Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-19

agriculture. Our farmers in many
lines-notably, for example, in some OF
the staple cropS-are not sharing In
the general national prosperity. Com
mon Justice demands that they should
and as a Nation We must see that they
do, not only upon the selfish grounds
of assuring the continuity of our food
supply: but because 1t is not rlgnt nor
desired by any group Of our people
that one part of the Nation shall pros
per while another languishes.
This serious condition OF some
branches of American agriculture has
led in the past few years to the in
vention of many legislative devices in
an effort to produce an instant cure
of deep-seated and puzzling series of
economic diseases. OF these the latest
idea is the so-called debenture plan:
The debenture plan, as set out In the
Senate amendments to the House farm
relief bill, is indistinguishable in its
effects from straight subsidy or bounty,
but is infinitely more complicated in
its operations and nowhere near as
direct in its effect upon price.
The amendment provides that when
ever the farm board finds it advisable
with respect to any agricultural COM
modity-Which under the act may be
anything from cotton stalks to fresh
peaches-it may direct the Secretary OF
the Treasury TO begin the issuance OF
certificates called export debentures to
any exporter of any such commodity
grown in the United States or of any
thing manufactured from it. The rate
is prescribed to be one-half of the
existing tariff rate upon imports Of the
commodity, except in the case OF cot
ton where there Is no tariff and the
rate is specified to be cents per
pound. On the manufactured goods
the rate shall be such as equals what
the rate would have been if the raw
material used had been exported.
Points Out vital Defects.
It further provides that If the board
finds at the beginning Of any crop
year-and it does not specify whether
the beginning of crop year OF wheat,
for example, is the time of the planting
of Winter wheat for next years harvest
or the time of harvest-that the PROB
able production of any commodity Will
exceed the f1ve-year average productlon
by more than 20 per cent but less tnan
40 per cent, there shall be reduction
in the debenture rate of 20 per cent,
and similarly for other increases IN the
estimated probable production.
It is the theory that this Will force
the export of American commodities so
long as their price here is less than
their values abroad, plus the amount
of the debenture or subsidy.
In IS minutes, 1t Is imposSlple 10
adequately discuss this proposal ana !
can point out, therefore, only one OF
two Of the vital defects.
To begin with, 1t proposes olreC:
subsidy to whomever Is the owner OF
wheat or cotton, for example, on the
date the board decides to award the
debenture. Today, for example, prac-
tically all of last years wheat crop mas
nassed from the hands OF the farmers
into those of the speculative and trad-
ing element. The price OF wheat Is
disastrously depressed, and the ooaro
would probably decide to award s a oe-
benture Immediately in order 10 SUNNI
late that price. The rate Of debenture
would be 81 cents. half the tarih OF
90 cents. The traders had on April l
approximately 300000,000 bushels OF
wheat which they owned. The estap-
lshment of a debenture plan. then'
therefore, would instantly nave given
them a present Of $4,000, 600 on STOCKS
on hand not one cent Of which Woulo
go to the farmer who proouceo 'iie
wheat.
The adoption Of any such act would
Immediately destroy all dealing in COM
modities for future delivery and reduce
the market to a cash basis for imme-
diate delivery in this country. Wneas
and cotton. however are used the Worlo
over and there would still exist futures
markets in Liverpool and elsewhere
which would fix the world price. NO
one in America would buy except 10!
immediate consumption because he WOULD
not be advised how long t1e ocpeltu a..
bounty would continue to be given nor
hry long the tariff rate. end, therefore,
the amount Of the debenture. would
remain unchanged This IS due both
to the possibility of Congress changing
the tariff end to the possibility OF the
president changing 1t under recommen-
dation of the Tariff Commission. Inc
maximum that any exporter Woulu,
therefore. pay for delayed delivery
would be the Liverpool price on the oate
of his purchase. plus, perhaps. some
small allowance for the possible collec-
ton of debenture when the time
came to ship the commodity abroad.
u. S. Price Fixing Favorable.
Our whole structure for handling
commodities is built upon orderly mar
keting. which implies the ability to get
a contract for future supplies on the part
Of cur nanufa cturers. Our central
s. orsge caparity is limited and anything
that forces the movement Of our COM
moditios on a cash and immediate de-
livery basis would so congest our facil1-
ties as inevitably to result in lower
prices. Whatever may be thought OF
futures trading in commodities, 1t Is
certain that we want trading In America
under some control to have some voice
in the fixation of price, and not leaving
It entirely to Liverpool or some foreign
point. Otherwise, certainly our domes-
tic producers. unadvised as to world
wide commodity price conditions. will
suffer.
American manufacturers, some of
whose processes of conversion the raw
material are long. will certainly hest
tote to buy commodities for manufacture
! at any higher price than the world
market. when. before their manufacture
ing operations are completed the ex-
port debcnture may be withdrawn by
the board or reduced in amount by all
estimate OF increased production in the
following year, SO that they will then
be in the position of having paid more
for their raw material than their for
| cign COMPETITOR but unable to secure q
| return of this excess cost when they
export the finished goods
From ALI of these considerations, Il
| results that the amount of the de-
/ bcnture, If the plan Is ever to operate,
must be permanently fixed for at least
a long period ahead, and that an.
nouncements Of change in rate must
likewise be made long time ahead.
1t was conceded in the Senate, and the
provision for the decreasing of the
amount OF the debenture therefore in
serted, that a straight bounty without
penalty for increase in production
would certainly increase production.
We are. therefore, faced with the
choice between plan that definitely
promises 70 increase production by