Full text of Marriner S. Eccles Papers : Agriculture in an Expanding Economy, Box 43, Folder 7, Item 6

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CONFIDENTIAL
NOT FOR RELEASE UNTIL
DECEMBER 6, 1945 A. M. PAPERS

AGRICULTURE IN AN EXPANDING ECONOMY
A Statement
by the
Research Committee
of the
Committee for Economic Development

RESEARCH COMMITTEE
RALPH E. FLANDERS,
Chairman
President
Federal Reserve Bank
Boston, Massachusetts

DONALD DAVID
Dean, Graduate School of
Business Administration
Harvard University
Cambridge, Massachusetts

ERIC A. JOHNSTON
President
Brown-Johnston Company
c/o Chamber of Com. of U. S.
Washington, D. C.

CHESTER C. DAVIS,
Vice Chairman
President
Federal Reserve Bank
St. Louis, Missouri

JOHN FENNELLY
Partner
Glore, Forgan & Co.
Chicago, Illinois

ERNEST KANZLER
Chairman of the Board
Universal C.I.T. Credit
Corporation
Detroit, Michigan
RAYMOND RUBICAM
444 Madison Avenue
New York, New York

MARION B. FOLSOM,
Vice Chairman
Treasurer
Eastman Kodak Co.
Rochester, N. Y.

WILLIAM C. FOSTER
Vice President, Pressed
and Welded Steel Products BEARDSLEY RUML
Co., Inc.
Chairman of the Board
Long Island City, New York R. H. Macy and Co., Inc.
New York, New York

GARDNER COWLES
President and Publisher
Des Moines Reg. & Trib.
Des Moines, Iowa

PAUL G. HOFFMAN,
President
Studebaker Corp.
South Bend, Indiana

R. GORDON WASSON
Vice President
J. P. Morgan & Co., Inc,
New York, New York

RESEARCH ADVISORY BOARD
HAROLD LASSWELL
Director of War
Communications Research,
Library of Congress

SUMNER H, SLIGHTER,
Chairman
Lamont University Prof.
Harvard University

DAVID F. CAVERS
Professor of Law
(on leave)
Harvard University

ROBERT De BLOIS CALKINS
Vice Chairman
Dean, School of Business
Columbia University

THEODORE W. SCHULTZ
NEIL JACOBY
Professor of
Professor of Finance
Agricultural
Economics
School of Business
The
University
of Chicago
The University of Chicago

DOUGLASS V. BROWN
Professor of Industrial
Relations, Mass.
Institute of Technology

RALPH YOUNG
Professor of Economics
University of
Pennsylvania

Research Director
THEODORE 0. YNTEMA
professor on leave from School of Business
The University of Chicago
Associate Research Director
and
Executive Secretary of Research Committee
HOWARD B. MYERS
Assistant to Research Director
Associate Research Director
SYLVIA STONE
GARDINER C. MEANS






The Trustees of the Committee for Economic Development established the Research Committee "to initiate studies
into the principles of business policy and of public policy
which will foster the full contribution by industry and commerce in the postwar period to the attainment of high and
secure standards of living for people in all walks of life
through maximum employment and high productivity in the
domestic economy." (From CED By-Laws)
CED's Research Committee of businessmen assigns
questions for study to qualified scholars, largely drawn
from leading universities. Under the by-laws "all research
is to be thoroughly objective in character, and the approach
in each instance is to be from the standpoint of the general
welfare and not from that of any special political or economic group." (From CED By-Laws)
The monographs prepared by the scholars, after consultation with the Research Committee, are published as
books by McGraw-Hill Book Co., Inc. In most cases, the
Research Committee itself then issues a "Policy Statement,"
such as the following, based largely upon the monograph.
Neither the Policy Statement which follows, nor any
other statement by the CED Research Committee, can claim
either indirectly of by inference to represent the views of
the Trustees, Regional, District or State Chairmen, or the
more than 2900 local CED committees and their 60,000 members. Up to the date of publication, they have not participated in the background discussion between businessmen and
economists leading toward the development of the statements.
The statements are offered to these committees and to all
others interested, as an aid to clearer understanding of
steps to be taken in reaching and maintaining high level of
productive employment and a steadily rising standard of
living.

AGRICULTURE IN AN EXPANDING ECONOMY
Page

I.

BUSINESSMEN AND AGRICULTURE

1

II.

CONDITIONS: NOW AND IN PROSPECT

3

Current Conditions
The Postwar Outlook
Special Problems:
The Wheat Surplus
The Cotton South
The Weather Hazard of the Plains States
Soil Exhaustion

3
4
6
6
6
8
8

III.

BASIC CAUSES OF AGRICULTURAL TROUBLES

. . . . 10

Surplus Labor Resources
Factors Limiting Demand
Instability of Income Due to Business Fluctuations. . . .
Income Instability and the Price Level
The Problem of Farm Product Prices
1910-1914 Parity
Agricultural Price Objectives
'

IV. W H A T CAN BE DONE?

10
11
12
12
13
15
16

17

To
To
To
To

Increase Consumption
17
Increase Exports
17
Increase Labor Mobility
19
Lessen Instability of Income
20
Short-run Production Adjustments
21
Fixed or Guaranteed Prices
21
Government Payments to Supplement Prices
23
Transition Payments
23
Adjustment Payments
23
Payments to Counteract Business Fluctuations. . . . 23
The Use of Payments: Pros and Cons
24
To Lessen Production Risks
24

V.

SUMMARY




27

AGRICULTURE IN AN EXPANDING ECONOMY
I. BUSINESSMEN AND AGRICULTURE
It is important that the non-farm business community understand the present conditions and future prospects of American agriculture. This statement is
intended to contribute to such an understanding. It offers a summary of changes
in agriculture that have occurred because of the war and of conditions that may be
expected to follow the war, as well as an appraisal of some of the adjustments or
remedies that may be considered.
The Committee for Economic Development is concerned primarily with ways to
maintain high production and employment in our peacetime economy. The purchasing
power of the rural population — which largely controls their economic and social
welfare — is so important in the nationfs welfare that agriculture must be given
high priority by any group considering postwar problems. This statement of the
Research Committee emphasizes the direct relationship between conditions in nonagricultural business and the prosperity of the farm sector of our economy. It discusses some questions of national agricultural policy, recognizing, however, the
limitations of the Committee, as an organization of businessmen, in attempting to
supply answers to problems that need consideration by broader councils in which
agricultural representatives have a leading part.
In preparing this statement, the Research Committee has had the benefit of
discussions that accompanied preparation of the study, "Agriculture in an Unstable
Economy," by Theodore W. Schultz, which the Committee for Economic Development is
publishing this month. The Committee has profited also from a study of the report
of the Committee on Postwar Agricultural Policy of the Association of Land-Grant
Colleges and Universities, and other materials as well.
In a world in which economic relationships have become highly involved, it
ought not be necessary to remark that the problems of farming are not simple but
complex. Agriculture is today so inextricably a part of an exchange economy that
policies and practices in fields far removed from farming have far-reaching effects
on the economic condition of farmers, while the economic condition of farmers has a
direct influence on general prosperity.
That the people of towns and cities have an immediate, vital interest in
agriculture should be self-evident. The farms are the source of the nation's food
supply and of much of the raw materials for its industries. Few persons realize
that the non-farm population - those living in towns, cities and rural areas that
are not farms — is upwards of 80 per cent of the population. How dependent this
urban population is upon the less than 20 per cent on the farms has been made sharply clear by the critical food problems of the nation during the war. Moreover, the
actual market which the farm has offered for the products of urban industry —
production goods, consumption goods, and housing — is great, and the potential
market is enormous. A healthy buying power on the farms is essential to sustained
high levels of production and employment elsewhere.
All segments of agriculture are not beset by like problems. The fortunes
of some are tied to the choices we make as to postwar international trade. Our
trade policy obviously will be significant in the future of the great cotton and
wheat growing areas. Some farm problems can be answered satisfactorily only as we




resolve the problem of domestic urban employment. Agriculture is in fact a cluster
of industries, some of which are rising while others are falling.
There are national economic questions related to agriculture that have had
less public discussion than the price and marketing problems of agriculture. The
problems involved in maintaining the soil and its fertility and in correcting overpopulation in certain farming areas are two such matters. Both represent social
costs and consequences to the nation that do not permit of further negligence.
If this statement contributes to the educational process while farm programs are being re-examined, it will have achieved its main purpose. Understanding
of agricultural problems by all groups in our nation is essential if policies are to
evolve that will support a strong agriculture and the general welfare.




II.

