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No. 67 "Consumers And The AAA: A Study of the System of Regimentation Flagrantly Violative of Constitutional Liberties Which Makes the Consumer the Real Forgotten Man of the Present Administration," October 7, 1935.
No. 67 "Consumers And The AAA: A Study of the System of Regimentation Flagrantly Violative of Constitutional Liberties Which Makes the Consumer the Real Forgotten Man of the Present Administration," October 7, 1935. American Liberty League. 400dpi TIFF G4 page images Digital Library Services, University of Kentucky Libraries Lexington, Kentucky Am_Lib_Leag_67 These pages may freely searched and displayed. Permission must be received for subsequent distribution in print or electronically. No. 67 "Consumers And The AAA: A Study of the System of Regimentation Flagrantly Violative of Constitutional Liberties Which Makes the Consumer the Real Forgotten Man of the Present Administration," October 7, 1935. American Liberty League. American Liberty League. Washington, D.C. 1935. This electronic text file was created by Optical Character Recognition (OCR). No corrections have been made to the OCR-ed text and no editing has been done to the content of the original document. Encoding has been done through an automated process using the recommendations for Level 1 of the TEI in Libraries Guidelines. Digital page images are linked to the text file. Pamphlets Available â˜… Copies of the following pamphlets and other League literature may be obtained upon application to the League's national headquarters: Statement of Principles and Purposes American Liberty League Its Platform An Analysis of the President's Budget Message Economic Security Inflation The Thirty Hour Week The Pending Banking Bill The Holding Company Bill Price Control The Labor Relations Bill The Bituminous Coal Bill Extension of the NRA The Farmers' Home Bill The TVA Amendments The New Deal, Its Unsound Theories and Irreconcilable Policies Speech by Ralph M. Shaw How to Meet the Issue Speech by William E. Borah The Supreme Court and the New Deal An Open Letter to the President By Dr. Neil Carothers The Revised AAA Amendments The President's Tax Program The American Bar The Trustee of American Institutions Speech by Albert C. Ritchie Two Amazing Years Speech by Nicholas Roosevelt Fabian Socialism in the New Deal Speech by Demarest Lloyd The People's Money Speech by Dr. Walter E. Spahr The Principles of Constitutional Democracy and the New Deal Speech by R. E. Desvernine Which Road to Take? Speech by J. Howard Pew The Blessings of Stability Speech by James W. Wadsworth Legislation By Coercion or Constitution Speech by Jouett Shouse Recovery by Statute Speech by Dr. Neil Carothers Expanding Bureaucracy The Imperilment of Democracy Speech by Fitzgerald Hall. Lawmaking by Executive Order The Test of Citizenship Speech by Dean Carl W. Ackerman Today's Lessons for Tomorrow Speech by Captain William H. Stayton New Deal Laws in Federal Courts Potato Control "Breathing Spells" Speech by Jouett Shouse The National Labor Relations Act Summary of Conclusions from report of the National Lawyers Committee â˜… AMERICAN LIBERTY LEAGUE NATIONAL PRESS BUILDING WASHINGTON, D. C. CONSUMERS AND THE AAA â˜… â˜… â˜… A Study of the System of Regimentation Flagrantly Violative of Constitutional Liberties Which Makes the Consumer the Real Forgotten Man of the Present Administration AMERICAN LIBERTY LEAGUE Rational Headquarters NATIONAL PRESS BUILDING WASHINGTON, D. C. Document No. 67 October, 1935 Consumers and the AAA Authorities Cited Bureau of Labor Statistics The Brookings Institution The Secretary of Agriculture The Cabinet Committee on the Cotton Textile Industry Annual report of the Agricultural Adjustment Administration The Assistant Oeneral Counsel of the Treasury Department The National Industrial Conference Board The Commission on Recent Social Trends â˜… The consumer is the forgotten man of the present administration. In the less than two and one-half years since the enactment of the Agricultural Adjustment Act retail food prices have advanced an average of 32 per cent. The increase since the beginning of the administration is 37 per cent. Prices of some foods, have increased more than 100 per cent. Through its cotton program the Agricultural Adjustment Administratiqn has contributed to higher prices of clothing and house furnishings. The consumer has suffered under the operation of a law whose essential features have been held to be unconstitutional in decisions in United States District Courts and in Circuit Courts of Appeals. Recent amendments to the law, which are designed to continue the AAA machinery in effect even in the event of an adverse decision by the Supreme Court, serve to make the system of regimentation of agriculture even more flagrantly violative of liberties guaranteed by the Constitution and to encroach still more upon rights reserved to the states. Salient facts with respect to prices paid by consumers for commodities affected by AAA policies include the following: 1. Prices of food to consumers have been constantly rising until they have added very greatly to the cost of living. 