APPENDIX E.-ADMINISTRATIVE EXPENDItures_ Exhibit 14. Summary of expenditures through December 31,1934, analyzed by State and character.. 15. General administrative expenses through December 31, 1934, analyzed by State and character___ 16. General administrative expenses through December 31, 1934, by objective classification and by Agri- APPENDIX F.-MARKETING AGREEMENTS, LICENSES, AND CODES.. Exhibit 17. Marketing agreements in effect as of December 31... 441 Exhibit 20. Number of adjustment contracts by commodities and States accepted as of December 31, 1934................ 444 125757-35-2 FOREWORD When the first report of the Agricultural Adjustment Administration was made 1 year ago, the adjustment program had been in operation approximately 9 months. Production-adjustment measures had been launched for several of the major farm commodities, but at that time the effects of the program had only begun to be felt. During the year 1934, the programs have been extended to include more than 3 million farmers as signers of adjustment contracts and several hundred thousand others working through marketing agreements and licenses. The number of farmers participating constitutes considerably more than half of all the farmers in the United States, and a still larger fraction of the number raising or marketing enough farm produce to be interested in participating. The year 1934 also has brought tangible results in the way of increased farm income. The total cash income of farmers for the year, according to estimates of the Bureau of Agricultural Economics, is approximately $6,100,000,000, as compared with $5,051,000,000 for 1933 and $4,328,000,000 for 1932. 1 The great drought which spread over a large part of the United States was a dominant factor in the situation during the year, and brought out the flexibility of the adjustment program. While the drought contributed materially to raising farm prices and was the principal cause of the shortage of meat products developing at the beginning of 1935, it left many farmers in a desperate plight. Their situation has been ameliorated somewhat by benefit payments, which served as crop income insurance, by the Government's cattle-buying program, and other emergency measures. With accumulated surpluses of some farm commodities largely eliminated by the drought, agriculture's problem now is to carry forward a controlled expansion in step with increasing domestic and foreign demand, and to consolidate the economic gains already made. XVIII Clavis Administrator, Agricultural Adjustment Act. 2. Percent increase in cash income, 1934 over 1932 3. Percentage of rental and benefit payments to farm cash 7. Percent of total farm cash income in 1933 contributed by commodities now covered by production-control programs. 8. Number of marketing agreements and licenses in effect: At close of 1933. At close of 1934. $10, 479, 000, 000 $4, 328, 000, 000 $5, 051, 000, 000 $6, 100, 000, 000 As 1935 opened, the Agricultural Adjustment Act, adopted May 12, 1933, had been in effect for nearly 20 months. What have been the results of this act? Where do the farmers of the United States, after 20 months of adjustment effort, stand on the economic ladder? This chapter will sketch, in broad fashion, the present economic position of agriculture as a whole. Details on the various commodities will be filled in as the story of adjustment in each commodity is told in succeeding chapters. I. THE ADJUSTMENT PROBLEM The act was directed mainly toward correcting those economic conditions in agriculture which had impoverished the farmers and were impeding national recovery. It recognized a disparity between farm prices and prices of nonagricultural products. This disparity seriously restricted farm purchasing power; that is to say, the purchasing power of one-fourth of the Nation's consumers. Under normal circumstances the Nation's farm population depends on the exchange of farm products for about 60 percent of the goods it requires for its living and for operating the farm as a business, and on home production for the remaining 40 percent of its living requirements. Furthermore, each farm is a small factory, buying goods for production as well as for living. Reduction of the exchange value of farm products, consequently, not only greatly lowered the standard of living on the Nation's farms, but increased industrial unemployment, disrupted commerce, and weakened the national credit structure. THE PARITY PRICE YARDSTICK Action to remove the disparity between prices of farm and nonfarm products required definition of a price relationship to be recognized as parity. The act established a specific measure of exchange value for farm products, as an equitable goal for farm prices and an objective for price-improvement efforts. That measure was an exchange value equal to the exchange value in the pre-war period, August 1909 to July 1914. (For tobacco, the relationship between farm prices and prices of nonagricultural products that existed in the post-war period, August 1919 to July 1929, was adopted as the measure.) Parity prices, in other words, are prices for farm products which represent the same purchasing power in relation to goods farmers must buy, as farm products had in the pre-war period. BALANCING PRODUCTION WITH DEMAND The Agricultural Adjustment Act, as amended, prescribes adjustment of production as one means of attaining parity prices for agricul*ture. In the depression, prices of farm products fell much more rapidly than did prices of the products of industry. This, to a large extent, was because, in the face of a decreased market, agriculture did not bring its production down as rapidly as industry did. The resultant agricultural surpluses forced farm prices down below the level of industrial prices. The act provided for adjustment of production to a point which would balance production with demand and thus give farm products an equitable exchange value in terms of industrial goods. Methods of adjustment by which farm prices might be increased were also prescribed in the act. PRODUCTION CONTROL AND BENEFIT PAYMENTS One method, the production-control plan, applies only to farm products defined in the act as basic commodities, and so designated because they contributed a large share of total farm income, because large export surpluses of these commodities existed at the time when the act was passed, and because all are processed before they are consumed and therefore there is a point at which processing taxes can be levied. Powers were conferred upon the Secretary of Agriculture to enter into voluntary agreements with producers of basic commodities for the control of production, to make benefit payments to farmers who cooperate in adjustment programs, and to fix the rates of processing taxes levied in the act to finance these benefit payments. The seven basic commodities originally named in the act are wheat, cotton, tobacco, corn and hogs, milk and its products, and rice. MARKETING AGREEMENTS AND LICENSES Under the second major method the Secretary of Agriculture was empowered to enter into marketing agreements with processors, producers, associations of producers, and others engaged in the handling of any agricultural commodity or product thereof, in the current of or in competition with, or so as to burden, obstruct, or in any way affect, interstate or foreign commerce, and to issue licenses permitting processors, associations of producers, and others to engage in the handling, in the current of interstate or foreign commerce, of any agricultural commodity or product thereof, or any competing commodity or product thereof. The act further authorized the use of processing-tax proceeds to remove surplus agricultural commodities from commercial channels. These adjustment methods were intended to facilitate maintenance of farm prices, to enable the farm producers collectively to attain more effective control over the production and marketing of their products, and to give those cooperating in adjustment an advantage over those not cooperating. Protection for consumers against undue price increases in agricultural products was written into the act. WHAT HAS BEEN ACCOMPLISHED? The extent to which the objectives defined by the Agricultural Adjustment Act have been attained may be indicated in the answers to several broad questions. For what commodities have adjustment measures been put into effect? To what extent have these measures been sponsored by the producers of the crops concerned? To what extent has the economic position of agriculture improved? What gains in income have been made by the agricultural population? Were adjustment measures sufficiently flexible to help agriculture adapt itself to conditions that have been changing since the adoption of the act? This report aims to discuss answers to these questions in the light of developments in 1934. II. THE SCOPE OF THE ADJUSTMENT PROGRAM SYNOPSIS OF 1933 EFFORTS In 1933 production-adjustment programs financed by processing taxes and providing for disbursement of rental and benefit payments were applied to cotton, wheat, and one type of tobacco-cigar-leaf. Among the seven commodities originally designated by the act as basic, marketing agreements and licenses were applied to rice and to fluid milk in certain areas. |