Evening star., 1933-06-11


prices. Overproduction largely explains
why farm prices have sagged much lower
than other. prices. The slump in all
prices indicates that farm debts and
taxes would be burdensome, even If no
disparity existed between the prices OF
the two kinds of commodities. Opinions
differ as to the relative importance OF
the two factors. Some authorities attach
so much Importance to the general price
level, which is essentially monetary
phenomenon, that they think cure for
that would make it unnecessary to deal
with overproduction. do not share that
view, nor quite evidently, does Congress
The new law recognizes both elements
of the problem. 1t provides means to
deal with both. For the overproduction
difficulty it sets up machinery to adjust
production of the basic farm commodi-
ties so that supply and demand will be
brought into better balance. For the
general price level problem it provides
means for expanding the currency and,
therefore, of raising general prices. Also,
the law contains authority for bond
issue to refinance debt remembered
farms, to lower the rate of interest and
to prevent foreclosures.
I wish, for several reasons, to discuss
mainly the overproduction phase OF the
farmers problem This is the special
responsibility of the Department of Agri-
culture The monetary phase belongs to
the Treasury authorities, and the credit
phase to the newly organized Farm
Credit Administration. More important
than these administrative reasons, how
ever, is the fact that overproduction pre-
sents difficulties which, il not removed,
can make everything done under the
other sections of the law ineffective.
Overproduction cannot in the existing
circumstances be expected to cure itself.
And yet the whole Nation, and not merely
the agricultural community, have vital
interest In curing it. Overproduction in
agriculture means q bankrupt farming
group. It means deranged credit and
financial conditions, industrial disorder
and urban unemployment.
Certain critics object to the term over
production. Why not, they say, call it
underconsumption? American farmers
do not now produce substantially more
than they produced and sold profitably
not many years ago. It is not production,
but demand, that has changed. It is
true that demand has fallen both at
home and abroad.
Nevertheless, it is legitimate to speak
of overproduction because that term i'm
plies remedial action, instead Of sug-
gesting passive waiting for the revival
of demand. Production in excess of de-
mand is overproduction in reality,
whether it comes about through an In
crease in output or decrease in con-.
sumner demand In either case part of
the remedy is the same-a decrease in
output. For overstocked markets and
the resulting decline Of relative prices
production adjustments are the only
cure
Normally, producers attend to this
matter themselves. It is in the American
tradition that they should. Only ex-
ceptional need and exceptional difficulties
can justify governmental Intervention to
accomplish the desired end. Inrindustry
no such Intervention is needed. At the
present moment not many industries are
producing more than half their normal
output. The present circumstances are
unique, not merely in the history Of the
United States, but in the history Of the
world. Never before have forces con-
spired so irresistibly to create stupen-
dous overproduction problem. brief
historical survey win indicate the nature
and magnitude Of these forces.
AS is well known. American agricul-
n Aaan In q