2. The greatest increase in food prices has been in meats, especially pork products, which 2 have been a particular subject for experimentation by the AAA. 3. Meats have continued to advance in price during the summer and early fall, reductions in prices of seasonal vegetables and fruits accounting for a temporary interruption in the upward trend of the index of all food prices. 4. Increases in food prices have been out of f proportion to changes in incomes and have forced either a shifting to less expensive substitutes or a reduction in expenditures for other items in j the budget of consumers. 5. The retail price of bread has increased 26 per cent, of which amount the Brookings Institution estimates one-third due to the processing tax. 6. The new Potato Control Act must be disregarded or it will mean a very substantial increase in the price to the consumer for this necessary article of food. 7. The processing tax on cotton requires an extra charge to the consumer of manufactured goods on top of increased raw material prices pegged above world market levels. 8. Processing taxes and control programs, while responsible for only a part of price increases, have accentuated upward movements due to drought and other factors. 9. Bungling policies of the AAA have resulted in a dislocation of normal relationships among prices of different foods. 10. The parity price formula under which the AAA seeks to lift farm prices to the same level as industrial prices is unfair to the consumer. Cause of High Prices No one will contend that the increase in prices of foods has been entirely due to the AAA or that, in the case of meats at least, chief responsibility can be charged to the control program. It is indisputable, however, that the efforts of the AAA have served to accelerate an upward price trend caused by uncontrollable factors and to make the burden upon consumers greater than it would have been otherwise. V The drought of 1934 undoubtedly has been a major cause of high prices of foods, particularly meats, during the present year. Devaluation of the dollar served to advance the price level for commodities figuring in international trade, including wheat and cotton. Shorter hours and higher wage scales in industry have increased costs of distribution of agricultural products and thereby added to the price to the consumer. The clumsy attempts of the AAA to control prices, initiated in advance of crop seasons and without thought of the variations caused by Nature, have accomplished but little for the farmer but have increased the consumer's burdens. Extent of Price Increases The Bureau of Labor Statistics offers a table of the advance in prices. Its index number for retail prices of 48 foods on September 10, 1935, stood at 123.9. The basis of the index is 100 for average prices of 1913, which means that the food price level now is about 24 per cent higher than in 1913. At the time the present administration took office in March, 1933, the food price level had dropped below that prevailing in 1913. The index stood at 90.5 in that month and advanced to 93.7 in May, 1933, when the Agricultural Adjustment Act was passed. The 123.9 level thus represents an increase of 37 per cent since March, 1933, and 32 per cent since May, 1933. The present level shows a steady increase during the past two years, the index standing at 107 on September 12, 1933, and at 116.8 on September 11, 1934. The high point in the present year was 125.2 on April 23. There was a slight decline during the summer months as prices of fruits and vegetables and other seasonal foods dropped. While the present food price level remains below that of the period of inflated prices existing up to 1930, prices of pork products are higher. The price relationship among different foods has been sharply changed during the past two years, the effect being to force consumers to buy less expensive varieties. Less meat is being bought this year than last, while more fish and other substitutes are being used. The index for prices of meats was 163.9 on September 10, 1935, as compared with 104.4 on September 12, 1933, and 133.8 on September 11, 1934. Both in March and May, 1933, the index was 100.1. The average increase in prices of meats under the AAA thus has been about 64 per cent. The index for cereals and bakery products, a group of foods affected by the AAA program, was 151.2 on September 10, 1935, as compared with 115.8 in May, 1933, an increase of 30 per cent. The index for dairy products was 106.2 on September 10, 1935, as compared with 92.2 in May, 1933, an increase of 15 per cent. Wholesale food prices have advanced even 4 more than retail prices. The index of wholesale food prices is at the highest point of the year and shows an increase of about 