Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-12-01
THE GOVERNMENT AS GuARANToR.

which he sets fortf> his views On some important
agricultural questions, and i'll which, among other
things. he proposes a method Of price control which
he believes will be decidedly to the advantage OF
the farming population Of the United States, and
through that, to the advantage Of the country at
large. In brief, his plan is that the government Shall
guarantee the prices of a list of important agricul-
tural products: Wheat, which is bread wool and
cotton, which are cloth corn, which is meat; and
sugar, of which we import a very large quantity. =
Mr.. Mcredith's plan is for the government through,
a properly organized body to determine the cost Of
production Of each OF these main products, and a
year in advance to name the price at which it will
agree to purchase the surplus of such products re-
naming in the hands of the producer,
1t is maintained that by following this course
the government would enable the farmer to know
IN advance the minimum price at which he could
dispose OF his product, and the farmer would be
able, therefore, to adjust his operations to a price
which he would know could be realized, the effect
being, ia-the opinion OF the writer, to place the en-
tire agricultural industry upon a basis more nearly
approaching certainty, and from, which the specula-
tive element would be largely eliminated.
Mr.. Meredith is aware of the fact that there
would likely be objection to this plan from the farm
ers on the ground that the guaranteed price for
wheat named during the war became in effect for a
considerable period the maximum price, although it
had not this legal intent or effect. This, however,
he believes could be remedied, in that the guaranty
would remain simply a guaranty, the farmer being
at liberty to dispose of his product at a higher price
if he could obtain a higher price, but being sure at
all times that he could obtain at least the minimum
guaranteed price. Eta.
The application of this plan would Inevitably
lead to the substituting of the farming interest by
the national government, especially in relation to
Of which we produce a considerable sur
plus. In a year of high foreign prices the govern
ment would not be called upon to make good this
guaranty. Our surplus would go abroad to obtain
the highest price realizable in the foreign market,
but when the foreign price fell below the. govern
ments guaranty, the surplus would then be sold to
the government. The government would have the
surplus on its hands to be disposed of wherever
there happened to be a market for it. There would
be no permanent regular market because the pro
ductlon OF a surplus would be continuous, and it is
evident that the government could not go on year
after year purchasing each annual surplus and piling
one years surplus on top Of the others. The pur-
chase must be liquidated and the Commodity must
be sold abroad, because there would be mo other
market for it. Being sold, it must be sold at the
going market price, and in that case, the government
would be called upon to bear as a loss whatever
difference might exist between its guaranty and the
foreign market.
If it is urged in defense OF this plan that the
foreign market would at no time be lower than the
government guaranty, then all merit i'll a guaranty
vanishes. The farmer might as well do business on
the basis of the foreign market at the outset and let
it go at that.
Mr.. Meredith makes the mistake that is made
by a great many other people, of comparing guaran-
ty OF commodity prices with the attitude assumed
by the government toward the railroads.. He makes
the specific statement that I'VE recognize railroads
to be of the utmost importance we guarantee a rea-
sonable return on their capital, and tax ourselves to
meet it."
The meaning Of this sentence is not quite clear.
1t 1t is intended to mean that a federal tax is levied
and a federal appropriation made to- make the in
come of the railroads equal to a given percentage
OF their capital, that statement is entirely contrary
to the facts. There is no appropriation made for
such a purpose, and has been none except tor the
limited period Of transition from public ownership
back to private ownership. Beyond that, the rail-
roads make the net income estimated as fair BY the
government, If they can; if they are unsuccessful in
doing this, they must be satisfied with a small re-
turn. The government does not pay the difference.
Inasynuch as Mr.. Meredith must be quite con
,versant with the facts, it is more likely that he
means in this sentence that the government permits
the railroads to charge rates sufficient to Weld a
guaranteed dividend, and that through the payment
OF these rates, the people tax themselves~to make
this guaranty good. That would be at least super
ticlally correct. But to compare the business of rail-
reading to the business of farming is to compare
two things which are entirely unlike. Farming is
a private enterprise. The farmer is at liberty to
farm as much or as little land as he deems wise and
finds convenient. He can select his own crops, his
own method of rotation, and can do entirely as he
pleases' within the limits of his economic possibili-
ties. The railroad has no such freedom. 1t is re-
CURED by law to do certain things. 1t must operate
trains at certain times and in a certain manner. ut
must carry goods from place to place regardless Of
whether such traffic is at the time desirable or not.
The service which it renders is fixed absolutely by
the government, and the wages which it must pay
to its employees. if not definitely fixed, are at least
approximately fixed by law. Under these circum-
stances, inasmueh as the government regulates the
outlay Of the railroad, it is entirely proper. that it
should prescribe rates which will give at least a rea-
sonable prospect Of yielding a fair income. The gov
eminent does not regulate the service which the
farmer must perform, nor does it govern his actions
in any way whatever and therefore, its regulation
Of farmers prices would be entirely different from
the regulation Of the prices of railroad service.
In the little pamphlet which Mr.. Meredith sends
out, he makes the frank admission that his scheme
is not at all new. He acknowledges receipt Of a let
ter from 4 friend which relates that 400 years before