The following is a transcript of remarks by Mr. Carl H. Wilken before the 25th annual meeting of the National Association of Commissioners, Secretaries and Directors of Agriculture. This meeting took place November 29, 30, December 1, 1943, at the Statler Hotel, St. Louis, Missouri.

Mr. Wilken:

The human race has been plagued in recent years by the problem of distributing that which it could produce. It is the problem that must be solved if a foundation of peace is to be built.

In this analysis the writer will not give you a theoretical program based on assumptions that may or may not be true, but a program based on the actual records of the United States as a business for 150 years. The period from 1910-1942 will be used as a table of experience in pointing out some of the fallacies that have caused our depressions and the lack of distribution that was required to employ our people.

All attempts to overwhelm the reader with statistics will be found absent. Facts are presented in a form of simple arithmetic that all can understand.

In the short space of 150 years, the United States has given its citizens the highest living standard in the world. It has given them the finest and greatest variety of food at the lowest cost on the basis of per capita income of any other nation.

The additional income above their essential food costs has given them the widest distribution of ownership of homes, real estate, automobiles, shares in various corporate industries, and private ownership of business institutions. It has given them the best schools, the most sanitary conditions under which to live and, finally, the greatest freedom of initiative of any nation.

We should, therefore, ask ourselves, "How did this happen?" Are we more intelligent than our relatives in foreign lands? Have we greater ability? These and other questions can be answered simply by the two words, "People's Capitalism," or the "Capitalism of the United States." It has given us the most dynamic economy that the world has ever had. It was "People's Capitalism" that unleashed the initiative of our citizens throughout the years and spurred their ambition to invent and create a great nation out of an unknown land. Because of "People's Capitalism," the gain was theirs to have and to hold and to pass on to their children in order that they might have a better day.

WHAT IS "PEOPLE'S CAPITALISM?"

The capitalism of the United States, as set out in the Constitution, handed down to us is "People's Capitalism." It is the right of free enterprise, the right to own homes or a business of our won, under the rules of government that protect the individual against the exploitation of a more powerful neighbor.

At times this has not been true and the equities of people in homes and property have been lost because of so-called "depressions." Too often have their savings been swept away in this manner. It was not the fault, however, of "People's Capitalism," but the result of a lack of understanding of fundamental economy. We did not understand the wonderful heritage that our forefathers had given us and the measures that they had provided to prevent such happenings.

Our depressions have not been due to a failure of harvest, to the unwillingness of our citizens to work, or to a lack of production. They were due to our inability to properly maintain the value of things produced in terms of our monetary unit, the dollar.

Never has there been a shortage of real wealth in the United States. But often there has been a shortage of dollars because of the price of the wealth produced. The price of corn, for example, has varied from ten cents per bushel to over two dollars per bushel in a short space of time. Arithmetic is exact and it naturally followed that the producer of corn at ten cents per bushel found himself without a great amount of dollar exchange to buy from his fellow citizens in other lines of work.

Our forefathers, when they drafted the Constitution, provided the framework with which the people could protect themselves, but in our daily struggle to get ahead, we have failed to use the protection they gave us.

Therefore, our first step in a study of "People's Capitalism" is to analyze the Constitution of the United States, the yardstick under which we live and prosper.

Our forefathers came to the Western Continent seeking freedom. Freedom from poverty and religious persecution and freedom from government that exploited their labor and their production.

After the original colonies had been settled, they found that oppression had followed them across the sea, that they were to be taxed to support a government without the right of representation. Finally, they drafted the Declaration of Independence and fought the Revolutionary War to establish their right to govern themselves.

A few years later, they drafted the Constitution of the United States -- the greatest document ever given to men as a pattern of free and representative government. It is truly an inspired document and its basic form has stood the test of time and experience.

It was only natural for our forefathers to provide for religious freedom, a freedom that has been guarded zealously, and to provide for representative government in which the people, by their ballot, would elect their President and Members of the House and the Senate. It was also natural for them to provide for the right to own property and to protect it against seizure by some one more powerful. The right of the individual to own property is "People's Capitalism" as differentiated from monopolistic or International Capitalism that owns the resources and exploits the people. It is also different than the State Capitalism as found in the Communistic, Fascistic and Nazist forms of government.

Also, in order to protect themselves against the manipulation of money by other nations, it was natural for them to establish an independent monetary unit -- the dollar -- under the control of the representatives of the people. Congress, the representatives elected by the people, was given the right and the power to "issue money and regulate the value thereof." They realized that the power to regulate the value of the dollar automatically carried with it the power to exploit the production of our nation through the medium of low wages and low prices for goods.

They realized that, in order to buy, the laboring men and other producers must have dollar income, the medium of exchange that the Constitution provided. By giving this power to Congress, they gave to the people the right to provide proper price levels and, in turn, sufficient money with which to exchange their products.

In that section of the Constitution we have the framework for distribution, the proper flow of money from production. In that part which provided for individual ownership, we have the groundwork for equitable distribution of capital holdings and in turn the distribution of capital earnings. This is our system of capitalism as compared to large holdings of natural resources and exploitation of labor as prevalent throughout the rest of the world. It was money in the hands of the public that made it possible for our nation, with only six percent of the world's population, to buy seventy percent of the automobiles, fifty-four percent of the tin, etc., that the world produced.

In the days of our forefathers they lived on the land and over 90 percent of our economy was agriculture. Raw materials from the farm were processed on the farm an d there was little need for trade. Hence, money was a minor item in their way of life.

They were not overwhelmed by the importance of money and believed that actual production should determine the value of money rather than to have money determine the value of wealth. To them, food, clothing, and shelter were the essential things. Money, to them, was purely a medium of exchange and it was their purpose to regulate the value of the dollar so that there would not be a shortage of money, our exchange medium, with which to exchange production of goods and services.

