AGRICULTURE OUR GREATEST INDUSTRY.
(Equity Co-Operative Exchange address at St. Paul, Minn., December, 1915, Developed and Extended.)
Every intelligent citizen recognizes the fact that agriculture is our greatest industry, and that on it depends the prosperity of every other legitimate industry, business or profession.
Then why is it that in this year of abnormal conditions in the worlds markets favorable to us, and the greatest crop in our history, that there should be this unusual activity manifested by political farmers for the betterment of agricultural conditions, as evidenced by the large number of conventions and conferences being held to aid the farmer"?
Is it in response to any signal of distress from the farmers ?
Perhaps a knowledge that the farmers are slowly waking up to the fact that they have been made the goat long enough, may have something to do with it, and that this year of great agricultural prosperity will be a good time to sidetrack us on minor issues. Can it be done again ?
To succeed in any business, calling or profession, you must have a pride in that calling, an ambition to excel, and to make the home and environments such that your family will want to make their homes near the old homestead. This cannot be done unless you understand the best methods of production, distribution and marketing, the latter being by far the most important.
Better Marketing Very Important.
No matter how close you may adapt your crops to your soil ; how efficient you may have been in your work of production ; nor how fortunate you may have been in climatic conditions to produce a good crop,
Then it follows that the marketing of your crop should be your primary consideration. Profitable farming is more important to you than better farming, and the more closely you unite the two, the more successful you will be.
You are to be congratulated on this second step forward that you have taken in marketing the product of your own labor, and the success of which you are here to celebrate was accomplished on your own initiative, without the help of any of the political farmers who are now so freely and actively meeting, conferring and discussing the best methods for you to follow to increase production, many of whom have been very active in trying to prevent you from establishing an independent grain exchange of your own.
Of course we should appreciate their kindly interest and advice, but in view of our past experience we should remember the fable of the stork and the farmer ; it is not safe to depend on others ; we must do it ourselves ; and why not ?
Agriculture is the only industry that permits another class or group of men, who neither produce nor aid in production, to monopolize the marketing, and in doing so to insist that to insure prices we must have rapid and constant changes ; and to insure the changes, they must sell from one hundred to two hundred times as many bushels as are actually sold.
This stigma on agriculture has been tolerated quite too long. You have demonstrated that it is not necessary. You are removing the stain, and your effort should be appreciated by every self-respecting farmer.
Every other business, industry and profession in the nation, including those so active in conferences and conventions of late, would resent the farmers calling conventions and conferences to advise them how to manage their business, more especially the
I have watched those conferences and conventions very closely, and have seen absolutely nothing new of real value to our industry.
They carefully avoided all of our present day vital issues.
Evidently they had never heard of your great struggle to secure a free and open market for your own grain.
Rural Credits was discussed by such bankers as Myron T. Herrick, one of the chief promoters of fake rural credits, to relieve the distress of a group of practical politicians, who guessed wrong on reciprocity, and is now one of our most active opponents. His remedy would seem to be the Repeal of the Sherman anti-trust law.
The transportation problem was discussed by a railroad official, who failed to mention the extra 30 cents per bushel transportation tax levied on the 1915 crop of wheat, or the effect it had on the farmer.
The money problem, proper, the most important by far, was not discussed at all.
Co-operation, principally by professionals, and a lot of experimental recommendations wholly impracticable because of present discriminations against agriculture, and not one word against the real discriminations.
There were a few representatives of organized agriculture present, very few. They must have felt lonesome, but mark you that it will be the superficial, imaginative, experimental and impracticable resolutions of the great Chicago convention that will be referred to in congress as the needs of agriculture, and not the real practical things demanded by the representative farmers there and here and at the other annual meetings of organized farmers.
The object is plain. It is to tide over another presidential campaign on sham, pretence, and bun-
|George Loftus the Leader||9|
Equal Opportunity for Agriculture Demanded.
The farmers and our true friends at this and every other convention should demand and insist on the one fundamental principle, that in so far as legislation is concerned, agriculture must be placed upon an equal footing with any other business or industry in our own nation, and be provided with as good facilities for production, transportation, distribution and marketing as are provided for our competitors in our own and foreign markets, and firmly resolve that we will continue the fight until all discriminations have been removed and equal opportunity achieved.
