Ladies and Gentlemen:
The last half century has seen many organizations formed in the name of agriculture, usually to relieve some local or national distress. When conditions have improved the organization has disappeared. But the National Grange, having a much broader basis, has continued without interruption a long and useful existence. The main reason for this has been the sound foundation on which it stands. It has not devoted its efforts to the treatment of local and temporary symptoms, but with a wider and more penetrating view it has sought to eradicate causes. It has been interested in securing prosperity, improving living conditions, and encouraging education; but primarily it has stood for the development of the men, women, and children of the farm in intelligence, character, and moral worth. Realizing that these are the most important products of life in the open country, it has never failed to place upon them its main emphasis.
Based on this need, which goes on alike in prosperity and adversity, while other organizations were committing their life and their reputation to the promotion of panaceas for the relief of all the ills of the farm, some of which have been tried, some rejected, and some proven a delusion, the Grange has continued to hold a sound and conservative position and to grow steadily in influence and in the public estimation. It has been an inspiring example to the other successful farm organizations now in existence. When its activities began the farm was isolated, highways were bad, educational facilities were poor, labor-saving machinery on the land and in the home was scarce, social life was almost entirely lacking. The Grange has steadily given its support to the movement for better roads and better schools, to developing agricultural colleges and experiment stations, organizing the National and State Departments of Agriculture, and to the general improvement of life in the farm home. It is entitled to great credit for the vast improvements which the last 50 years have witnessed.
In its early days the influence of the National Government upon agriculture was indirect and remote. It had the sale of the public lands through which it opened up the agricultural domain of the Middle West, and it did something to encourage land and water transportation in those areas. But it was not until the agricultural colleges and experiment stations were established in 1862 that the Federal Government began directly and specifically on a considerable scale to contribute to the encouragement and improvement of agriculture. The Department of Agriculture with a seat in the Cabinet began on a very modest scale. It is now made up of many bureaus employing about 22,700 persons, having agents in all parts of this country and some abroad, giving special attention to the culture of everything that grows on the land and to all kinds of domestic animals, promoting education, supervising production, transportation, and marketing, building roads, protecting health, regulating grain exchanges and packing industries, and expending about $155,000,000. All of this has been of such a quiet and unobtrusive growth and development that many of our people, even though they are engaged in farming, are almost unaware of its existence. This opinion is so prevalent that it is often asserted the National Government is not doing much for agriculture. As a matter of fact, this money outlay represents only a small part of what the United States really does for the farmer.
In common with every other business activity, this country has seen periods of prosperity and periods of depression in agriculture. Your organization has had experience with at least two eras of great distress. Following the Civil War there was a rapid settlement of the great prairie States, resulting in so large an increase of farm products that they could find no satisfactory market, notwithstanding the vast growth of our industrial activities at the same time. Both, however, were operating on a falling market, which culminated in the distress and the panic of the early nineties. As is always the case in time of distress, those who were afflicted were not always discriminating in their attacks and criticisms. These were particularly prevalent against the railroads, the packing houses, the grain trades, and the banks, and finally upon the United States currency. During this period the country twice turned the two great political parties out of office, sometimes voting to reduce the tariff and sometimes voting to raise it. We can see now that the fundamental difficulty was overproduction, complicated by unsound money. The United States Government was trying to fix the price of silver by law, which, of course, was bound to fail.
This period ended in the last years of the century, when a sound currency law was enacted and our great industrial development began under the stimulation of the protective tariff of the McKinley administration. This was also the period of the introduction on a large scale of farm machinery, substituting horsepower, steam power, and gasoline power, and later some electric power, for man power, greatly increasing the productivity of the individual on the farm. Scientific knowledge was also applied to both the raising of crops and livestock, but our industrial demand was so large that farm prices steadily increased until at the time of the World War their index price was far above the index price of other commodities.
With the high prices and unlimited demand of the war period, we all know what happened. A great artificial inflation took place in all kinds of property. The prices of farm products and farm land, in common with all other prices and rates of wages, reached a very high level. The farmer was called on in the name of patriotism to enlarge his production, and the spirit in which he responded was a determining element in winning the war and saving the allied nations from starvation.
But this was followed by the drastic horizontal deflation which occurred in 1920. The loss which this brought to those who owned farm products and farm lands was stupendous. The suffering was enormous. This has sometimes been charged to the efforts made by the Government, beginning in the fall of 1919, to reduce the mounting cost of living. I think it is apparent now that it was bound to come in any event. During the seasons of 1919 and 1920 the inhabitants of Europe began to raise their own food and distant colonial supplies which had accumulated through lack of shipping were brought in. The needs of our own markets, left bare by the war, for the raw materials of the farm had become supplied. Deflation was bound to occur, as it always does, after the inflation of a war period. But its occurrence was none the less filled with distress. The artificial prices had stimulated overproduction. The final result was disaster, as the final result is always disaster in the vicious circle of an artificially high price and increased production. In the end overproduction occurs, which brings the artificial price down with a crash to the ruin of all concerned.
