Western news and the Libby times. [volume] (Libby, Mont.) 1920-1933, 1932-12-01
The Agricultural Depression
BY E. M. CHILD


matter of concern to the country as
whole and particularly in the Flathead
which is dependent SO largely upon
farm production. The agricultural de-
preston should be considered separ-
ately and distinctly from the general
business depression because, while it
is coincident herewith and undoubt-
eddy aggravated by it, it is due to
causes quite distinct from it.
The agricultural depression began
long before the fall in commodity
prices generally, and it is likely to
continue long after their rise, unless
corrective methods are applied. Since
the general trend of farm prices fol-
low the price of wheat we may discuss
the agricultural situation from the
standpoint of wheat prices.
The present business depression be
gan in 1929. 1t is one of those recur-
rent business depressions in which
over production followed by the forced
sale OF surplus goods, by lowering
prices, mills closing, men out of en-
ployment, merchants not buying goods
and business stagnation are the out
ward symptoms. When the bottom is
reached merchants must buy, mills
open up to supply demand, men are
again employed and the cycle is COM
plete The present depression would
have in the general course of events
run its course and been over before
this, had recovery not unfortunately
been retarded by world financial cri-
sis brought about in the main by the
burden of war debts.
The financial crisis was precipitated
in June, 1881, by the financial collapse
of Austria followed by that of Ger
many. Practically all Latin-American
countries had defaulted in the pay
ment of their debts, and Austria and
Germany would have done SO also had
it not been for the debt moratorium
as to national debts and the stand
still agreement" as to private interna-
tional debts. The result was to in
crease the financial uncertainty and
timidity, and loans among nations prac-
tically ceased, and as further conse-
quence trade between nations dropped
to about half its former volume Ma
turally this reacts unfavorably upon
the business recovery that was then
under way and has prolonged the de-
preston.
Now while the price of wheat-and
with it other farm products-has been
forced down in the general price col
lapse due to depression, the general
low price of wheat as compared to
other commodities preceded and would
have resulted, though not to the same
extent, even though there had been
no general depression.
From 1925 to 1929 when commodity
prices were soaring the general ten
dencv Of the price of wheat was down.
wardward. In October 1924 at the
Minneapolis market it was S1.58 3-8,
in '25 S1.5l, in '26 SLASH; in ~ S1.4li2;
jim % S1.21 7-8, in '29 Sl.35K4. In other
words, the price Of wheat did not fol-
low the general rise of commodity
Ffices, but actually went against the
/ tide of rising prices. This was due te
] the fact that beginning soon after the
war the supply of wheat far exceeded
I the demand and has continued to dc
so ever since The Argentine, Australia
and Canada, as we'll as the United
States, all enormously increased their
output Of wheat All this was coupled
with lessening of demand. This les
SEEMING of demand in the United States
was due partly to the fact that other
more luxurious or highly advertised
foods took the place of wheat products
The annual per capita consumption OF
/ wheat flour has dropped in this coun-
try from 224 pounds in 1889 to ITS in
1929, and along with this, the substi-
tuition of the tractor for the horse
has released large acreage from the
production of oats and hay to that o
wheat. This has tended to increase the
wheat surplus but the main factor
has been the Improvement in farm
machinery. The tractor, the gang pillow
and the combine have brought into
production vast acreage which here
tofore has not been in production.
II is evident that SO long as more
wheat is produced than can be con-
surned this condition will continue UNI
less means are found to protect tht
i farmer Of the United States, both
against the flood of foreign wheat as
well as his own over production. Oh
course, the situation would eventually
4 correct itself in this country by pro-
cess Of elimination; that is to say j
wheat continues to be produced below
cost, the least productive landry
lands-less fertile soil-will go out Of
cultivation until a point is reached
when the amount produced in this
country will be below the demand anc
the tariff will become effective, but
this means the bankruptcy of ten to
fifteen per cent of our farmers and
urtold hardship to others in the pro-
cess Of readjustment, besides economic
loss to the entire nation, and some
other plan should be devised. France
and Germany were able to protect
their farmers by high tariff on wheat
which they put on as soon as the mar
ket became flooded The internal price
of what in France sand Germany il
from two to three times the worle
price and the French and German
wheat grower is prosperous. This is Sc
because each of these countries pro.
duced less than the nations need anc
the tariff law was therefore effectiv,
and gave the producer adequate pro.