This convention is different from any of the others in that it marks a new era in the farmers movement, not only in the interest of the producers, but the consumers also. It is a great gathering to celebrate the first substantial victory of the organized co-operative farmers in their efforts to reach the consumer without having an unnecessary tribute to a private monopoly, that has assumed that we were not capable of marketing the products of our own labor, and have appropriated and enjoyed it so long as to consider it a vested right.
George Loftus, the Leader.
The fight has been a long and a hard one, for with private monopoly an injury to one is the concern of all, and by means of interlocking directorates and mutual interests they have had the direct and indirect aid of money monopoly, transportation monopoly, and, if you please, of the legislative, or political, monopoly as controlled by both the dominant political parties. Under their directions it has been an unequal contest, and you have succeeded only because of the indomitable courage, ability and zeal of a Loftus.
He asked no quarter and gave none. That is the only standard for success in fighting private monopoly, and I rejoice, with you that it has been made so plain in this contest. I hope the standard will never be lowered. I know in part what it means, for cooperating with the farmers of North Dakota and Minnesota, as president of the Dakota Farmers Alliance, I began this contest in 1886, and the seed that was then sown is now being harvested in part. It will be an inspiration to the younger men now entering into the greater contest for the total elimination of private profit from the administration of the medium and means of exchange and all public utilities.
The business men of St. Paul should be congratulated for their good business sagacity and foresight in co-operating with you.
But do not forget that eternal vigilance is the price of liberty.
This is only your second step on the way to the consumer ; first, the interior co-operative elevator, and now the first terminal elevator and grain exchange.
While you have been trying to make these two steps, private monopoly has gained a mile and secured a perfect monopoly of money, the medium of exchange, and of the railroad and ocean transportation, whereby a little later they will take all they think you will stand and continue production. They will not kill the goose that lays the golden egg.
The average farmer is a patient GOOSE. He not only gives up the golden egg, but yields the feathers also for the plucking.
He surely is a silly GOOSE.
By co-operation, you saved, perhaps, five cents per bushel at your local elevator, while the public service corporations, by rail and water have increased the ocean transportation tax alone 30 cents per bushel.
(Note.This has since been increased to 50 cents and are gradually but steadily increasing the transportation tax by rail on all farm products. This is the way they have gained a mile while you have taken these two steps.)
|Equal Opportunity for All||11|
But you have won and are consolidating the first trench, and have captured a part of the second trench ; we must go on and complete the work so well begun.
The farmers of the northwest are looking to you more than to any of the other many gatherings, conventions and annual gatherings that are being held, for a practical advanced program for the future.
"Equal opportunity for all is the rock on which you should build.
Free Trade for OneFree Trade for All.
As an illustration of what I mean, if we are to have free trade for farm products we should have free trade for all products.
Free Money for OneFree Money for All.
If any business in our own country secures the use of money or credit from our federal unit free of interest, so should agriculture.
If our competitors in the worlds markets and now in our own, have government-owned transportation by land or water for farm products to market without private profit, so should we, or we are handicapped in the competition.
If our competitors have publicly owned and operated terminal elevators, without private profit, so should we.
These things we are entitled to, and should demand and insist on.
I have no use, and neither should you have, for those practical politicians who will advise you, as I heard the president of one state organization of farmers say publicly that all we should ask for is what they (private monopoly) will concede. They have never asked us what we were willing to concede, but have taken what they wanted. If you are willing to accept that advice, I can tell you in advance just what you will get ; in the words of good old Jerry Simpson, you will get just what is left in the hens nest when the egg is taken out.
We did not succeed in building up our interior farmers co-operative elevator companies by permission of the old line elevator companies, nor have you built up
DISCRIMINATIONS AGAINST AGRICULTURE.
The discriminations against agriculture, and failure to protect our interests in the past, should admonish our farmers that it is utterly useless to longer depend on the representatives of other industries, professions, or political parties to promote and safeguard our interests. Unorganized agriculture has always borne the burdens of all communities, states and nations.