45 per cent from May, 1933. Actual Price Increases The table which follows shows comparative average retail prices of leading foods in the principal cities of the United States as computed by the Bureau of Labor Statistics. In separate columns are prices for the year 1913; for May 15, 1929, which was at the height of the period of excessive prices during the speculative boom; for May 15, 1933, which was three days after the enactment of the Agricultural Adjustment Act; and for September 10, 1935, the latest date for which figures are available. All price figures represent cents per pound except where otherwise indicated. The table follows: May 15, May 15, Sept. 10, Per cent 1929 1933 1935 increase under Retail price in cents per pound AAA Sirloin steak. 25.4 50.4 28.4 40.7 43 Round steak. 22.3 44.9 24.6 36.9 50 Rib roast 19.8 37.2 20.8 30 44 Pork chops . 21 37.7 18 38.9 116 Bacon, sliced 27 43.4 21.3 46.2 117 Leg of lamb. 18.9 42.1 21.4 282 32 Hens ....... 21.3 42.2 21.5 29.6 38 Lard ...... 15.8 18.4 8.9 22.1 148 Eggs (dozen) Butter ...... 34.5 38.7 20.3 392 93 38.3 54.5 282 323 15 Milk (quart) 8.9 14.2 10 11.7 17 Flour ....... 3.3 5 3.4 5 47 Bread ...... 5.6 9 6.5 8.3 26 Corn meal. .. 3 5.3 3.5 5.2 48 Rolled oats . 8.9 5.6 7.7 37 Rice ........ 8.7 9.7 5.8 8.4 45 Potatoes 1.7 2.7 1.7 1.7 0 Sugar ....... 5.4 6.4 53 5.8 9 It may be seen from the above table that prices of meats and meat products have increased by 32 to 148 per cent during the operation of the AAA; that prices of bread, wheat flour and corn meal have increased respectively by 26, 47 and 48 per cent; that the price of rice, which has received special attention in the AAA program, has increased 45 per cent, and that the price of other foods has increased by varying percentages. Control Programs Consumers feel directly the effects of the operations of the AAA through processing taxes 5 shifted to them by meat packers, millers or other processors and through such part of higher prices as may be caused by marketing agreements and by production curtailments required by Government contracts or compulsory laws. The revenue from processing taxes is used to finance benefit payments to farmers who agree to reduce production. Foodstuffs on which processing taxes have been levied include hogs, on which the tax is 2!/4 cents per pound; corn, 5 cents per bushel; wheat, 30 cents per bushel; peanuts, 1 cent per pound; raw sugar, one-half cent per pound; rice, 1 cent per pound. There are processing taxes on tobacco varying from 2 to 6.1 cents per pound. The processing tax on cotton is 4.2 cents per pound. The amended law authorizes processing taxes of 30 cents per bushel on rye and 25 cents per bushel on barley. The total amount collected from processing taxes gives an idea of the extra charge that has been passed on to consumers through this item. By the end of the year 1935 the total collected from all processing taxes since first levied in 1933 will be upwards of $1,000,000,000. About two-thirds of the total affects food. The great bulk of the amount has been passed on to consumers, although in some instances the tax has had the effect of reducing the price to farmers and in others it has been absorbed by the processors. It would be impossible to compute the waste in dollars and the time lost by supposed beneficiaries in the administration of this Act. The commodities upon which processing taxes are levied are those upon which benefit payments are made to farmers. Milk and a number of fruits, nuts and vegetables have figured in marketing agreements. There has been a compulsory reduction in the acreage of cotton and tobacco. The new Potato Control Act, which is included in the amendments to the Agricultural Adjustment Act, is compulsory. The control programs, involving reduction in acreage or volume of production, have by no means accomplished all that was predicted in the way of stimulating advances in prices. The control programs have added to the cost of living by increased price burdens. Processing taxes bear more heavily upon the poorer classes than those with large incomes, according to the testimony of Robert H. Jackson, Assistant General Counsel of the Treasury Department, before the Senate Finance Committee on August 6, 1935. Mr. Jackson grouped processing taxes with miscellaneous internal revenue and customs levies which he said "have an incidence that has little relation to ability to contribute to the cost of government." "It is a commonplace," said Mr. Jackson, "that such taxes are proportional to consumption, hit poorer classes hardest, and rest with greater weight upon large families with small incomes than they do upon small families with large incomes." Meat Prices The greatest increase in food prices since the AAA became effective has been in meats. Pork products lead the list. The retail price of pork chops has gone up 116 per cent during the existence of the AAA, sliced bacon 117 per cent, and lard 148 per cent. The prices of