NFO-260 (AV10761): US Farm Report: Shocking Planned Peasantry for the Independent Farmer

my special guests on this week's us farm report are mr. Erhard Pfingsten national vice-president of the National Farmers Organization mr. Charles Walters economist and mr. Jack Grimmer national farmers organization leader from the state of California these three gentlemen a short time ago visited in Washington with the agricultural representative on the Council of Economic Advisors Dr. Hendrick S Houthakker a Netherlands and American trained and educated man the Council of Economic Advisors was established in 1946 for the purpose of advising and guiding the chief executive members of the council represent all facets of the American economy these three gentlemen came away from that interview in Washington in a state of amazement and near shock and we will hear their story later so stay tuned [music] hi everybody and welcome to us farm report let's get to the heart of our story today The adventures of these three gentlemen in Washington in a visit with Dr. Hendrick Houthakker gentlemen as Erhard Pfingsten knows we make a great effort on us farm report toward informality particularly in how we address one another Erhard Pfingsten as you all know is best known to NFO members across the land and people in agriculturists as Fink and he will be so addressed today a Chuck it would be remiss I think since you and I have been friends for many years for me to call you on this show mr. Walters so if you don't mind you will be Chuck all right that's fine and Jack and I have known each other for quite a while and so his name shall be Jack today okay I just thought we ought to get that all straightened out before we proceed Chuck can you give us some background on the Council of Economic Advisers the Council of Economic Advisors was formed back after World War two in other words there was a general feeling among the people the politicians and everyone that following a war you were going to have a depression and this is something the modern industrial society could not tolerate so we passed an act called the Employment Act of 1946 sometimes called the full employment act and it set up a Council of three economic advisors plus as many subordinates as they require and their job would be to direct the president in the economic policy of the United States so as to maintain as near as possible full employment of course the council is a slave of its own education and its own philosophy in this case we feel that it's the follower of another philosophy as enunciated by another committee but this is a private committee which was founded in 1942 the committee for economic development Paul Hoffman was the first head of it it was funded very heavily by the Ford Foundation some of these other groups we feel at this stage of the game that the committee for economic development has in fact written the policy paper for the United States government and though this policy paper has no official standing it has in fact been taken in in whole cloth and adopted by the Council of Economic Advisers Chuck the committee of Economic Development although it is better known really isn't it as CED that's right see love is not as you say government sponsored know who is it what who sponsors it well this is a private agency I guess ever since the foundations law came into being back in the Wilson administration we've had a lot of these tax-exempt organizations or foundations that wrote policy papers just to illustrate the point we had one called the foundation for economic education which was a big factor back in the full parity days right after World War Two mm-hmm and it was in a way one of the predecessors of a group like CED 51% of its funds came from no few no more than a handful of biological persons and these were almost always the heads or Board Chairman of corporations like General Motors DuPont Goodrich rubber national steel and then there were the rest of the contributions would come from corporations as a corporate gift one well here's a small list I have armored Chrysler con Edison DuPont General Motors Goodrich Gulf oil Sun Oil Eli Lilly and so on well the committee for economic development or CED came on real strong because they hired Paul Hoffman to have it he came straight from the Ford Foundation and he's worked in government and it started writing its policy papers and I came on in 1962 with an adaptive program for agriculture was actually I believe its third farm paper and this is the one that has become the blueprint for the government's policymakers Fink why did you and Chuck and Jack go to Washington and seek out an interview with Dr. Houthakker our people that were in Washington contacting congressmen letting them know what agriculture needed and what was wanted out here inrural America were invariably making the statement that the congressmen were referring to the policy of the economic advisors and of course this policy seemed to be to advocate lower farm prices or pass legislation that would bring about lower farm prices so we finally decided that perhaps it would be a good idea if some of us who didn't know what the situation was and were able to let's say convey the idea can't call on the doctor that is the advisor for agriculture and perhaps explain to him what the situation really was out here what the costs were and so forth and this is what led us to set up the appointment I was there of course and we took Chuck because he is in the economist and then of course Grimmer so that we'd have a representation across the United States of people that didn't know exactly what the policy was or help make an effort to change that policy well think what did Dr. Houthakker say to give you fellas this kind of reaction he said that both the present and the past Department