Farmers, Tariffs and Democrats

by TNR Staff | July 7, 1926

The corn belt has lost its Haugen bill, and will not have the Fess amendment. The latter, although it proposes to lend government funds to producers’ cooperatives with small security, will not serve, because it provides no way for the cooperatives to repay such loans as may be incurred for the purpose of meeting any loss on surplus crops sold abroad. It will be remembered that the aim of the farm bloc is to reap the benefit of the existing tariff on agricultural products by making sure that there is no surplus of crops on the American market to drive prices down from the protected level to the world level. This aim was to have been achieved by enabling cooperatives or other agents to buy for sale abroad enough to prevent a surplus on the domestic market, buying it at the protected price and selling it at the world price—which of course would be lower.

This operation would necessarily involve a loss to the organizations conducting it. They could not in good faith borrow money for this purpose, nor could the government lend the money, with or without security, unless a way were provided for these organizations to retrieve the loss. That could be done only through an “equalization fee” collected from the producers themselves as proposed in the Dickinson and Haugen bills. But, naturally enough, the cooperatives do not want to undertake the dangerous responsibility of collecting such fees without the sanction and help of law. As a matter of fact, it would be utterly impossible for them, in their present stage of development at least, to collect. The farmers’ representatives in Congress were not merely playing politics in refusing the substitute offered by the administration; they ere exhibiting a logical tenacity in their purpose.

The administration was, on the contrary, playing the best politics it knows by supporting the Fess proposal. It could not accept the farmers’ device, for several-reasons. In the first place, it is temperamentally and on principle opposed to the sort of government aid the farmers want. In the second place, it has a strong suspicion that the plan would merely lead to worse evils and embarrassments. And in the third place, its advisers know full well that if any such plan did work, it would deprive the privileged groups of any advantage they now enjoy from protection. For to protect everybody by tariff is to protect nobody. Protected manufacturers would have to pay wages and buy materials at the same price levels at which they sell their products. That is, in fact, just what the farmers want. As long as protection exists, and industrial interests derive special benefits from it, farmers suffer an inequality which they hope to remove by forcing their way into the protected circle. Mr. Coolidge evidently feels that the farm revolt is too serious not to receive some recognition, and he therefore expects to get by with a substitute and his usual luck—which might be exemplified in this case in a smaller corn crop, more hogs, and higher prices for corn.

The defeat of the farmers means, in sober fact, a revelation by deed of the insincerity of the protective tariff policy. If the agitation for the Haugen bill had been devised especially for the purpose by a Democratic Machiavelli, it could not have been better calculated to convert farmer high-tariff Republicans into farmer low-tariff Democrats. We want, say the farmers, effective tariff protection and to secure it we want a machinery to dump our surplus abroad, as do the manufacturers. What you want, forcibly says Mr. Mellon, is a subsidy at the expense of the American consumer. Democratic leaders are not slow to see what they can reply in behalf of the farmer. You, Mr. Mellon, already receive the same kind of subsidy which you deny the farmer. And in order to get it, your Mr. Grundy, who lobbies for protection, spends millions to buy votes and win elections. The only course for the farmers, since you will not split with them, is to oust you, your party and your tariff.

This is a pretty situation—a godsend to Democrats seeking an issue. But is it not too pretty? Is it also a godsend to the farmer? The prospect brings us a vision of a good old-fashioned campaign with the tariff as the chief issue, in which harassed candidates have little to do but fish the old speeches out of the old barrels. We can see the Democrats seeking to break the Republican front by going after farmer votes and replenishing their sorely depleted treasury with contributions from the low-tariff bankers, foreign investors and importers. We can see the Republicans trying to break into the solid South by appealing to the cotton manufacturing interests, and meanwhile, through exploitation of the low tariff menace, tightening their grip on the beet-sugar states, the manufacturing states, and all those accustomed to buying favors with campaign funds. We can see problems like coal, giant power, railroads, the new mergers, being sunk far beyond sounding depths in these murky waters. And in the lurid sky above this picture we can see a devil of confusion grinning at the irony of it all—at the fact that this fine logic was founded on a false premise, that no matter who wins, the farmer will be about as badly off as ever—unless, due to economic accident, corn prices rise and the winning party claims the credit.

For the whole controversy in which the farmers have engaged has arisen on the basis of the assumption that all their troubles arise from tariff discrimination. There is tariff discrimination of course—we do not deny that—and of course it should be abolished. But for several reasons we do not believe it is as important a factor as several others in the agricultural problem. If the farmers make it their chief fighting issue they will in opinion be as foolish as would be the United States if it should go to war in order to gain concessions in Greenland. The truth is that many persons are supposed to enjoy protection are not in fact profiting from it any more than is the farmer. There are other important industries besides his which suffer from overproduction and cannot market their surpluses abroad. Among them are woolen, worsted, cotton, clothing, shoes, coal. And there are industries which would not suffer foreign competition and would not sell their products cheaper if all tariff bars were removed. Among them are automobiles, agricultural machinery, railroads, electric power and all public utilities. Among them are distributing, selling, advertising—middlemen and overhead trades. Subtract from the farmer’s expenses the subsidized profits in the products and services of all who in fact profit from the protective tariff, and the difference in his cost of living would not be enough to enable him to live in visible luxury.

The chief causes of agricultural decline in a growing industrial nation are more various and subtle than a protective tariff schedule. England, without one, built a national structure top-heavy with factories. Inequalities of bargaining power may arise at home as well as across national boundaries. The organization of production and of markets is more easy in some processes than in others regardless of state protection; such advantages arise often from technical or accidental reasons. The state may and does extend or protect special privilege in other ways than by import duties. Letting a community drift in the direction determined by the utmost profit for the keenest seekers thereof often produces inequalities among professions that can be remedied only by careful community planning. In short, we believe that the farmers’ real hope lies in the directions that a campaign over the tariff would for a time obscure. And we hope that after their disappointment with Republican politics, they will not need an equally long and futile experience with Democratic before they awaken to their rime interests.

This article originally ran in the July 7, 1926 issue of the magazine.

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