Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-21
(Continued from Third PageD

january. HlS tSlinldtS is pi ObaoiS
conservative. Even so. the effect would
have been important.
From October to January 6l per
cent Of the total crop-about 0.9SO 00O
baies-was marketed at an average
farm price of 1895 cents. Call it IL
cents. If that vast quantity of cotton
nearly five and half billion pounds
had sold for IS instead of II cents,
farmers who had to sell or did sell
from October TO January would have
been two cents pound better off.
Nearly $110.000.000,
Had 5000. 900 bales been taken off
ne market at 13 cents pound and
stored. the total price would have
been s195. 100000.
How could this huge deal have been
financed under the Jardine plan" In
the first place. 65 per cent of the pur-
chase price-nearly $4,000. 900
would have been available under the
intermediate credits act. The rest
would have been advanced by the
farm board out Of the revolving fund,
assuming that the board would have
made advances up to the full market
price Of the cotton. Then the credit
from the revolving fund would have
been SOS, 100000.
y
This is where some critics, who are
ready to damn their neighbors dog
by calling him bad names" even before
inquiring into the disposition of the
animal. dub the Jardine plan raid
on the Treasury" IAN outright sub
sidy." etc.
Let US follow our illustra ton little
further, to see what is the probable
security for the money advanced out
OF the revolving fund.
In the first place the farm board
would have held second mortgage
on every bale of cotton stored by the
Sterilization corporation, the Inter
mediate Credits Bank holding the first.
Clearly, then. the Governments funds
would have been absolutely safe on
last years operations alone. had the
5000. 900 bales sold for enough to pay
the two mortgages and cost of storing.
Is there a basis for supposing that this
would have happened?
The farm price of cotton has ad-
vanced not only to Is cents but to
approximately Il cents, margin of
cents, which is surely more than
enough to cover storage costs and
interest on the two loans. On August
Il middling spot cotton sold at an
average of 10 cents in 10 markets.
It makes little difference whether
market price or farm price is taken
for illustration. The principle is the
same. The point is that that part of
the proposed revolving fund used to
hold last years. cotton would have
been safe and the Jardine plan would
not have been a raid on the Treasury.
Last years cotton furnishes par
ticulariy good case for showing bene.
fic:al and profitable operation of tho
stabilizati IN corporation. At the same
time such surplus control was particu-
larry needed last year. In any staple
crop this plan could be put into opera
Government loans, in years when its
operation Is most needed. There is
good reason to suppose that it would
not be needed at all in some years.
A sterilization corporation in cotton
would not only have paid its debts last
year. but would probably have made
a substantial profit, especially If the
next crop should turn out to be only
1892 900 bales, as indicated by the
crop report of August /.
ANY gain in years of profitable
operation would be put into a reserve
fund to be used to offset possible losses.
This would be second security for
loans made by the farm board from
the revolving fund. In case Of loss
due to unforeseen circumstances in any
one year the revolving fund would
be reimbursed from the surplus set
aside In years Of profitable operation.
Should the loss in any year be so
great as to exceed the accumulated
surplus, the balance due the revolving
fund could be paid out of the next
year or years of profitable operation.
This fact should stimulate caution in
the business policy of the sterilization
corporation.
When all the security for the re-
volving fund has been lcited-money
got out of the commodity stored after
paying the intermediate Credit Bank
and cost Of storing. and surplus from
years of profitable operation-and
when statistical research has done it's
part there remains an important ques-
ton:
VIII the sterilization corporation
and the farm board exercise sound
business judgment and have the back
bone to resist the popular urge to do
unsound things?
This question applies more or less
to every proposed plan for handling
crop SURPRISES designed to be operated
by democratic institutions, whether
cooperative or governmental, or both.
When the masses feel that an institu-
ton which they control by their vote
or otherwise has the power to confer
benefits upon them they may try to
push that institution to the limit for
their benefit. And popular conception
OF what is beneficial is often short
sighted. 1t would he easy to give
insufficient consideration to the fact
that there would have been demands
on sterilization corporation last
year to buy cotton at high figure,
say IS or 20 cents, even IL statistics
and business sense had shown it To
be unsafe TO pay more than IS or
IA cents.
There are two ways to minimize the
danger OF blind popular demand for
the spectacular, against the dictates
Of sound judgment. One is by suffi.
GENTLY removing the controlling power
from the immediate influence of popu
lar demand to make business iudg.