CONDITIONS: NOW AND IN PROSPECT

In evaluating the postwar position of agriculture, certain factors are
critical:
What is the total farm production likely to be?
What changes in demand are in prospect?
What is the outlook for prices?
In what financial condition will farmers find themselves?
What will be their position as buyers — that is, how will the
farmer's earnings compare with the earnings of workers in other
pursuits?
Current Conditions
Under the pressure of war demand, agricultural output as a whole expanded
a fourth, food products a third, in the five-year period 1939-1944. Livestock output rose 50 per cent.l About 30 million acres have been added to our crop land —
almost a ten per cent increase over the land in crop cultivation before the war.
Wheat acreage is up 11 million acres and corn has added 10 million acres* Oil-bearing crops have been increased most, percentage-wise, with soybean acreage doubled.
The large prewar carry-over stocks have been sharply reduced, except for cotton, but
when the war and foreign relief demands have subsided, the expanded productive
capacity will aggravate problems for which prewar measures had already proved inadequate . 2
Prices received by farmers have doubled from the low point at which they
stood in 1939. Costs have risen, too, and have partly negated the rise in prices,
but farmers in general are enjoying greatly increased net incomes. Land prices are
moving upward at a rate that calls for national concern. On March 1 of this year,
farm real estate prices in the United States as a whole were 52 per cent above their
1935-39 averages.3 However, during the 1930's distress sales of land forced prices
down, and comparisons based on those years make land price increases appear higher

1
So great an increase is not likely to continue, because it was made possible in
part by using up feed reserves and importing feed graiji. Wheat prices that would
permit its use for feed would help to sustain high livestock production.
2
This may imply that land reclamation projects should be frowned upon. It should
be noted that some recent reclamation projects have been warranted and others will
be worthwhile, where a desirable transfer of population is effected. In general,
however, political factors are unduly influential in decisions to irrigate, drain,
or clear land. Theodore W. Schultz, Agriculture in an Unstable Economy, McGraw-Hill
Book Co., Inc., New York, 1945, p. 79.
3

U. S. Department of Agriculture index.




4.

than is the case if other years are used as the base. Farm real estate prices on
March 1 were 26 per ce.nt above the 1910-14 average, 16 per cent above their previous
34-year average.1 But land prices are still on the way up. In many localities, the
price of farms bought in the war-boom market is not likely to be sustained if farm
product prices begin to move downward, or if they become less favorable compared
with farm costs. The danger signal overhangs this situation.
Farm people are in the best financial position they have occupied in over
three decades. They have increased the dollar amount of their liquid reserves in
bank deposits, savings bonds, and cash by $12 billion since 1939. At the same time,
they have reduced their indebtedness considerably. In these respects, behavior during this war is in sharp and favorable contrast with that of World War I. Equities
of farm owners and farm tenants have risen by $38 billion since 1940 to a net worth
of $82 billion; a large part of this, however, has been due to the write-up in prices
that has occurred. Better soil practices during the 1930fs were improving land
values, but the intensive farming of the war years has unquestionably taken its toll
in soil fertility. To the extent of this loss the land has actually gone down in
value. Throughout the depression and the war years, moreover, we have been drawing
on our farm buildings inventory. Except for the write-up in prices, the net balance
in the capital value of farms might easily show a loss.
In spite of the fact that agriculture has become more profitable during
the past four years, an unprecedented migration away from farms has occurred. The
farm population has dropped from about 30 million to about 25 million people roughly 16 per cent - while the total population was increasing by more than 5 per
cent, This migration has corrected in part the peacetime over-supply of labor on
farms2 Which was a major cause of the low per capita earnings of the greater part of
the manpower engaged in agriculture between the two wars. The transfer of about
1,650,000 men to the Armed Services has been offset in numbers by the natural increase in farm population since 1940. The farm population decrease of roughly
5,000,000 was due, therefore, to the movement to jobs away from the farms. The extent to which surplus workers return to farms after the war is one of the critical
questions that will affect farm prosperity. The return of some will be required to
replace farmers who want to retire because of old age, women drawn into the farm
labor force because of the wartime pinch in particular areas, and very young boys
and girls. A further influx of labor into farming will again depress per capita
earnings and continue much of the economic and social maladjustment that has attended
the "farm problem" the past two decades; it is likely also to continue attempts at
political solutions to the problems of this important sector of our economy.
The Postwar Outlook
When land and other agricultural capital have once been committed to
production, the enterprise tends to stay in production, almost without reference to

1
There is a wide variation in the increase in land prices between states, ranging
from 17 per cent in North Dakota to 95 per cent in Kentucky and 96 per cent in South
Carolina. The corn belt states show variations of 49 per cent in Iowa and 81 in
Indiana.
2

In this statement, "labor on farms" and similar terms refer to all workers,
owners and operators as well as hired hands, unless otherwise specified.




the performance of business or the level of foreign trade, and the consequent size
of demand. If we cling to recently achieved levels of agricultural production
(which may be the result particularly with improved technology), this will mean
about one-fourth more output than we had in 1939, weather conditions being equal.
Demand, enlarged by war requirements and the temporary elimination of
other supplier countries, is likely to drop sharply when the relief period is over
and storage stocks have been replenished. The need for food in war-devastated lands
is enormous, and may draw heavily on American supplies for a longer period than is
now anticipated, but a rapid restoration of farming areas abroad is the more likely
circumstance.
Under lend-lease, agricultural exports have reached a dollar scale two and
a half times prewar volume.1 They will shrink substantially as military and relief
and rehabilitation demands come to an end. Export subsidies are unlikely to be effective over the long pull in counteracting this shrinkage.
As war conditions recede at home and abroad, powerful forced will be
dragging at farm commodity prices. The task of carrying out the price guarantees
provided for in existing laws will be far from easy. The tendency will be toward a
decline in the exchange value of farm products in terms of other goods and probably
in market prices as well.
Although the drop in farm
as great as the drop which followed
to offset the forces leading to the
widespread and serious difficulties

prices and income may not be as precipitous or
World War I, and some measures may be developed
decline, it nevertheless is likely to cause
in agriculture.

Stresses will not fall equally or at the same time on all segments of
agriculture, though they will tend to spread and in time to equalize throughout the
agricultural structure. All farmers do not, of course, find themselves at the same
level of economic well-being; on the contrary, at any given time they represent
every stage from the prosperous to the very poor.
Conditions will be made worse if the current trend continues of buying
farms on credit and at high prices and if we have unwise, even though well-meant,
moves to place large numbers of industrial war workers and returning veterans on
the land, with agricultural production as their only source of income. Experienced
farmers now in the Armed Services who wish to return to farming should be encouraged
to reestablish themselves; but careless applause or support of the "back to the 40
acres" idea will mean heartaches for many uninformed individuals, and will merely
add to the long range problem already confronting the nation of drawing people off
the farms. The man who is considering farming as his future occupation should be
made aware of the choice he is making. In the first years after the war, accumulated unfilled demands for both producer and consumer goods will help provide an
opportunity for high level employment in the non-agricultural sector of our economy.
Job opportunities off the farm will exist
The more workers there are who remain

1

Since farm prices in general have doubled during the war years, the increase in
agricultural exports has not been of major proportions, but food has been substituted for reduced cotton exports.




employed in the industrial and commercial sectors, the better will be the distribution of labor and of earnings, in itself tending to sustain high level production.
In general, if the country is successful in maintaining high levels of
employment and high consumer purchasing power, the market will be favorable for sustained high production of dairy and poultry products, meats, fruits, and vegetables.
This would permit some farmers to switch from crops likely to be in surplus, and it
would reduce somewhat the surplus of such crops as corn and wheat by enlarging the
demand for feed. A greater production of non-agricultural goods and services would
tend to maintain the favorable wartime terms of exchange for farm products, a longneeded improvement in the farmer's peacetime position.
Special Problems
The Wheat Surplus
There are great areas in agriculture where the problems will not, however, be solved or ameliorated by strong domestic market demand. Our wheat acreage
has been expanded to produce more than can be consumed as bread grain in this country or in such foreign markets as may be available. Per capita consumption of wheat
does not rise with increasing consumer purchasing power. A better solution to our
wheat surplus problem than reduction of acreage might be an extension of the uses of
wheat, since this is a crop in which we have important production advantages. Larger
quantities of wheat could be utilized as livestock feed if its price were in line
with feed grains. A price 10 per cent above corn will take wheat into the feed market. Wheat prices are now more than 50 per cent above corn. It needs to be recognized that government programs that keep wheat prices above this relationship with
corn prices tend to confine wheat use to bread grain, except as a portion of the
crop is diverted by special devices to alternate uses for feed or industry, as was
done during the war. Wheat might serve importantly in a program of feed storage
that could, if not abused, lend more stability and profitability to the livestock
sector of agriculture.
The Cotton South
Cotton and the region in which cotton dominates the farm economy present
extraordinary problems. In 1940 the eleven states in which cotton is an important
crop contained 47 per cent of the nation's farm population.
Cash farm income from cotton, however, accounts for a smaller portion of
total cash farm income than might be expected in view of the concentration of farm
population in the cotton states. It amounted to about 13 per cent in 1928-29, and
about 7 per cent in 1944.
Raw cotton was our principal export item until 1936, when it was surpassed by "machinery of all classes," and (from 1937) by automobiles. From 1909
through 1933 the United States exported more than 50 per cent of the total world exports of cotton, and even as late as 1937 American cotton exports accounted for 47
per cent of the world international cotton movement. During the years 1931-35, an
average of nearly 59 per cent of our cotton production was exported.
The drop in American raw cotton exports is entangled at bottom with the
world-wide stifling of international trade during the 1930?s. Since purchases from




us by other countries are determined, over a period of years, by our willingness to
buy and to make available dollar exchange, our high tariff wall and our low internal
production in most of those years were unquestionably major factors in the declining
exports of raw cotton.1 Add to this cotton prices well above world prices (sustained only by the Commodity Credit Corporation crop loans), and there should be
little amazement that there is still a 10.7 million-bale carry-over of cotton, the
equivalent of an entire year f s crop. (The carry-over has at this date become almost
wholly "residue" cotton, low-grade short staple cotton overpriced relative to competitive fibres. It does not, therefore, represent the value of a year's crop.) In
the domestic market, high priced cotton has lost ground to the synthetic fibres.
In peacetime the cotton crop is likely to face intense competition from
foreign cotton and synthetic fibres. To maintain the present levels of cotton
production, the cotton price will have to be such that it can command a large
domestic market and can compete successfully for foreign business.
Mechanization in cultivation and picking is likely to bring revolutionary
changes throughout the cotton belt after the war. As mechanization progresses,
production costs will fall. The change can go far toward enabling growers to sell
at the lower prices demanded for world markets; patently, it will aggravate the excess labor problem.
Mechanization will bring long-range gains to labor in higher returns per
worker. There is also the important gain attending the transfer of labor out of
occupations where it now has low marginal value to occupations where the labor input
commands a higher return. It is unlikely that all labor leaders will acknowledge
the importance of these shifts, and some will protest against the transitional unemployment that will follow widespread mechanization in cotton production, as well
as against the influx of labor from the farms to industry. Measures to ease the
transfer of labor are referred to later in this statement.
A cotton price in line with its competitive value is a necessary first
step in any really effective adjustment program for this major region. But the
resources of the cotton South are gravely overtaxed by the pressure of people on
the land. Fundamentally, the problem is not cotton but an excess of labor and the
resultant extremely low income per head. The remaking of the economy of the cotton
South^ is undoubtedly the most important and the most difficult special problem in
agriculture confronting the United States.
1

The needs and problems in future international trade are fully discussed in the
CED research study by Calvin B. Hoover, International Trade and Domestic Employment,
McGraw-Hill Book Co., Inc., New York, 1945. CED Research Committee recommendations
with respect to policy are contained in the policy statement, International Trade,
Foreign Investment and Domestic Employment, New York, May 1945.
2
Increased diversification, including livestock production and accompanying
changes to feed crops, as well as reforesting of poorer lands are two desirable
measures for this region; the importance of industrial development in the South
to offer jobs to its excess farm labor can not be over-emphasized.




