Cotton Fiasco

April 8, 1957

Just how pernicious does a government subsidy or control scheme have to become before there can be any hope of getting rid of it?

The question keeps recurring in connection with the farm program. It is hard to realize quite how grotesque this program is until we examine it crop by crop. Let us look at cotton, for example.

The following quotation is condensed from a book published last year, Farmers at the Crossroads, by Secretary of Agriculture Ezra Taft Benson (as told to Carlisle Bargeron):

“The story of cotton is a tragic one. Becoming frightened at the problem of abundance, cotton farmers elected to live by rigid high price supports. What has been the result?

“Twenty-five years ago, cotton grew on 43 million acres of United States farm land. In 1956 the acreage is 17.4 million.

“Twenty-five years ago, before American cotton growers began to hold the price umbrella for foreign cotton producers, cotton production abroad totaled 12 million bales. This past year foreign production was 25 million bales.

“Twenty-five years ago the United States exported 7 million bales of cotton. During the past year our exports were 2 million bales.

“After 25 years of the utmost government solicitude, cotton has lost markets everywhere. Its producers have lost freedom. Cottonseed-oil supply is limited and soybean oil is increasingly taking its place. The pity is that the road back is a long, long one. Markets once lost are not easily regained.”

CONTINUED FOLLY

This may still stand as a pretty good summary of the present situation, except that, whereas cotton exports were only 2.2 million bales in the crop year ended July 31, it is estimated that they will reach 6.5 million bales in the present crop year. But it is ironic to call these figures “exports.” They are simply the amount of cotton our government is now managing to unload on foreigners at a huge loss to the American taxpayer.

In the summer of 1939, as a result of the price-support program at that time, the government accumulated in storage some 11 million bales of cotton, equal to a full year’s American production. The second world war came along and bailed the government out. So we continued the folly. In the summer of 1950, the government once more accumulated over 6 million bales of cotton. This time the Korean war came to the rescue. We continued the folly. As the president of the New York and New Orleans cotton exchanges summed the present situation in a joint statement a few weeks ago before a Congressional committee: “In effect the program has resulted in subsidies to every foreign competitor of the American cotton farmer and textile manufacturer and in encouraging the development of artificial fibers which have rapidly increased in production to the disadvantage of every farmer.

A WAY OUT?

Last year the government piled a more noxious subsidy on top of existing subsidies. This is the “soil bank,” a subsidy for not producing. It differs only in name, not in substance, from the various acreage reduction and plow-under schemes tried out under Henry Wallace beginning in 1933.

Is there any way out? Some people in the cotton trade have suggested that the government loan level against cotton should be set only to “give protection in case of dire need.” Other have recommended direct “compensatory payments” to cotton growers, but only against the amount of cotton consumed domestically, leaving all sales and prices to the open market. Either of these substitutes, at the start, would at least be less pernicious than the scheme we have. But, like it they would also probably prove self-perpetuating, and follow the same laws of malignant growth.

I should like to repeat a proposal put forward in this column a year ago. Let the government either give back the present cotton surplus to the growers who produced it, or sell it back to them at less than it would cost the growers to produce more. Then leave prices, production, consumption, any exports to the free market, and junk once for all the whole fantastic prices support and crop-restriction program.