A surplus of production was always welcome to trade for manufactured goods from the mother countries.

To protect the right of Congress in regulating the value of the dollar, the first session of Congress passed a tariff act for revenue and for the protection of the price level of goods and services in the United States. That the tariff is a monetary measure and a protection for our dollar value has been little recognized by our citizens.

At no time in our history have tariffs been abandoned as a protection for our price level. The result has been higher wages and prices in the United States than in the rest of the world. May the day never come then the American people are led to give up this protection for our economic welfare! All they need to do is to cast a glance at China, India, and other nations having no protection. The exploitations of these people is an indictment of the Christian Nations.

The result of tariffs, even though at times selfishly used, has been to maintain a higher wage and price level in the United States. With production turned into dollar income and, in turn, purchasing power, we had distribution of the goods and developed rapidly. Manufacturing flourished with the use of abundant raw materials of all kinds. New production times price created income which translated into more Capital Savings available for more expansion.

Incentive of gain and ownership instilled in our citizens the desire to forge ahead and, as time passed, one new territory after another was developed and brought into use for an expanding population and consumption. Word was sent back to the mother countries concerning this land of promise, and a stream of immigrants helped increase our natural growth.

Tracing through our economic history from 1850, manufacturing expanded in ratio with the growth of our agricultural areas. This was a natural result as Agriculture has constantly produced the greatest part of all raw materials. Even today Agriculture produces 65 percent of all raw materials produced. The growth of manufacturing was almost in direct ratio to the number of farms and the total harvested acreage, the foundation for all farm production.

This expansion continued rapidly and by 1910 we had taken up most of the natural farm land -- that with natural rainfall and soil fertility. Since that time a leveling-off has taken place. The number of farms has decreased as well as the open spaces that could be had for the asking. The number of employees in manufacturing also started to level off in ratio.

In spite of the fact that since 1910 our farm acreage harvested has increased only six percent as compared to a population increase of 42 percent, our progress continued. With tools of production in the farm and factory, the efficiency of these two groups increased their per man production at a rapid rate.

This increase in efficiency allowed for new industries to come into being. Labor, as a result of the increase in population, was drawn off into the service fields such as government, schools, medicine, dentistry, recreation, transportation, servicing of automobiles with tires, electrical appliances, gas, etc. This factor has generally been overlooked by most of our economists and they think only in terms of industrial employment, little realizing that manufacturing, as such, employs only about one out of every five laboring men. This increase in our service industries needed for a higher standard of living had a very marked effect, however, in our economy. It increased the trade turn of the initial farm dollar created by production of farm products.

In 1910, for example, each farmer was producing, roughly, enough for himself and 3.4 other families. The trade turn of the farm dollar, therefore, was one plus 3.4 or 4.4 times. As a result, in 1910, the National Income was 4.4 times the farm income.

By 1921 this trade turn had increased to a seven times turn. Due to the efficiency of the farmer, he was then producing enough for himself and six other families. The trade turn then became one plus six, or seven. In other words, each dollar of farm income in 1921, as it passed through trade channels, created a total of six more. The average of the trade turn of the farm dollar in the period 1921-1940 was approximately seven times.

With this ratio in existence it was only natural that the income spirals up and down with the rise and fall of farm prices could become quite rapid, yes, even vicious. When translated into higher units, it means that for each loss of $1,000,000,000 of farm income, the nation will lose $7,000,000,000 of national income. Therein lies our failure to keep an even keel and maintain the distribution of goods.

We have failed to realize that farm income is the origin of national income. Unlike the days of our forefathers, when most of the people lived on the farm, we now find approximately 80 percent of the population in other occupations. It is difficult for them to realize that the price of the food they eat determines the ultimate wage that they can receive and the number of jobs that are available. This brings us up to the change that took place in dollar income resulting from the World War I.

THE GROWTH OF DOLLAR INCOME

Having reached the point of natural expansion of our agricultural resources -- those areas provided by nature with rainfall for crop production -- our increase of population brought our production and consumption into approximate balance. No longer were we dependent on a world market for our surplus nor on a price influenced by world conditions. The law of supply and demand rapidly brought farm prices into balance with industrial wages, and for the first time in our history the farmer came into his own.

The point of equal exchange in recent years has been used in calculating the proper value of farm crops, using the term "Parity Prices."

This period brought into fulfillment the vision and hopes of our forefathers for economic equality in terms of the dollar. In this period we find that the dollar value was 100 cents and on the average, for all groups. That, in essence, is the meaning of parity and under a "People's Capitalism" the "parity" price level is the level at which we have the greatest distribution of goods. The "parity" price level is the "key to Distribution." It is also the point of our maximum need for foreign goods.

Then came World War I with its increased demands for exports of farm products. The increased dollar exchange from higher farm prices and government borrowings increased the wages of labor. In our desire for more farm production we plowed up the semi-arid sections and increased our harvested acreage 12 percent. It was a coincidence that this increase was in line with the increase in population.

Because of the additional demand and additional income of our citizens, our prices advanced rapidly and a national income that had averaged $31,000,000,000 in five years from 1910-14 rose by leaps and bounds. Increased per man production on the farm and in the factory increased the trade turn and in 1920 found ourselves with a national income of $71,000,000,000.

The fall of 1920 was the end of the second harvest in Europe after the Armistice in 1918. They again were in production of farm products, and the Economic Law that goods flow to the highest market commenced to exert its influence. Our farm prices, with reduced tariffs, brought about during President Wilson's administration, started to drop in the latter part of 1920. The politicians called it coming back to "Normalcy."

