Ruining Peter to ‘Aid’ Paul

April 23, 1956

The new farm bill is a shameless monstrosity. During debate on it the “farm bloc” itself was torn into a dozen haggling special commodity blocs. Wheat-belt congressmen voted for a two-price system for their commodity, but not for corn or cotton. Southern congressmen voted for “parity” supports that discriminated in favor of cotton. And so on around the circle, in a sordid scramble for local votes. Neither party did anything to be proud of. But one thing at least was accomplished by this spectacle. It should stand as a classic illustration to the American people of what inevitably happens when class legislation is either asked for or tolerated; of what inevitably happens whenever the principle of the free market is abandoned for government “economic planning.”

The whole notion of government-enforced “parity” prices or income for “agriculture” is a pious fraud. No doubt when it was first proposed it had a certain superficial plausibility. If “agriculture” were not kept prosperous by government subsidy, how could “industry” prosper?

The weaknesses in this idea became evident the moment a serious effort was made to apply it. Why should one section of the population alone (about one eighth of it) get guaranteed prices not granted to every other section? If farmers perform an “essential” service, so do doctors and nurses and teachers, scientists, reporters, and plumbers. Where can one draw the line?

As a matter of fact, as soon as Congress got down to cases, the costliness and impracticability of granting “parity” even to “the farmers” were seen to be so great that discrimination immediately began even as between farmers themselves. Congress decided to guarantee “parity” only for half-a-dozen “basic” commodities. How peculiar the definition of “basic” was, can be seen when we list the so-called basic commodities and the percentage of the total cash receipts from agriculture that each of these commodities represented in 1954: Cotton, 8 percent; wheat, 6.6 percent; corn, 4.6 percent; tobacco, 3.8 percent; rice, 0.8 percent; peanuts, 0.4 percent; total, 24.2 percent.

Altogether, the so-called “basic” commodities account for less than a quarter of the total direct cash receipts of the nation’s farmers. On the other hand, cash receipts from livestock and their products constituted in 1954, 55.3 percent of the total. Cattle and calves alone accounted for 16.9 percent of the total, dairy products for 13.7 percent, poultry and poultry products for 10.6 percent, and hogs for 12.1 percent. But the producers of these latter products got no advantage from the price support of the “basic” commodities. On the contrary, this price support for the “basic” commodities increased the feed costs and the price-cost squeeze on the producers of livestock and livestock products.

The biggest joke in the “basic” commodity list is peanuts. They account for only four tenths of 1 percent of total farm cash receipts, as compared with twice as much from oats or barley or potatoes, or with six times as much from soybeans. Politics are fearful and wonderful.

All price-supported commodities together, in fact, account for only 45 percent of gross farm receipts. Support for one commodity producer, as we have just seen, increases the production costs of other farm-commodity producers. The government is forced to order acreage reductions on price-supported commodities to mitigate the surpluses that supports would otherwise create. In 1955, 28 million fewer acres were planted to wheat and cotton than in 1953. But as a result 23 million more acres were planted to oats, barley, soybeans, sorghum grain, and other sorghums. So the previous producers of all these latter crops were just as much injured by this diversion as the producers of the so-called basic crops were “helped.”

These are only a few random examples of the distortions of prices, production, and income that are inevitably brought about by governmenmental controls. Farmer Peter victimized to “aid” farmer Paul.