The Washington times., 1936-01-09
SMALL INCOME
! HELD BETTER
H.. THAN AAA
BY LEWIS HANEY
tPrOfessOr of Economics, New York
University

AS III Tile CdoG Vi NEOA' ~ 10
notable that the nation is accept
ing the passage Of AAA coolly. 1t
Is significant that we hear few
wild utterances. The farmers are
not marching on Washington.
There is no revolt or social revo'
luton"
OF course. the Socialist, Thomas,
and the Labor leader, Green, are
out with demands for changing
the Constitution so as to restrict
the Supreme Court. But these are
abnormal cases, and do not rep
resent the majority of the people.
Even Mr.. Roosevelt seems un-
usually restrained. He has made
some remark about examing both
opinions that he would
like to consider the ideas of Bran.
deis and Cardozo as being equal
10 the two-thirds majority Of the
Court. But he has not suggested
the idea that the Constitution is
Q horse-and-buggy affair, as he
did in the MIRA case.
My general opinion is that
the uncOnstitutiOnality Of AAA
is likely to have important
political effects; but that its di-
rect economic effects will not
be as great as many fear, and
will mostly be beneficial.
Politically, the illegality Of MIRA
and AAA means that the whole
New Deal scheme of Federal con-
troll over industry is overthrown.
With these alphabetical agencies
will 60 the Bankhead bill, Guffey
bill, Wagner bill, and at least
parts of iva, railway pensions,
and social security" bill.
This will increase the tendency
already shown by Mr.. Roosevelt
to raise the constitutional issue
in his campaign. Gle brought it
into his recent broadcast when
he said the Congress will protect
its "prerogativeS.O
It is likely to raise the tariff
issue also, since many agricul-
turalists believe that the AAA was
Q sort of offset to the protection
Of industry.
It will probably lead to spend
ing for farm relief" out Of gen
eral funds, and thus increase the
Administrators deficit, The
President will insist on "doing
something" for the farmer. Prob.
ably at least the $50 million dol
lars expected as farm doles under
the 1885 arrangement will be
paid somehow.
This may. increase the pressure
for new taxes, but politician run
ming for election is not apt to
favor that. so a worse unbalanced
budget and an increased tendency
toward initiation are more likely.
AS to the direct economic ef-
fects, several points are to be re-
fnembered: The farm doles have
not exceeded 10 per cent of total
farm income. The SURPRISES of
farm products have been reduced
by drought, pig killing, etc. Farm
prices are now relatively high
compared with m n u features.
Farm debts are lighter. Thus farm
erS do not need as much relief as
formerly.
without AAA, the farmers can
now buy the things they need
more cheaply, thus reducing liv-
ing costs and operating expenses.
Furthermore, they will find an in
creased demand for their products.
Already flour and cotton goods
are cheaper at wholesale. More
will be bought by consumers, and
there will thus be bigger demand
for wheat and cotton.
A little cheaper cotton would
certainly increase exports, and
help to regain our lost foreign
markets.
There is a shortage Of hogs,
and the price has actually risen.
The statistical position of wheat
is good and the price has held.
(The Canadian surplus is not
affected one way or the Other.)
A large part of the sugar con-
troll under the JOnes-C OStigan
law remains in force.
Anyhow, / think that most
farmers will be better off in
using their land and labor to
raise things, thus earning even
q small income rather than In
depending on dOleS from Wash
ingtOn.
Manufacturers in general will
be benefited. Those who have
been unable to pass the processing
tax on to consumers by raising
prices will be directly benefited
(These include meat packers, cot
ton manufacturers, bakers, anc
makers of packaged foods anc
tobacco.) Others will be able tt
increase the quantity Of good.
sold by reducing prices.
The great beneficiary will b.
the consumer. And I, for one
can't figure anything to be very
harmful which helps US all b!
reducing our cost of living.
Finally, there has been grea
deal of hesitation and postponed
buying in the last month or two
Now that the decision is out, WI
may expect this to result in in