The far areas, and they include about 38 states in the Union, exercised the power of the ballot to elect a new administration. In 1921 tariffs were revised upwards, the drop in farm prices was halted and we started off into a higher level of national income. The new price level was approximately 169 percent of the 1910-14 level. With our population able to consume our own production, except in the case of wheat and cotton, again we had a new normal or parity period in 1925-29.

During this five-year period, our national income averaged approximately $78,000,000,000 instead of $31,000,000,000 in 1910- 14. Part of the increase was due to the 69 percent increase in unit price, and the balance was due to increased production. Because of replacement of horsepower with motor power, we were able to take the acreage consumed by horses and mules and translate it into a marked increase in dairy products and vegetable production. Our basic crops of corn, wheat, oats, rye, barley, and flax, which are the foundation of feed, however, remained practically constant. For example, in 1986, we produced 2,671,000,000 bushels of corn from 89 million acres, with an average of 30 bushels per acre. We have not been able to average that much in the years that followed. In 1943, we will have 94 million acres with a yield of approximately 32 bushels per acre. In other words, our corn production has become almost a constant and can be increased only through a greater use of fertilizer and more intensive farming.

With the increase in national income in the twenties, our people had the income to make the automobile a part of their living standard. This industry developed rapidly and by 1929 our factories were pouring out 4.5 million cars per year. Other items such as tires, gasoline, filling stations, became necessary and gave employment. Our petroleum industry grew apace and furnished increased demand on transportation.

The increase in income made it possible to levy fees for car licenses and taxes on gasoline, thus, we had the funds to start building one of the largest and best highway systems in the world. Many people think of 1929 as a boom period but it was not. It was a period when, again, "People's Capitalism" functioned in distribution; it was a period of progress, development and prosperity such as the world had never witnessed.

All through this period we maintained the basic parts of "People's Capitalism." In developing the great areas West of the Alleghenies, we carried out a policy of individual ownership of resources. Instead of selling the land in the Middle West to some capitalist, through the "Homestead Laws" we provided for division of our land resources into small farms of 160 acres. This led to the springing up of over six million individual capitalists on our farms. It led to the building of our rural communities with their small factories and individually owned business institutions. It provided for distribution of income.

Few people realize that even today, with our large combinations of capital, Agriculture has a capital valuation of 3.5 times that of all industry, that it employs as many men as manufacturing and that it, along with the small towns of 2,000 and under, buys 40 percent of all goods sold at retail. It's the greatest market in the world. And, yet we have economists and business men who turned their back upon it and helped contribute to the depression of 1929.

DEPRESSION OF 1929

The depression of 1929 was attributed to the Stock Market crash but that was the finale of the show and not the opening act. The opening act was a reduction in raw material prices, starting in 1923 and culminating in 1929. The reduction in raw material prices can be attributed to our financiers' desertion of our "People's Capitalism" in search of what they thought was higher profits in other lands.

Instead of developing the United States, they invested their money in foreign sources of raw materials, sugar plantations, mines, oil wells, and so on. After bringing their various projects into production they faced the problem of marketing and turned their eyes to the United States. Through one method and another, tariffs were reduced and evaded by depressing prices in other countries. Raw materials started to flow into the United States, destroying the foundation of our domestic income.

In the period of 1925-29, a grand total of $1,750,000,000 of farm products came into the United States in excess of our exports. This finally forced farm prices downward and the depression was under way. There can be no major depression in the United States unless it is preceded by falling farm prices.

The drop in national income in 1930-32 ratioed approximately seven times the drop in farm income. By 1932 our farm income had dropped from $11,900,000,000 in 1929 to $5,300,000,000. National income had dropped from $83,300,000,000 in 1929 to $40,000,000,000 in 1932. With $45,300,000,000 less income in 1932 we had a shortage of money and all commerce was paralyzed. Our automobile industry, for example, had dropped from 4.5 million cars in 1929 to 1.26 million in 1932.

Farmers were being set out in the road by sheriffs. Angry farmers in turn were dragging Judges off of the bench in the northwest section of Iowa and were refusing to sell farm products. Millions were unemployed, factories were idle, and people were starving for want of food.

Yet there had been no crop failure nor had a surplus been produced when compared with the previous years. The farm production of 1932 was almost identically the same as in 1925 and 1929. Our population had increased about 4 million and any surplus that existed was created by the loss of $43,300,000,000 of purchasing power because of low farm prices. Purchasing power is determined by income.

In 1932, the people, again using their power of the ballot, put out the old and elected a new administration which came in as the "New Deal."

THE NEW DEAL

The New Deal was ushered in with a deluge of promises, better prices for the farmer, social security, reduction in taxes, and a job for everyone.

To bring this about, a program was initiated so contrary to "People's Capitalism" and so contradictory of common sense and arithmetic that it was a complete revolution in economics.

It was decided that we could become more prosperous by producing less and working less. Pigs were slaughtered by the million, crops were plowed under, thus destroying the very materials for labor to use and fashion into finished goods for trade and commerce. Under WPA, a disgrace to "People's Capitalism," men were put to work at non-productive labor that was degrading to human morals. Their wages were paid from a mortgage on tomorrow's income. We were to become prosperous through debts and government doles.

Even though this program was against all rules of economy and arithmetic, the stress of economic conditions made willing servants out of our people. Mayors from practically every small village, and the Mayors from our larger cities, all started to trek to Washington to bow their knees in supplication for relief projects to be paid for by a mortgage on our citizens. After that happened, let us not say that Dictatorship cannot happen here. Our people proved, like those of other nations, their willingness to accept anything under the stress of economic conditions that usually precede a Dictator.

All of this occurred in spite of the fact that we had the real wealth of prosperity without a dole and without a mortgage on our children. All that we had to do was to use the foundation of our forefathers for regulating the value of the dollar under a "Peoples' Capitalism."

