in the dust, where it has since been destroyed. They are now released from all the worry and expense of harvest in 1940, for they can collect the value of eight and a half bushels of wheat an acre, on the average, next summer.

The non-complying farmers have no such advantage. And yet those who stubbornly resist the government are greater in number than those who accept the bribes. To judge from the number who have taken advantage of wheat loans and wheat insurance, it is probable that at least three fourths of the wheat farmers did not comply either in 1938 or in 1939.

III

I have charged that attempts at crop control have defeated their purpose and have resulted in increased acreages. This is borne out by the statistical tables of the United States Department of Agriculture, as follows: —

Analyzing the chart further, we note that without government interference the farmers reduced their wheat seedings by 22 million acres in the five years after the World War. They were rapidly going back to a balanced agriculture. But promises of the McNary-Haugen advocates in the 1920’s and the farmrelief legislation of the last eleven years have increased seedings to a point 8 million acres greater than in 1919. This becomes more appalling when we learn that 1919 seedings were 10 million acres greater than in any previous year. Differences between seeding and harvest, as shown on the chart, are normally due to killing of the crop by drouth or frost. But since 1933 these differences brought about by nature have been augmented by United States Treasury checks paid for ploughing under a part of the fields!

By the record, crop control must stand indicted for inducing the farmers to abandon safe and sane agriculture. Until the World War, farmers generally balanced their crops through rotation. Even as far back as 1784, George Washington planted such soil-building crops as alfalfa, lespedeza, and clover, alternating with tobacco, wheat, and corn. American farmers are good business men and know their business well enough to do the thing that is best for them.

It is true that one of the features of the AAA is a tie-up between crop curtailment and soil conservation. The case history, however, shows that the farmers practised crop rotation without being paid for it. The World War caused them to venture into growing grain crops for the big profits offered by two-dollar wheat and similarly high prices for corn and cotton. But our acreage chart shows that after the war they were again returning to a balanced agriculture, which they abandoned only after schemes for relief were devised by self-styled economists. Faith of the farmer in his government led him astray. It is idle to argue that the farmer does or does not conserve soil. A comparison of average yields per acre seventy years ago, when the farm land of the West was virgin soil, with the average yields of today shows that yields of all major crops have increased. But commencing with the war years there has been a slight decline, although the decline is not yet down to the level of 1870. Even if we explain the decline by citing drouths or any other possible cause, yet the years of decline in yields coincide exactly with the years of increased grain and cotton acreages, brought on first by the war boom and then by federal programming.

This table is from the statistical records of the United States Department of Agriculture, giving average yields for the nation as a whole: —

The record indicts the politico-physicians of malpractice. Worse! After eleven years of Sagwaw, parity has not been attained. The politicians do not even understand parity, for they have neglected to consider machinery. The average farmer of 1909-1913 drove a team of horses gaited for field work at two and a quarter miles an hour. Today the average farmer drives a tractor at five miles an hour. In 1909-1913 his team drew a one-bottom plough, whereas the average tractor draws a two-bottom plough. The combine harvests and threshes wheat in one operation, and other savings have so multiplied man power that engineers at the Kansas State College of Agriculture and Applied Sciences have computed the ratio for wheat growing at five to one. Whereas thirty-five minutes of man power were required to produce a bushel of wheat in 1910, only seven minutes are needed today.

It is true that the tractor and fuel must be purchased with money, whereas the farmer grows his horses and feed; but a tractor uses no fuel when idle and a horse eats the year around. Whereas the wheat grower of 1909-1913 had to pay cash for his harvest and threshing crew and hired a man or two for ploughing, he and a son handle the crop alone today, and the land formerly required for growing feed can be turned to something else.

Since wheat production is more highly mechanized than any other kind of farming, it increases unemployment and therefore should not be encouraged by government benefits. Dairying and other types of balanced farming are not so aided. Wheat farming fits into the scheme of absentee landlords and ‘suitcase’ farmers. Forty per cent of our farms are operated by tenants, but the landlords of the cities collect their share of federal benefits, many of them in the wheat-growing West collecting in excess of $10,000 each annually from their hundred or more farms. The big farmer, whether an absentee landlord or a true operator, draws the largest benefits. If the little tenant farmer needs relief, why not give it to him without subterfuge?

The ‘suitcase’ farmer lives in the city and often holds a position there. He can harvest wheat in June, plough in July, and sow a new crop in September. I know a Wichita clerk who grows 160 acres of wheat by working only Saturdays and Sundays and sometimes at night by using the tractor headlight. He works in an office in Wichita for five days a week, the limit under the Wagner Act, and then drives to the country, where he operates a farm big enough to care for a family under balanced agriculture. He makes a pretense of growing soil-building crops and draws federal benefits. This practice is not uncommon.

IV

Farmers are not guilty of drafting this farm-relief legislation. Seventy-five Senators and Representatives answer the roll call in Congress from the ten important wheat-growing states of the Plains. Only nine of them are farmers and only one of the nine serves on an agricultural committee of either house, although a number of lawyers and editors from those states are on agricultural committees.

What, then, do the farmers want? I listen to numbers of them from five Southwestern wheat states every year. A great many of them believe in federal programming from Washington. But the majority make such suggestions as these: —

1. Abolish class laws. This goes for big business and labor as well as for farming.

2. Let the farmer sell on the world market. With modern machinery, he can outsell anybody on earth.

3. Abolish tariff barriers erected for the benefit of big business which prevent the farmer from buying on the world market. If the farmer can compete on the world market, as he used to do, then big business can compete.

4. Increase employment for railroads and ships by restoring our export trade. In the 1920’s, when men were employed, America consumed twenty pounds more of flour per capita than in the 1930’s. That would amount to fifty million bushels more of wheat.

5. Let Congress vote more money for agricultural research. Our farms could produce pulp for paper mills, rubber for tires, and alcohol for automobile fuel to take the place of gasoline when the oil wells run dry.

6. Require all Congressmen to read President Coolidge’s McNary-Haugen veto message before they are allowed to vote on any farm bill.

In other words, you cannot pull yourself up by tugging at your bootstraps.

V

In writing this article, I have placed myself in a class proscribed by Henry A. Wallace, Secretary of Agriculture, who in an address in December at St. Paul asserted that any person who opposes his ideas for the farmer ‘is in danger of putting himself in the position of saying that farmers are not entitled to a fair share.’

Let me introduce here as a witness in my behalf Henry C. Wallace, father of Henry A. Wallace. Henry C. Wallace also was a Secretary of Agriculture, and for three decades prior to his death did much for the advancement of farming in the Middle West. In 1920, when farm-relief talk was in its infancy, he wrote: —

‘If it cannot be stopped in any other way, Congress should enact a law imposing very severe penalties upon any government official who undertakes to influence either crop production or prices. There are too many people in public office who seem to think they ought to exercise some sort of guidance or guarantee over the farm. . . .

‘Others would have the government undertake to fix prices, either arbitrarily or indirectly by buying up surplus crops. The experience of 5000 years shows the impracticability of such efforts.’