of Agriculture had been very unfair to the American farmers in leading them to believe that they were even trying to help them that their assignment was to eliminate the human resources or in other words the people an individual ownership from agriculture would you repeat that statement yes he said that both the present and the past Department of Agriculture had been very unfair people or to the farmers in leading them to believe that they were even trying to help them that their assignment was to eliminate the human resources in other words the farmers an individual ownership from agriculture and that was just one way to do it and that is by lowering the farm prices well no wonder you came away with the feelings you had Chuck let's develop this interview with Dr. Houthakker what was its beginning point and how was it developed well I think I I opened the conversation I referred to a speech that Dr. Houthakker it made in North Carolina in which he said that farm prices should be set at a distressed level at a distressed level at a distressed level and I asked him in view of the fact that all of the rest of the economy was highly organized we had in effect administered prices in automobiles and manufactured goods in labor we've had the Wagner Act and all that sort of thing I didn't understand the economic thinking behind this and I wouldn't wanted some sort of an explanation did he give you that well he fell back on the precept that's been outlined in detail by the CED policy paper that we had to remove the excess human resource from agriculture this was the only way that we could solve what he defined as this tendency to produce more than the market could take away of agricultural production I guess Chuck that we can equate excess human resource in agriculture to individual ownership now you had some questions for the good doctor about that didn't you jack yes I totally Maz little gloomy in this whole program I didn't quite follow him that I always thought in our Constitution this is right to ownership was the basics of our United States he pointed out well this is this doesn't hold true he said in an in our period while we're getting the farmers off of the farm and which will be done in two years why will happen in the factories working and getting a guaranteed weight at this time why we'll have great prosperity again what's going to happen at the end of the two years we get all the farmers off the farms get them into the urban areas contribute to the urban crisis all the more leave the land what's the answer Fink well then I think utter chaos is the only answer that you can have but before I go into that any deeper I would like to back up on this term that the use of the excess human resources sources in Agriculture's this is CED term will CED and that the doctor also used the term ice but the implication is there that those people who cannot make a living in agriculture that they are excess now there is no such thing as an excess of producers out here the problem is the low prices so if you were to classify any other industry or equate any industry with this same term and have them sell at the prices that they received 20 years ago which is what the farmer well the farmer isn't even receiving the prices today that he received 20 years ago then by on the same definition you'd have to say that the total economy was in excess or all the people in it were in excess I think this point came up in the conversation I think I asked the doctor well if we have excess in agriculture and this is your solution what is your solution for the excess in industrial America we have a million people on relief in New York City alone or is that's just us it's just is this just a small factor or a dislocation and I think at that point he said no this is not this is a little more serious than that yes but nevertheless he was continuously indicating when we were asking him what was he gonna do with another two and a half million people in industry when the rate of employment was already rising and rising at a terrific rate and he always tried to fall back on all this was temporary mm-hmm but the language is in the paper it says here on page 25 of their CED policy paper on aggregate to the principal one a program such as we are recommending here to induce excess resources people primarily to remove or to move rapidly out of agriculture and then this is the same language you hear from the horse's mouth so here's what you have bill you have a policy paper that's been printed it's put on the library shelves it's in every college every economists in the country gets it and our people out here either question that's even in existence did this man talk about human distress yes that was brought up and brought up very emphatically I asked him the question what he was going to do with these people and what it would do to these people and he was his statement was that admittedly this interim or this transfer to a different type of Agriculture would be very painful and that he felt indeed sorry for the people but presently involved in agriculture because they were going to have to take this pain but he said nevertheless it's got to be done so I'd say that's a pretty cold approach to it and it ended up then finally with and this was one of the final statements or questions that I asked him that am I to conclude from the discussion that we have had here today that we are going to make the people of this nation served the dollar or the people who have the great amount of those dollars rather than have the dollar serve the people and with some hesitation he said well basically I would say that you're correct can you believe this Jack what you're hearing well what you heard I can't say how shocking this was I have been informed of this this program this material been put