The one step that would have stopped the depression in six months -- restoration of farm prices to par, or regulating the dollar value at 100 -- was ignored with the exception of a corn loan and other commodity loans at about 52 percent of parity.

Thus, our Nation found itself leveled off into a condition of enforced depression. Our financiers in this country and other countries had not learned a lesson from the depression. The farm program was brought forth by them under the theory that they could better give the farmer a check to keep him satisfied that to give him a proper price. The still did not realize that he could buy only half as much with $500 for his corn crop as he could if he had received $1,000.

To pay for their export of manufactured goods, the financiers imported many products from their acquired sources of production in other lands. These imports displaces our own farm crops which were destroyed and not produced by plowing under and curtailment.

Nature tried to warn the American people with a drought in 1934 and on up through 1941, our net import of farm products averaged approximately 700 million dollars per year, foreign valuation (values as purchased in other nations). When translated into domestic values and units of production, these imports were the equivalent of 50,000,000 acres per year.

Never has the Nation witnessed such an asinine procedure. Think of 135 million intelligent people blindly following a program of paying our farmers $1,000,000,000 a year not to produce and then, in turn, buying 50 million acres of worked products to supplement our own and, incidentally, forcing other nations to go without. Inadvertently we helped create and maintain a condition of poverty throughout the world that finally resulted in a way too terrible to contemplate.

These imports prevented our prices from recovering and the continued depression led to more and more rules and regulations until the theory of State Capitalism, just as contrary to a "People's Capitalism" as is International Capitalism, reared its ugly head. Through the powers of relief check and federal patronage, the New Deal started to assume the powers of a Dictator.

The Constitution and the Supreme Court were relegated to the "horse and buggy" days. Congress, whipped into line by pressure groups paid from government funds, voted away their powers and, incidentally, the rights of the people. At long last Congress has commenced to realize what has taken place, but recovery of these powers from an entrenched Bureaucracy is not an easy task. Now, with the war, their criticism must be guarded so as not to be misconstrued as unpatriotic.

THE WAR AND LEND LEASE

One of the amazing factors of our present situation is that six percent of the world's population has taken it upon itself to finance and furnish materials for all those who have none. Our economists, who are directing the government, have a dollar complex and have asked Congress to appropriate funds in an amount that even those who ask for them cannot comprehend. As proof, I would like to point out that the Byrd Committee in July, 1943, reported that from the beginning of the war and up until July 1, 1943, the Government had spent $110,000,000,000 for war purposes and that $244,000,000,000 remained unexpended. This condition exists even in the greatest orgy of spending that the world has ever seen. Why the unexpended balance? The answer is simple. The theorists who made the estimates of appropriations had no conception of production and thought only of appropriating money, a habit acquired prior to the war. The nation just couldn't produce the things that they wished to buy.

These huge appropriations did much to dislocate our domestic economy, and thousands and thousands of small businessmen have been forced to close their doors because of lack of supplies. Liquidation of small businessmen, or any other owner of property, means liquidation to that extent of "People's Capitalism," so badly needed in the post-war era.

The total value of all goods sold at retail in 1941 totaled $53,000,000,000, and yet the theorists were ordering goods in terms of $100,000,000,000 per year for war purposes. And, the poor farmer was blamed for "inflation."

Of all the things we face, the one of food is the most tragic. We have promised people all over the world that we will feed them, when facts are that we can not produce enough for our own use if we wish to maintain our American food standards. As I have pointed out, since 1910 we have increased our harvested acreage by six percent while our population has increased 43 percent. Because of the war, the imports have been shut off. Higher prices have restored the domestic buying power and our people want to buy food that is not to be had.

In spite of the fact that Nature, in 1942, gave us the most bountiful crop that we have ever had, there is not enough for them to buy. The production of 1943 has fallen off because of weather conditions that are beyond human control. Crop production has fallen off and livestock will have to be liquidated to meet the level of feed crops produced. Washington is talking of a cereal diet, conditions actually may become that serious.

The liquidation of livestock during the turn of the year 1942 will give us temporary relief from meat shortages, but after that, a divine providence will have to give us abundance because, with only normal crop yields, our acres will not furnish enough food for our own. Yet we have promised to feed millions of allies in other nations. It's the greatest tragedy of all time! For 12 years we held production in abeyance and did not expand the foundation for food production because of a misconception of surplus created through underconsumption, the result of low prices.

Add to the food situation the loss in National income during the Depression and the price we will have paid for deserting "People's Capitalism," the greatest heritage that a Nation ever had, passes in infinity. The loss in income was so tremendous that it becomes fantastic, but how can we deny the record?

The hard cold facts are an indictment of our public spirit, our citizenship, and our lack of thought and effort in recognizing the simple truths set out in the Constitution of the United States. We must plead guilty to a laxity of interest in our welfare and that of our Nation. In the following analysis we will reveal, in terms of simple arithmetic, the loss that our nation as a business suffered during the Depression. It is a loss that could have been prevented. It is a loss that can recur unless we return to the fundamental economy of the United States.

ANALYSIS OF THE NATIONAL INCOME 1929-42 INCLUSIVE

In 1929 farm prices were approximately at par, and the General Commodity Index was, for all practical purposes, at par -- 1929 Index equals 100. In 1942, the General Commodity Index again was in line with 1929 as 100. Therefore, adding the incomes of 1929 and 1942 and dividing by two we get the mean income that could have been our potential income during 1930-41 inclusive, a 12 year period.

Adding the National income for the 12 years, 1930-41, inclusive, we get the total income that we actually received with farm prices, below par and with our National income below par.

