Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-22
HOOVER'S LETTER TO McNARY
Executive Expresses Opposition Export Debenur lan
Citing 10 Reasons for His Stand. a

discretion of the farm. board, yet the
tendency of all boards is to use the
whole Of their authority, and more cer-
tainly In this case. In view of the pres
sure from those who would not under
stand its possibility Of harm, and en-
phatically from the interested dealers
In the. commodity.
Loss to Farmer Is Seen.
6. 1t is not proposed to pay the de-
bentures of subsidies to the farmers,
but to the export merchants, and 1t
seems certain that a large part OF 1t
would not be reflected back to the
farmer. It offers opportunity for
manipulation in the export market,
none Of which would be of advantage
to the farmer. The conditions of COM
petitiye marketing at home and abroad
and the increased risks would absorb
a considerable part of its effect into the
distribution and manufacturing trades.
Moreover, the theoretical benefits would
be further diminished by the fact that
debentures would sell constantly at a
discount, for the reason that persons
paying duties upon imports would not
take the trouble to accumulate the de-
bentureS and lose interest upon them
unless obtainable at discount.
7. The provision of such an export
subsidy would necessitate revision OF
the import tariffs. For instance, an ex-
port subsidy of 2 cents pound on raw
cotton would mean the foreign manu-
facturerS would be receiving cotton at
2 cents a pound less than the American
manufacturer, and the foreigner could
ship his manufactured goods back into
the American market with this advan-
tage. AS the subsidy in many cases is
larger than the freight to foreign ports
and back, 1t raises large opportunities
of fraud in return shipment activities.
8. Export bounties are recognized by
many nations as one form Of dumping.
/ am advised that similar action by
another nation would be construed as
violation of our own laws. Such laws
are in force in the principal countries OF
our export markets and to protect their
own agriculture would probably lead to
action which would nullify the subsidy
given by us.
Would Require Tax Increase.
9. A further serious question arises
again (if the plan did have the effect
intendedD, where the foreign producer
of animals would be enabled to purchase
feed for less than the American farmer
producing the same animals. For IN
stance, the swine growers In Ontario
would be able to- purchase American
corn for less than the American farmers
across the border and it would tend to
transfer the production of pork products
for export to Europe from the United
States to Canada. 1t would have the
same and probably even more disastrous
effect in dairy products.
10. The plan would require a sub
Stantial increase in taxes as no such ex-
penditure or depletion of revenues as
this plan implies could be paid from
marginal income of the Government,
more particularly in view Of the very
large increased expenditures imposed by
the naval program, flood control and
other branches of farm relief.
Altogether, from the above reasons,
it is my belief that the theoretical bene-
fits would not be reflected to the Ameri-
can farmer: that it would create prof.
iteering: that it contains elements
which would bring American agricul-
ture to disaster.
The introduction of such plan would
also inevitably confuse and minimize
the much more far-reaching plan of
farm relief, upon the fundamental prin-
cipleS of which there has been general
agreement.
Yours faithfully
HERBERT HOOVER.