Finance and Effective Wartime Use of Agricultural Resources

Abstract

For a decade or more prior to the beginning of World War II much of the thinking on agricultural finance and related agricultural policies was conditioned by what some have labeled the psychology of a surplus economy. It is not surprising, therefore, that considerable time elapsed, after the outbreak of the present war, before the influence of a possible wartime scarcity economy was fully reflected in the thinking of students of agricultural policy. One of the early reactions was to stress the increased incomes which might accrue to the farmers. At the outset, emphasis was placed on the prospects that those farmers who were still in a weak financial position would soon be able to obtain enough income to set their financial houses in order, and on the dangers that buyers of farms would involve themselves in excessive new debts as many did during and following the last world war. This attitude changed radically with the rapid shift from widespread under-employment of agricultural manpower and other rural resources to drastic shortages of these resources. The emphasis has shifted from control of agricultural production to the adoption of measures designed to maximize agricultural production. To accomplish this latter objective subsidies and related forms of public assistance are now advocated as methods of overcoming extra costs which may be incurred in the production and distribution of products. Earlier these inducements were discussed mainly in terms of raising the level of income and improving the lot of low-income groups. The present complex and difficult situation has led naturally to differences of opinion on questions of wartime agricultural policy. Time lags and leads in the recognition of wartime agricultural problems alone could be expected to give rise to divergent views. Likewise the relative weights given to several partially conflicting public objectives-holding down the cost of living for the urban population, promoting effective wartime uses of agricultural resources, safeguarding farmers against possible post-war financial losses, and distributing the costs of the war equitably among different economic groups--doubtless have influenced the views held on specific agricultural policy issues.2 These differences of opinion in turn have been reflected in divergent views on issues of wartime agricultural finance policy. Students of financial policies, as they relate to agriculture, have found it necessary to reorient their thinking not only on many of the technical aspects of farm finance, but also on the questions that fall outside the general field of finance.