It was this condition of agriculture with which the country has had to deal since 1920. We had more ready money than anyone else, so that the products of other countries were headed for our shores. In the winter of 1921 our imports of wheat from Canada represented 40,000,000 bushels. Enormous imports of wool and other farm products were taking place. The meet this condition the emergency tariff act, passed especially for the benefit of agriculture, was enacted, followed up by the permanent tariff measure of 1922. The passage of these laws at once restored the sheep industry and kept the great dairy industry in a prosperous condition. In framing both these measures the advice of the representatives of the farm organizations was not only sought but the rates of duty on agricultural products were fixed in accordance with their recommendations. Of course, if the country adopts the policy of protection, it has to be applied not only to the things the individual sells but also to the things he buys. This general rule, however, was almost completely suspended in the case of agriculture. Practically everything that the farmer raises is well protected. Practically everything he buys for the purpose of engaging in the business of farming comes in free of duty.
Of course food and clothing pay a duty because they are made of raw farm products, but they are not peculiar to the business of farming like barbed wire, cotton gins, binding twine, threshing machines, mowing machines, plows, and harrows. It is true that there is a duty of $1.12½ on a ton of pig iron, but there is a duty of $14 a ton on wheat and $240 a ton on butter.
It has been asserted that if we removed our duties on imports, foreign manufacturers would sell more goods in this country, which would enable them to purchase more of our agricultural products. About 65 per cent of our importations now come in free of duty. We afford the largest free market in the world, with the possible exception of Great Britain. Between 15 and 20 per cent of the balance are farm products which are protected.
Suppose we removed the tariff on some of the balance. It is assumed in that case that foreign countries would send in imports. If that were done, our own factories would close and our people would be out of employment. Such a result has never helped but always injured agriculture. If this did not occur, it would mean that our wages and profits must be reduced to meet foreign competition, in which case there would be no imports and, according to the argument, no additional sales of farm produce abroad. We should only have distress and living conditions much below what they are now in our industries. This has never benefited agriculture. Whether these results occurred in whole or in part, instead of being benefited agriculture would be injured by losing some of the best of its important domestic market.
In addition to this, it does not follow at all that if foreigners secured money by selling commodities in our market they would spend it here in corresponding purchases. They would buy where they can buy the cheapest. We know that there are other countries which have low-priced land and low-priced labor, which makes it possible to raise grain and cattle cheaper than we can. If additional purchases were made, every economic principle compels us to suppose they would be made in those regions.
Another agency that was brought into action to assist agriculture at this juncture was the War Finance Corporation. It carried financial help directly to agriculture, arranging financing for approximately 1,000,000 bales of cotton and going to the relief of the livestock industry. At one time its loans reached nearly $300,000,000. The revival of agriculture is told in the complete liquidation of these loans with almost no loss. This action saved our animal industry. Another method of relief was the Agricultural Credit Corporation, formed to furnish capital for diversification in the North Dakota region. It has been doing much to restock that locality with cattle, sheep, and hogs with a most beneficial effect.
To furnish long-time credit for raising and marketing crops and livestock, and Government advanced $60,000,000 to supply the capital for 12 Intermediate Credit Banks. These were especially adapted to the needs of cooperative marketing associations. Their total rediscounts and advances up to last October amounted to over $458,000,000 made at reasonable rates, which have also tended to make rates generally reasonable for agriculture. The real estate mortgage requirements of agriculture have been provided for by the Federal and joint stock land banks, which have made more than 450,000 loans on farm lands, aggregating more than $1,900,000,000. These are made at rates lower than the farmers of any other country enjoy on any extended scale. It furnishes capital at a price lower that it can be secured for industry.
Because of the large sums available at these banks, other money-lending institutions have been obliged to reduce their rates to about the same point. Without the benefit of this law, farm loans would probably range nearly 3 per cent above what they now are. The main reason for these low rates is because the Federal Government made the bonds of these banks free from all taxation. The direct benefit which accrues to the borrowers from these banks, because all National, State, and local taxes are thus remitted on their borrowings, is probably not less than $500,000,000 a year. When it is considered that the same benefits extend only in a somewhat less degree to those who borrow from other source, the advantage to agriculture derived from our Federal farm loan system reaches a stupendous sum. It is a benefit the like of which no government anywhere on earth ever before bestowed upon an industry.