pork chops, bacon and lard are even higher than in 1929. The processing tax has been largely passed on to consumers during the present season, although, at first, before drought sent prices skyward, it was passed back to farmers in the form of lower prices for their hogs. The tax is equivalent to an excise tax of 20 per cent or more on the high prices of hogs recently prevailing. It amounted to a tax of as much as 40 per cent when prices were low. As part of the basic cost of a raw material used in a finished food product, the tax, which is on the live weight of the hogs, tends to pyramid during the various stages before it reaches the final consumer. The 2^ cents per pound tax may easily be multiplied several times in the retail price of pork products. The corn-hog curtailment program of the AAA undoubtedly has had something to do with skyrocketing prices of pork products, although the drought of 1934, which reduced feed supplies, is regarded as the chief factor. The AAA bought and slaughtered 222,149 sows and 6,188,717 little pigs in the fall of 1933. This wholesale destruction of live animals was followed by contracts under which the Government paid farmers not to raise pigs and corn. Opinions differ as to whether the ill-advised slaughter of sows and little pigs, an action made farcical by the drought of 1934, can be blamed in part for present high prices. In any event the AAA corn-hog curtailment program as a whole has aggravated the shortage of hogs attributable 7 to the 1934 drought. Storage stocks of pork and lard this summer were the smallest on record. The number of hogs over six months of age was 30 per cent less than a year ago. Retail prices of beef have advanced less than those of pork. The price of sirloin steak and rib roast has gone up 44 per cent, while that of round steak has increased 50 per cent during the life of the AAA. No plan of production control has been applied to beef and there is no processing tax on cattle. One factor in the advance in prices was the reduction in the number of cattle through the purchase by the Government of more than 8,000,000 in areas affected by the 1934 drought. The cattle were slaughtered and the meat used for relief purposes. The number purchased was about double the number said by Government officials to represent an undesirable surplus. The result was that stocks were reduced too much. It is contended by some authorities that it was not necessary to slaughter so many cattle. Sheep have not been involved in control programs. The increase in the price of leg of lamb has been 32 per cent since the AAA was inaugurated. The price has been affected to some extent by purchases of sheep by the Government in drought areas. Recital of these facts offers a comparison between the prices for hog products on which a processing tax has been collected and the prices for beef and mutton on which there has been no processing tax. This clearly shows that the processing tax is paid by the ultimate consumer and greatly increases the cost of food. Bread Prices The part played by AAA policies in higher retail prices of bread and wheat flour, which have advanced 26 and 47 per cent respectively since 1933, is analyzed in a study by the Brookings Institution on Wheat and the AAA, recently published. A quotation from this book, page 364, follows: "Of the net increase in retail bread prices, which from early 1933 to the end of 1934 appear to have risen about 2 cents a pound, the processing tax was responsible for at least one-fourth and possibly a third; the advance in wheat prices, for one-third or more; and other factors, including costs of other ingredients, for about another third. Of the smaller increase in retail flour prices, higher wheat prices account for at least one-half, the processing tax for at least one-third, and other factors for a smaller amount. For the still smaller increase in wholesale prices of flour, higher wheat prices account for somewhat more than half and the processing tax for somewhat less than half." On the basis of the computation by the Brookings Institution, the processing tax represents a hidden tax of 7 or 8 per cent of the present retail price of bread. This is a tax which no Congress would have the temerity to levy directly upon consumers. Recent increases in the price of wheat and a prospective shortage of high-grade wheat promise a material advance in present costs of bread. The Brookings Institution belittles the effects upon prices of the wheat control program, under which the AAA has paid farmers not to raise wheat. The assertion is made in its study that "the maximum price effect rightly to be ascribed to all AAA operations combined was to hold the average price of wheat in 1933-34 some 2 or 3 cents a bushel above what it would otherwise have been; and even this cannot be demonstrated." According to this study, depreciation of the dollar, which affected commodities figuring to an important degree in foreign trade, even though