8.
The Weather Hazard of the Plains States
A third special problem in agriculture is found in the Plains States where
the farm population lives under peculiar hazards due to erratic weather. It is of
direct concern to the nation that measures be devised through contributory crop insurance to lessen the economic uncertainty confronting agriculture in these states
because of fluctuations in crop yield due to weather. About 40 per cent of the
nation's crop land is affected, particularly large parts of the Dakotas, Nebraska,
Kansas, Oklahoma, the panhandle of Texas, and sections of Montana and Colorado.
We Have Been Exhausting the Soil
The improved earnings by farmers that would accompany high peacetime
markets will not automatically meet the problem of soil conservation, to which the
nation must give greater attention, America's wealth in land resources has made for
negligence in its care. The decreasing productivity of our land has been concealed
to some extent by improved production techniques, especially the mechanization of
farm production, and by enlarged yields effected by the control of crop diseases,
the development of improved strains, and other technological advances. Farmers must
do the bulk of the work of conserving and restoring; the soil, but the government
will have to provide them with technical assistance if the work is to accomplish the
desired results and have an assurance of permanence. Many soil-conserving practices
will pay their own way; help is needed in others. Priceless natural resources will
continue to be destroyed as long as efforts to conserve them are inadequate and
scattered.!
Most of the land of the nation slopes enough to erode, if the soil is improperly handled. Terraces or ditches are usually necessary to remove excess water
safely from sloping land. But the terraces must have protected outlets or the water
will cut into the soil and aggravate the erosion. Even after the water has been
moved safely from a terraced field, there must be a place to put it. To expect the
average farmer to deal with this kind of problem, and many others of greater or
lesser difficulty, is to expect him to have some degree of proficiency in engineering. Most farmers do not have this proficiency. Most of them are not engineers, or
agronomists, or hydrologists, or foresters. They are farmers, and when it comes to
dealing with the erosion problems on their lands they almost invariably require
technical help and advice if they are to arrive at the correct solution 2

* * *

1
The Soil Conservation Bureau has estimated that 100 million acres are beyond
repair, and an equal vast acreage is rapidly deteriorating.
2

Such restoration and care of the soil obviously improve the farmer's output
and lessen his costs over the long run, also increasing the range of uses for
the land.




9.
Apart from these particular problems that confront farmers and the nation,
two questions will require consideration; in seeking the answers to them we may
learn something of the relationship of agriculture to the other parts of our
economy.




1) What caused the earnings of farm people to be so low during most of
the inter-war years, and what changes are necessary to enable farmers
to earn larger per capita incomes?
2) Why is income from farming so unstable, and how may this be remedied?

10.

III.

BASIC CAUSES OF AGRICULTURAL TROUBLES

The farm problem is a compound of several major factors and a multitude of
minor ones. In considering the future of our farm economy, it is essential to keep
in mind not only the effect of the major factors one on the other but also the rate
or extent of change, which may be as critical as the direction of change. This applies particularly to the farm product demand-supply relationship.
An excessively large labor supply, an increasing rate of output per worker, and a slackening in the rate of increase of demand characterize American agriculture today. Even on the face of it, these conditions point to an imbalance, with
depressed conditions and low earnings per worker the result.
What makes for these conditions is outlined in the following pages. How
each relates to prosperity or depression in agriculture and in the nation as a whole
is discussed also.
Surplus Laborl Resources
The excess of human resources engaged in agriculture is probably the most
important single factor in the "farm problem." The condition is symptomatic of ills
elsewhere in our economy, and is not likely to be corrected until these other factors have been righted. The surplus number of workers on farms reflects, first, the
slowing down of the non-agricultural industries in the latter inter-war years. Job
opportunities off the farm being limited, the normal flow of labor from farm to town
dwindled. Meanwhile, the large natural increase of the farm population, greater in
rate than that of the urban population, continued to add to the excess supply of
labor in agriculture.
A second important element making for an excess of workers on farms is the
continuous improvement in output capacity of farm workers. American agriculture is
in the midst of a technical revolution, the counterpart of the technological advance
in industry. These changes improve labor efficiency and the output per worker. The
labor-saving effect of this revolution has already evidenced itself, and the forward
surge in better farm equipment and techniques is still in its early stages.
Excess labor in agriculture does not show itself in crowds of men lined up
and looking for jobs. Instead of visible unemployment, there is over-crowded, underproductive, low paid employment. Agricultural unemployment is concealed in part
by what would be comparable to a spread-work policy in industry. Most farm people
stay at work on the farm, although some of them at times earn very little.
Since 1900, the proportion of the nation's working population engaged in
agriculture has dropped from 37 to 15 per cent.2 (A similar fall took place in
1

Refers to all workers - owners and operators as well as hired hands.

2
The large farm production of 1944 by such a small fraction of the labor force
required unrecorded hours of labor by the women and the very old and the very
young on the farms.




11.

other countries, as in Canada, where the drop since 1900 has been from 40 to 22 per
cent.) Nevertheless, the number still depending for a living solely on agriculture
is too large to permit all of them or even most of them to earn satisfactory livings
by farming.
If in the years ahead changes that increase farm productivity outrun
changes that increase demand, the serious unbalance in our economy will persist,
moderated to the extent that the economy expands and permits the movement of workers
out of agriculture. This unbalance will tend to depress the per capita earnings of
farmers except during wars or business booms or while inventories are being accumulated. The flow of labor from the farms must take place even when farming is enjoying good times.1
Factors Limiting Demand
On the demand side, negative factors weighed in heavily during the two
decades following World War I. During many years in that period, the low levels of
production and employment in the economy outside of agriculture meant a correspondingly low demand for the products of the farm used in industry as well as the aggregate food demand. Food demand does not, in fact, keep pace with rises in family
incomes; except for the very low income group, people spend proportionately less on
food as their earnings increase.2 it should be noted, however, that "proportionately less" still permits some increase in food demand as earnings improve, including
significant shifts in choice of foods. Low incomes mean a greater consumption of
cheaper foods such as grain products and potatoes; with higher incomes there is increased consumption of meat, dairy, and poultry products, fruits and vegetables.

1

"Although need for non-farm opportunities has been emphasized, it is vital to
maintain in agriculture a sufficient number of efficient people. Consequently,
attention should be focused not only on economic rewards of farming, but also on
every aspect of rural living. In this way, agriculture will be able to retain its
share of ambitious and able young people; for it remains true that many thousands
of persons who possess the necessary experience and ability, put forth the effort
required, use good judgment, and take advantage of available private and public
aids, will find their best opportunities on farms." Postwar Agricultural Policy,
Report of the Committee on Postwar Agricultural Policy of the Association of LandGrant Colleges and Universities, October 1944, p. 12.
2
Theodore W. Schultz has estimated that farm products as a whole have an income
elasticity of one-fourth; in other words, when per capita income increases 12 per
cent, the amount spent on farm products increases only 3 per cent. However, use
of the simple average obscures the fact that consumption of some farm products,
importantly dairy and poultry products and meat, moves in direct relationship to
income. Wheat and cotton do not.
As incomes increase, people may increase their expenditures for services attached to farm products. That is, they eat more meals in restaurants, hotels,
etc.; they buy more costly clothing, shoes, and the like. But these expenditures
will only slightly affect the demand for products at the farm. It is important to
recognize that demand for farm products in the aggregate does not rise in direct
relationship to total income. Agriculture in an Unstable Economy, pp. 60-70.




(The latter group of products require more agricultural resources — labor and
land.) With the low production levels in the economy as a whole during the I930fs,
however, very large numbers were in the low income group.
Demand for American farm products has been, and will continue to be, affected negatively by the fact that the rate of increase of population within the
markets available to the American farmer is dropping markedly. The rate of population increase has moved upward again during the war, but this is not expected to
continue. It is a phenomenon that has occurred temporarily during and after other
wars.
Instability of Income due to Business Fluctuations
In addition to the low average per capita earnings that characterized
farming in the twenty years between the wars, American agriculture has been burdened
by a great instability in its prices and therefore in the income obtained from the
sales of crops and livestock. Whenever business has boomed, net farm income has
risen fully twice as fast as non-farm income. Then when business declined, the net
income from farming has always fallen more sharply and further than the income of
persons not on farms.
Maintaining a stable farm income may be impossible if we do not learn how
to keep industry from the production extremes that are its past history. If we use
the period 1935-39 as the base, we find that from 1919 through 1941 total industrial
output in physical volume fluctuated from a point 42 per cent below to 62 per cent
above the base years1 average volume. The low level was registered in the depressed
years of 1922 and 1932; the high in 1941.
In the deep depression year of 1933, agricultural output by volume was
only 3 per cent below that of the base years (1935-39), and the low point in agricultural production in 1935 was only 8 per cent below. In 1941 total farm output
hit its prewar high level, but, even so, it was only 13 per cent above that of
1935-39.
The great swings in industrial output were reflected in similar swings in
national income; and, as national income dropped, demand along with agricultural
high prices also dropped. Farmers, however, continued to produce just about the
same aggregate amount of crops and livestock whether prices were high or low. Sometimes when farm product prices were falling, the individual farmer was driven to
produce more, to mine his land faster, in order to meet expenses and high fixed
charges on his land.
Income Instability and the Price Level
Apart from income instability stemming from changes in the agricultural
supply-demand relationship, farmers have suffered from wide shifts in the general
price level. Farmers who are in debt are particularly vulnerable, and since most
farmers are self-employed, many of them carry comparatively large capital debts. The
general level of prices is identified with the value of money. Farmers have a deeprooted concern about the value of money. They have been victims of the caprice of
the general price level too often to favor anything but a stable price level at high
employment.




