Business Tides: The Newsweek Era of Henry Hazlitt by Henry Hazlitt

Author:Henry Hazlitt [Hazlitt, Henry]
Language: eng
Format: epub
Tags: LvMI, Austrian Economics
ISBN: 9781610162036
Amazon: 161016203X
Publisher: Ludwig von Mises Institute
Published: 2011-09-27T23:00:00+00:00

Why Farm Aid Runs Amuck

April 30, 1956

President Eisenhower showed political courage in vetoing the hodgepodge farm bill. He made an excellent analysis of its worst provisions and contradictions. And then, by administrative action, he canceled out half of his own courage and argument.

Mr. Eisenhower correctly pointed out the four main provisions that made the bill unacceptable: “(1) The return to a wartime rigid 90 percent of parity supports for the basic commodities; (2) dual parity for wheat, corn, cotton, and peanuts; (3) mandatory price supports for feed grains; (4) multiple-price plans for wheat and rice.” The effect of these provisions, he pointed out, would be to “increase the amount of government control and further add to our price-depressing surpluses.”

The provision for dual parity, for example, would result in a permanent double standard of parity for determining price supports. Four crops would receive preferential treatment out of 160 products for which parity prices are figured. And the bill “would hurt livestock farmers more than it would help them—although well over half of farm income is from livestock.”

The President rightly trained his main battery on the effort to go back to rigid wartime price supports at 90 percent of parity. The bill, he pointed out, would not help solve “the real problem—the surpluses which hang over the market and push down farm prices.” On the contrary, it would “set in motion forces designed to produce more of certain crops at a time when we need less of them.” It “would encourage even more surpluses; more surpluses which we cannot use . . . more surpluses which build up faster than we can dispose of them . . . more surpluses which would further depress farm prices in the market.”

But after having made this eloquent analysis, the President himself then announced that in 1956 “we” would set price supports on five of the basic crops—wheat, corn, cotton, rice, and peanuts—“at a level of at least 82½ percent of parity.” He named minimum support levels that would result in a national average of $2 a bushel for wheat and $1.50 a bushel for corn. He promised high price supports on cotton and peanuts, and increased price supports on manufacturing milk and butterfat. He has well over $400 million for that purpose, he declared.

Then he went on to ask for his soil-bank program, nevertheless, with payments that “could add up to as much as an additional $500 million” to farmers this crop year. The government is already holding the tremendous amount of $8.9 billion of unsalable farm commodities. This is in itself conclusive evidence that even the present “flexible” scales of 75 to 90 percent of “parity” is far too high. The prices announced by the President would in all probability force the surpluses still higher. Just how low price supports would have to be set now to make it possible to work off surpluses is hard to say. It is instructive to recall at this time that the Agricultural Adjustment Act of 1938 adopted price supports ranging from only 52 to 75 percent of “parity.

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