The War and American Agriculture

Abstract

THE intent of this study is to trace the developments in agricultural production, prices, wages, costs, income, and related subjects since the beginning of the present world war, and to anticipate the further changes in these factors during the remainder of the war and in the early postwar period. second part of this assignment will not take the form of actual forecasts, but instead will present the circumstances which will determine the course of future changes. Obviously these circumstances are conjectural in large measure. They include the political even more than the military. movements of prices, wages, costs, and related factors in and out of wars ordinarily compose a clearly marked, pronounced, and highly characteristic cycle. forces engendered by the onset of wars are so potent that they presently interrupt and redirect all cyclical or trend developments that do not fall in with them. And the end of a war becomes a new starting point at least for short cycles, and if it is a major war, for intermediate cycles in addition. Not until several years after the end of a major war do the prewar trend and longer cycle influences begin to stand out. It is accurate therefore to speak not only of war cycles but also of the impact of wars on other cyclical patterns. This study will concern itself mainly with the present war cycle. But some attention will be given to its incidence on the agricultural phases of other cycles. An aspect of the cyclical pattern of this war which has become a matter of major interest is that of the relative levels of farm prices and incomes as balanced against industrial wage rates and wage incomes and against the earnings of non-agricultural capital and enterprise. Much of the current struggle over inflation control measures has centered around the issue of these levels and the proper criteria by which to judge their relative positions. Agriculture started in this war with a bench mark already established, namely parity as defined in the Agricultural Adjustment Act of I933 and subsequent related measures. Labor was given the Little Steel Formula as a bench mark in the War Labor Board decision of July I942. (No comparable criterion has been set up for urban capital and enterprise.) Whether the attempt in the ensuing October legislation, hereinafter called the Stabilization Act, to tie agricultural and labor earnings and rates of pay together at existing relative levels, and in effect in terms of these two criteria, was validly based, needs to be examined carefully as well as the departures from these levels since. senior author of this study laid a foundation for such an analysis, and traced the developments through I94I, in his book entitled Parity, Parity, Parity,' which begins with the following paragraphs: is a balance concept like an apothecary's scales. If Agriculture gets more than its share and tips the scale beam downward in its favor, then the rest of society must get a smaller share than before. balance in this case, however, has three scale pans instead of two, one for Agriculture, one for Labor, and one for Capital. Hence three Parities must be considered Parity for Agriculture, Parity for Labor and Parity for Capital. The term Parity was brought into the dis* This is Publication No. 4 in the publication series of the Seminar in Agricultural Policy of the Littauer School of Public Administration. t authors wish to acknowledge a heavy debt to the Bureau of Agricultural Economics of the United States Department of Agriculture for supplying a large part of the data used in this study, and also for providing many of the charts and constructing others. authors also had financial assistance from the Committee on Research in the Social Sciences of Harvard University, and from the Seminar in Agricultural Policy of the Littauer School of Public Administration. Acknowledgment is also due to Professors Seymour Harris, Alvin Hansen and Sumner Slichter of Harvard University, and to Dr. Charles D. Hyson, for help on particular points in the analysis. Only the authors, however, are responsible for the use of the information supplied or the conclusions reached. 1 John D. Black, Parity, Parity, Parity, published by the Harvard Committee on Research in the Social Sciences, Harvard University, June I942.