13,
Many agencies of government are concerned directly or indirectly with
fiscal-monetary functions, which influence the general price level. The coordinating of these functions in a program designed to lessen the violent fluctuations of
the price level should be made an objective in government policy. Involved are
measures pertaining to the issue and retirement of money, to the raising and also
the spending of money by government, taxation, public borrowing and repayments, and
government loans to individuals and corporations. Policies in these areas that
would contribute to price level stability, as well as to high production and employment, are the subject matter of other studies for the Committee for Economic Development, but the Committee can not overstate the importance of this problem for
agriculture. It deserves high rating in any program for agricultural betterment.
The Problem of Farm Product Prices
As has been indicated above, the see-sawing of total farm income is caused
primarily by price changes, not by changes in the volume of farm output.1 Recognition of this fact has led farmers to insist on efforts to stabilize farm product
prices; if price stabilization could be accomplished, the farmer feels with some
justification that many of his difficulties would disappear. But price stability
is possible only if the relationship of demand to supply is comparatively constant.
The aggregate supply of food and other farm products is much more stable than the
aggregate demand. Changes in total demand and shifts in demand for a particular
commodity express themselves primarily in farm-product price changes, and only slowly affect output. The ease with which the consumer can substitute one food for
another, and can shift to lower-price commodities, should be remembered. Agriculture is a highly sensitive barometer of what is happening elsewhere in our
economy.
When we try to get around this by fixing prices by law at levels as high as
when demand was at the peak, we encounter the "surplus" problem — what to do with
the excess above what the market will take at such floor prices. The government
buys it up, either directly or through loans, and then starts worrying about how to
hold it or dump it. Experience confronts us with the fact that merely setting a
price or fixing a parity formula by law does not solve farmers' price problems.
Agricultural price policy should be such as to leave prices free to carry
most of the load of guiding agricultural production, as well as to gain the largest
possible volume of consumption of farm products. Unless prices are free to reflect
the volume of demand that can be obtained,2 farmers will inevitably over-produce
some products and under-produce others. The natural variables in agricultural

1
Variations in volume occurring in specific crops do affect both the price
the income earned. Apple prices, for example, may suffer from an extra large
A small crop does not necessarily have the reverse effect; that is, the price
not benefit to the extent that might seem indicated by the limited crop. The
ticity of demand for the particular product will be a determining factor.

and
crop.
may
elas-

2
This assumes that a fall in farm prices will be quickly transmitted to retail
prices, encouraging expansion of consumption to as great an extent as possible.
This has often not been the case, and it is one grievance of farmers against other
parts of the economy.




14.
production represent sufficient problems in marketing without adding market distortions due to rigid prices.
For maximum usefulness, our pricing system must operate in such a way that
price differentials will channel production away from items for which demand is
diminishing and toward items for which it is increasing. But provision should be
made so that a violent and unpredicted drop in the value of a commodity will not
impose upon the growers and holders of surplus quantities a penalty and distress
wholly out of line with the relationship of total quantities to total demand. For
example, "stop loss" floors have been used successfully to check disastrous price
drops which otherwise would have magnified the effect of local or temporary gluts
without regard to the over-all supply-demand situation. Marketing agreements have
been effective in diverting short-term peak surpluses to lower-value uses, thus
avoiding temporary price collapses which by their violence do great harm to the
producer with no real benefit to the consumer.
While price policy should support the basic price function of guiding
agricultural production, it should not discourage the search for ways to minimize
price uncertainties. Violent short-term price fluctuations occur, sometimes intensified by speculation, which have no relation to longer-term, supply-demand price
adjustments. The present marketing system for farm products would be improved by
lessening the violence or range of these swings.
An important shortcoming of any policy operating through farm product
pricing lies in the fact that little can be done through prices alone to improve
the productivity or income of the two, or even three, million farm families with
the lowest income. Their land may be worn out or too poor to begin with, or their
capital in land and equipment may be too meager to yield an adequate return no matter what market prices may be. Unless these deficiencies are remedied or new
sources of income are developed, most of these families will remain poor. Of this
large group with low farm incomes, about one million have non-farm income and are
not entirely dependent on agriculture.
Between the price the farmer receives and the price the housewife pays
stand the charges for whatever services have been rendered in processing, packaging, transporting, and marketing the product. Farmers and consumers alike are
interested in these costs. They cannot be eliminated by the farmer nor can he do
much to affect them.l When consumption rises swiftly, as during the war, expanded
1

The Land-Grant Colleges report points out that farmers' cooperative associations have improved the marketing of agricultural products and the purchasing
of farm supplies and services. As pace-setters in promoting efficiency, they
benefit non-members as well as members; in the long run a portion of the savings
they achieve is passed on to consumers in the form of lower prices. Despite the
contributions of cooperative marketing associations and the work of consumer
societies, and improvements in distribution efficiency, most costs and charges
between farmer and consumer are on a unit basis and remain rigid while prices
change.




15.

demand! makes itself felt at each point. The result is an ultimate price that grows
larger because it is inflated like a balloon in successive "blows". To the farmer
and to the consumer (the ultimate seller and the ultimate buyer), the difference
mounts high.
On the downgrade, a drop in the retail price that is small percentage-wise
may be proportionately very large when it has been passed along to the farmer. That
part of the price accounted for by the services between the farmer and the ultimate
consumer is not proportionately affected. The farmerfs price is the most flexible
item in the column of costs that make up the consumer price.
1910-14 Parity
Thoughtful leaders in agriculture and in Congress and the executive branch
of government are giving serious study to the problem of farm product prices.
Leaders in non-agricultura] business and in labor have a stake in maintaining a
prosperous agriculture, and they should lend their help. Farmers have fought for a
quarter of a century to get the concept of purchasing power parity established in
the law. They will resist its discontinuance unless some workable and satisfactory
standard is offered in its stead, even though they may recognize defects in the
1910-14 formula, now the "base" for price guarantees and the yardstick for farm
programs intended to influence the prices of farm products.
In general, "parity" as defined by the present law is the price in today's
market that will give a farm product the same exchange value — the power to buy the
same amount of goods and services — that the product possessed in the period 191014, just prior to the first World War. Through amendments to the law the growers of
a few products have obtained a more favorable base period than 1910-14.
The five years 1910-14 were designated as the "parity" base period in the
bitterly contested farm relief bills of the 'twenties. The Agricultural Adjustment
Act of 1933 made parity prices based on the 1910-14 period the standard in setting
price goals for agricultural commodities. In that five-year period, farm product
prices relative to industry prices had been comparatively satisfactory. As a yardstick in remedying the disastrous collapse of the farm product price structure in
the 1920's, the 1910-14 standard had merit. It has much less meaning for agriculture and the economy as a whole in 1946.
Parity as an idea appeals to the public as fair and just. But used as a
legal instrument to fix farm product prices, parity based on a relationship that
existed 30 years ago has become a liability in American* agricultural policy. Making

1
Demand for American farm products swelled as normal supplies of countries in the
battle areas were eliminated. The abnormal rate of consumption of food and other
farm products by armies also enters in. Wartime price rises are not wholly related
to increased volume of demand but also to the nature of demand. Housewives (and
others) are not so selective in their purchases, and they more readily pay the asked
price, because of the known shortages as well as improved incomes. These kinds;of
demand have no counterpart in peacetime, but they do illustrate the impact on farmproduct prices of markets for the marginal portion of farm output.




16.
it effective, by means of loans and purchase programs, continues out-grown price
relationships and tends to perpetuate past production patterns; resists production
changes that are in farmers1 long-run interests and builds up surpluses toward an
eventual crisis and collapse; it tends to drive a wedge between internal and external prices of farm products that enter export trade, thus opening the way for
two-price systems, export dumping, and other measures hostile to a liberal foreign
trade policy.
Agricultural Price Objectives
A redefinition of parity is overdue. The needed standard of measurement
cannot be expressed in terms of commodity relationships. It should be a policy with
two objectives: to create conditions favorable to the enjoyment of at least a fair
minimum standard of realized income by farm families, and to guide farm production
into the pattern that makes most efficient use of agricultural resources.
An intensive study is needed of at least four major questions affecting
future agriculture policies. It is clear that the program of farm production control in the 1930's failed to accomplish many of its objectives. Facts are needed to
indicate why production controls were relatively ineffective, and what they may and
may not be used to accomplish. The problems of the family-size commercial farm need
to be examined separately from subsistence farming. The farm population problem
needs careful analysis on a regional basis and by type of farming areas. Information on the cxharacteristics of demand for agricultural products is far from adequate. The possibility of appointing a commission whose members are experienced in
dealing with agricultural problems to work jointly on an analysis of these questions
deserves careful consideration.
It is wholly unlikely that any formula or program will immediately bring
a satisfactory solution of the problem of parity of realized income among farmers
themselves and as between farmers and non-agricultural workers. Improvements over
existing practices and policies should be attainable, however. Some proposals that
move toward the objectives stated above are considered in the following section.




17.

