justments in production to demand as rapidly and accurately as can industry. It is handicapped by weather, diseases, limitations of soil and climate, slow business turnover, and other more or less uncontrollable influences. Nature will give bountiful yields in some years, even though acreage may have been decreased. Certainly it is to the interest of the entire community that agriculture should not be periodically depressed by over-production and low prices. Business at large has almost an equal interest with agriculture in preventing any undue fluctuations in farm commodity prices. Measures to regulate the movement of surpluses into consumption are needed so as to lessen speculative hazards and prevent unnecessary price fluctuations. But I am opposed to government handling of farm products; I am opposed to price fixing.

Of course, it is well to differentiate between surpluses. It may be a useful carry-over from one producing season to another, part of which is involved in the process of manufacture and distribution, and part of which is the national reserve against fluctuating seasonal production. It may be over-production beyond the domestic and world demand.

There are, I believe, two general avenues of approach to a solution of the surplus problem. One is through the better management of production. The other is through marketing and distribution.

In the first instance the problems must be dealt with from the farm end. I have said repeatedly that a substantial part of the farmer's problems must be solved on the farm, and I say it with full under

standing of the difficulties that face the individual. I have been up against them.

The ideal solution is to have the best possible adjustment of production to market requirements. This is much more feasible to-day than in the hit-or-miss situation of a few years ago. The process of collecting and disseminating the necessary information which helps farmers to adjust their production programs to consuming demand is rapidly being improved. Reliable estimates, surveys, and reports give the farmer of to-day great advantage in his planning. It is essential to have the utmost efficiency in farm operation, however. There is no formula under the sun that can guarantee the wellbeing of the inefficient producer.

It is a difficult field, but I believe farmers through their organizations have a most powerful instrument to control the movement of surpluses into consumptive channels. A measure of the progress already achieved in this direction is the fact that nearly one fifth of our agricultural business, or about $2,500,000,000 worth, was done last year through farmers' business organizations.

The activities of government agencies in connection with the surplus problem should, in my judgment, supplement and assist rather than control and direct the efforts of the farmers themselves and their associations. To accomplish this may call for enabling legislation. Even if direct government interference in the channels of trade were to be tolerated by the consuming public, it would lead to heavier production, and ultimately to an aggravation of the whole problem. Government buying and selling, if successful, would smother the coöperative movement, because it would eliminate the incentive for collective action.

Although coöperative marketing is a farmers' movement, it is not in any proper sense a selfish class movement and holds no menace either to consumers or to other business interests. There is plenty of room for action here without injuring the rights of the consumer by any development of trading practices in restraint of trade. Farm production is so extensive and varied, so dependent on nature, that restriction of it to the point at which the consumer's interests would be menaced is a remote possibility.

The chief aim of coöperative marketing is not to obtain for the

producers the profits of independent merchants, but rather to contribute to and effect better merchandizing methods than previously were employed in the marketing of farm commodities. Business agriculture to-day demands that we bring about a better balance between production and distribution. American farmers can more effectively apply modern business methods to their business and effect integration in the production and distribution of agricultural products by banding themselves together in coöperative groups. In coöperative marketing organizations the members do not contribute their services in the informal way in which one farmer may help another in harvesting or threshing. They take an additional step and contribute capital to finance a joint business enterprise, and enter into agreements which specify the duties of each member. When this occurs, coöperation takes on a more or less definite legal status, and meets problems similar to those of other business organizations. American farmers' coöperatives must find and fill their place in the agricultural, commercial, and industrial life of the nation. There is also a real need for a better understanding and appreciation of the coöperative movement by the general public.

The tremendous development of coöperative marketing in the last ten years is not an accident. It is an inevitable outgrowth of the times. Perhaps a picture of the revolution that American farm machinery has wrought in crop production may not be amiss. Could the farmer of Pharaoh's time have been suddenly reincarnated and set down in our

grandfather's wheat-fields, he could have picked up the grain-cradle and gone to work with a familiar tool at a perfectly familiar job. And then, within twenty years, the methods of crop production underwent greater changes than in the previous five thousand years. At one stride we covered ground where fifty centuries had left almost no mark of progress whatever.

As a result, not forgetting the war itself, the farmer has emerged from the old self-sufficient economy, wherein surplus production was a blessing, into a modern specialized economy wherein the exchange value of his products is the vital consideration and an undue surplus of products is anything but a blessing. So we have come to hear the farmer talking a great deal about orderly marketing.

Much has been said, and is said, about the "middleman." I have little use for the demagogues who forever cry blindly against the middleman, laying at his door all the troubles that beset agriculture. The machinery of distribution is just as essential as that of production. I do want, however, to impress upon every one that no small part of the agricultural problem of to-day unquestionably centers on the marketing rather than on the production end. We shall all be better off if we recognize and accept that fact. Agriculture is facing a problem of efficiency in merchandizing much as it has hitherto faced and solved the problem of efficiency in production.