In the table that follows, we give the National income for the 14 years, 1929-42. Adding the income for 1929 and 1942 and dividing by two, we have a mean of $101,559,000,000. When multiplied by 12, we have a total of 1,218 billion dollars for the 12 years, potential income. Adding the actual income for the 12 years, totals $463,000,000,000 or approximately $3,500 per capita during the 12 year period. It represents a market that industry could have had that surpasses all comprehension, yet, tragically and factually true. It seems unbelievable, but if the reader will examine the record of income, which is taken from the "Survey of Current Business," Bureau of Domestic and Foreign Trade, U.S. Department of Commerce, and note that the difference in National income in 1932 and 1942 was roughly $50,000,000,000, the result becomes one of reality and factual loss.

The foregoing table represents an average loss of $38,000,000,000 per year. We can have a similar loss if we do not maintain parity prices in the post-war era. With a floor or a minimum farm price at 100 percent parity with finished goods prices, there can be no depression and we can have permanent prosperity. Why shouldn't we? We have the resources, the labor, the factories, and every other need.

If we will regulate the value of the dollar at parity or 100, we will have the income. It's the most important problem before the world today. The solvency of the United States, or the lack of solvency of the United States, will determine world prosperity or world chaos.

WHAT IS THE ANSWER?

As I have pointed out in this analysis the answer is simple indeed. The record of the past reveals that at a parity price level there has never been a depression or unemployment in the United States, Also, one finds that a dole from the government, WPA, etc., were unnecessary.

It can be proved from the record that for each one percent that farm prices are below par, there will be one percent unemployment, one percent loss in factory production and one percent loss in National income. Mr. Charles R. Ray of Chicago, who has been working with me for five years, is willing to go before any group or committee in the Nation and prove it from the record of the past. It is not a theory, but is a fact, in the same manner as an audit of a business.

With a formula devised from the trade turns and ratios that exist of farm income and raw material income to National income, we have been able, during the past five years, to pre-estimate the national income seven months in advance of the Department of Commerce, with an accuracy of 99 percent. We can predict the national income of the Nation in the postwar era at any price and production level, the number of employed and the possible surplus in the United States Treasury.

Assuming that the war is over, a projection of National income for 1946 on the basis of 140 percent of the 1925-29 average of farm marketings with a 100 percent farm parity will be a minimum of approximately $138,400,000,000. This income would employ 57.5 million laborers -- all that will be available -- without any public works. Taxes, on the basis of the 1942 level, will leave a surplus in the Federal Treasury for the payment of interest and amortization of the National debt. At a price level 20 percent above the present parity level, our National income would approximate $165,000,000,000. With this income, our Nation can make television, air-cooling equipment, etc., as part of our living standard.

The only reason for a depression will be to turn our back on "People's Capitalism" and adopt some unsound economic theory similar to the theory that caused us to suffer a loss of $463,000,000,000 in the sort space of 12 years.

The answer to the economic riddle has been found. Economy is a science operating according to the laws of arithmetic rather than following theory or politics. The quotation from the Classics, "Remember, O Stranger, Arithmetic is the most Accurate of All Sciences, the Mother of Safety," is borne out by the record of the United States. All income is a matter of arithmetic, goods, and services times prices.

HOW CAN A PRICE BE MAINTAINED?

It can be done by maintaining a price balance between six or seven of our basic crops such as corn, oats, wheat, barley, rye, flax, and cotton, the foundation of all farm production, and the price of finished goods as reflected in some normal period. In other words, if, in the postwar era the General Commodity Index, which reflects industrial prices, is 10 percent above the normal period 1925-29, then those initial farm prices must be 10 percent higher than the 1925-29 average, or vice versa.

All calculations can be made almost as definitely as the premium on a life insurance policy or the taxes you pay. For example, we can average 2,500,000,000 bushels of corn annually. At a dollar a bushel, we can create $2,500,000,000 of new income; at 50 cents per bushel, just fifty percent as much, and so on down the whole category of goods and services. In 1942, if the price level had been fifty percent of what it was, the National income would have been fifty percent of $119,700,000,000. The problem is hard because we indulge only in theory and don't get at it. Our minds are confused with so many things that aren't true. The commodity loan offers a very simple method of stabilizing values if made at the proper level.

Does it mean regimentation? NO! There need be no curtailment of production. Why should there be? With each initial farm dollar creating $7.00 of National income, there will always be $7.00 to consume any additional production or to dispose of it to other nations even if required to take the extreme form of charity. In the period of 12 years, 1930-41, we could have given away $53,000,000,000 of goods and services to other nations, and if we had maintained our price level, we still would have had $400,000,000,000 more of income to be used.

A good merchant maintains a price on his product. If he develops a surplus he has a sale and then spreads the mark-down over the whole. In the same way, any cost of properly maintaining prices becomes a minor item, indeed as compared to the loss we took because we did not maintain a proper price for our production. During the 12-year period, we could have given away all our foreign trade and charged it to profit and loss. This, of course, could not be necessary, but it is foolish to worry about foreign trade when it is such a minor part of the whole in a Nation that is richer than a dream of Midas. With only six percent of the World's population, we have 25 percent of the available raw material supply. Why worry about foreign trade when we have everything, except a few minor items, in abundance?

Of course, we have been told that we depend on other nations, but again facts disprove mightily. Today, in 1943, we are taking care of our own 135 million people, putting into the armed forces more men than any of our Allies except Russia and, at the same time, producing more war materials than all the rest of the nations together. What are we using to produce them? We are using our own raw materials, our own factories, our own labor, our own transportation, our own finances, and yes, we are even lend- leasing by the billion of dollars goods and services. These facts cannot be denied. In like manner, in the postwar era we can produce plenty in the United States and if we price it properly we can have the prosperity such as no nation in history ever had.

We may require a tariff to protect our price and the theorists will howl, "Isolationists," little realizing that they themselves, through low tariffs, would bring about lower prices, lower income and in turn, less purchasing power for both domestic and imported goods.

