From Labor Action, Vol. 5 No. 33, 18 August 1941, pp. 2 & 3.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The first witness to testify before the House Banking and Currency Committee concerning the Price Control Bill was Leon Henderson, administrator of the Office of Price Administration and Civilian Supply. When Mr. Henderson got to the question of agricultural prices, he was questioned about the reason for the bill containing the provision that the ceiling on farm prices be 110 per cent of parity instead of the Administration’s long-sought goal of 100 per cent of parity.
While Mr. Henderson hesitated and looked toward Chairman Steagall, who took credit for this change in a press interview. Representative Ford of California interrupted: “I answer – votes.” Never was a truer word spoken by a congressman. All the legislation in regard to the economic controls to be established under the war economy has been subject to an old-fashioned log-rolling process. But the provision for 110 per cent of parity on farm prices represents one of the greatest triumphs the congressional farm bloc has ever scored in long years of pressure politics and, by the same token, a tremendous blow at the standard of living of the vast majority of the working population of this country.
To understand what is involved, we must first briefly consider the meaning of “parity” and the situation of the farm population, particularly as affected by World War II. Parity, according to the dictionary, means equality. The word first came into prominence during the 1920s when farm lobbyists and farmers’ organizations, especially the Farm Bureau, an organization representing the more well-to-do commercial farmers, used it to describe their goal for farm recovery.
The farmers of the United States, for a series of historical reasons, had entered into an era of permanent depression following World War I. The Armistice of 1918 left them with terrific surpluses on hand, particularly in the staple crops, wheat and cotton. The colonial areas of the world – Canada, Argentina, Australia, Brazil, India, Egypt – had greatly increased their production of these commodities under the stimulus of war-time demand. Cheaper production in these new territories and imperialist trade rivalries meant the steady loss of foreign markets for the American farmer. While more clothing, bread and other necessities which are made from farm products could easily be used by the American population, this is not possible under capitalism to any great extent. For capitalism means an economy of scarcity and insufficient purchasing power in the hands of the vast majority who produce the wealth of this country – the workers.
Consequently, the prices of farm products began to decline. Meanwhile, the prices of industrial products (the things the farmer must buy) either remained high or went higher. As a result, the purchasing power of the farmer’s dollar went down steadily. The farmers wanted more purchasing power; that is, they wanted higher prices for farm commodities in relation to the prices of industrial products which they had to buy. They said they wanted equality between farm prices and industrial prices. Hence, the slogan of “parity.” But – and here is the vital question – what period should be selected as an example of parity, of the proper relationship between farm and industrial prices? The farm organizations examined the government’s statistics and selected the period from 1909–1914 as “normal” for the relationship between farm and industrial prices.
What is meant by “normal” is always, of course, a difficult question to answer. The fact of the matter is, however, as any examination of price statistics will show, that the period from 1909–1914 represents the highest possible parity base which could be selected in the 20th century. It is distinctly an abnormal period, if by “normal” we mean what is most usual or typical. The period from 1909–1914 represents an extremely prosperous period for farmers. This applies, to be sure, only to the capitalist farmers; but the whole discussion of parity prices is only concerned with the relatively well-to-do capitalist farmers, representing at the most some 35 per cent of the farm population who produce 89 per cent of the total value of all farm crops which are marketed. The majority of the farmers who live in real poverty and distress, the tenant farmers, share-croppers and agricultural laborers, are certainly not the concern of the congressional farm bloc, for parity cannot help them. Only a fundamental change in the economic system and a redistribution of the land can improve the status of these truly forgotten people of America.
The first attempts to achieve parity under Coolidge and Hoover were miserable failures. They are important only as confirmation of the necessity for government intervention in solving the problems created by a declining capitalist order. The onset of the great depression of 1929 only made matters worse tor the farmers.