IV, WHAT CAN BE DONE?
To Increase Consumption
Farm people have a major stake in all policies affecting non-agricultural
production and employment. The prerequisite to high agricultural income is an expanding economy. The fact that our employable population has been working regularly
— most of it at good wages — has been the prime factor during the past five years
in building up a mainly profitable demand for the products of the farmer.
With high levels of production and employment, an increased consumption
of livestock products would promote better use of more agricultural resources, including land and labor. This is in accordance with sound nutrition and the tastes
of people. (It seems probable that the general use of low-temperature food storage
will improve the possibilities of increasing consumption of meat as well as of the
choicer qualities of fruits and vegetables.)
In addition, when non-agricultural employment is expanding, the economy
can absorb the excess labor supply which, if held on the farm, depresses farm income
per worker. A study of periods in which American agriculture has been relatively
prosperous indicates that to draw a sufficient amount of the labor off the farms,
the output of non-agricultural industries has grown two or three times as rapidly as
agriculture.
While the main dependence for maintaining good markets for farm products
must always be on a high level of consumer income, the possibility of increasing
consumption through special measures to improve the diet of low income families in
this country will undoubtedly be given renewed attention after the war. The Committee certainly endorses that objective. Education in nutrition will work an
important, though slow, improvement in levels of health. How greatly such food
distribution and educational programs may add to the volume of food consumption is
still open to debate. The actual volume added to farm product consumption may be
relatively small. Improved diets often call for different foods, not simply more
food. Care needs to be exercised that such programs do not become a means merely
for moving surplus farm products, irrespective of their relationship to ideal diets.
To Increase Exports
In the year ending June 30, 1944, the government exported under lend-lease
alone $1.9 billion worth of agricultural products — about one-sixth of total lendlease shipments. In addition, there were some exports of farm products for cash.
In the three years prior to the beginning of World War II, agricultural exports
averaged $780 million annually.1 Though the dollar value of agricultural exports

1
"In agricultural exports, the United States lost much ground in the period between the two wars. They shrank, by any measuring stick. In dollar volume, they
exceeded the $2 billion mark for one or two years during the middle twenties, but
dropped to $800 million and less after the depression. The decline in physical
volume was also severe. (Cotton exports, most important of them all, dropped from
an average of 8.52 million bales during 1924-1929 to 5.42 million bales during
1936-1939.)" Schultz, op. cit. pp. 147-8.




has risen markedly with rising farm product prices, quantitatively the increase has
not been of major proportions, but there has been an important substitution of food
for reduced cotton exports. If American cotton prices continue seriously out of
line with world cotton prices, it is unlikely that cotton will return to its former
position in our exports when the food producing areas of other countries have been
restored. There will be high demand for both food products and cotton during the
rehabilitation period, but it is not likely to last long.
Percentage-wise, agricultural exports appear to be of quite secondary
importance in the total farm output. In 1938 (a good export year), total agricultural exports in dollars were roughly 8 per cent of gross farm income. Use of
such percentages ignores, however, the strategic role of foreign markets for particular crops, such as tobacco, wheat and cotton.
Major emphasis is placed, throughout this statement, upon the domestic
market and therefore upon business conditions outside agriculture, with their immediate effect both upon farm product prices and the distribution of the labor
force, the importance of foreign markets must not be lost sight of, however. The
United States has highly specialized agricultural resources suited and developed to
produce for export. But if our domestic prices for these crops continue above world
levels, other nations can be expected to oppose our subsidizing exports in increasing volume in competition with countries that are primarily raw materials producers.
During the transition, international commodity agreements may be counted
on to help us hold our present share of the export market for commodities such as
wheat and cotton for which there are serious surpluses in world markets. They will
not increase our agricultural exports. We should recognize that at bottom such
agreements parcelling out markets simply provide time for adjusting our production
to the volume we are prepared to sell competitively. American farmers will hold
their own in the world market with those products for which costs of production permit them to meet world prices. We should anticipate that we will not hold, over the
years, a large-volume export trade in commodities for which artificially high domestic prices are maintained.1
1
This statement deals with recommendations viewed as manageable within our own
country. Much more can be proposed if we and other nations agree to act in concert
to achieve fundamental objectives. Most proposals affecting American agriculture
anticipate readjustments in our agricultural exports that are "producer" adjustments. What may be called for, in the interests of the people of both our country
and other countries, are "consumer" adjustments.
A report by Arthur R. Upgren and William J. Waines points out that most of
Western Europe is an agricultural deficit area. In the 1930fs, wheat in this area
was priced at over two dollars a bushel, whereas production advantages in the United
States and other wheat surplus-producing countries made possible an average price of
less than a dollar. Europe could be far more efficient producing dairy and poultry
products, meats, fruits and vegetables in larger amounts and wheat, pork, and feeds
in smaller amount. The saving through purchase of her wheat needs, as one example,
would be enormous. Provided an expanded market, wheat growers in America might be
ready to accept free market pricing. Certainly benefit payments to our farmers that
were approaching a billion dollars a year while the people of Western Europe paid a
billion and a half in excessive prices for wheat, pork and lard do not recommend
themselves as common sense. See The Midcontinent and the Peace: The Interests_oj
Western Canada and Central NorthwegtUnited States in the Peace Settlements, a report prepared under the auspices of the University of Manitoba and the University of
Minnesota, University of Minnesota Press, August, 1943.




For the long haul, by the elimination of trade barriers and reductions in
tariffs, the over-all volume of our foreign trade — particularly our imports —
should increase, thus enlarging export opportunities for commodities in which we
have comparative production advantages. The importance of improvement in international trade both for economic progress and for peace is considered in detail in the
CED policy statement on international trade.1
To Increase Labor Mobility
Farm people do not quit the farm when agricultural prices are low; instead, judging from the experiences of the inter-war years, they leave farming when
jobs are available in industry. The excess supply of labor in agriculture diminishes when industry expands, and not necessarily when farm prices fall.
Various suggestions have been offered to broaden the opportunities for the
surplus farm population to find employment away from the farm. A National Labor
Outlook, comparable to the Agricultural Outlook developed by the United States
Department of Agriculture and the State Agricultural Colleges, has been recommended. Farm workers are especially isolated. They lack knowledge about the types of
jobs, working conditions, and earnings that may be available to them elsewhere. Existing employment agencies might be asked to provide specialized placement service
to help equalize the nation?s labor supply.2
Improvements could be made in the educational process that now prevails in
rural areas, as a means to improve labor mobility. The vocational training that is
available is mainly aimed to train farm youth to continue as farmers, It should be
broadened to develop skills and means of earning a livelihood in non-agricultural
pursuits for the boys and girls not needed in farm production.
The need for adequate health and educational facilities in rural areas can
not be over-emphasized. The farms have always been a major source of the nation's
labor supply. The cities have a direct interest in the health and training of the
farm population as future urban residents. Most educational and health costs are now
carried locally. Rural-farm people consequently bear a disproportionate share of
the cost of rearing and educating the children of the nation — cost reckoned in
terms of food, clothing, shelter, medical care, and education — because of the normal movement of young people from farm to city. This is true even though the job of
rearing and educating done in some overcrowded farm areas has been relatively a poor
one.
The process of educating youth in the country who will work in the cities
seems likely to continue. If the costs are to be distributed equitably and the job
well done, the federal government - through grants-in-aid - will have to invest more
heavily in the health and education of its rural and farm population. Progress in
1

International Trade, Foreign Investment and Domestic Employment, a policy statement by the Research Committee of the Committee for Economic Development, New York,
May, 1945.
2

It is important, too, that ways, be developed to extend the Social Security program to include agriculture, particularly with respect to old age benefits.




20.
this direction will enhance the worker's productivity and at the same time add to
his mobility. High industrial activity, if achieved for the country as a whole,
will not of itself correct the general low earnings of such areas as the cotton
South, and federal aid will be required until such areas have moved ahead with essential reorganization. The nation can not neglect the educational and health needs
of children.
It should not be necessary, in order to bring workers and non-agricultural
jobs together, for the workers to do all of the moving. Greater mobility of capital
in a decentralizing movement of industry into areas of labor surplus is needed also.
The ability and willingness of the individual to leave his community and to seek and
find occupation elsewhere should not, furthermore, be the chief means of effecting
the transfer of surplus rural population to industry and commerce. Instead, there
should be some definite and organized effort to develop industrial and commercial
activity in the very areas in which surplus population is located. The possibilities should not be overlooked that new processing industries using raw material
grown in such areas can be located locally. The need and the opportunity for expanding services and distribution facilities is great in many rural areas not
seriously troubled with labor-surplus as well as those that are.
Measures that would increase the number of subsistence farms are not a
remedy for the under-employment problem in agriculture. Too many farm families are
already barely at or are below a subsistence level of living for one reason or another. This does not mean that there may not be many more farm residents who earn
the major part of their income by non-agricultural employment, especially as an accompaniment to decentralization of industrial production.
Attention needs to be given to other barriers that obstruct the migration
of farm people. The entry of workers into many fields is blocked by restrictions,
some imposed by organized labor groups. Federal programs for recruiting and distributing the farm labor supply during the war contained provisions that were actually
barriers to interstate migration. Social controls inherent in customs and traditionsl often play a decisive part in checking the movement of people from farms. To
ignore these various factors after the war will be to aggravate one of agriculture's
major problems, the over-supply and mal-distribution of farm labor.
To Lessen Instability of Income
The instability of income from farming originates, as has been pointed
out, from three sources: fluctuations in the general price level, changes in the

1
"As a group, the money wages of farm (hired) laborers are generally low, their
living conditions are unsati3factory, and they do not participate generally in the
benefits of the social security program. This situation can be partly remedied if
farm laborers in the future are included in the social security program for old age
and survivor's insurance, and also receive the benefits now available to workers in
industry under the unemployment compensation program.
"For migratory workers there should be permanent labor numes and modern labor
camps, which can be provided by farm cooperatives as well as by state or federal
agencies. Both laborers and farmers can be aided by a coordinated program of job
placement information and service." Land-Grant Colleges report, OJCK ciLt^, p. 37-38.




