Evening star., 1935-08-27
ARTIFICIAL PRICE
'FALLACY IS SHOWN
Bloc Politics and Costs OF
"JuggIing' Brought Home
to New Deal.
BY DAVID LAWRENCE.

Basically. the argument of the
Southern Senators for a pegged price
of cotton is no different from that
which prompted the Hoover admin
3stration to buy and sell farm COM
modities through the Farm Board,
whose losses we're revealed officially
only this week as having been about
$344 100000.
The New Deal of course, with its
crop control and crop lending
schemes, has merely followed the
principle that it is the business OF
government to manage prices-some-
thing which would be all right If
there were no politics or human ma
ture to contend with and if every
body would bow to the mandate OF
government gracefully and unselfish-
". as Is envisioned by the champions
of a utopian state.
Bloc Shows Power.
But the Department Of Agricul-
ture and the Agricultural Adjustment
Administration officials are very I'M
happy over what has happened. for
they have been face to face with a
political bloc of formidable proper
tions-the Senators from wheat and
cotton States. Several years ago
such a group, known as the farm:
bloc" operating on a bipartisan
basis, harassed the Harding. Coolidge
and Hoover administrations success
fully.
Is it the business of Government to
peg prices? 1t never used to be, but
ever since the war the drive through
Republican and Democratic admins
trations has been to give the farmer
what is known as parity prfce-an
average that is equivalent to the
prices he used to get before 1914.
This pledge of a parity price has
brought processing taxes subsidies,
loans on farm commodities above
market levels and host OF artificial
tiles that place upon the Federal Gov
ernment a responsibility with far
reaching consequences. Thus while
the Hoover regime pegged prices. 1t
didn't try to control production. The
Roosevelt Wallace program seeks to
restrict production and theoretically to
pay the farmer for limiting his output.
--- Cut in Income Proved.
But meanwhile the New Deal
scheme has come a cropper Just as
did the old Farm Board Farm prices
are controlled by world conditions.
Cotton, for example, has been selling
below II cents in the world markets,
and yet the Washington Government
has been willing to lend II cents.
Now, as the world price has worked
down lower, the New Deal wants TO
lend only 9 cents, and this naturally
amounts to a reduction in income for
the cotton farmer.
The difference is to be made up BY
q fiuctuating subsidy. Had this drop
come naturally, due to weather condi-
tions or factors abroad, 1t would have
been accepted as the operation Of the
j law of supply and demand. But since
the Government itself does the cut
ting of the price, the result has been
that the Senators from the States af-
fected raised howl and managed to
tie up the whole session Of Congress
with threats that had to be taken into
consideration lest the Congress get
~out of hand altogether.
incidentally, the Norris lame duck"
amendment was supposed to end all
2 filibusters by having long session Of
Congress and avoiding the so-called
Hshort session. But few Senators not
8 only have f1libustered but have pre-
vented for several days the passage Of
: the third deficiency bill in order TO
make their influence felt. The Norris
amendment has failed to accomplish
this particular objective, though, of
course, it has eliminated voting by
"lame duck" or defeated Congressmen.
The principal lesson of the events
OF the last few days, however, is that
political pressure by groups or blocs
/ is still as intense as ever, and that
officials who try to regulate prices
scientifically find the political oppo-
sftion almost overwhelming. The
cost, moreover, to all the taxpayers of
prices maintained indefinitely at Gov
eminent expense is most disconcert-
: ing and may make an even greater
political issue than the alleged benefit
8 or lack of it to the cotton farmer.
{ Also, Americas cotton market
abroad is diminishing because the
prices inside the United States are too
Thigh for foreign purchasers. This
means that textile mills in America
lie idle and workmen are IN distress
because foreign Spindles can get cot
tor cheaper elsewhere than in the
RUnfted States. Brazil India and
Egypt are increasing their cotton pro-
nduction coincident with the reduction
genforced in America.
There is a possibility, too, that the
prices for raw cotton, if held too high
sby the Government, may result in
diminished consumption of cotton
goods inside the United States All
sof this makes a problem so compli-
Gated for political government that
the opportunities to solve it fairly
for all concerned are reduced no mat
9ter how well-intentioned the New
:. Dealers. like Secretary Wallace and
Farm Administrator Chester Davis,
happen to be.
Sect10nalSm Still Evident.
Subsidies 20 the farmers may have
s to be paid during the emergency but
Fany plan that forces the Government
ito maintain loans at the market price
without margin for safety or any
scheme which places the American
Government in the situation as the
controlling factor in any farm COM
virlodity price is bound to end tragical-
sly. because every sectional interest
will demand for itself an advantage
and will join with other sections in
swhat is known as log-rolltng to get
more advantages.
=, The leadership of the national
executive must come to the surface in
such a dilemma, but on the eve Of
presidential elections even the Presi-
~dent hesitates to get his fingers
: burned In a sectional controversy
swhich he naturally wants the Congress
Itself to straighten out for him. But
such are the fallacies Of New Deal
a-N