A good example is that of rubber. In 1929 we produced 4.5 million automobiles. This required rubber for tires. In 1932 we produced only 1.25 million cars because of low prices and low income. The result was a direct curtailment of rubber purchases, not because of a tariff but because of inability to buy the cars which would have required the rubber.

The "Hawley-Smoot" tariff bill often has been blamed for the depression because it blocked the exports of farm products. The simple facts are that we had none to export except cotton and a little wheat. Cotton, our principal export crop, did not suffer from the "Hawley-Smoot" tariff bill. The record of the U.S. Department of Agriculture reveals that in 1930, the year the bill was passed, our cotton exports were seven million bales and in 1931, the year after the bill was passed, our exports were nine million bales and in 1932, the year of the deepest depression we exported 8.8 million bales. The years 1931 and 1932 were two of the best years of cotton exports in the history of the United States. It was low prices that caused the depression and tariffs had little to do with it.

POSTWAR PRICES

If the rest of the world will adjust its price level to our parity level as a yardstick, there need be no tariffs. With our price level as a yardstick, the world can, for the first time in history, have a sound International price level and monetary system. If that should happen, the money-changers will be forced to give the people of other nations a decent wage. Then the world can have distribution of goods. Then we will have a foundation for peace. What chance is there for a Chinaman to have freedom........what opportunity do our factories have to sell him an automobile or an airplane? Yes, and finally, what chance have our missionaries to teach Christianity in the face of exploitation that is contrary to Christian Doctrine? None at all. Furthermore, it is easy to understand the distrust of the Yellow Race when we offer them our good will.

DEPRESSION WAS MONETARY

We have pointed out how our depression was nothing more than low prices or a dislocation of price levels in terms of money.

The record would indicate that it might have been manipulation of prices by selfish financiers operating under a misguided theory of economics. This is indicated by Christopher Hollis, an English Economist who taught in our own University of Notre Dame as an exchange professor.

In 1935, Mr. Hollis wrote a book entitled, "The Break Down of Money." Chapter eleven is devoted to and entitled "The American Slump," which, he states, was monetary. Chapter eleven concludes with the following direct quotation: "A money-lending country must be a Free Trade country, and the purpose of the money-lending power has been to impose Free Trade upon the United States. It has not been a purpose easy of achievement. For in the days when labor in the United States was scanty and valuable the American working- man succeeded in obtaining for himself a very much higher wage than the working-man of Europe. It has been generally, and rightly, recognized in the United States that under conditions of Free Trade, American manufacturers would only be able to compete against European manufacturers if the American wage was reduce to something like the European level -- to say nothing of the menace of the still cheaper labor of Japan. Though American Free Trade is just as necessary to the money-lenders of the last century, yet the problem is a very different one, and to solve that different problem merely academic discourses upon the beauties of low tariffs were of little effect. The Democratic Party, in a timid, compromising, half-hearted way, tried these tactics and was humiliatingly defeated in the elections of 1920, 1924 and 1928.

"In opposition to the sermonizings of the old-fashioned Democrats has been the financiers' policy. Their belief is that the only chance of getting the tariff down has been so to reduce the purchasing power of the American people that they can no longer even approximately consume their own products. As long as that purchasing power was adequate, the American manufacturer was indifferent to foreign markets. But with domestic purchasing power reduced, foreign markets became essential to him. And, the more that he could be persuaded to look abroad for his markets, the easier it will be to change his whole attitude toward wages. At present he is in favour of high tariffs and high wages, for he looks on the working-man as his customer. But, if he can be induced to look abroad for his markets, then wages become merely an item of costs and it is to the manufacturer's interest to reduce them as low as possible. If they are reduced and the odium for reducing them, of course, allowed to fall on the manufacturer -- then American industry becomes at once a much more profitable investment for the financier, while the foreign goods can flow into Free Trade America to pay the interests on the Foreign Market."

Whether the American people will be able to differentiate between these two terms of capitalism and that of "People's Capitalism" in the United States remains to be seen. The future of the world depends on a solvent United States. A solvent United States is a dream unless our price level is such that our Annual production times price will give us the income to remain solvent.

The International philosophy is being pushed on every hand, with no reference what so ever as to how there is any equity of exchange between the one extreme of Industrial Labor in the United States with annual earning of over $2,000 per man and the Chinese Labor with an annual per man income of $65.00.

To reduce our price level means repudiation of our war debt, bankruptcy, and world chaos. Would it not be better, then, to stabilize at our parity level and, as time goes on, to bring the rest of the world up to our level. In no other way can we help the world obtain the Four Freedoms. The past history of economic slavery for three-fourths of the world's population cannot be abolished by bankrupting the United States. We have the resources and we have the form of capitalism that has given us the highest living standard and the greatest human freedom of any nation in the world. Let us preserve it and teach others how to use it. Therein lies our destiny.

The greatest service that we can render to other nations is to maintain our American price level and force other nations to revalue their monetary units on a basis of our parity price level.

We do half of the dollar business of the world with only six percent of the world's population and in maintaining our price level, we would practically force the rest of the world to adopt it. The increase in income thus obtained by peoples of other nations would open the way to world distribution.

[A question and response period followed the presentation of these remarks.]

Mr. Tom Linder, Georgia:

About this inflation, there has been so much wild talk about inflation. Isn't it true that the only major threat of inflation is paying out of money by government which isn't supported by the production of any civilian goods or raw material?

