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'Z-229 LIBRARY THE .FLAGS 01" FARCERS, ECONOMISTS AND ADMIN1STRATOHS IN DEVELOPING AGRICULTURAL POLICY Address of Chester C . Davis Member Board of Governors of the Federal Reserve System Before a luncheon meeting of the American Farm Economic Association Adelphia Hotel Philadelphia, Pennsylvania Friday, December 29, 1939 'Z-229 THE PLAGE 01'' FARMERS, ECONOMISTS AND ADMINISTRATORS IN DEVELOPING AGRICULTURAL POLICY This field has been plowed and harrowed and planted and topped so often that 110 harvest of mine can hope to equal earlier yields even though I were to apply liberal quantities of fertilizer. ^ is a broad field, and I shall have to be on guard against the temptation to wander about in reminiscences of men we have all known, the part they have played in the stirring events of the past two ^ Q cades of unfolding agricultural policy. Please bear with me while I survey the field in a few preliminary observations. Each man must tell of the world as he sees t from his own doorstep. 0 Obviously what he describes does not coin- ide exactly with what another sees. It is not wilful misrepresenta- tion, therefore, if what I have seen does not agree with what each you has seen. Agricultural policy is not summed up in one law or set of W s that directly affect agricultural production and marketing. It expressed in a complex system of laws, administrative acts and at^Udo3 that cover not farming alone, but other and wider ranges of ^eriiational trade, taxation, monetary and credit policy, as well as f e c i a l laws and policies with respect to non-agricultural industry *** labor. It is possible to attempt a general classification of the ^spective parts the farmer, the economist, and the administrator .2- Z-229 in shaping legislation that enters into agricultural policy, important person needs to be added to the title list to round it out, That, of course, is the legislator. The farmer 1 s reaction to the pressure of economic condi- tions is the source and inspiration of such interest and action as been developed in this field. He has developed important na- tional and State farm organizations that represent him in councils away from home. Individuals who are frequently professional economists W e their attention drawn to special problems and needs by the spot- lighting of farmer interest. They suggest lines of action which are ^eVe.loped and matured in the give and take of discussion with farm leaders, administrative officials and legislators. Administrators are forced to apply the test of workability all programs or plans, and to strive for their amendment nnd improvement once they are under w a y . If a program requires legislative sanction, the legislators say what shall and shall not be done. a They are generally re- Ponsive to expressions of farmer opinion if convinced they are 8e *uine, In other words, farmer interest and concern build up preslike the mountainous weight of a pent-up flood; individuals, xe a q u e n t l y economists, trace out in shallow flitches the new lines long which the flow will move; while the administrator's chief Z-229 .3- c °ncern is to keep the water moving once the flow starts, and to enand straighten the channels* The legislator must sanction the ^tails and their subsequent change ana improvement. These categories are not mutually exclusive. a A farmer or -^gislator, as well as an economist or a business executive may be ^he original idea man; the economist or the farmer may become the administrator. But these elements are generally present in the genesis the continuous evolution of any phase of national agricultural Policy, i am not able to say of our own policy that in its evolution ^he p ur -t p i a y e d by the economist has been of greater or lesser importhan that of the farmer, the administrator, or the legislator, bp °ause all have been essential. When I refer to the work the agricultural economists have ^ e , ;[ a m talking about individuals, and not- a group or class. ^ V e not thought or acted as a class. They The trail-blazing economists have made their marks on the policies of this generation broke ^ith the general tradition of their profession to do it. On the whole, the present-day farm economist has become much 1,i0 t*e a man of action and much less the ivory-tower critic than his pred- e °eSsop was. The change has not come about in smooth and regular Most of it came in two definite spurts. Henry C . Wallace °ught on the first when he asked the professional men who had been v ^Udyi n g f a r m problems to show him what could be done about them. Se °ond came with the New Deal when nearly every farm economist of The .4- Z-229 standing in the country was given a chance to advise and help shape programs, or to help administer them in AAA, FCA, FSA, FSCC, CCC, anci the rest of the alphabetical permutations. Most of the farm economists sat through the yeasty decade 0,11 1921 on like Buddhas contemplating their respective navels. For years after the post-war crisis had shaken the American farmer's world, th 6 groat land grant colleges and their economic staffs remained stodgi- ^ unconcerned. The exceptions, however, were important and brilliant, f °nci they made history. To paint the full panorama of the making of agricultural since the war, assigning to each actor his proper size and perPsctive calls for a better artist than I can ever hope to become. To itiaicp even a respectable attempt in this short talk demands an ambition ^tch • ^ H n g that of the fellow who conceived the re-enactment of creation s ts, ^ ide-show for tourists at the Natural Bridge. I am not that ambi- At most I can point out some high lights of performance which illuminate the subject I have undertaken to discuss. Since this is f e t i n g of economists, and since I cannot cover the whole field, I it will be appropriate to speak mainly of certain individuals and trace policy. their contributions to the present pattern of nati § you agricultural First of all, 1 want to emphasize the importance of the man shocked farm economists out of their self-complacency, and hung up * b old green light in the Department of Agriculture for venturesome 'Z-229 °°uls with a yen for crusading - Henry C . Wallace, the Secretary of Agriculture from March 4, 1921 to his death in 1924. I cannot think him and of those years without thinking also of the agricultural ec °nomist who stood at his side while the first important drive for P°st~war farm legislation was taking form - Dr. Henry C . Taylor, or& a *Uzer and first chief of the Bureau of Agricultural Economics. Those who knew the first Secretary Wallace recall clearly baffled disappointment when he realized that, in a situation which hg n considered as desperately demanding remedy, the economists had no ° s ^ive help to offer. He used to complain that something was wrong ^ther with the men or the system that had trained and produced them, if a £ter a lifetime of stucly of agricultural problems, economists were ^ b l e to respond to a crisis except by giving reasons why action c °l-d.d not be taken. He did not ask for perfection, but for advice as -hich was best of admittedly imperfect courses - constructive adnCe lGs t and the courage to make a start. His views were published in s-parade language in the Journal of Farm Economics in January, "Confronted with national problems, agricultural, economic and political, of greater magnitude than ever before encountered, would that more economists might attune their tars to the Macedonian cry that comes up from the open country, give up for a time their detached seats of observation from which they view domestic and world activities with cold gray eyes and make records which may enable future economists to explain what happened, and why it happened, and take an Active interest in those who struggle with the definite purpose of helping them work out their problems, not alone for their benefit but for the benefit of the nation." .6- Z-229 It is of great interest to me that the roster of Presidents the American Farm Economic Association contains the names of so fna ^y economists who have made important contributions to our agricul- tural policy. of There are 29 names on that list. More than one-third them are indelibly associated with some definite idea that has been incorporated in national policy. f e w It may be interesting to mention a of those men, and note briefly how they have influenced their times, s °'ne as first advocates, others as nurses and feeders of some idea, s °me plan for farm relief. I have mentioned Dr. Taylor. association. He was the ninth president of His influence on the direction of the farm relief < H v e from 1925 to 1928 was profound. I first came in contact with hirn when he took that famous trip through the northwest in the early of 1923. Some have been so unkind as to say the purpose of that was to arouse interest in and support for the program of farm relater embodied in the McNary-Haugen bills. If Dr. Taylor advised Advocated any particular program on that trip I never heard of it. Perhaps the art of putting an idea across by asking questions did ^ die out completely 2500 years ago. To go back to the beginning of this association: its first ^^sident, W . J . Spillman, published in 192q and 1927 a farm plan com^ e t e with farm allotments, processing taxes ana benefit payments, th °u6h all of the terms were not to be coined until 1953, when some as younger men had discussed these ideas with Spillman took a hand the formation of the Agricultural Adjustment Act. Z-229 .7- Dr. Spillman's views influenced John D. Black who was later become a president of this body. ltl They appeared with modifications the chapter on the Domestic Allotment plan in Dr. Black's book on ^ i c u l t u r a l Reform in the United States, published in 1929. M . L . Wilson, your president in .1925, continued the study of Domestic Allotment plan as outlined by Spillman and Black, and was '^argely instrumental in enlisting farm and public interest and support, ^ t e r , as an administrator, he had the chance to develop the first com&, °dity program in the Triple A , embodying many of the principles of the The second president of this body, Dr. George F . Warren, powerful3 -y influenced farm thought and public policy. He helped focus atten- ti on price ratios, and on the field of monetary action and price ^vela. ivien who sat at his feet later