Agriculture is the only great industry (except mining) that by natural or climatic conditions is forced to take chances. When the farmer plants his seed, he has no guarantee that he will have a full crop, a partial crop, or any crop at all. He must continue the expense of cultivation ; for destruction by hail, drought, rust or frost may come on the eve of harvest, or during harvest. In my own personal experience, in one of our best agricultural counties (Deuel) on the eastern border of the state, this has happened to me more than one-third of the time.
This is what we might call a natural discrimination, for which the farmer is supposed to be compensated by an occasional bumper crop, but seldom considered by the professional farmer. But the loss and inconvenience are not limited to the farmer. If the average farmer loses his crop in whole or in part, he is unable to pay all of his bills. This embarrasses his creditors, and they in turn their creditors, until it reaches the manufacturer. In addition he must limit his purchases, and this in turn cuts down the trade of the local merchant, the wholesaler, the jobber and the manufacturer. It is an endless chain of inconvenience to general business.
National Insurance for Farmers.
It would seem reasonable to suggest that some system of national insurance might be provided to compensate the farmer for labor performed, up to a
Agriculture is our only great industry that is not protected from foreign competition in our home market. Every other industry, even those manufacturing farm products into food products, has tariff protection to the extent of fair interest on investment, the difference in the cost of labor at home and abroad, with a reasonable profit added, the protected manufacturers to be the judges of what is reasonable, and the cost of transportation to our market.
It is the one and only great industry against which the efforts of the past and present administrations have been directed in their efforts to reduce the cost of living ; the former by a reciprocity agreement with Canada, to admit farm products only free of duty, while protecting food products manufactured from farm products by a high tariff.
The Republican party tried its best to place farm products on the free list and failed.
The Democratic party tried, and succeeded.
The Finished Product.
In all other industries the manufacturer knows what the finished product will cost, and fixes the price so as to realize a profit. In fact, most manufacturers now sell in advance of manufacture. If they cannot sell at a profit, they quit manufacturing. The success of any industry depends on sale at a profit.
The farmer not only takes chances on production, but has no assurance whatever as to the price. It is our only industry that is forced to accept of the worlds uncontrolled law of supply and demand.
A large worlds yield means a low price for our crop, even though ours has been light. We must accept or the worlds price, less the cost of transporta-
Agriculture is the only great industry that pays freight both on what we produce, and also on what we purchase to consume or use.
Every other industry in the nation pays as much, if not more, attention to distribution and marketing as to production. Not one of them would last a year if they ignored these common-sense business principles as the average farmer does.
The men who finish the farmers work, by buying, distributing, transporting, or manufacturing farm products into food products to reach the consumer, each in turn makes a certain profit, whether the farmer does or not.
Agriculture is the only great industry conducted without any special privilege, bonus, subsidy or protection.
It is the one great industry upon which the trusts and public service corporations conducted as private monopolies feed, without sharing the profits in return.
Farmers Necessity is Speculartors Opportunity.
The average farmer must sell the product of his years labor as soon as possible after harvest, while the consumer buys for daily needs only. This made an opportunity for a group of non-producers to organize a system of storage elevators and grain exchanges to buy for speculation and hold for the consumptive demand, which enables then to fix the price for both producer and consumer. Their sole object being profit, they force the price down as low as possible when they buy, and up when they sell.
The farmer lost on an average ten cents per bushel for the last thirty years by the decline in price between May and September as per the market reports. The farmer loses, but the consumer does not benefit. He pays the monopoly price at all times. No other industry would permit such a practice with its products.
Co-operation in selling at the interior will never solve this problem. The farmer must be aided to hold for the consumptive demand, and in time manufacture farm products into food products, that his produce may be sold to the consumers clubs, or associations, direct.
In no other business, industry or profession, do those engaged in it tax themselves to advertise to try to secure more competitors in their line of work, but they all unite with the good-natured farmer in trying to secure more farmers, more farming, greater production, and lower prices for the product of the farm.
Recent Discriminations By Congress.
During the late Republican administration, the tariff was revised to suit the manufacturers.
The initial steps taken for a complete change in our financial system to suit the national bankers association.
The junketing trip to Europe to investigate banking conditions as a shield for the introduction of the Aldrich Central Bank plan.
The Aldrich-Vreeland currency law to provide for the issue of national bank notes on other securities than national bonds.