21.
volume of demand, and uncertainty in crop yields. As was emphasized earlier in this
statement, any price policy for agriculture worth consideration must begin with the
general price level. Attention to specific price maladjustments will not avail much
for greater stability of agricultural income while the general price level continues
to gallop up and down.
To lessen instability due to changes in the volume of demand, it is important that the industrial-urban economy be stabilized at a high level of production. Attainment of this goal would automatically minimize the instability of farm
income associated with business fluctuations. Farmers have therefore, reciprocally
as it were, a very immediate interest in CED research studies and policy statements that deal with problems affecting high production in the industrial and commercial sectors of our economy. Nothing is more important to farm income than this
goal, which would provide a setting favorable for policies and special measures
aimed at stabilizing farm income and product prices.
What to do in case drastic business fluctuations do occur is a natural
agricultural worry. The prospect is that American farmers will find themselves
confronted periodically by a widespread and recurrent curtailment in the demand for
farm products, certainly until our modern industrial-urban economy has put its house
in order sufficiently to avoid major business fluctuations. While these cycles come
and go, what are farm people to do? The farmer is no more willing than the next man
to sit and wait. They will be searching for the best among possible alternatives to
offset the effects of business fluctuations upon them. The Research Committee of
the CED feels that it can appraise some of the proposed remedies, but that it is not
its province to urge the adoption of any particular program.
Short-Run Production Adjustments
The suggestion will undoubtedly be made that farm output be reduced when
unemployment spreads and demand falls, and expanded when business booms, thus fitting agricultural production to business fluctuations. The strongest argument
against this policy is that it would hurt the rest of the economy, by making food
and other farm products more costly during depressions, without substantially helping the farmer. It would not help to correct the depression; it would merely deepen
its incidence. Moreover, because of the structure of the farm sector of the economy, with its multitude of small units, as well as the nature of crop and livestock
production, much of which has to be planned ahead for long periods, it would be difficult, if not impossible, to control the short-run supply of agricultural goods to
the extent necessary to maintain stable prices. It is likely to prove a considerable task for agriculture to make even the long-run adjustments required by permanent demand changes.
Fixed or Guaranteed Prices
Another alternative likely to be offered is the use in periods of economic
depression of a system of price guarantees similar to those adopted in wartime to
secure the needed large volume of war food production. The existing system of price
guarantees will, in fact, continue for two years beginning with the January 1st
following the date when the President or Congress declares the war emergency period
at an end. These government-pledged price supports apply to most important farm
commodities produced commercially in this country, and for some the guarantee
promises to maintain prices at 90 or 92 per cent of parity.




22.

It will be a task of some magnitude to meet those guarantees. For example, with perishable and semi-perishable crops like livestock and dairy products,
fruits and vegetables, it is necessary that prices permit the markets to clear the
supplies that are delivered. There are practical limits to the quantities which
public or private agencies can store while they look around for new outlets. If for
any reason consumer purchasing power falls off while the prices of these commodities
are held at a support level warranted by a wartime market the quantities bought and
consumed will drop. Farmers will find they are producing and delivering more than
the market will take at the old price, no matter what the law says.
The problem will not be much simpler even for durable products like cotton. If Congress by passing a law, or the Department of Agriculture by issuing a
regulation, fixing the price of cotton at 18 or 20 or 22 cents a pound, could move
the cotton crop into consumption at that price, we should not have much of a cotton
problem. It might work if the demand for cotton could be met only by the American
staple and nothing else, and if over lean and fat years the demand equalled the
supply. But the peacetime world can buy cotton in markets other than ours, and the
domestic mills can use synthetic fibers. Many cotton producers have sounded a warning to stop, look, and listen lest we wake up some day to find we have priced ourselves out of the market.
These same difficulties would operate against the successful functioning
of fixed or guaranteed prices as an instrument to mitigate farm income instability
due to depressions. The public has accepted guaranteed price supports for war purposes, and to cushion the shock of readjustment from war to peacetime volume and
prices. However, there is reason to fear the tendency to shove the supports up and
up to higher levels that, continued, can have very undesirable consequences. A system of rigid, legislated prices extended indefinitely into the future can do a great
deal of harm to the farmers themselves, distorting their production decisions both
as to the kind and the quantity of crops or livestock they produce.
There is room fQr improvement in the free-price marketing system for farm
products, and the business community has a responsible part in it. In this discussion, the criticism of high support prices that freeze markets does not extend to
measures aimed at lessening short-term price uncertainties such as result from local
or temporary surpluses.
Price guarantees, fixed at levels higher than the over-all supply-demand
situation warrants, tend to hold more producers in a given field than would otherwise stay there. Farmers will go on producing a crop because its price is sustained, even though the actual demand may call for reduced volume, and perhaps for a
lesser number of producers. In the transition period, with many persons footloose,
such price guarantees may draw many others into farming. Sooner or later, the supply-demand channel becomes clogged, and a bewildered nation wonders why we "overproduce ."
The country is now involved with far-flung price guarantees, and others
will probably be urged to achieve necessary regional adjustments. This suggests
that consideration should be given to fixing the guarantees on a sliding scale, with
the guaranteed price declining from period to period as its adjustment purpose is effected. Thus, a declining scale of price supports could be used to help get from 20
cent cotton to a price that could meet competition in the domestic and world markets,




23.

while essential changes in the use of the resources of the cotton South (or other
areas) are being made. Price supports may have a legitimate peacetime role in minimizing losses and hardship, but they should not be allowed to freeze production
patterns.
Government Payments to Supplement Prices
Many difficulties and disadvantages attend attempts to fix market prices
and maintain them independent of changes in consumer buying power or changes in the
volume of supply. Experience with fixed prices has been sufficiently discouraging
to prompt search for other ways to support and stabilize farm income. One proposal
offered is that the Government under certain conditions pay directly to the farmer
the difference between the unit price guaranteed and the price obtainable in the
market. Such payments are not intended to displace the very much needed programs to
improve marketing processes, to develop new uses and outlets, and otherwise to
stabilize and strengthen markets. Those who advocate the direct supplementary payments (including many leading farm economists) argue that the country as a whole,
including the farmers, would be better off by permitting the price flexibility necessary to move farm products fully into consumption, avoiding the building up of unmanageable surpluses in Government hands. The payments would safeguard the farmer
without disturbing full-volume production and trade.
Transition Payments
The exact character of the payments, and the conditions under which they
would be made, would differ with their purpose. Where the purpose is to discharge
the government's commitment to support farm prices for two years after the war, market prices would be relied upon to channel farm products into trade, governmental
payments to the farmer covering the difference between the current market price and
the support price commitment. Those favoring this procedure claim that it would
afford an orderly way of making the transition from the war to the postwar supply
and demand situation, without concealing from the farmer the necessary or desirable
production changes. The public interest requires that the government carry out its
pledges and yet do so in ways that would have minimum adverse effects on agricultural
production, trade, and consumption.
Adjustment Payments
Where the purpose is to aid a depressed sector of agriculture in making a
transition (such as now confronts the cotton South) affecting markedly the production, employment, and income of the farm families in the area, the adjustment payments would be made to participating farm families for,specific performance. Here
we are dealing with a problem that is neither cyclical nor transitional, but essentially long run in its characteristics. The adjustments in themselves will be
long-period ones. Payments for this purpose should be geared to the adjustment
deemed necessary for a better economic balance in the area in question.
Payments to Counteract Business Fluctuations
A system of compensatory payments has been proposed to counteract the adverse effects of acute industrial depressions upon the income from farming. A particular argument offered in its favor is that since such payments would be made only




24.
in the trough of the business cycle they would be counter-cyclical in their general
effect; they would help to maintain industrial markets and to keep a depression from
dropping as low as it might otherwise do. As in the case of the transition period
payments discussed above, compensatory payments would have to be made in a fashion
that would not distort agricultural production or the trade of farm products.
The Use of Payments; Pros and Cons
In the current debate on future agricultural policy, sharp lines are being
drawn between those who believe direct supplemental payments can be used to bring
flexibility into the farm commodity price structure without damage to farm income,
and those who condemn direct payments as "cheap food" devices that would make farmers dependent on "subsidy" props that might be withdrawn at any time. As is often
the case, the arguers on both sides tend to over-simplify the issues.
The use that can be made of direct payments in meeting future agricultural
problems should have careful, objective study. Payments can not be substitutes for
the various forms of effective action that can properly be taken to support and
stabilize market prices for particular commodities. In s6me cases, however, they
offer important advantages over rigid price-setting in that they would protect
farmer income while leaving market prices free to command as great consumption as
possible, and to indicate the probable direction of demand.
Farm leaders who are suspicious of the direct payment proposals ask these
questions: "Why should agriculture be the one large group in the economy condemned
to live on direct Treasury subsidies? Labor is given minimum wage guarantees and
legislative aid to demand and get higher wages which are passed on to the consumer
by manufacturer and dealer. Why should not the farmer be enabled to collect a living price from the consume:- in the same way, without being forced to depend on government subsidies?"
These questions open some interesting lines of thought which this statement can not explore at length. There are essential differences between direct payments to farmers as a method of making good on wartime guarantees, payments to help
bring about needed regional adjustments, payments to offset agricultural depression
arising from severe drops in industrial activity, and the subsidy payments now in
effect to hold or roll back farm commodity prices even though consumer purchasing
power is at a peak. The probability that a program of maintaining high fixed prices
in the market will also require large Treasury subsidies can not be overlooked.
All the tools in the kit are likely to be needed in evolving a workable
agricultural price structure in the postwar years. The problem will be to select
the best ones, or the best combination, not only for agriculture's welfare, but for
the general public interest.
To Lessen Production Risks
Many things need to be done to lessen risks due to fluctuations in agricultural yield. Some of them require government aid, others do not.
The most promising general line of action probably lies in further improvements in farm practice and technology. Over the long run, individual farmers




25.