occupiea high places in Govern- • one who was also at one time your president, W . I. Myers, became outstanding administrator as Governor of the Farm Credit Administraduring the formative years during which the Production Credit ^Ss°ciut:ions and the Banks .ror Cooperatives developed as important ox farm credit machinery. Merely to mention other names of men who have headed the Am ' e r ican Farm Economic Associations is to call to mind ways in which cultural policy has been affected by their work. You think of ^"lor, ana Stine and Tol.ley and Wilson in connection with the Outlook p ° n s , and the developing concept of balanced agricultural output; of .8- Gra Z-229 y and land utilization policies that are fundamental in so many Government programs of today$ of Tolley in connection with marketing freemen ts and State and regional pro rata plans; of Elliott and °0uhty and regional planning. I think of these men as having directly influenced action. Others from your roster of presidents have contributed brilliantly in the field of knowledge and thus indirectly to policy itself. The impossibility even to mention all the economists who de- aer v e mention as having influenced importantly the development of ag- ricultural policy in recent years should be apparent by now. Perhaps Was unwise to single out the few who can be referred to within our U m e limits today, because names come crowding on me with every right their place. D r . Charles L . Stewart developed the export debenture of the twenties, which, though never enacted into law in its ^ e i n a l form, has been given another dress in one of the amendments the Agricultural Adjustment Act. The thread of influences and events that reach through from S ^ W a r t ' s first export debenture proposal to Section 32 of the amended cultural Adjustment Act .illustrates clearly the persistence of til0 Ught in the field of farm policy. ^Sislative forms. Dr. Stewart's plan took several Basically it would have issued to exporters of d e i f i e d farm products, debentures which were to be accepted at face by the Treasury in payment of duties on imports. To the extent debentures were issued and used, the total of customs revenues c °llected by the Government would have diminished. ari wh d provided public backing for the plan. o became interested was Marvin Jones. House Committee on Agriculture. Farm groups took up One of the leaders An Congres In 1953 he became Chairman of It was he who secured adoption of provision which sets aside '60 per cent of the annual .revenues from Gu stornc, and authorizes their use to pay bounties on exports, or losses ^curred in diverting surplus farm products into new domestic uses or f °r relief distribution. It is the offspring of the export debenture Plan. The field for direct action by farm economists has been expended almost infinitely in recent years. The nation has been combed y old and new Federal agencies seeking seasoned timber for adminis^'ntors, and promising young men for assistants in executive work and Program planning. Triple A, Farm Security, Surplus Commodities Corpo- ration, the Farm Credit Administration, and many others have brought economists into new action fields. This could go on indefinitely but it has proceeded far enough f °r purposes of illustration. n o o n e piece 0 It is of utmost importance to realize f legislation can express the whole agricultural pol- > and even within its scope, no legislation is complete and finished. 1+ Is constantly being amended, expanded, replaced. In other words, p ^rmers, economists, legislators and administrators working together W C n » t solved the farm problem. Wi They never will solve it. -U forever be trying with measurable But they success to improve the economic .10- Z-229 status of men and women on the farms. Theories discussed by a few today may be put to the tost tomorrow. Experience gained yester- % is the foundation of the program of today. ideas is truly remarkable. The conservation of Most of the positive thoughts that have appeared in the millions of pages and years of words devoted to disCu S8ion of farm problems have influenced in one way or another the Resent pattern of agricultural policy. The continuous change that is taking place in the pattern is the result of the reaction of farmers to present programs, the ^sponse of members of Congress to what they believe the farmer.reg i o n in their respective States or districts to be, and the experiof the administrators. It is in this stage that the influence of the administrator reaches its greatest importance. to Personal illustration. Gc Again I turn A man like Jack Hutson, who combines °nomic training and administrative experience with an unusual capac *ty to work out action programs to meet problems as they arise, can1101 le fail to exert considerable influences on the direction of farm Sislation. A man whose training and experience have buen that of Present AAA Administrator, "Spike" Evans, must because of his f i n i n g and experience apply to every proposition the question: will it work out in the country?" Right at this moment the farm leaders and officials who ^ tou concerned with the continued success of the farm programs have a 8 h problem