The Bribe to the Farmer

September 22, 1952

Once a government undertakes to subsidize or guaranty a favored group of producers against the competition and vicissitudes of a free market, it creates a permanent vested interest in the continuance and constant enlargement of its subsidy or guaranty.

The world upheavals and bad government policies following the first world war led to great distress among American farmers. There was much talk about restoring “fair” prices for the farmer’s products. A strange idea was born. This was that the particular relationship between agricultural prices and other prices which prevailed from 1909 to 1914 represented some sort of mystical “parity,” and that the aim of government policy should be to restore it. Actually those five years were one of the most favorable periods to agriculture, so far as relative prices were concerned, in our entire history.

But even if this had not been so, the idea that there was some mystical “parity” ratio between agricultural and industrial prices, which ought to be permanently maintained, was economic claptrap. If there had been any disinterested logic behind the idea, it would have been applied all around the circle. An attempt would have been made to preserve indefinitely the particular price relationship that existed from 1909 to 1914 between every commodity and every other—no matter what profound changes occurred daily or over the years in supply and demand, in costs or methods of production, or in consumers’ wants.

Fortunately, no such preposterous proposal was ever made. Yet “parity” prices for farm products are still demanded by politicians, and the notion of “parity” prices is still treated with solemn respect.

And the government handouts keep growing. Today, when the farmers are enjoying what would have been regarded in 1934 as unbelievable incomes and prosperity, they are getting not smaller, but far bigger handouts than they were then. Strict comparisons are difficult because of the caprices of government accounting. But in 1934, when farm income totaled $6,117,000,000, government payments to farmers amounted to $250,000,000. In the fiscal year 1952, when farm income had soared to $33,573,000,000, government payments for farm programs had gone up to $1,042,000,000. For the fiscal year to end next June 30 they are planned at $1,804,000,000.

In its September letter the National City Bank of New York presents an instructive history of farm price support. “What started out as an emergency program to cushion the collapse of farm prices during the depression,” it points out, “has been gradually transformed into a permanent program of price supports with a constant upward bias.” Even farm organizations have been unsuccessfully urging Congress to show restraint.

But the two major parties are now competing recklessly with each other in bidding for the farmer’s vote with the taxpayer’s money. The Democratic platform wants “a mandatory price support program at not less than 90 percent of parity.” The Republican platform calls for “a farm program aimed at full parity prices for all farm products in the market place.” Governor Stevenson first piously quotes Jefferson’s fine motto: “Equal rights for all; special privileges for none,” then insists in special handouts to the farmer, and even argues that boosting the prices that the farmer gets doesn’t boost the food prices that the housewife pays. General Eisenhower, not to be outdone, not only stands behind the present price supports at 90 percent of parity, but adds: “And a fair share is not merely 90 percent of parity—it is full parity.”

Where does all this leave the lip-service in favor of government economy? When are we going to learn the economic absurdity of trying to subsidize everybody at the expense of everybody else? And when will the candidates of both parties realize that when they try to bribe each special group in turn, out of the public purse, they are participating in the debasement and eventual disintegration of our democracy itself?