The Act of March 2nd, 1911, preparing for the way for the demonetization of gold by decoinage ; and the strong recommendation of the Aldrich Currency Bill.
Everything possible was done for the big interests who had full control of legislation, and then to shift the blame for the high cost of living on the farmer, a special effort was made to decrease the price of farm products by a reciprocity agreement and open door for Canada.
Then followed the present Democratic administration which revised the tariff, in such a way as to amply protect the manufacturers, and sacrifice the farmers by placing farm products on the free list.
The enactment of the Aldrich Currency Bill, with a few foreign frills, and a change of name, covering the same plan, but much bolder.
The usual promise to the farmer, that it was deed primarily for his benefit, to get his support, with the usual result--nothing in it for agriculture.
The amendment of the anti-trust laws, to give a clear way and clear sailing for big business freed from legal annoyance, so satisfactory to the trusts as to be approved by every one of their representatives in both branches of congress.
The change of the Interstate Commerce Commission by appointments to make it a pro-railroad board, instead of one to regulate and control in the interest of the people.
The farmer pays the cost of transportation to the terminal market, wherever that market may be, just as certainly as he does from the farm to his home market town. It is so hard to get the average farmer to understand that simple, but very important, proposition.
Transportation a Tax.
Transportation is a tax upon his labor, just as certain as any tax levied by his township, county, state or nation. He complains quickly of a minor direct tax and pays no attention to this major, indirect tax, which amounts to many times more than all of the others put together. He readily recognizes the advantage of saving a mans wages by having a boy or girl drive a second team with him to market, but does not understand that a raise of one or two cents per hundred in freight rates will offset that saving.
Just in proportion as the cost of transportation and marketing increases, the price received by the farmer decreases, and vice versa.
Railroads Public Utilities.
Our railroads are public highways, chartered by the public, to serve the public. All they are entitled to is a reasonable compensation for services performed, and the employer, not the employe, should be the judge. In no well managed private business does the employer continually complain, or argue, or reason with an inefficient, unfaithful employe, or hire a foreman to try to regulate or control him. He discharges him. It is a poor business to quarrel with your employes.
This is just as true of a public employe as of a private employe, of a public service corporation, as of an individual.
Rates Increase With Crop Decrease.
In 1911 when we in the Northwest had a very short crop of grain, much less than the labor cost of production, our railroads increased the rate on grain from one to two cents per hundred. The ocean rate was increased 2.8 cents per bushel. A total increase of four cents per bushel.
Commissioner of Corporations Porter reported to President Taft that he had the proof that the railroad corporations controlled the ocean traffic. Then the increased rate for 1911 of four cents per bushel resulted in four cents per bushel more for the railroads and four cents per bushel less for the farmer. How much of an extra tax was that on you, Mr. Farmer ?
For the same crop year of 1911 our railroads reduced the freight rate for our western Canadian competitors in Saskatchewan and Alberta, coming into our Minneapolis and Duluth markets, and on east, from 12 to 25 cents per hundred. Our Great Empire Builder [J.J. Hill] had reached across the boundary and annexed an other zone of plenty which he was anxious to develop and exploit, and did not hesitate to do so at our expense.
|Increased Ocean Rates||19|
What difference does it make to our farmers whether our competitors are favored with a reduction in tariff rates or transportation rates ?
What effect does it have when they are favored with both ? It means that they derive an advantage over us in reaching the worlds markets.
The discrimination in favor of our Canadian competitors remained in force for the crop of 1912, and so far as I know is still in force.
The increase in our local rate remained for the bumper crop of 1912, but the ocean rate was increased by another four cents per bushel.
Eight cents per bushel more for the railroads, and eight cents per bushel less for the farmers, to which they were entitled by the worlds law of supply and demand.
Mr. Farmer, how much of a tax was that on you ? This is based on wheat for brevity, but applies to all farm products of which we produce a surplus for export.
If the crop is short, they increase the rate to compensate them for loss of tonnage. If the crop is large they increase the rate because the farmer, having raised a large crop, can the better afford it.
Ocean Rates Vastly Increased.