in front of us I read it I studied it but it still doesn't have the effect on me as it did when I heard it right straight from the economic adviser and there's no question about it it's there and it's moving fast and when he pointed out we he wanted this done in two years this is another shocking part of it too two years they gotta move fast two years well Chuck who's going to do the farming well as you know the average age in agriculture is getting quite old 59 isn't it somewhere and it's being quoted in that area there always be an agriculture somebody's got to do the farming but the program here is to convert the ownership of the farmland over to others this is why we're liquidating the plant now I don't believe this came up in exactly this form in the interview but I have had conversations with others predecessors including Dr. snicker and I asked him that exact question in Des Moines one time he said well when we get around to it and have to do it why we'll bring him out from the cities and I presume he meant your peon labor force or your what we call peasantry and this is where we will go take agriculture if this program continues is to an agricultural peasantry let's leave the theories and the facts and the impressions that you all had of what the man said for just a moment and let me ask you about your impressions of the man himself Dr. Houthakker Jack what did you think of him well I got the impression from him that he was just [unclear] me out that I had I had a lot to learn I didn't understand the problem what about you chuck how did you react to the man to the man I'd say he's a sincere man he's a scholar but he's also the prisoner of a theory period the one he grew up and has spent his life with I think he's uneasy about this because I think there is in the back of his head some question about whether or not the nostrums that are being propelled that are correct so this kind of the impression I had a troubled man think well I thought one of the greatest impressions I had of them is that the man was extremely honest in talking to us sparred with other economists and he mentioned Dr. Schnecker before and they've all was while they were compounding this theory we're always leading me to believe we're trying to lead me to believe that lower prices would be good for me this man was honest he made no bones about exactly what the plans were what had to be and what if it's in their power is going to be done so I'd say I'd have to admire the man at least from forgiving us to us straight from the shoulder and I think it had better be a warning to the people involved to get back to what the man said the warnings that he issued and the very disheartening realities that you all came away with was anything said there by him or by any of you about the pure and simple fact that agriculture that farming to thousands of people is a satisfactory rewarding way of life and the way of life that these people would like to retain was this factor talked about well I think it came in in that pretty much in that discussion that it was a painful process but that unfortunately it was going to have to be endured by those people that he felt sorry for the people that were involved in agriculture but still this is never under the less the way it's got to be so there was at a very little room there for discussion for people because there was no interest in the people or the welfare of the people involved bill I got the impression that it was almost a scene out of darkness at noon whereas where the the multitude was being horsewhipped through the desert for 40 years to their own theoretical future happiness oh Chuck this government policy and stated attitude toward the farmer stated by Dr. Houthakker do you feel that this is the result of ignorance or is it a matter of just pure self-interest well I think from an economic point of view there's really no compelling mandate for the economic policy we're being following nor is there any real reason why there should be this lack of participation by the farmer in the welfare or the well-being of the society most of it is being accomplished to serve certain people the objectives are very simple assurance of an abundance of cheap raw materials cheap food shows clothing products that people use to relieve the upward pressure among those who have a large number of employees and this would be your mature fortune corporations surplus labor force to constantly arrive in the city and this creates a pressure to keep the union or organized labor force of docile in group and of course there's the factor of manipulation between keeping farm raw materials at 50% of parity or above slightly but never the hundred percent so they can make a profit in buying the raw material and again in selling the finished product so really what you have here is a distortion of resource use in agriculture and it's being called efficiency and this from any point of view is simply conjectural economics Jack what in your opinion was the highlight of the interview with Dr. Houthakker I think it was where he said it we're over producing you might say producing too much for the market and with the same resources and at that point paint come in with an extraordinary example I thought what did you say at that point think well of course that the we were not produced getting the additional production with the same resources that all of the increase in production that he had been talking about was being bought by the American farmer and paid for it dearly and that that additional increase was not even being paid for what it was costing so in order to make the point that the corporations which is a recommended type of Agriculture could produced for even the same amount that the family farmer is producing now I ask his indulgence to listen just long