Comments on “Economic Provisions of Marketing Agreements for General Crops”

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W E ARE all indebted to Mr. Holt for his very fair and frank discussion of this large and difficult problem. His treatment has been objective and informative. In short he has given us a brief or digest of the A.A.A. program of marketing agreements for general crops which we will find convenient and reliable. It is an inventory of facts which we needed to have. This paper deals with This is the control era. We have now had some six years of control-three under the Farm Board and three under the A.A.A. The Farm Board tried marketing control, but gave it up saying we needed production control. The A.A.A. entered and tried both production and marketing control. Our neighbor, Canada, now has 21 controls going, under her Marketing Board. Twenty-four of our States have set up programs of milk control. Mr. Holt in this paper describes 25 federal controls. Most of the wheat countries of the world have set up wheat controls. Mr. Holt, for lack of time, has omitted milk controls from his discussion of A.A.A. Marketing Agreements. The first fourteen milk marketing agreements set up by the Federal government were all cancelled within a few months owing to difficulties of enforcement, particularly the enforcement of the price fixing provisions. Dr. E. G. Nourse, in his book on Marketing Agreements, lists a total of 61 such agreements up to September 1, 1935, at which time 39 had ceased to function and 22 were still in operation. This is a high death rate. Mr. Holt's topic, considered as a philosophy of economics rather than a mere inventory of facts, is price policy. The A.A.A. seems to assume that the big problem is one of price, and that the correct price policy is one of higher prices. I question this policy. The big cooperatives in the years 1920-1925, both in collective bargaining and in direct price fixing, suffered more harm from their high prices than from their low prices. Many of these cooperatives, looking back on their experiences, admitted their mistake. Their policy of high prices had curtailed consumption and stimulated production. The A.A.A.'s price yardstick, Parity prices, is a rubber yardstick and has no'practical value whatever as an economic barometer of a correct price. Mr. Holt mentions four types of control provided by these marketing agreements. (1) Price; (2) Supply; (3) Grade and Quality; (4) Reforms. He does not discuss the fourth type-reforms. It is my understanding that since the purge of the Department by the Secretary a few months ago, the militant reformers in the A.A.A. have been removed or silenced. On price control, Mr. Holt says it has now been abandoned, except as to milk. The major function, therefore, will now be control of supply, in one way or another. The key-note of Mr. Holt's discussion of these problems is found in these two statements: