Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-22
DEBENTURE PLAN
STUDY OUTLINED
Treasury, Agriculture and
Commerce Departments
AnaIyze Proposal.
BY the Associated Press.

BY the Associated Press
The declaration Of President Hoover
opposing the debenture plan OF farm
relief was based largely on studies made
for him by the Agriculture, Commerce
and Treasury Departments.
Secretary Hyde Of the Agriculture
Department reported:
ut appears from our study of the
effect Of export debentures in other
countries that it has operated to in
crease production. -
"As consequence of the operation
OF the debenture plan, there would be
tendency In farming to shift from
many lines of production toward the
production of debenturable commodi-
ties especially those with a short pro-
duction cycle-grain and cotton, for ex-
ample-the acreage OF which could be
increased greatly from one year to the
next in the expectation Of realizing
quickly the benefits of the debenture.
This would at least temporarily disturb
established production programs. Fur
thermore, should the support Of prices
provided through this plan be removed,
the debenturable commodities would be
left in an overstimulated condition and
agriculture would stand to suffer ac-
cordingly.
Increase Would Cut World Mart.
"It should be noted also that an in
crease in our exports of commodity
would tend to depress world prices
This would tend to reduce the effective
ness of the debentures and necessitate
further increases in debenture rates in
order to maintain prices. =
Should the world price level of a
commodity rise materially, there still
would be an enhancement Of the domes-
tic price above the world level by the
would tend to give an abnormal stimulus
to production"
memorandum prepared by the De-
partment of Commerce estimated that
If the export bonus were fully effective
in raising prices the total cost to the
public theoretically on the seven COM
modities to be affected-pork, wheat,
corn, rice cotton, tobacco and cattle
would be $518, 000,0 900 annually, Of which
1859 600, 900 would be increased cost on
domestic consumption and $I49, 900, 900
public revenues spent on paying the
bounty.
THE BILL" it continued, provides
that when increased acreage or pro-
duction reaches Is per cent, the de-
benture plan then becomes imperative
and shall be withdrawn. The effect OF
this would be to leave the industry
with an increased production and nc
protection"
Melons Comment.
A straight export bounty, It said
would have the same effect, would cost
the public exactly the same. and would
be simpler of operation, but "it should
be pointed out that practically all coun-
tries, with two or three exceptions, have
anti-dumping laws"
Secretary Mellon could see no differ
ence in principle between the issuance
of debenture and payment of cash
bounty on exports i'll its effect on the
Treasury, and held That the bounty
would benefit the farmer more than
the debenture, since "the debentures
must inevitably sell at discount"
That, he said, not only would de-
prive the farmer of part of the benefit
but would represent bonus to exporters
and seriously dislocate the tariff SEIZED.
ules."
Furthermore, he thought it would be
undesirable ito pay cash bounty or
the exports Of a commodity which al
| ready is produced in excess of domestic
requirements"
He also outlined the effects which
could be expected to reduce customs re-
ceipts, and pointed to the likelihood OF
protective measures by foreign govern.
ments with important agricultural in
tereStS.