Evening star., 1933-09-05
FARM STAb|L|z|NG
WORK IS REVIEWED.
Study Prepared by Haskell,
.. C. Economist, Discussed
at Banff Conference.

stabilization operations of the Fed
eral Farm Board were the subject OF
serious consideration in round-table IN
ternational discussion at the Fifth bl.
ennia1 Conference Of the Institute OF
Pacific relations recently concluded at
Banff, Canada.
Inn discussions revolved around
couaprehensive study of the subject spe-
cially prepared for the occasion by Earl
S. Haskell Of this city. ,
Mr.. Haskell, who was former director
general of agriculture and public DO
mains of Persia and former agricultural
economist for the Federal Farm Board,
prepared his studies for the American
Council Of the Institute Of Pacific Re
lations, which has published the 4S-
page document as contribution to the
history of this great experiment IN price
control.
Foredoomed to Failure.
I'm reviewing the stabilization under
takings of the Federal Farm Board, II
now quite clear" said Mr.. Haskell In
his conclusions, that coming, as they
did. at the outset Of so drastic and
prolonged a business depression, they
could not but be foredoomed to failure
in the major objectives. Undertaken
under the conditions and the manner
that they were, the only possibility OF
avoiding heavy final losses to the re-
volving fund lay in carrying the bulk OF
the stocks until they could be liquidated
upon rising markets. And over SO long
q period the accumulated carrying
charges, particularly in the case OF SO
bulky q product as wheat. would have
rendered the avoidance Of large even
tual losses all but an imposslbllity.
Such large accumulations, mevltapiy
carried in the show window OF visible
supplies, are always depressing !actor
on prices no matter now sKliiuiiy
handled. .,,
The board clearly foresaw this"
said Mr.. Haskell, "but the board at the
outset and through the entire period OF
accumulation, was under tremendous
and widespread pressure alike from pro-
ducers members of Congress and many
elements in the trade, to make use OF
the sterilization machinery provided IN
the agricultural marketing act. The
board was constantly urged to extend
these operations to even larger propor-
tions than was done. Had the board
not used this machinery put at It's dis-
posal it would have been as severely
condemned by many OF these same e!e-
ments as it was later criticized Tor the
actions taken. Once the operations
were launched, it is difficult to see how
they could have been Withdrawn In a
markedly different manner or with
widely different final results. The pro-
portions of the wheat and cotton sur
plus crops and supplies Hextended over a
period of wears such as these, are quite
beyond the capacity of a fund OF even
$500,000 900.
Unusual Risks Involved.
1.-THE principal mistake of the board,
II it may be called such, was in not
foreseeing a depression such as de-
yeloped. But it could hardly be blamed
for this, in the light of the experiences
and losses subsequently sustained py
every line of buiness in the country.
The real error of judgment by the board
were in making the initial loans on the
commodities up to the high stated val
ues, and later loans on such high per-
centages of the current prices. Ninety
per cent loans are always hazardous,
and at the beginning of price decline
they can hardly be other than fatal
It should be remembered, too, that most
of these commodity advances were sup
Elemental to primary loans from panks:
These marginal loans by the board
were. therefore, extra hazardous. They
involved risks which banks would not
assume even in more normal times than
these.
"Finally the conclusion is inescapable
that the impelling motive in the setting
I'D of the sterilization corporations was
to save the cooperative associations
from the insolvency which they faced
as a result of the high-basis loans or
advances to their members. The forced
liquidation of these associations, had
the sterilization corporations not taken
over many of their obligations, would
have been disastrous to the whole pro-
gram which the Far Board had before
It. Such foundations would have meant
a severe setback to the whole agrl-
cultural cooperative marketing move
ment which the Farm Board was Gre
ated to foster. In view of the later
development. and the present financial
status of many of these associations,
it may well be questioned whether the
association, were, or will be, In the
end, aided by the stabilization efforts.
Marketing Act Discussed.
In his analysis, Mr.. Haskell discussed
the agricultural marketing act, and
went comprehensively into the opera
tions of the Government for wheat
stabilization and cotton stabilization.
His studies are bulTarked by numerous
tables and graphic presentation OF the
subject by charts.
The paper was prepared for the
American council as one OF its series
on economic conflict and control for
coy,eidarotjop hv the Ranff Conference.