enough to actual costs costs off of my own farm that would illustrate that it cannot be produced for the projected price of 75 cents an acre or 75 cents a bushel that's corn we're talking about now so ask him what he concede that I would have to figure 6% in interest on the land as a cost he thought that was a very fair figure I asked him what he ought to agree that we had to figure the taxes as a cost for owning the land he said that was right so then on the basis of my own farm now this is not figuring today's inflated land prices that you hear talk about but the actual price that I paid for my farm after World War 2 the interest on the investment and the taxes on the land would be 38 dollars an acre just to own the land this includes nothing else just the cost of owning it then he had mentioned that single crossed hybrid seed corn had definitely increased the yield and this we were ignoring when we were talking about prices as to the days gone by and for on account of this increase we couldn't expect as big a price so then I pointed out to him that the days that he was talking about the days of open pollinated the very best seed that you could buy seed corn would cost you a dollar a bushel and at that time we were planning 10 acres with a bushel of seed corn so our cost would have been 10 cents an acre but today in single cross hybrid seed that comes packed in packages not bushels but packages 80,000 seeds per package and 80,000 seeds will exactly plant 5 acres for me so at that rate my cost per seed today is 5 dollars an acre 50 times higher than it was at that time so add that $5 now you mentioned fertilizer herbicides and insecticides that all of these had increased their yield which is true but which again we are buying so my cost on my farm per acre of corn for the last two years of just these chemicals has been $34 a maker so if you will add these costs the $38 an acre for owning the land you cost $5 for seed per acre and the fertilizer we have a total cost of 77 dollars an acre now we haven't plowed a furrow yet we haven't done any cultivating we haven't dropped the kernel of seed we haven't applied any herbicides insecticides or fertilizer we haven't done any harvesting we haven't figured any cost for this high-priced machinery that we have today we haven't dried any grain we haven't stored any we haven't paid any costs for transportation to market and already without doing anything we've got $77 cost now in the state of Iowa the nation's leading corn producing state at least most years the highest average yield that we have ever had was 94 bushel per acre according to USDA so 94 bushel an acre multiplied by the 75 cents a bushel projected price would give us $70 gross income on that acre so right there alone we have a loss of six dollars and 50 cents an acre before we've started doing any producing whatsoever so how can the corporation's produce any cheaper than that what was his answer to all this at this point the meeting was ended well Fink in view of the facts that you and Chuck and Jack learned in your visit with the doctor had occurred and in view of the facts that have been presented here on this program today will you tell our viewers what you think is going to happen to American agriculture the bill what's going to happen is going to depend solely and completely on those people out there and what they do there's only one way they can eliminate the family farm and destroy rural America and that is by bringing prices down so if the farmers out there are going to depend on the people who are manipulating them out of business depend on them to set the price you can just bet that the whole rural community is going to be destroyed the only way it can be done is if the people out there set by in complacency and watch it happen there's only one thing that can prevent it as I see it now and that is full fair prices for the American farmer that lets him stay in business the whole rural community is involved in this it is their destruction so first of all I think we need to get the support from the businessmen to encourage the farmers to do something for their problem and then a realization of the farmers what must be done once the farmers get together and say this is the price you're gonna pay me what is anybody gonna do it but pay that price exactly as prices are in US administered in all other businesses in the industry today the NFO has given the American farmer the opportunity to solve his price problem by blocking his production together and selling it through collective bargaining with all of us working together and selling together as one man so that our prices cannot be manipulated against us the NFO has built the structure organized now in 48 continental United States we have the marketing area set up in every producing area in the United States we have already to a great extent effect of the prices and all we need now is of additional production block together to give us the additional weight to tip the scales all the way the other way the American farmer can have a price just as soon as he is ready to do his part so I urge all of you forget your petty differences your little beefs and let's get together to save our hides to save our very way of life this is your last chance the power of the production will finally decide it once you decide to block it together and it has to be done through the animal thank you very much Fink thanks to you chuck and Jo my special guests on this week's show have been the national vice-president of the National Farmers Organization mr. Erhard Pfingsten also we have had as a guest mr. Charles Walters economist and mr. Jack grimmer an fo leader from the state of California us farm report is seen each week at this same time on this station until we meet again so long everybody [music]