Mr. Wilken:

That's right. In regard to inflation, up to the present time you have had nothing to speak of. the thing you had when the war started was a recovery from a sub-par price level back up to normal. If you will take your daily papers you will find commodity index carrying 35 principal commodities. At the present time it is about 106 percent, with 1926 as 100. That is the extreme amount of inflation you could have had since the war started. The principal reason why people seem to think we have had inflation is because that for ten-twelve years they have been buying their groceries cheaper than they should have been able to buy them. They bought them at the expense of about 10-12 million men out of employment. In a period of war like we have at present, some fundamental principles of business should prevail, if we but understand that annual production of the nation times price, should create income to pay all the bills. As it is, your government has a deficit of from 40 to 50 billion dollars to finance the war. That money, borrowed from tomorrow, is the reason for inflation, not farm prices. The farmer has earned his income for the reason his price level today is very little above par, the only reason he has an increased income is by putting in 70 or 80 hours a week he has increased his production; not because of the price level.

Voice:

Can this debt ever be paid unless we return to parity?

Mr. Wilken:

No, it cannot. You can liquidate the national debt if you operate your nation as a business and you release your national income. In the final analysis it depends on this initial foundation. In the post war period, if you want 150 billion national income the first thing you have to do is create a raw material income.

I will give you this little example. In 1929 with a 100 production we had a national income of 83.3 billion dollars. Then we came up to 1942 and we have 119.7 billion. The price, however, is the same approximately as in 1929. You see, we get the difference between 83.3 billion in 1929 and 119.7 billion in 1942. We earn it by producing more units of farm products. There are two factors in income; one is the number of units, and the other is the price per unit. If you price your product properly you have money to spare and automatically exchange it with somebody else, but you must produce.

Voice:

Is there any disposition on the part of the Federal Government in the planning program to see that, or are they not able to see it?

Mr. Wilken:

They have a conflicting economy. They have had since they got into power. On the one hand they were spending money to maintain the price and they were reducing tariff to keep the price down. In the post war era they cannot do this. They have no market on the other side. I asked, "What do you intend to pay these men?" They figure they can pay industrial workers $1,000 per year. On this table you will find we are going to have a total of 57 1/2 million workers in the postwar era. Skilled workers in the United States represent an average income per worker in the nation. If they are going to pay him $1,000 that would mean your national income was 57 1/2 billion dollars. That is all the income you are going to have. Your government, yet, has told you the farmer is entitled to parity but you have not had it before the war. I think the Commissioners of Agriculture could write down a permanent parity price bill and pass it. I think Congress could do that for you. But whether the Administration will veto that bill or not, I don't know. But from the sentiment I got from the Congress, you can pass that bill whenever you work at it.

You have heard a lot about the farm bloc. You have never really had a farm bloc. Your political picture is this: You have 39 states that depend principally upon agriculture for income. If one state has two senators, the farm population always has got 78 votes in the United States Senate, if they vote together. The South and North because of politics and one thing and another, have been see-sawing back and forth but if those sections will get together and center on the price of farm products, you can have anything you want because you have the votes.

Voice:

Why should not the Directors of Agriculture of the various states realize their responsibility and assume the responsibility of writing such a measure and present it to Congress, and don't you think now is the proper time for the Commissioners, Secretaries and Directors to get together on such a farm program?

Mr. Wilken:

If the Congress of the United States would in the next three-four months pass a permanent parity price bill for farm products and tell the public of the United States that they are not going to have a depression, you would have the greatest wave of confidence sweep over the U.S. you have had for a long time.

Voice:

The only sure way to prevent inflation is by assuring the farmer through parity prices his fair share of the national income, or his fair share of the consumer dollar?

Mr. Wilken:

That's right.

Voice:

Mr. Wilken, will you assist the Commissioners of Agriculture in this meeting in writing up such a program to present to Congress?

Mr. Wilken:

Absolutely.

Voice:

I just want to ask another question, Mr. Wilken. Wouldn't this price subsidy that is now being considered give to the United States government all the power of price fixing? In other words, we will surrender our state rights, we will in effect, say, take this now and do what you want with it.

Mr. Wilken:

No. Let me help you think this through. One part of Mr Thatcher's statement pointed out we ought to combine the various credit agencies. You have a Farm Credit Administration. Part of that Far Credit Administration is the Production Credit Association. Production Credit Association could make all the loans. Give your Production Credit Associations out here in the area under control of the farmers the power to make these loans, backed up, of course, by the government of the United States. In regard to prices, parity price is not a fixed price, never has been and never will be and your price is determined by arithmetic, not by the government. Ceiling prices of finished goods will determine relative prices of farm products. It is a matter of keeping your prices in balance. The minute Congress of the United States passes a bill providing for 100 percent parity and providing for prices on basic drops, you would not have to make any loans through Commodity Credit Association. Your local banker would make the loan. You would have the government out of business. You have a law of supply and demand which says supply and demand will govern prices. You still have left out a factor and that is the supply and demand to foreign trade. That will have to enter into there if you are going to use what we always consider the American medium of exchange, based on gold. In the past war era if we were to take gold at $35.07 and we would adjust silver up to that level, which would make it about 97 cents, then take six basic world crops and maintain them on par with gold, you would really add those six commodities and silver to your monetary foundation. Up to the present time you have used just that one item -- gold.

Voice:

Isn't it a fact that there is where the government would have to come in?

Mr. Wilken:

Your Constitution provides for that because it gives Congress power to regulate the value of the dollar. You cannot have a stable dollar or regular value of the dollar unless you have stable commodity prices all in balance with one and the other.

Voice:

I have been in this fight for the commodity dollar for a good many years, ever since Dr. Warren proposed it. If you are going to change the popular sentiment of the United States away from the gold standard you are going to have to perform miracles. If we could get a committee -- get Congress to appoint a committee and have this presented to Congress, we might at last have something brought in definite before Congress that we could get support for.

Mr. Wilken:

With your commodity loan, you can slip up on them. It was the best minority measure that was ever invented. You automatically establish relationship between the commodity and the dollar when you do that.