can be assisted to do much more than they are doing to reduce the instability in
their output. Better farming practices often require more capital in the form of
land and equipment. The farm family that produces much of what it needs for living
is less vulnerable than the single cash-crop farmer who buys all his living at the
store, provided, of course, the diversification of effort does not sacrifice the
advantages of specialized production.1
Farming on the contour, terraces, lateral runways, and the like — practices that hold needed water where it falls — in most cases will pay their own way
in lower costs and greater production stability. Pasture development and management
is a promising field in mixed farming areas.
All programs aimed either to guide or stabilize farm production should
hold to conservation of the soil as a primary purpose. Technical assistance and
financial aid will continue to be required by most farmers. Farm tenure arrangements, taxation, and other devices that now widen the gap between the earnings of
our farm land and the long-range social costs should be overhauled. Many of the
remedies lie in the hands of the states and localities.
Much land now being farmed is too poor to yield its operators a satisfactory living. Great areas have been homesteaded for general farming where the
risks are too great for safe use except as range. Much submarginal hill land should
be reforested. Long-range programs should be developed to restore these areas to
proper safe use for timber growing. This field offers a wide opportunity for action
by the federal government, by the state involved, and by private enterprise.
We shall face a need for widespread farm production adjustments as far
ahead as anyone can see. Only at the price of excessive hardship are long-range,
general shifts in production to meet permanent demand changes accomplished by individual farmers working alone; for effective adjustment they will continue to need
the cooperative machinery that is provided by the government. Experience has made
clear, however, the undesirability of attempts to adjust production to counteract
short-run fluctuations in demand. Experience sounds another note of caution: government "adjustments" programs actually tend sometimes to retard the needed adjustment, preserving the status quo which must, on the contrary, be changed before
fundamental improvement is possible.
1

"...the family-type farm should remain the basis on which American agriculture
typically is organized. Although there is no reason to standardize all farms, because of differences in agricultural requirements and in the managerial abilities of
farmers, the best interest of the country will be served when a majority of farms
are of the type on which the operator, with the help of his family and perhaps a
moderate amount of outside labor, can make a satisfactory living and maintain the
farm's productivity and assets. About 3,000,000 farms are of this kind at present,
compared with about 80,000 larger-scale farms and plantations. The nearly 2,500,000
other farms listed by the census are small units. About half of these, however, are
not dependent on agricultural income, for they are part-time farms and rural residences. There remain over a million very small farms, many of which are subsistence
farms, on which the families are trying to gain a living by farming." Land-Grant
Colleges report, oj^jcit^, p. 30.




26.
A system of crop insurance for areas of high climatic risk is recommended
by many persons well acquainted with the problems of these areas. The main purpose
of crop insurance is to minimize the effect of year-to-year fluctuation in weather
upon the individual farmer's income. If the cost of insurance were to be borne by
the general public, it would result in the long run in rising land values and rents
with little real gain to the individual farm family. The cost should be borne by
the parcel of land concerned, and reflected in its value.
There is much to be said both for and against a broad permanent program
for the storage of feed grain as an aid to stabilizing livestock production. Favoring storages is the fact that feed crop fluctuations translate themselves into ups
and downs in livestock production. If the extra grain in years of better-thanaverage crops is stored and used for feed in below-average crop years, livestock
production will tend to be stabilized. However, the danger that such storage programs may be used as a device to raise feed grain prices is very real. High feed
prices tend to restrict livestock production and thus to build up increasingly large
supplies of grain which overhang the market. This danger could be met by conservative storage practices that erred — if error were necessary — on the side of generous current consumption.
Neither crop insurance nor "ever normal granary" programs can be operated
without the aid of government. Nor is it possible to bring safe farming practices
within the reach of two million or more low-income farm families without a comprehensive public program of technical assistance and education.




27.

V. SUMMARY
After the war farmers will tend to produce more than they produced before
the war. The demand for American farm products will fall when relief and inventory
needs have been met. The nation will then face the "farm problem" once more; before
then it should know something about (a) what causes chronic agricultural depression
such as marked most of the inter-war years, and how may agriculture avoid it? and
(b) why is income from farming so unstable, and what may be done about it?
* * *
General policies designed to achieve reasonable stability in the general
price level and to keep the industrial-urban economy going at a high level of
production are of first-rank importance to farmers. There are two points of view
on the interdependence of agriculture and the city industries, often expressed as
though they conflict with each other. One claims that high level employment and
prosperity in city occupations depend importantly on high farm income and rural purchasing power. The other claims that we cannot have a flourishing agriculture unless those in non-farm employment prosper, with full employment at high wages.
Neither claim cancels the validity of the other; an argument as to which factor
takes precedence is like an argument over whether the right leg, or the left one,
is responsible for moving a man as he walks.

Agriculture can reach its highest state of well-being only in an environment of high level employment, unrestricted and abundant production, and high purchasing power. These are important to everyone, but they are particularly necessary
to farmers. No other factor can possibly mean as much to the welfare of the farmers
as good consumer markets. Moreover, high-level industrial production provides a
large supply of goods to trade for the products of the farm, thus improving the
terms of exchange for the farmer.

Expanding non-agricultural employment - and thereby providing goods and
services that can be absorbed in a rising standard of living - is important not
alone because it means adequate markets for the products of the farm; it is vitally
necessary in order to offer jobs to surplus farm workers who otherwise remain on
farms and worsen the problem of overpopulation and underemployment that has characterized the farming business. An active urban economy means job opportunities for
those who are not needed on the farms.
#

#

• *

Export shipments of food after military and relief needs end will fall
sharply below the wartime lend-lease volume. Special devices aimed to raise the
level of nutrition of low income groups are properly social measures, not farm
relief; they should not be expected — or used — to solve agricultural surplus
problems. In the long run, educational programs can help bring about needed improvement in the quality and quantity of the nation's diet and at the same time




28.
strengthen the farmer's market, but volume of consumption will depend mainly on the
continuance of high total consumer buying power.
* * *
It is important to increase farm labor's mobility through broader vocational training and better information and placement services. Greater mobility of
capital accompanying decentralized industrial production into areas of labor surplus
would bring non-agricultural employment to underemployed farm workers.
* * *
Given free movement of surplus workers from farms to other jobs, and
adequate capital (land, buildings, and equipment) for the families remaining on the
farm, better soil management and farm practices and improved technology would result
in larger production per family and lower costs per unit, with better net returns
and higher living standards than farmers as a whole have ever known.
* * *
Government assistance will continue to be needed in many ways. Crop insurance by which year-to-year production risks are leveled off, with the costs
reflected in the value of the land insured, may be of aid to the Plains states;
storage of grain carried from above-average to below-average crop years may contribute to stability of livestock production, if safeguards are set up against use of
storage to hold up prices. A nation-wide soil conservation program means much in
the long run to cities which will suffer most if the fertility of the soil continues
to be depleted. Farmers will need the help of government if they are to make the
production shifts required by permanent demand changes. These and other government
programs are required after the war. It is a concern of all citizens to see that
they are both conceived and administered well.
* * •*
If demand subsides to peace levels while agricultural production remains
high, as seems likely, a heavy drag will be imposed on the government's price guarantees. Before the problems that will attend that situation confront us, careful
thought needs to be given to what our peacetime agricultural price policy should be.
* * *
Improvements in the kinds and cost of credit for agriculture; support for
agricultural cooperatives; commodity loan and storage programs; adjustments and curtailment of acreage and production; fixed or guaranteed prices; marketing agreements;
parity payments to producers — these are some of the instruments of agricultural
policy that have been used. Some are still in use. Not one is complete or fully
effective by itself. Adjustment programs which seek to control shortrun production,
in order to offset cyclical fluctuations in demand and to increase or sustain
prices, have proved difficult and relatively ineffective. Fixed or guaranteed
prices are likely to produce harmful effects, not the least being the effect on the
farmer of "surpluses" which appear when producers deliver more than consumers will
take at the guaranteed price. Efforts should be continued to find better ways to




satisfy both the government's obligation to agriculture and the needs of the general
welfare. No simple rule or formula is likely to be found for agricultural pricing
policy. Current disagreements notwithstanding, continued study should be given to
the use of supplemental payments to farmers to carry out postwar price guarantees,
to encourage needed production adjustments, or to offset a fall in consumer buying
power.

We are depleting our soil and plant-food mineral reserves at a rapid rate,
and without these in the right supply we shall have neither healthy plants nor
healthy people. The farms are giving up to the cities in the process of land mining, which is what much farming is, a mineral wealth which the farmer does not
figure in his costs. He is depleting his reserves year by year, but he cannot
charge- it against his taxes or pass it along in his prices. Those who live on the
pavements owe it to their farmer neighbors to take more than a passive interest in
the protection and restoration of the land. Farmers must do the work and take the
initiative, but ways must be found for the rest of us to do our part. We have the
land resources to provide abundantly for our prospective population only if we stop
wasting the soil and care for what we have left as well as we know how.
* * *
If family-type farms are to continue and the farm family is to enjoy a
fair standard of living, they must command capital in the form of land and modern
equipment adequate to make them efficient producers. Agricultural development in
the United States has been attended by a continuous rise in each farm worker's productive capacity. At the time of the nation's birth more than 90 per cent of the
population worked on farms, producing a scant surplus for the small minority living
in cities and towns. In 1944, less than 20 per cent of the population was on farms,
and the large agricultural output of that year was produced by 15 per cent of the
nation's labor force. More food and raw materials at lower costs, produced by fewer
farm families, is of course the corollary of increasing efficiency in equipment and
farm technology on small as well as large farms. Further development in this direction will come with a rush after the war.

The farm is the seedbed of our population increase. It is the most important source of new blood for the cities whose population does not otherwise sustain itself. Standards of nutrition, health, and education in rural areas, therefore, are of prime national concern. To see that the farmers have equal facilities
and opportunities in these respects is not merely fair play; it is important to
national self-preservation. The whole economy shares the responsibility to see that
over-populated rural areas are able to make better provision for educating and
training their youth and for health and nutrition. It is important to the nation,
too, that farm conditions be attractive enough to hold on the farms a sufficient
number of well-qualified persons to make for an improved agricultural economy.