The farmers of this country have become the most efficient agricultural producers in the world under our traditional governmental policy which for generations has

fostered and promoted agricultural production. It is too much to hope that any single piece of legislation will provide a panacea for all the difficulties that beset agriculture. We are dealing with a general problem which has been the concern of nearly every civilized government. What I hope for is that we can at least take a long forward step in assuring to farmers a firm place in our economic progress with a full and equitable share in the national income.

The relationship of the government to coöperative associations may be loose and informal or close and authoritative. It may range all the way from a mere let-alone policy to one of thoroughgoing supervision and minute regulation. Of course, neither extreme is within the range of practical policy. What the government can do further to assist depends upon the funds available for such work and the demands of the coöperative associations. What the Department of Agriculture is already doing indicates the nature of the service it can give.

It is not proposed, on the other hand, that the coöperative movement should be hampered by government regulations. Coöperation in the United States has developed from the needs and experiences of the farm people. The weight of experience in this country shows that it should begin as an economic movement of the rural communities and that it should be free to develop in accordance with their needs and the opportunities for service. It seems obvious, moreover, that supervision and control are not desirable. Coöperative associations are, to re

peat, business concerns. Like other business concerns they must eventually stand or fall by themselves.

22

Speaking of the middleman makes pertinent some references to the real causes for the spreads between prices received by producers and those paid by consumers. The most important factor in the creation of these large spreads is the cost of extensive services imposed upon the distribution structure as a result of present-day methods of living. Services multiply in the terminal markets. It is here that the greater part of the difference between producer price and consumer price is incurred.

Studies conducted by government agencies confirm this observation. It appears from these that profits of the various distributing agencies are not of first importance in determining the wide spreads. Profits in such cases are of relatively small significance when expressed in terms of the retail price to consumers. It is the cost of services rendered by the various agencies of distribution which are of greatest importance in causing wide spreads.

For example, a study of city distribution margins and contributing factors, carried out in some detail in the New York Port District in coöperation with the Port Authority, showed that the combined jobbing and retail margin for fourteen important fruits and vegetables was about 47 per cent of the final retail price. About four fifths of this combined margin measures the size of the average retail margin for the fourteen commodities. Although the study relates particularly to

conditions existing in the New York Port District, facts of general importance have been brought out.

Terminal handling costs, which consist mainly of freight-car movement within the terminal area and truck hauls to jobber and to retailer, amounted on the average to somewhat less than 10 per cent of the retail price. These costs for a sack of Michigan potatoes were greater for the terminal movement of about fifteen miles than they were for the entire road haul of more than a thousand miles. The chief element of cost in terminal handling is that of trucking. An analysis of this item of expense indicated that of the average dollar paid as trucking charges on fruits and vegetables, 25 cents went to pay for idle time because of lack of work during trucking hours; 21 cents were necessary to meet the to meet the expense of unproductive work-delay at terminals, trips with part loads, and other partly unproductive efforts; 26 cents paid for operating expenses incurred during productive operation; 14 cents covered loading expense; and 14 cents remained for the owner as salary and profit. Thus 46 cents out of each dollar received from trucking charges were required to maintain facilities in idleness and unproductive service during working hours.

Notwithstanding the extent of distribution inefficiency indicated by this analysis, there appears to be slight possibility of any great saving. in trucking costs with the present handicap of out-of-date receiving arrangements.

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A word with regard to farm credit. Farmers are, generally speaking,

receiving better prices for their products than at any time in the past five years; and, with good crops, the two factors have materially improved their financial position. But nevertheless there are many regions where the small farmer, particularly, is at disadvantage. While certain of the present difficulties of farmers trace back to easy credit, many farmers are especially handicapped in getting credit accommodations at reasonable cost. There are some regions where local capital is insufficient to meet the legitimate needs of agriculture, and where the cost of short-time loans is excessively high. Crop liens and chattel mortgages often interfere with the proper marketing of crops. This state of affairs has at times hampered the development of cooperative marketing associations, but these conditions need not persist. They can be corrected by the organization of agricultural credit corporations, through which the intermediate credit banks can be reached. The intermediate credit banks have gone far in financing

coöperative marketing associations; they can do much also for the individual farmer by means of the credit corporations. Of course, machinery has been provided by the government for both long-time and short-time credit, but much still remains to be done to bring the services of these institutions to the farmer. This is especially true of the federal intermediate credit system. This constructive piece of credit legislation will give maximum benefits to the farmer only if the system is thoroughly vitalized.

I am not advocating the organization of new agricultural credit corporations where established credit agencies are already adequately serving the farmer. But I do want to emphasize the importance of developing credit machinery which serves the farmer adequately and reasonably in times of depression as well as in times of prosperity.

In conclusion it should be pointed out that progress is being made, slowly perhaps, but inevitably. The American farmer will have his place under the sun.