Evening star., 1935-04-23
SURPLUS EXPORTS
SOLUTION NEEDED
Political Commentator Says
New Plans Required to
Scrap Others.
By DAVID LAWRENCE.

whatever it may be.
The New Dealers, conceding dif1l-
culties and even at times admitting
the merit of some Of the criticism lev
eled at their plans, ask on the other
hand for practical alternatives.
Thus the extension of the national
industrial recovery act, which many
critics oppose for various reasons, finds
various supporters in the business
world who wish to retain certain bene-
fits they now receive from the codes.
Also. the flaws in the restricted pro-
duction theory may be debated at
length, but what to do about the
A. A. A. and the enormous processing
taxes that have been collected and the
pyramided costs that have been erected
on top of the processing taxes is some
thing that is causing many SleepleSs
nights hereabout.
Solution Still Required.
The simple suggestion of scrapping
H. all is naturally not accepted for a
moment by the administration because
the actual situation in connection with
the exportable surpluses has by no
means been solved and will not be by
Just letting nature take its course.
The higher costs of operation inside
the United States, as compared with
the lower costs abroad, present diff
ferential which is keeping American
products from meeting world prices
on an even basis. Hence the talk of
Government subsidy as an emergency
measure for export purposes only, so
as to move goods into the world gen
orally, is receiving much more consid-
GRAFTON from those who normally
would be emphatically opposed to any
such schemes.
In other words, the choice is found
to be not exactly an easy one
whether to continue along as at
present, with the unsatisfactory fac
tors of increased unemployment and
loss of world markets, or to set up
some policy of expediency which may
be put into effect at once, without
tearing down suddenly the processing
tax structure in some instances or
the subsidy in others.
Farm Situation TANGLED.
The involvements of the processing
tax are SO complicated that, even If
IL was agreed to do away with it,
there would be difficulty in olsen
tangling the farm situation from it
In any short interval.
Thus $790,000,000 has been COL
lected on processing taxes from July,
1888, and this sum is more than
has been collected in the same 21
months from the taxes on individual
incomes. About 100000, 900 has been
paid out by the Government in the
form of benefits to those who did
not plant and who restricted produc-
ton, as well as to producers, the
practice in the latter case being to
pay a. subsidy SO as to bring the
farmers price up 10 q pre-war av-
erage.
Unfortunately, the processing tax
has forced its way into the selling
price at retail, or has cut into the
middlemen's earnings. or has been re-
hected In lower return to the pro-
Queer because consumption has been
further reduced on account of the
higher prices. Naturally, the more
OF any product which is left uncon-
sumed. the greater the surplus and
hence the lower the price.
Vision Limited.
1t is this endless chain of circum-
stances that has brought the process
ing tax idea and the restriction of
production theory to its unhappy
climax. The defenders of these ex-
periments insist these were emer-
eency measures. But where the New
Dealers fell down was in failing to
take into account what the consumer
does when the price gets beyond him.
Also, the sponsors didn't realize how
difhcult 1t was to control the sub
stitutes which are brought into play
the moment some article gets too high
Tor the average Wage-earner.
The cotton textile manufacturers.
Tor instance, have led the fight
against the processing taxes because
they have had imposed upon them
two expense items-the extra tax
end higher labor costs practically
~SSAA cA3Vih Ny lN n. 1HGX
would be glad to retain both items
II they could sell enough goods at q
fair enough price 10 earn a living.
Scheme Reverses Tariff.
II is the same old story which was
pointed out when the artificial con-
trols invented by the N. r. A. and
the A. A. A. were first promulgated
everything would be lovely if volume
OF sales could be increased. The
question now is whether America
can pay the high prices inside the
United States and whether the Gov
ernment can subsidize the American
producers when they sell for export
at world price levels. In sense
the idea Is the reverse of the tariff
and was given wide support for q
decade beginning in 1921, when the
McNary-Haugen plan and, later, the
export debenture scheme, were offered
as means of farm relief.
1t would appear that these meas.
nres, one of which twice passed Con-
gress, would be welcomed today by
various groups who never dreamed
Gioo 0l V1lC1uI COIltIOl COulQ De car
ried under the processing tax and
restricted production to the extremes
now being noted.
New Starting Point.
AS for the New Deal, it probably
will welcome any alternative that
recognizes in realistic fashion the
situation as it is today, and not what
it might have been had some of the
new experiments never been tried.
It's where do we 90 from here?"
that the administration officials feel
is the starting point of any alterna-
tive formulas today. In this connec-
tion the export subsidy plan may
prove a helpful device, uneconomic
as it may be as a long-range opera
tion. So the problem is to frame q
transition policy that leads us to sound
economics and yet encompasses the
structure that has been built up-a
task that challenges the ingenuity
Of brain trusters Of the practical
school Of economics as much as the
planned economy" experts Of the
New Deal.