Evening star., 1939-03-19
Discusses Farm Coins
Under the New Deal
By Frederic J. Hdskin.

AAnI uACAC 40 IlUc LII The eCOnOIlC
affairs Of men could not be better exem.
plif1ed than by the experience Of farm
ers and other branches of activity in
America over the last 20 years. Probably
In no previous such short span of time
has there been so notable shifting Of
vested wealth. The shift has been from
the owners of urban enterprises to the
farming population.
It would be difficult to find many
farmers who would freely admit that
they are the recipients of wealth as the
result of the passage of these years. It
is always difficult to get a farmer to ad-
NIT that times are good in any circum-
stances. A farmer has SO many holes into
which to pour his income that no times
seem particularly good. His situation
merely is that some times are worse than
other times.
For the decade from 1920 to 1890, or
approximately that period, the American
farmer was hard pressed. The prices he
received for his produce dwindled year
by year. His mortgage debt increased
and his taxes were heavy. He was bur-
dened by overproduction. He was driven
to use for fuel farm produce, which, in
happier times, brought cash income.
Many attempts were made by the Fed
eral Congress to aid him. There we're
the attempts to pass the McNary- -Haugen
BILL designed to raise the price of princi-
pal farm products, and to subsidize ex-
nOrtc Various ovnoiio,fc tot
and number tried. The plight Of the
farmer did not improve. Total farm in
come got down around something Like
$4,000 ,000, 900, relatively a small sum.
Thousands of farmers were completely
bankrupt.
Then came the great depression and,
while farmers felt some of the economic
pangs of that disaster the period para
doxically, marked the beginning of .
better day for them. When the New
Deal began, prices were increased BY
various artificial methods such as crop
control and regulated marketing.
The long period of declining prices had
brought the American farmer to a posi-
ton where his business savings were
negative to the extent of nearly billion
dollars. Negative savings is a statis-
tical term which really means the oppo-
OF creating given amount of vested
interest, the subject has gone that much
in red, seen that much disappear. The
term does not, in any case, refer to
cash balance. Beginning about 1888 the
balance sheet of the American farmer
began to show marked improvement. BY
1884 positive savings Of almost a billion
dollars were shown.
There was steady increase in this fig
ure of positive savings until it now
stands not far short of $4,000, 900 900.
This is not in money; it is in increased
vested interest Specifically, it means
that farmers have paid of that much In
farm mortgage debt or have discharged
bank loans or paid up on land purchase
contracts. They do not have that addi-
tional cash, but they have that additional
equity. Positive savings may include new
livestock purchased, new farm machin-
cry. new or repaired buildings-anything
tangible except money. There is an in
tangible gain, TOO, in that the farmers
credit has improved by that much.
In sharp contrast appear all other.
major branches of American business
enterprise. Manufacturing has suffered
the greatest losses, as shown by negative
savings. AS applied to the manufacture.
ing industry positive savings mean net
worth, the equity which stockholders
have in corporations over and above
bonded Indebtedness. Just before the
1929 crash the manufacturing positive
savings amounted to about 81, 900 0O0, 900,
Like plummet came the drop. BY thu
end of 1882 this comfortable figure had
been changed to figure of some $3,OOO,-
100000 in negative savings. Instead of
the financial position being on the black
side, bonded Indebtedness had increased,
there had been default upon bonds, sur
pluses had been wiped out and. in short.
the whole picture turned upside down.
The year 1888 brought a quick recov-
cry. Back dividends were paid up and
indebtednesses retired new equipment
was purchased to make up the accumu-
lated depreciation until the figure of
negative savings stood at $75OO .OOO-
still negative. but q far more ENCOURAGING
figure. In 1896 the manufacturing indus
try came within an ace of bringing the
position back to one of balance where
there would be neither positive savings
nor negative. The negative side was not
quite wiped out nor has it been as yet. -.
General trade also was very hard hit.
In this business group positive savings,
the accumulations of past years, had
amounted to slight margin, but trade
only required slight margin. With the
disastrous year of 1880, however, there
came plunge and 1882 saw negative
savings of some $4,000, ,0O0, 900. Inven-
tories had, necessarily, been written down
TO almost nothing. Stocks of goods which
relatively short time earlier would have,
been worth large sums were almost
worthless. They were not moving into con.
sumption and, therefore, were deteriorat.
ing on the shelves. With the advent of
the recovery measures set on foot by the.
New Deal. trade livened materially. The
measure Of re-employment which had
been brought about created purchasing
power which saved the traders. But even
yet the negative saving position has not
been wiped out. The figure on the