its influence was relatively slight on other prices, was responsible for about half of the increase of 35 cents per bushel from the weighted average farm price of 37.9 cents in 1932-33 to 73.3 cents in 1933-34. A short crop accounted for most of the rest of the increase. The elaborate program of the AAA thus is held to have been ineffective. AAA control has had but little to do with the recent upward movement of the price of wheat. Dairy Products Marketing agreements and licenses through which an attempt has been made to control the price of milk have been typical of bungling policies of the AAA. Farmers have not benefited materially; neither have consumers suffered a very great increase in prices. According to the recent study by the Brookings Institution on The Dairy Industry and the AAA, little tangible result has been achieved in either production or marketing control outside the reduction in the number of excess cattle through Government purchases. The milk marketing agreements and licenses have not worked satisfactorily. A sidelight on the manner in which the AAA has groped in the dark, consumers being at the mercy of its experimentation, is found in a comment in this study on the dairy industry that "a Government agency was called upon to undertake something which nobody knew how to do and which perhaps could not be done at all under existing limitations." It was added that "there were those on the outside who thought they knew how; but events since have proved that they were as wrong as anybody else." If officials of the AAA are correct in their assumption that the new amendments to the law will facilitate operation of the milk control program, consumers may expect to feel the effect before long in the form of higher prices. The amendments specifically permit the fixing of prices paid to farmers for milk. The higher prices must be passed on to consumers. Potatoes Potatoes are one of the few foods which have not increased greatly in price. The average retail price has not changed substantially during the past two years. Inasmuch as no article of food is more essential to consumers generally, they have reason to be thankful for this. The Potato Control Act, signed by the President as part of the amendments to the Agricultural Adjustment Act on August 24, 1935, has for its purpose a boosting of prices. Publicity given this legislative monstrosity has caused such a storm of protest that the administration is trying to avoid wide enforcement of the law. Nevertheless, it stands on the statute books, a threat to those who oppose the follies of the AAA. The goal upon which those responsible for the Potato Act have had their eyes fixed is a price to the farmer nearly 100 per cent higher than average prices recently prevailing. If retail prices are advanced proportionately, it will mean a very considerable addition to the budget of most consumers. Under the Potato Act consumers are denied the privilege of buying their potatoes where and how they please. The purchaser of potatoes, which are not packed in prescribed containers and properly stamped, is equally guilty with sellers and faces a jail sentence as well as a fine. Cotton The AAA has contributed to higher prices of industrial products through its cotton program. 10 By paying farmers in the South not to raise cotton, enforcing acreage curtailment by the penalties of the Bankhead Cotton Control Act and loaning on the farmers' cotton amounts greater than the world price, the Government has forced domestic prices up to a level about twice as high as prevailed at the time of the enactment of the AAA. Consumers of cotton goods have been obliged to pay prices high enough not only to cover a cost of raw material higher than the world price but high enough also to absorb a processing tax of 4.2 cents per pound. Except for foreign competition, which has seriously affected domestic manufacturers, consumers would have had to bear a heavier load than has actually been the case. They have benefited to some extent at the expense of a distressed cotton textile industry. The report of the Cabinet Committee on the Cotton Textile Industry, submitted to the President in August, 1935, states that from March to October, 1933, the cost of raw material, including the processing tax, increased 100 per cent and since that time the trend has been further upward. In the same report it is shown that the processing tax represented about 11 per cent of all costs of 108 cotton spinning companies for which statistics were assembled. It was testified before the Cabinet Committee that the processing tax on average coarse goods amounted to about 15 per cent of the total cost of the goods. The higher costs of manufacture of cotton goods have raised the price to a level out of line with its customary relationship to general commodity prices which has acted as a deterrent upon consumer purchases. In an official statement by the AAA it has been estimated that the cotton processing