on their hands. The aims of the program would not be Z-229 .11- Wholly satisfied by achievement of parity of farm prices with other Prices and costs. They include the building u p of reserve stocks of products, considerably larger than normal carry-over, to meet *he accidents of drouth and p e s t , or of sudden abnormal demand. di Or- n a r i l y , the existence of abnormally large stocks depress prices to tlle farmer more than proportionately. Y e t it is desirable for the general welfare that they be built u p and maintained. i s essential that means be found to relieve the farmer of the full shock of stored surpluses on his prices. a Therefore, it This cannot be done unless general conviction is established that after the reserves have C a c h e d certain proportions — after the ever-normal granary is filled seeding and other uses of the productive plant w i l l be adjusted acc °rdingly. S u mus The public has to know that we w i l l not continue to pile on surplus until a disastrous liquidation from stored sup- Plies becomes inevitable. The necessary adjustment in the productive plant can be Assured only if farmers who cooperate in the general program have economic advantage over those who do n o t . This advantage can be Siven if adequate appropriations are made by Congress, or if some ^ v i c e is offered t<s compensate tho cooperating f a r m e r . The conferences that are now going on over the so-called Cei, ie tificate plan illustrate very well the preliminary stages of the 8islative process. Incidentally, they tend to illustrate what I is an important weakness in tho mechanism through which .12- Z-229 democracy functions in the United States. The Department of Agriculture is trying to convince other tiepa rtments which are primarily concerned with questions of taxes and revenues that the certificate plan should be adopted as partial substitute for the unbudgeted appropriations that were made last yoar but which it is feared may not be regularly forthcoming. Ul- timately, the proponents of the plan hope to line up the President the United States on their side. The legislative branch of the Government does not participate in the discussions at this stage. Even if all the interested executive departments, include s the President, agree on a program, it still cannot be considered "the Government's plan. istration's plan. It cannot even be properly called, the Admin- Because leaders of the majority of both Houses of °°ngross who are, after all, important cogs in the Government, or in ^ho Administration, have not participated in the early stages that shaping legislative forms which sooner or later will reach Confess, This is not- anybody's fault. The trouble is that our own Peculiar form of democratic Government does not draw the executive ail Gn d legislative leaders together in a common responsibility in the actment and the administration of laws. 'I think that, on the con- trary, the operation of our particular machinery too often tends to di'ive a wedge between the executive and legislative branches of GovG3? nmont. .13- Z-229 If legis3.ati.ve leaders had a continuing share and responsibility in the administration of laws they enact; if administrators the duty and opportunity of standing on the floor of Congress to ex Plain and defend their courses; and if important legislation could >J e advanced only after the responsible legislative and executive le aders of the Government had agreed upon it, then the process of mak- in 8 and carrying out laws, and amending and perfecting them as we go would, in my opinion, be vastly more orderly than it can be now. ^ long-drawn-out dissension between executive and legislative branches 0tl important questions of Government policy would be impossible. Few can doubt that the future, like the present, will be Cl> owded with issues that impose heavy responsibilities on the leaders o f democracies. Problems will be constantly changing but they will "^obably not grow less. It is worthwhile to consider not whether the central Government needs more powers, but whether its forms are the bes "t that can bo devised to meet those problems by truly democratic ^°cesses as they arise. By this time I have come to recognize that the broad subject M r . Elliott assigned me so that I could -roam at will has turned to be too broad. It is impossible to get over it even inade- quately without straining your patience beyond the breaking point. In conclusion I want to point to one truth that study of ^ c u l t u r a l history of the past twenty years reveals. thf An unbroken ead has run through all the efforts of Government to aid agriculture -14- in our complex modern economy. Z-229 Into it are woven not only what Past administrations have done, but also the lost causes for which devoted men have struggled even though br their efforts at the time °ught them only bitter disappointment. What has been true in the Past will probably be true in the future. If this only were gener- *llly recognized then it might be possible for all interested elements t o approach consideration of changes in agricultural policy with 2°od humor and tolerance, above the level of bitterness engendered V partisan or class interest.
@FedFRASER