Effects of Production and the 1930 Business Depression on Farm Income

Abstract

Major business and agricultural depressions that periodically sweep over the country tend to restore a more balanced sense of economic realities. During such trials we tend to learn again the lesson that sustained agricultural well-being depends on sustained industrial prosperity here and abroad. During the few years of sustained urban prosperity prior to the collapse in the last half of 1929-years when domestic demand conditions were relatively stable-it appeared to some that the farmers' problems were largely of their own making, with only minor influences due to industrial conditions. Some even attempted to prove statistically that most of the variations in farm prices and farm income are due to variations in supply. The events of 1930 and 1931, however, have again demonstrated how a business depression sweeping over the entire country drags farmers down to the despair of profitless production and the loss of their land just as it reduces millions of industrial workers to the dire want of the jobless. The purpose of this statement is to point out a few specific influences of the 1930 business depression on agriculture, and to present certain facts of aggregate production, prices and income for the country as a whole which show fairly clearly how the great changes in general demand conditions, and not production, were the chief factors in the collapse in farm income in 1930 and 1931. These facts together with others that have to do with inflexible taxes, debts, operating costs; with competition between farmers of different regions, between farmers and unemployed city labor, and with foreign demand and competition and the vagaries of nature, point to the tremendous difficulties in the way of regional or national agricultural adjustments to demand conditions weighed down by national and international forces. Being practically insuperable, these difficulties lend 'reasonableness to the point of view, now frequently heard, that a solution of the present agricultural depression depends more on restoring industrial prosperity than on adjusting agricultural production to the reduced demand. Some of the effects that a business depression can have on