Your organization has seen the growth and development of the cooperative association. The National Government first undertook to assist this movement by the passage of the Capper-Volstead Act, and it has more recently passed another important law setting up a division of cooperative marketing in the Department of Agriculture equipped with men and money to stimulate and develop this method of disposing of farm produce. The grain exchanges and the packing industries have been brought under Government supervision and control. About $4,000,000 has recently been added to the appropriation for agriculture research. Cotton standards have been adopted. Agriculture has been protected from poor seed. An investigation is under way to find new uses for cotton. Authorization has been granted for licensing agricultural warehouses.
A farmer has been put on the Federal Reserve Board, a former master of the National Grange has been placed on the tariff board, and finally there have been four sweeping reductions in Federal taxation, which I am told by the Department of Agriculture practically relieve the farmers from paying taxes to the Federal Government.
The work of the Department of Agriculture has been strengthened and expanded. A noteworthy development, in addition to the scientific and research work upon which it is continually diligent in behalf of the farmer, as well as in behalf of the consumer, is the establishment of a comprehensive radio service through which a vast amount of vital market information and other helpful facts is now carried to millions of farmers daily through the medium of stations in all parts of the country. At the same time the market news service has been extended until the leased wires now cover nearly 8,000 miles and reach from coast to coast.
The different things the National Government is doing to aid agriculture is a most impressive list.
With this assistance the great agricultural depression has been gradually relieved. In 1921 the purchasing power of farm products had dropped to 69. In October of this year it had risen to 90. The livestock industry is especially prosperous, but grain prices are not so encouraging. Yields per acre for this season were about 3 per cent above average for the last 10 years, while the acreage of crops harvested was the largest of record. This gives a very definite assurance of an increased gross income for agriculture as a whole.
It is apparent that the farmer has become very well schooled in the art of production. But further advances will be made through the use of improved machinery, and of improved breeds of stock, more scientific cultivation, and the elimination of all wasteful methods which will reduce the cost and increase the quality of production. The farmer who can proceed in these directions is on a solid foundation with every assurance of success.
The lesson which has not yet been so well learned is that of marketing. One of the greatest handicaps of agriculture is temporary overproduction. The world is hungry to consume all that the farmer ever raises. His difficulty arises from attempting to sell at the wrong time of the wrong place. The most successful method of meeting this difficulty has been through cooperative associations. They have enabled agriculture in a large way to take better advantage of all the agencies of distribution, the bankers, the carriers, the commission merchants, the packers, and the millers. This is a movement to unify all the agencies of production, distribution, and consumption, so that they can function as a coordinated whole which will sell at the right place and at the right time. A fine example of this is the grape exchange recently established in California.
This movement toward cooperative marketing is still in its infancy. It has sometimes failed through lack of management, but it is sound in theory, and when conducted in a businesslike way offers the most promising solution to the great marketing problem. It avoids any attempt at price fixing or putting the Government into business, both of which would be fatal to the independence of the farmer and in the end would bring disaster. It likewise avoids the hazardous proposal of a subsidy, which the American people would never be willing to pay for any length of time. It rests on the sound merchandising principle of taking the product and disposing of it in the most advantageous way that shrewd and orderly marketing affords. Such further assistance as is necessary to render this effort more effective through setting up a board for its administration, supplied with sufficient funds to demonstrate its soundness in its experimental stage, may well be provided by the National Government.
My own views on farm relief have been so many times set out in my messages to the Congress that I do not care to dwell upon them on this occasion. Sometimes I wonder if gatherings of farmers are not a little tired of hearing discussions of farm relief.
The great strength of the farm in our national life lies in the farm home. It has been the prime source from which have sprung the ability and the character of the Nation. Those who suggest that the farmer is in danger of being reduced to a state of peasantry entirely disregard the inherent independence and resourcefulness that is bred in life in the open. That spirit does not depend upon the possession of a large amount of property or income or the price of agricultural products. I was born and raised in such surroundings, and on this subject I know whereof I speak. The danger of the development of the peasant spirit in this country lies in our crowded tenements, which shelter the dependent wage earners of our great centers of population. Under present conditions that menace also is disappearing. From that danger our farm population is the most remote.
Everyone knows that agriculture was prostrated by the inevitable result of a cruel and remorseless deflation. All the property of the country suffered at the same time, but agriculture was slowest in recovering and in many respects was least able to help itself. The Government of the United States wants to see the condition of the farmer continue to improve. It is very encouraging to know that it is far better than the condition of the farmer in any other country. The profound interest of the Government is demonstrated by the fact that it is doing more for the agriculture of the Nation than any other Government does or ever did. But we are still far from perfection. Much remains to be done. But as we consider the progress that has come during the life of the National Grange we have every reason to expect that further improvement will be still more rapidly made, to the end that life on the farm may be broader, fuller, and richer.