tax adds 1.3 cents to the cost of cotton required to manufacture a yard of muslin, approximately 3 cents for a work shirt and about 8 cents for the cotton required to manufacture a pair of overalls. The statement did not attempt to show actual additional cost to the consumer by reason of unavoidable pyramiding in the process of distribution. Retail prices of many cotton goods have increased from 20 to 50 per cent and even more under the AAA. Consumers' Strikes Housewives have reason to be aware of the increase in retail prices of food, an advance so great in recent months as to cause consumers' strikes in New York, Chicago, Detroit, St. Louis, Pittsburgh, Los Angeles and other cities. Those joining in these protests against mounting living costs have felt aggrieved because prices of food are advancing more rapidly than their incomes. Food accounts for about one-third of the average family budget. An increase of about 35 per cent in the cost of food has meant that families with fixed incomes have had to reduce other expenditures. The National Industrial Conference Board estimates that the budget of the average family among small wage earners in the United States is divided as follows: food 33 per cent, housing 20 per cent, clothing 12 per cent, fuel and light 5 per cent, and sundries 30 per cent. On this basis the normal outlay for food from a $2,000 income is $660. An increase of 35 per cent in food prices would add $231. The consumer has no alternatives but to select less expensive foods or sacrifice other items, such as clothing and sundries. The average family uses 75 pounds of pork products and 150 pounds of beef products annually. An increase in the price of pork from 20 to 40 cents per pound means that a $15 item in the annual budget is increased to $30. Similarly, an increase in the price of beef from 25 to 35 cents per pound increases an item of $37.50 to $52.50. Those who have investigated the possibility of a reduction of the costs of the distribution of food have found no evidence of excessive charges by processors, wholesalers or retailers. The profits of 851 meat packing companies which submit reports to the Department of Agriculture averaged last year about a cent and a half per dollar of sales or only a fraction of a cent per pound of meat sold. Profits over a ten-year period have averaged not more than one cent per dollar of sales. Net profits of meat retailers in recent years are estimated at from 2 to 2% cents out of each dollar of sales. The retailer pays the wholesaler of meats about 75 cents out of every dollar he receives from consumers. Of the remaining 25 cents, half or more is paid for wages and most of the balance for other expenses incidental to distribution, including taxes. Parity Prices The alleged objective of the AAA is to raise prices of the things farmers sell to the level of the things they buy. 12 The law sets up a policy to "reestablish prices to farmers at a level that will give agricultural commodities a purchasing power with respect to articles that farmers buy, equivalent to the purchasing power of agricultural commodities in the base period." The base for all commodities except tobacco and potatoes is the pre-war period from August, 1909, to July, 1914. For tobacco and potatoes the base period is the post-war decade from August, 1919, to July, 1929. The so-called parity price formula contemplates a price per bushel of wheat or pound of pork which will go as far toward the purchase of a farm implement or a pair of shoes as a bushel of wheat or a pound of pork would go in the prewar period. The identical pre-war prices for farm products are regarded as not sufficient if prices for industrial products are now on a higher level. The unit used in the computation is the bushel or the pound of the farm product rather than the yield per acre or the aggregate cash revenue per worker or per farm. The consumers suffer under the parity price device. The attainment of parity prices may mean a relatively better status for farmers than they enjoyed in the base period instead of an equivalent status. The extra cost is passed on to the consumers either through higher prices or by means of the processing tax. Tremendous strides have been made in recent years in the development of more efficient and economical methods of agricultural production. Secretary of Agriculture Wallace in his book New Frontiers says: "Science has made it possible for American agriculture since the War to increase production 25 per cent without any increase in acreage. There had never been anything like that before." Experts of the Commission on Recent Social Trends reported in 1932 that our agricultural output per worker increased 22 per cent between the average of the decade 1912-1921 and the decade 1922-1931. In the light of these facts a parity price representing relative purchasing power of a bushel or a pound of a farm commodity is far from an accurate gauge with which to measure the present