For the crop of 1914, taking advantage of the European war, on the excuse of war risks, they raised the ocean rates another 20 cents per bushel. As the insurance companies were also trying to coin misery into money, the government organized a temporary war insurance department, insuring grain for one per cent--less than two cents per bushel. But instead of lowering the rate, they increased it another 12 cents per bushel, making the total increase 32 cents per bushel. The law of supply and demand said that you farmers were entitled to that extra 32 cents per bushel.
The law of monopoly said that it belonged to those who had the power to take it, and, trusted as our public servants, they took it for their own private use.
Secretary of Agriculture Houston thinks that private monopoly of money and transportation is all right ; that the farmers are too sturdy and independent to seek or accept legislative redress from the oppression, or greed of money or transportation monopoly.
On page one, monthly crop report of date January 31st, 1916, we find : Ocean freight rates on canned and cured meats from New York to Liverpool were quoted at $1.25 per hundred pounds in the first week in January, 1916, or about five times the rates quoted prior to 1914.
In report of date July 15, 1915, page 10, we find that the average rate on ocean transportation for wheat from New York to Liverpool for the five years 1906-1910 was 3.3 cents per bushel ; 1911, 4.2, 1912, 7.7, 1914, 7.5. In June, 1915, the rate had advanced to 26 cents.
In report for December 30th, 1915, we find the rate (p. 80) 37.2 cents.
In report of date March 16th, 1916 (p. 26), the rate is quoted 48 cents.
On food products, manufactured from farm products, the rate had increased five times. On the raw farm product (wheat) the rate had increased fifteen times.
The Secretary makes neither comment nor recommendation.
As the special cabinet guardian of agriculture, he does not seem to realize that that 40 odd cents per bushel belonged of right to the farmers who grew that wheat. I shall assume that the Secretary was highly gratified that the farmers were so "independent that they could yield that very large sum to our railroad corporations.
Now, Mr. Farmer, do not throw away your pencil in disgust but just figure up what you might have done with that extra 40 odd cents per bushel to which you were entitled, had we had publicly owned and operated transportation by land and water. When you have done so, show your figures to your friends,
|Bulk and Package Freight||21|
I have noticed only one small cargo of wheat captured, or destroyed, on each the Atlantic and Pacific oceans. The one per cent insurance has proven ample, the premiums paid for the 14 months up to November 10th, 1915, being $2,127,976, and the net losses paid $695,984. Surplus premium on hand $1,431,992. A splendid object lesson in government insurance.
Why not make it permanent ? Why not extend to other lines ?
Insurance has now become a public necessity and should be administered as a public utility.
Bulk and Package Freight.
Another very unfair and expensive discrimination against agriculture in connection with ocean transportation is practiced in the classification of bulk and package freight. Bulk means farm products and package means manufactured products. As shown above, bulk rates were increased three times as much as package rates.
For a change in package rates ninety days notice is required. Bulk rates may be changed daily, and have been changed more than once in a day.
The farmer pays for this uncertainty, as the dealer must protect himself against a sudden change.
Public Highways to the North and South, Why Not for the Center.
The federal government is building a railroad in Alaska to develop our extreme northern country, and paying for same by taxing the whole people. We in this Northwest are paying our share of that expense.
To the south, the Panama canal was also built by taxation of the whole nation. It is a splendid public highway, and will be of inestimable benefit to the West, the South and the East, in reducing transportation rates for them.
Alberta, our Canadian neighbor, claims to be the future bread-basket of the world. Wide awake to the possibilities of a public highway to the south, they claimed that if they had a modern terminal elevator at Vancouver, to handle wheat in bulk instead of in sacks, they could save 14 cents per bushel in freight rates to Liverpool, and the Dominion government promptly responded.
We in the Northwest, the real bread-basket of the world, have helped one of our principal competitors to undersell us in the worlds markets, and benefit to the extent of 14 cents per bushel by the use of our public highway, operated by our government, without private profit.
In view of the foregoing facts, and that we have not been compensated to the extent of a nickel a ton in transportation rates, would it be suggesting too much that we now proceed to help ourselves to a public highway to the ocean, in fact one to the east, and one to the gulf, to the south, to be owned and operated as real public highways at cost of transportation.
I might go on almost indefinitely, but the foregoing should be enough to arrest your attention, and increase your desire for equal opportunity for agriculture at home and abroad. Without that we cannot expect permanent progress and development.