Voice:

I think there is a definite relationship between the income of agriculture and the national income, but I am at sea when it comes to how we are going to set up and stabilize parity prices to the farmer without the government perhaps entering into a subsidy program, a thing that this Association has decried definitely. I am wondering just how, or what forces are going to be responsible for setting up parity prices to agriculture without price fixing, a thing that I don't think we are altogether in favor of, and without subsidies. If we could just say that it must be done and will be done and that would turn the trick, I think table would mean a lot and I think it would work. Personally, I am not clear as how you are going to set up prices if the legislature ignores the question of supply and demand, and hold it where it ought to be. I just say, it is beyond me.

Mr. Wilken:

I would say this, Mr. Brown. You forget that your commodity loan, for example, you provide the flow of money into you channels of trade to make it possible for the law of supply and demand to work. We know we can produce 2 1/2 billion bushels of corn annually. Arithmetic tells us at $1 per bushel that would be 2 1/2 billion dollars. At 50 cents per bushel it will mean only half that much. In those seven basic crops, if you maintain parity you could have 2 1/2 billion from corn, 1 1/2 from cotton, 1 1/2 from wheat, and so on. That is a definite known income you are going to produce. You establish the price through your commodity loan. If yo do that and protect it with a parity tariff you cannot have a depression in the United States.

Voice:

Mr. Wilken, we would have to disregard taking care of the rest of the Americas if we adopted that plan, would we not?

Mr. Wilken:

No. It would make it possible for us to help them.

Voice:

When you determine you parity formula -- I would like to see those seven or eight commodities extended to include some others. Part of our fight would be to get a basic formula that would be approved by everybody.

Mr. Wilken:

From the studies we have made, I would frankly say that -- for instance, cotton. In my estimation it could be adjusted about 5 cents a pound. My reason is that cotton has always been in competition with world prices while some of our other products have not. In all fairness the price of cotton could be adjusted above the 1925-29 base.

Voice:

What figures are you going to take in, to fix your parity. We have had a controversy in Washington over including farm labor. We did bring taxes in. These things have got to be settled before you can figure your actual parity on these things over a period of years. Congress, or somebody, has to determine what parity is.

Mr. Wilken:

It doesn't matter where you start. Suppose we take the 1925-29 relative price level. Suppose Congress decides it is not high enough. We will adjust it 10 percent above that. Because of this trade turn, in six to nine months that ten percent will automatically translate into an equivalent increase to the rest of the nation. The one factor you want to keep in mind is this, like everything else your economy has to have a beginning and if you take those seven crops which constitute 85% of your harvested acreage in the United States -- take those seven basic crops and forget everything else. If after you have done that it is necessary to have some marketing agreements for other items, for the sale of milk in some areas, for instance -- we have a number of things already working -- but these other crop levels will adjust automatically. You talk about, for instance the cost of hauling a ton of freight, the cost of sending a telegram. That is fixed by law. There is a minimum wage, you cannot pay a man in industry a sum below what is fixed by law. You do not have to have andy CCC or CPA or any of those things. Now, we produce 12 million bales of cotton and don't need but 11 million bales. The New York cotton exchange runs the price of the whole 11 million bales down because we happen to produce a little bit more than was needed. What is the reason you couldn't fix a minimum price by statute on these commodities so that if a man didn't need a bale of cotton he wouldn't have to buy it and if he needs it and buys, he must pay the minimum price? You could do that and if Congress were to pass a bill prohibiting the sale of any product on the future market at less than parity you would cure a lot of fluctuation.

Voice:

Mr. Wilken, doesn't your plan contemplate that if there is no demand, the government will pay that parity price?

Mr. Wilken:

There is no thing as not a demand for farm products. The demand is always there. If you keep the chips in the worker's hands you don't have to worry about him eating. Now the facts of the case are that in 1932 we didn't have over-production of farm products. We didn't produce as much as in 1928. We had 4 million more people. We seemed to have a surplus. All we had was low prices.

Voice:

According to your statement, the agricultural dollar turns over five times, then when agriculture is getting its fair share of the annual national income isn't it a fact the benefits every other essential group in the country as well as the farmer himself?

Mr. Wilken:

They cannot get it if the farmer doesn't get it. I want to make this point in closing, that twenty years of the records of the nation prove that for every one percent that your farm price has been below par you have had one percent unemployment and one percent loss of factory production and you have had one percent loss in national income; and in the period from 1930 to 1941 -- 12 years -- the United States lost 463 billion dollars of income that it could have had without any cost to anyone and with benefit to all.

Voice:

Mr. Dumond asked why you mentioned only 7 or 8 different commodities. Isn't it a fact that the government as a whole would be better off if each and every commodity had a true parity price for their products? It isn't your purpose to eliminate, as I understand, to eliminate and have parity prices for only those 7?

Mr. Wilken:

My purpose is to have enough of a foundation to stabilize your economy and at the same time have all the flux you can possibly have between other items. I would hesitate to put a price on any perishable product. Often, if the price goes down, you could increase consumption and increased consumption of a unit, times price makes demand. You can not get all the eggs out of a hen in a few days time. They just come along one a day. A hog will put on a couple of pounds of pork a day, as you feed him. Your cattle do the same. In other words, your law of supply and demand will take care of those items. When you harvest your corn crop in the Fall, you have 365 days of supply and only one day of demand!

Voice:

What are some of the other crops you could include in fixing a basis to work out parity?

Mr. Wilken:

I would take corn, wheat, cotton, oats, barley, rye, flax. You could add two or three more, it wouldn't hurt.

Voice:

What about soy beans? And rice? Soy beans have become quite important.

Mr. Wilken:

Those might be added.

[This transcript is taken from the June, 1979, Special Edition of the National Organization for Raw Materials, Inc., newsletter.

Typographic errors in the newsletter text have been corrected; any appearing in this text are the responsibility of Randy Cook]