ORIGINALLY PUBLISHED | JUNE 5, 1919 | THE FARMER'S ADVOCATE
Not long ago I saw in one of our dailies a very good cartoon in which “Food” and “Wages” were standing on a high scaffold with a ladder leading therefrom, Each of these worthies was pointing to the ladder and urging the other to “go down first.” Food, wages, transportation and manufacture seem so inextricably interwoven in their welfare and existence that it is difficult to say what the future holds out in the way of profits and prices. Primarily the production and price of food governs or is used as an excuse to govern the rise and fall of wages, transportation tariffs, price of manufactured goods, etc. During the last three years the buying power of a dollar bill in food alone has dropped very materially. The wage earner wants to live as well as he did three years ago, so he says to his employer, “I must have more dollars to buy food and clothes.” And he backs up his demand with a union strike. To keep things going, the employer adds a percentage to the freight tariff or the cost of the manufactured article as the case may be.
Now if the farmer were as favorably placed as the working man and the so-called “Big Interests,” when these put up their prices he would say, “The commodities I cannot raise and have to use in my work and life, the cost of getting my stuff on the market, my men’s wages have all risen in price; I must have more for my produce or go out of the business. I will combine with my brother farmers and hold my produce until the consumer gives me enough for my goods to give me a living profit.” Then the other interests would take another hitch up, and who knows where the thing would stop?
But Providence has ordained that farmers shall only by unremitting toil and strict economy make enough to keep soul and body together by selling as fast as they produce. The fact that they furnish a product more or less perishable also robs them of any independence they might otherwise obtain through union. So that in the last analysis it is food or rather the helplessness of the farmer that keeps prices down, and not the agency which causes them to soar. They have to sell as soon as they produce and take what a grudging trade will give them, in prices based, not on value of cost of production, but on scarcity or abundance of supply.
Farmer Never Has Controlled Prices
It has been proved, time and again, that the farmer cannot control prices either as an individual or in combination; and as a farmer I am afraid he never will. Take a concrete case to illustrate the point. A concern is turning out farm implements. If the management is endowed with good business foresight and grip, the raw material has been purchased at wholesale and at lowest price. The employees are trained to highest efficiency, and all waste is eliminated. To the cost of the implement is added the desired profit, and it is sold at the desired price, subject to slight fluctuations, i. e., the manufacturer, whether he be alone, or, as is more often the case to-day, the industry in combination, controls the price of the output. If the output exceeds the demand the manufacturer says: “These are not perishable, we will hold them.”
On the other hand, the farmer after years spent in breed selection, learning how and what to feed for best gains, how to grow feeds or where best to purchase them, produces one hundred pounds of pork that cost him twenty dollars. The farmer cannot say, “I want to make 10 per cent. profit on that pork, and will sell it for $22.00.” He has to take the price set for the time being by the packers or wholesalers, a price which will allow them to sell and make their desired profit. Nor can the farmer, if the market does not suit him, hold, because his commodity is perishable.
There may be conditions under which he may sell his twenty-dollar pork for twenty-five or even more, but more often conditions compel him to sell under cost. Occasionally food prices do materially strengthen but it is through no control of the producer, nor does it mean a greater profit for him as a rule, because at such times the cost of production is generally greater.
A good example is furnished by the last three years when the curtailment of labor in production and the increase of consumption by the armies and their dependent accompaniments created a necessary insistent demand considerably in excess of supply. The cry of food shortage brought and has kept up the price of foods. It was not through ny action or influence of the producer, nor have the profits to the producer been much, if any, greater than before. If he has received twice as much for his produce his wage sheet, equipment, clothing, feed, fertilizer, etc., have jumped in the same or greater proportion.
There is another condition in which scarcity of food may bring high prices, and this condition may obtain in the near future. Food prices will undoubtedly continue high until next autumn, then there may be a depression of prices dependent on, and modified by, the ability of the rural population of the world, or at least the northern hemisphere, to raise the large crops they hope to, and also on the character of the season.
When Prices Will Fall
The impetus that has been given production will have a tendency to carry it into surplus; supply will exceed demand and prices will drop below cost of production. The power and influence of organized labour will keep up the price of their commodity, and the pendulum of production will swing to the minimum, because of the drawing of labor from the farms where low prices of farm produce will not allow payment of wages that could be obtained in other industries. Then lessened production will create a scarcity, high prices will ensue, and the pendulum of production will swing back to maximum. Thus, if no outside controlling factors interfered to steady prices, we would have a more or less regular vibratory motion of prices and production, the time of vibration depending on the number of months or years it takes to mature the particular product.This has been well illustrated in the last twenty-five years in the pork trade, especially in Ontario, where production and prices have played a very evident game of see-saw. Now all this vibratory tendency is undesirable and interferes with the stability of trade and industry, and it leads to the feeling that our Government should exercise a certain degree of control in regard to prices in every department of the national industrial household.
Price Control Dangerous
One can readily see that absolute control of prices by any national authority covering a sufficient period of time to allow any industry or number of industries to lay definite plans as to production and extension, would be fraught with much danger to trade. No man can bank on the future. At any period some unforeseen distracting influence may operate to upset all plans. Witness the state of affairs at present in connection with the wheat prices in the United States. Either the Government stands to lose or it will have to go back on the guaranteed price. That is, no one nation can do this thing. The United States has guaranteed to her wheat raisers a price of say $2.50 (not the actual price) per bushel until after the harvest of 1920. Canada, South America, or some other country without such a guarantee sells wheat to the other nations at $2.20, and even sells to U. S. millers at that price. Then about the only thing for the U. S. Government to do is to buy the wheat from the farmers, sell it at a loss of 30 cents per bushel and turn the loss back on people.
But it would seem to be quite possible to have price control work smoothly and very beneficially under the direction of a League of Nations. To-day such authorities as the nation's food controllers are expressing the opinion that food and fuel control boards should be a permanent institution in every nation.
Undoubtedly in the future international trade relations will be closer, stronger and freer than ever before. All industrial intercourse between nations should be broader and more unselfish than ever before. The thought in the future should not be, for instance, what will Canada gain by trading with this or that country, but can we establish such trade relations that the benefit will be mutual. In nations as in individuals a square deal on both sides leads to pleasant relations and a future extension of business. The popular conception of the jurisdiction of a League of Nations probably limits it to the policing of the different countries, the making of international laws as to armament, etc., and the settlement of international disputes. If, however, the different nations were to make food control permanent, and this would also mean the control of price, then why should not that control become international as well. This would obviate “cornering,” “profiteering,” lessen congestion of trade in any one place or country, tend largely to eliminate the speculator or middleman, and bring the consumer nearer to the producer.
An expert system of crop estimation, such as already exists in the International Institute of Agriculture, could regulate the trend of trade and price each year. Such price control would not necessarily mean higher prices but steadier prices, and lower prices to the consumer through the deletion of unnecessary accessories. Something of this kind must be done to stabilize agriculture and make it sufficiently attractive to lead more good business men to take it up as a profession.
As agriculture stands to-day unorganized, misrepresented by public opinion, unrepresented in the parliaments of the country, at the mercy of labor, industrial and political organization, men of business ability will not take it up nor remain with it if they have started.
True, organization is existent in a weak, disunited scattered sense; but as yet no national body of real executive power, which represents agriculture as a whole, and which would make its influence felt in improved legislation exists in Canada or, in fact, in any of our American countries.
Efficient organization in agriculture must come in the next twenty years; whether from the Governments, in response to the demand of a semi-starved urban population, or from an enlightened and educated agricultural people.
Annapolis Co. N.S.
R.J. Messenger