The worst form of discrimination against agriculture is that for the use of money, or credit. Money being a public utility, created by the national unit to facilitate the exchange of labor, and the products of labor, the government should have and keep absolute control of its administration. It should not permit discrimination against any class, business or industry. It should at all times provide a sufficient quantity for the free exchange of labor and labor products, and carefully guard against its use and abuse for exploitation or private profit.
But of this I will deal more fully later.
To offset the effects of the attempted discrimination against agriculture by means of the reciprocity agreement with Canada, a movement was inaugurated by the National Bankers' Association, quickly taken up by the national Republican campaign committee, and Ambassador Herrich authorized by President Taft to gather and submit European statistics, etc. The Democrats also became interested, and the zeal and interest displayed by the politicians was wonderful, before election.
The reports as published and distributed broadcast showed that the farmers of Europe had the use of money for a lower rate of interest than commerce and industry. But the reverse of conditions exists here, and for from one-third to one-half of what our farmers were paying. But that estimate was based on eight and a half per cent for farm land loans, which was too low. We must consider this question from the rate paid by the average farmer, and I have estimated the rate for the Northwest at 13 per cent.
After hearing from J. Sprunt Hill of North Carolina I concluded that my estimate was too low for the West and South. This was followed up by a remarkable address by the Comptroller of the Currency
Farmer Pays Highest Interest Rate.
In re discrimination ; in answer to questions of members of the committee, as to where usury was practiced worst (see p. 31 of hearings), Mr. Williams said : Principally certain portions of the South and the Southwest and the Northwest. In others words, they prevail principally in the agricultural regions where rates should be normal. Yes. In every part of the country today business men get money at very low rates, except when it comes to the farmer. Now is the time to help the farmer. Nearly all of these extortionate rates are rates charged to the poor farmer.
The rates of interest given ran all the way from 12 per cent to 2,400 per cent.
Comptroller Williams is to be commended for the splendid work he has done in trying to force obedience to our laws. In addition he has given some very valuable information by which the several states can very materially reduce the rate of interest in their respective states.
For instance, Section 5197 of the revised statutes of the United States, being part of the national bank act, provides that a national bank may take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at the rate allowed by the laws of the state or territory, or district where the bank is located and no more.
How to Reduce the Rate of Interest.
All that the state has to do, then, to reduce the rate of interest to six per cent is to enact a law making the legal rate of interest six per cent per annum, and
|A Remedy for Usury||25|
It may be said that the banks would not obey the law. Comptroller Williams' report confirms the fact that about one-sixth of the national banks have been violating the law, and then points out to these law-breakers Section 5117 of the same act which provides that : Each director when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this title.
The Comptroller has taken pains to see that every director of a national bank shall understand just what he has sworn to do, and cannot in the future plead ignorance of the law.
Remedy for Usurious Interest Rates.
The Comptroller says (p. 31, report of 1915) : As the action against the offending bank must be brought by the customer who has paid the usurious interest, suits are brought rarely. The customer who borrows at these unlawful rates is afraid to bring suit for the recovery of the money improperly taken from him, realizing that he may be blacklisted by the banks, and however great his need may be at some future time he would be unable to secure further loans.
To provide for this he recommends : If there should be an amendment to the national bank act authorizing and directing the Department of Justice to bring suit against usurers upon information furnished either through the Comptroller of the Currency or through other sources, the practice of usury in all the national banks throughout the country can be stopped. I therefore earnestly recommend to the present Congress the passage of such a law.
One little amendment to a national law, and one little act passed by each state legislature, and a John Skelton Williams Comptroller of the Currency, and usury would be stopped. Can you grasp what that means ? A conservative estimate would be that it would cut the gross total amount of interest paid by the toilers of the nation in two.
It would do more for the producers of the nation than all of the laws passed by Congress and the several states during the past quarter of a century.
One little amendment. One little act. One faithful public official. So small, and yet so great !
What an opportunity for free and independent citizens !
It might be said that the national banks could not do business loaning at 6 per cent. Times have changed. The national banks can now rediscount their paper at the federal reserve bank for 3 per cent, and they would receive 6 per cent. The margin is ample for both, even for commercial purposes. In fact, it might be reduced one-third and still leave a handsome margin conducted as at present for private profit.