The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-09-29


BY CHESTER G. DAVIS
Administrator, Agricultural Adjustment Act
The agricultural adjustment act.
passed in May, 1888, offered the
American farmers a method by
which he could progress toward the
achievement of balanced agricul-
ture. 1t was intended to bring the
farmer into position Of parity
that is, equality-with other Ameri-
can producers.
1t named seven commodities as
basic: Cotton, wheat, field corn,
hogs, rice, tobacco and milk and its
products. Qn 1884 the act was
amended to add sugar, beef and
dairy cattle, peanuts, rye, fax, bar
ley and grain sorghumS)
In addition, the act made it pos
sible to assist the producers of other
farm products through marketing
agreements and licenses.
= Certain Period Selected
Equality for agriculture had to be
expressed in terms of actual prices
and actual proportions of the ma
tional income. For starting point,
a period had to be selected when
price relations among the various
producing groups in the nation were
stable and considered to be equita-
BILE. Such a period was that which
preceded the World war.
Accordingly, for all of the "basic"
commodities except tobacco, which
has to be considered m terms of
the postwar decade, the period
for calculating parity prices. These,
the act declares, represent the fair
exchange value for farm commodi-
ties in terms of the goods farmers
buy.
The effectiveness of plans under
the act depended on their meeting
three requirements: First, produce
ton of the various commodities had
to be controlled. An adequate re-
duction of SURPRISES had to be eff
fected on the farm. Without such
a reduction, action further along
the line would be futile. Second,
the farmer who reduced his output
had to be assured of protection
against predatory individualiSts who
refused to cooperate. Third, the
well-being of the consumer of farm
products had to be considered along
with that of the farmer.
Get Benefit Payments
Farmers are making contracts
with the secretary of agriculture for
adjustment of their production. In
return for their cooperation they
receive benefit payments. Some of
the payments take the form, as in
the wheat program, of benefit pay
ments on the part of a farmers
crop thatsis used domestically. (This
is in substance what has been
known for several years as the do
nestle allotment plan.')
Some of the payments take the
form, as in the case of part of
those made under the cotton pro-
gram, of options on the cotton
stored by the old farm board. These
farmers receiving them to profit by
a price rise while not suffering from
a price fall.
In other cases the government
pays rent on acres either plowed up
or not planted, provided they are
not used for the substitution of
other competitive crops. The maxi
mum amount of the benefit pay
ment on any commodity is deter
mined by the difference between the
current price of the commodity and
the parity price.
Causes Crop Adjustment
The benefit payment method
brings about the crop adjustment
needed to secure a proper carryover
and proper price. 1t protects the
consumer of farm products by in
surfing that benefit payments will
not carry prices higher than the
parity level, and it rewards the CO.
operating farmer by giving him a
greater total return, under prevail
ing conditions, than the nonco-op-
orator.
Besides the basic crops reduced
by means of benefit payments,
growers of a number of other COM
modities less widely produced have
been helped under the power of the
secretary of agriculture to enter
into marketing agreements and
issue licenses. These agreements
and licenses are intended to help
producers to get better prices for
their products.
Monday: Processing taxes, and