Fear of Free Markets

June 10, 1963

The rejection by the wheat farmers of the Administration’s strict production control plan, in the national referendum of May 21, marked a turning point in the 30-year history of governmental crop controls and price supports in this country. For the first time the wheat growers turned down the offer of a higher price support at the cost of still more controls. For the first time they voted for less money in exchange for more freedom. For the first time they voted against Santa Claus. Under that benign white beard, he was beginning to look suspiciously like Big Brother.

When one considers the immediate monetary offer and the tremendous propaganda for it, the farmers’ decision was astonishing. If they voted for the government’s plan to control the wheat supply, they were promised a support price of $2 a bushel. If they voted against it, they were told by the Department of Agriculture and by the President that they could not expect more than $1 or $1.10 a bushel. Urging them to vote Yes were all the propaganda resources of the Agriculture Department (with its 100,000 employees), and the chief farm organizations with the exception of the American Farm Bureau Federation. On the day before the election President Kennedy personally appealed for a Yes vote.

DRACONIAN CONTROLS

What moved the farmers to turn all this down was the Draconian stringency of the controls they were asked to accept. They were not merely asked, as in the past, to withdraw a certain percentage of their acreage from wheat in order to be eligible for price supports. Every farmer would have been restricted to an exact maximum number of bushels, based on his “historic” production. He would have been subject to the tightest control of production and marketing ever seriously proposed in this country. The real issue, in the words of the Farm Bureau, was this: “Is government supply management going to be the future way of life for the American farmer? Who will manage your farm—you or the Federal government?”

Apparently, also the farmers did not take seriously the Department of Agriculture argument that they were choosing between $2 wheat and $1 wheat. The effective support prices under the certificate plan would have been a blend of two prices—$2 for certificate wheat and $1.30 for non-certificate wheat. Even if the growers disapproved the program, they knew that the Secretary of Agriculture, under existing law, would be required to support wheat for those staying within their acreage allotments at 50 percent of parity, or $1.25. And finally, they were apparently confident that the Administration and Congress would have to come forward with another plan.

SELL THE WHEAT BACK

The farm price support program has been a mess from the very beginning. The mess gets worse and more expensive year by year. It is often said that the crop restriction plan was defeated by the agricultural “revolution.” But this is at best a half-truth. The contrast most often cited now is that between the national average of 14.5 bushels of wheat per acre in 1947–49 and that of 25.1 bushels last year. But this result has been in large part brought about by the price support and acreage plans themselves. The farmers raised the average per acre yield (1) by taking their least productive acreage out of cultivation and (2) by pouring more fertilizer and labor into the remaining acres—a procedure that paid because of the support price itself.

The only solution to the farm problem is a return to the free market. This column suggested several years ago—and now renews the suggestion—that the government sell its surplus of more than a billion bushels of wheat back to the farmers themselves on a quota basis and below the average estimated cost of production—or say about 95 cents a bushel.

But this or any other extricating solution is now blocked by the folly of our government in renewing the International Wheat Agreement last year. In practically every direction, in fact (e.g., sugar and coffee), the Administration has rejected the free market and plunges deeper into regimentation and controls.