In 1933 came the New Deal, promising all things to all men. Recognizing the strategic situation of the farm bloc in Congress and the great voting strength of the farm states, the New Deal political strategists promised parity to the farmers. Their first effort, the Agricultural Adjustment Act of 1933, was a colossal blunder and a crime against humanity. They tried to raise the prices of farm products by ordering the farmers to plow under every third row of cotton and wheat – at a time when millions were going ragged for want of clothing and starving for want of food. The slight increase in farm prices which followed was largely due to the subsequent droughts.
The only important result of this first New Deal attempt to solve the farm problem was to strengthen the farm bloc in Congress. The farm bloc was now in the position of being able to blackmail the Roosevelt Administration on any important measure that it wanted to pass. Time after time, the farm bloc, in return for votes supporting the general Roosevelt program, received important concessions in the form of desired subsidies to the CAPITALIST farmers. It has been horse trading on a grand scale.
The failure of the Roosevelt farm program was emphasized by the election of 1936, which showed the farm belt clearly swinging away from the Democratic Party back to its traditional Republican allegiance. This called for heroic measures, and finally resulted in the passage of the AAA of 1938, which incorporates the goal of parity into existing legislation. Nobody quite knew how this goal was to be achieved, but the act, sometimes referred to as the Omnibus Act, contained every possible scheme that capitalist politicians could think of. It was rapidly being demonstrated a failure, in spite of the addition of the Food Stamp Plan, when, in September 1939, World War II broke out.
The immediate effect of World War II on the farmers was the reverse of World War I. In World War I, when Europe turned its fields into human slaughter houses, the Allies bought huge quantities of farm products in the U.S. This time, however, the newly developed colonial areas of the world could more than supply the needs of England and France. Moreover, the Allies, particularly the English, found it necessary to conserve their cash for the purchase of American munitions and planes. England actually reduced its normal purchases of cotton and tobacco from the U.S. As a consequence, the government warehouses have accumulated huge surpluses of the staple crops. The situation has been farther aggravated by the so-called “Hemisphere Defense Policy.” In the long run, this means that American imperialism will import agricultural raw materials from Latin America (products like wheat, cotton, meat, hides and copper, which, far the most part, compete directly with the American farmer) in return for its exports of capital and industrial commodities.
The pressure from the farm states to relieve the situation grew tremendously. Every step of the Roosevelt war program, in order to pass Congress, has had to be accompanied by concessions to the farm bloc. Meanwhile, the expenditure of billions of dollars for war by the government has had an inflationary effect on all prices, particularly farm prices. Mr. Henderson, in his testimony, stated the following percentage relationship of farm prices to parity as of July 15: rice 102, cottonseed 120, butter fat 112, milk equivalent 102, chickens 111, eggs 100, hogs 106, beef cattle 127, veal calves 114, lamb 117, Maryland tobacco 188, wool 149, corn 81, wheat 73, oats 62, and cotton 87. THE WHOLESALE COMMODITY INDEX OF THE BUREAU OF LABOR STATISTICS SHOWS THAT FOOD PRICES ARE RISING EVEN FASTER THAN THE GENERAL LEVEL OF PRICES – WHOLESALE FOOD PRICES HAVING RISEN ABOUT 60 PER CENT SINCE THE OUTBREAK OF WORLD WAR II.
Under the terms of the Price Control Bill, as introduced in the House of Representatives, agricultural prices will have a ceiling 110 per cent of parity – that is, 10 per cent more than the farm propagandists ever dared to demand. From the figures quoted by Mr. Henderson, it will mean a tremendous increase in the price of most of the important food and clothing items in the worker’s budget. Moreover, those prices which are above parity as of July 29 will have this higher level maintained as an alternative price ceiling. The price of meats, for example, will remain at the present extremely high levels. On the average, therefore, the workers are confronted with a bill whose avowed purpose is to prevent higher prices and inflation, but which will guarantee a 20 PER CENT INCREASE IN PRICES. Moreover, it is only the wealthy farmers and big middlemen who will benefit from this handout at the expense of the workers and the poor farmers. All of which only serves to emphasize once again the extreme injustices of the capitalist economic system, particularly in wartime, and the absolute necessity for workers’ control of price-fixing.
Last updated: 13.1.2013