###

30.
ABOUT THE COMMITTEE FOR ECONOMIC DEVELOPMENT

Peacetime expansion plans, whether by manufacturers, wholesalers, retailers or
any other type of business, are important first to the company or individual businessman making the plans. They are almost equally important to the community of
whose economy the given business is a part. Finally, every separate postwar plan
prepared and put into effect by America's more than 2,000,000 business employers,
large and small, is important to America as a nation.
WHAT IS CED?
To help stimulate private enterprise to plan realistically for business expansion and greater employment after the war, the Committee for Economic Development, or "CED," was organized as a private, non-profit, non-political association of
businessmen. To avoid mass unemployment, CED believes that American business should
aim its planning sights toward —
1.

Thirty to forty-five percent more business volume than in 1940, which
in turn would provide:

2.

Seven to ten million more jobs than in that same year.

CED is organized, under a Board of Trustees composed of twenty-seven of the
nation!s leading businessmen, into two major units — the Field Development Division
and Research Division.
The Field Development Division
The Field Development Division's basic job is to encourage bold and realistic
planning by individual businessmen for more production, sales and jobs in their own
companies.
To do this, local CED committees have been organized throughout the country.
More than 2900 such local committees are already at work in most communities of
10,000 population or over in the U. S. as well as in many smaller towns and villages.
The 60,000 individual businessmen who are volunteer members of these local CEDfs
are in contact with an important segment of the nation's 2,000,000 business employers
Thus, on a company-by-company basis, American business, large and small, is
being urged to plan for expanded production, distribution and employment in the
postwar period. Each local CED committee acts with complete autonomy in tackling
its own postwar employment problems.
Nationally, the Field Development Division acts as a clearing house for the
best ideas on company planning. It seeks in this manner to provide to CED community committees, and through them to individual businessmen, all possible assistance in carrying on their postwar planning. This assistance takes the form of handbooks, sound slidefilms, charts, etc. suggesting step-by-step planning procedures.
To prepare such material, the CED has mobilized the nation's outstanding
business experts in various phases of business activity — production, sales,




31.

advertising, etc. These experts, formed into twenty-seven Action and Advisory
Committees, have pooled their "know-how" for the benefit of all businessmen.
The Research Division
The efforts of individual businessmen and companies to expand and increase
employment — important as they are — cannot succeed unless we have a favorable
"economic climate," in which individual plans will have a chance to become realities.
In order to determine what policies of government, business, labor and agriculture will best contribute to an expanding economy, the CED Research Division was
organized. Under the CED by-laws "all research is to be thoroughly objective in
character, and the approach in each instance is to be from the standpoint of the
general welfare and not from that of any special political or economic group."
The Research Division consists of three groups:
1. A Research Committee of businessmen. After months of careful study and
frequent meetings with members of the Research Advisory Board and Research Staff,
this Committee issues official Statements on National Policy, such as the following:
"Postwar Employment and the Settlement of Terminated War Contracts," published October, 1943.
"Postwar Employment and the Liquidation of War Production," published
July, 1944.
"Postwar Federal Tax Plan for High Employment," published September, 1944.
"Postwar Employment and the Removal of Wartime Controls," published
April, 1945.
"Problems of Changeover Unemployment," published August, 1945.
"Toward More Production, More Jobs and More Freedom," published October, 1945.
The Research Committee is also charged with the responsibility of selecting
subjects for study and authorizing independent Research Reports by outstanding
experts. (See list of Research Studies on page 32.)
2. A Research Advisory Board of economists and social scientists. This Board
consults with the Research Committee and gives the businessmen the benefit of specialized knowledge. It also has the responsibility of approving, in terms of
technical competence but not in terms of content or conclusion, the independent
Research Reports made by the experts on the Research Staff.
3. Research Experts have been engaged by the Research Director on the basis
of special qualifications to undertake special studies.
Once a subject is assigned, the economist has complete freedom of conclusion
and expression. The results of his research are, however, discussed at frequent
meetings of the Research Committee of businessmen, sitting with the Research Advisory Board of economists and social scientists. As the facts are clearly developed,




32.

the areas of disagreement are gradually narrowed down. The author is the final
authority on both the content and the wording of his report, and thus he alone is
responsible for its conclusions, which may or may not agree with the official Statement on National Policy issued by the Research Committee of businessmen.
The following Research^Reports for the CED have been completed and published
by the McGraw-Hill Book Company, Inc.;
"The Liquidation of War Production"
by A. D. H. Kaplan
"Demobilization of Wartime Controls"
by John Maurice Clark
"Providing for Unemployed Workers in the Transition,"
by Richard A, Lester
"Production, Jobs and Taxes"
by Harold M. Groves
"International Trade and Domestic Employment"
by Calvin B. Hoover
"Agriculture in an Unstable Economy"
by Theodore W. Schultz
Publications of the CED Research Division fall, therefore, into two
categories:
(1) Official Statements on National Policy issued by the CED Research
Committee of businessmen.
(2) Research Reports embodying the individual views of the scholar assigned
by the Research Director to each special study.
The Value of Economic Research to Individual Businessmen
Both the number and the complexity of the problems of reconversion, transition, and postwar expansion make it difficult for the unaided businessman to keep
abreast of developments and to think through their implications for him.
CED urges that all businessmen make a strong effort to study the facts and
to utilize research material available from all sources, that they may be better
able to plan for postwar progress in their own enterprises, and contribute to the
broader objective of achieving a sound and stable "economic climate" favorable to
business activity and job expansion. This applies not only to "top management"
but to executives in the production, sales, personnel and other staff divisions who
share in decision-making, and certainly to the small businessman, who must make
all of his postwar planning decisions himself.




33.
CED FIELD DEVELOPMENT COMMITTEE

Walter D. Fuller, Chairman
President, Curtis Publishing Co.
Philadelphia, Pennsylvania
Curtis H. Gager, Vice Chairman
Vice Pres., General Foods Corp.
New York, New York

David C. Prince, Vice Chairman
Vice Pres., General Electric Co.
Schenectady, New York

Region 1
Henry P. Kendall, President
The Kendall Company
Boston, Massachusetts

Region 6
H. Carl Wolf, President
Atlanta Gas Light Co.
Atlanta, Georgia

Region 2
James H. McGraw, Jr., President
McGraw-Hill Publishing Co.
New York, New York

Region 7
Ralph Budd, President
Burlington Railroad Co.
Chicago, Illinois

Region 3
Thomas Roy Jones, President
American Type Founders, Inc.
Elizabeth, New Jersey

Region 8
Dr. Wm. McClellan
Chairman of the Board
Union Electric Co.
St. Louis, Missouri

Region 4
George D. Crabbs
Chairman of the Board
Philip Carey Mfg. Co.
Lockland, Ohio

Region 9
Harry W. Zinsmaster, President
Zinsmaster Bread Co.
Duluth, Minnesota

Region 5
Robert M. Hanes, President
Wachovia Bank & Trust Co.
Winston-Salem, North Carolina

Region 10
Grant Stauffer, President
Sinclair Coal Company
Kansas City, Missouri

Region 11
John W. Carpenter, President
Texas Power & Light Company
Dallas, Texas

Director of Field Development
C. Scott Fletcher
Assistant Director of Field Development
Henry R. Johnston




Assistant Director of Field Development
Richard S. Testut

34.

CED BOARD OF TRUSTEES
Paul G. Hoffman, Chairman
President
The Studebaker Corp.
South Bend, Indiana

Walter D. Fuller
President
Curtis Publishing Co.
Philadelphia, Pennsylvania

Marion B. Folsom, Vice Chairman
Treasurer
Eastman Kodak Company
Rochester, New York

Clarence Francis
Chairman of the Board
General Foods Corp.
New York, New York

W. Gibson Carey, Jr.
President
The Yale & Towne Mfg. Co.
New York, New York

Lou Holland
President
Holland Engraving Co.
Kansas City, Missouri

Frank A. Christensen
Vice President
The Continental Insurance Co. and
Fidelity & Casualty Co.
New York, New York

Charles R. Hook
President
The American Rolling Mill Co.
Middletown, Ohio

W. L. Clayton
Asst. Secy, of State
for Economic Affairs
Department of State
Washington, D. C.
Chester C. Davis
President
Federal Reserve Bank
St. Louis, Missouri
Milton S. Eisenhower
President
Kansas State College of
Agriculture and Applied Science
Manhattan, Kansas
Ralph E. Flanders
President
Federal Reserve Bank
Boston, Massachusetts




Jay C. Hormel
President
Geo. A. Hormel Co.
Austin, Minnesota
Reagan Houston
Industrialist and Merchant
San Antonio, Texas
Eric A. Johnston
President
Brown-Johnston Co.
c/o Chamber of Commerce of U. S.
Washington, D. C.
Harrison Jones
Chairman of the Board
The Coca-Cola Co.
Atlanta, Georgia
Fred Lazarus, Jr.
President
Federated Department Stores, Inc.
Cincinnati, Ohio

35.
CED BOARD OF TRUSTEES (continued)

Thomas B. McCabe
President
Scott Paper Company
Chester, Pennsylvania

John Stuart
Chairman of the Board
The Quaker Oats Co.
Chicago, Illinois

Reuben B. Robertson
Exec. Vice President
Champion Paper and Fibre Co.
Canton, North Carolina

Wayne C. Taylor
President
Export-Import Bank of Washington
Washington, D. C.

Harry Scherman
President
Book-of-the-Month Club
New York, New York

Sidney J. Weinberg
Partner
Goldman, Sachs & Co.
New York, New York

Robert Gordon Sproul
President
University of California
Berkeley, California

Charles E. Wilson
President
General Electric Co.
Schenectady, New York

Elmer T. Stevens
President
Charles A. Stevens & Co.
Chicago, Illinois

Executive Director
C. Scott Fletcher

Treasurer
Henry R. Johnston




Secretary
Elizabeth H. Walker

Director of Information
P. D. Fahnestock