status of farmers in comparison with that existing before the war. A higher yield per acre and a greater production per worker should make possible a larger cash income than in the base period even if prices are lower. The parity price formula denies to consumers the advantage 13 which they should have by reason of improved methods. Consumers never will reach the end of their treadmill under AAA policies. Successive price advances of food will take place through an endless chain process. Every time the prices of industrial products advance the parity prices of farm products are moved up. Inasmuch as the AAA control program enters into costs of many industrial products, each boost in the price of a farm product will in turn force a further upward revision of parity prices. Consumers, who themselves may have incomes no greater than before the War, have been burdened in the first instance by higher prices of industrial products due to policies inaugurated by the present administration, including the NRA. Next, they have been taxed through higher food prices to provide a subsidy for agriculture to compensate for these greater costs of industrial products. That does not end it, for the subsidy in the case of cotton, at least, will be reflected in higher industrial prices which in turn will require an adjustment of all parity prices. The new amendments to the Agricultural Adjustment Act have made possible higher parity prices by allowing the relation between the farmers' present mortgage-interest and land-tax rates and the rates that prevailed in the pre-war period to be taken into account. The annual report of the Agricultural Adjustment Administration for the year 1934 shows that average actual farm prices at the end of the year were as high as those prevailing before the War. The average of farm prices on December 15, 1934, was 101 per cent of the pre-war average according to the AAA figures. Prices paid by farmers for industrial products, however, averaged 126 per cent of the pre-war level. Therefore, under the parity price formula, the exchange value of farm products was only 80 per cent of pre-war. The processing taxes were designed to raise funds to pay farmers benefits sufficient to bring the 80 per cent up to 100 per cent. Latest available figures show that on September 15, 1935, the farm price index was 107, while the index of prices paid by farmers was 125. The annual report of the Agricultural Adjustment Administration states that at the end of 1934 parity returns, meaning revenue both from sales and Government benefits, were being realized by farmers on seven products for which control had been developed cotton, wheat, corn, hogs, tobacco, sugar and peanuts. 14 Consumers the Victims The consumers of the country, who comprise the entire population, are paying the costs of misguided experimentation. The picture is by no means as rosy as painted in the President's speech at Fremont, Nebraska. The AAA has achieved no lasting benefits for agriculture. Its manipulations have caused dislocations in the economic structure which counterbalance any possible temporary advantages. The experience of potato growers, whose market has been demoralized by the product of land diverted from cotton, tobacco, wheat, peanuts and other controlled crops, has demonstrated that it is impossible to stop with half-way measures. The inevitable end is complete regulation of all agricultural production. Consumers then would pay the prices fixed by a Socialistic Government. In its program of higher prices, subsidies and regimentation, the AAA has sacrificed efficiency, a possible lower level of costs and farm independence. Besides being unfair to domestic consumers, the high prices have served to destroy foreign markets. The regimentation of agriculture is flagrantly violative of liberties guaranteed by the Constitution. Consumers are paying the costs in the form of higher prices and as taxpayers are bearing costs not covered by processing taxes. Up to the end of September, 1935, the Agricultural Adjustment Administration had expended about $1,200,000,-000. Of this amount consumers of particular products contributed about $920,000,000 in processing taxes while consumers as taxpayers provided the remaining $280,000,000 appropriated from the Treasury. To the huge subsidy of $1,200,000,000 raised by taxation, special and general, should be added possible losses on loans by the Commodity Credit Corporation which had outstanding at the end of September, 1935, nearly $250,000,000. The additional cost to the taxpayers will be many hundreds of millions of dollars for every year the AAA remains in operation. The losses of the former Federal Farm Board will be insignificant in comparison with the costs of the present venture. Under the circumstances the consumers have cause for concern. They properly may object to footing the bills for a program which runs counter to sound economic theories and constitutional principles. 15 ft