To make farming profitable is no longer a question merely of raising more produce. We have passed that point. We now have knowledge and experience enough to enable us greatly to increase our yields, if only we put the knowledge into practice.
Farmer does not get his share.
But the farmer, speaking broadly, does not get his share of the proceeds of his labor, notwithstanding the increase in the price of farm products. A few farmers here and there, producing a superior article and favored by location or otherwise, can be quite independent of marketing systems; but the larger number of farmers never can be so situated, and they must grow the staples, and they are now at the mercy of many intermediaries. The farmer's risks, to say nothing of his investment and his labor, are not sufficiently taken into account in our scheme of business,—risks of bad years, storm, frost, flood, disease to stock and crop, and many things over which he has practically no control.
A merchant in a small city may want as much as twenty per cent commission to sell produce, and then retain the privilege of returning to the grower all the product that spoils on his hands or that he is unable to sell; he invests little capital, takes no risk, and makes more than the man who buys his land, prepares the crop months in advance, and assumes every risk from seed-time to dinner-table. I am citing this case not to say that it is a subject for public control nor even to assert that the merchant's commission is intrinsically too great, but only to illustrate the disadvantage in which the farmer often finds himself; and the farmer may even have no escape from this disadvantage, for all the merchants within his market region may agree to sell his produce only on such terms, and he may be obliged to accept these terms or not to sell his wares.
The manufacturer knows the cost of his products and charges his price. The farmer usually does not know the cost, and in general he makes no selling price; the prices of his staple produce are made for him.
That the producer does not secure his proportionate share of the selling price in many products is a matter of the commonest knowledge, and much study has been made of the question. If the question is put in another way, the consumer pays too great a margin, in great numbers of cases, over the cost of production. The following press item, coming to my hand as I write, is an example (given for what it is worth), although not extreme: "The government of New York, and not the government in Washington, is where the people of this city must look, if they expect to see reduction in living expenses. A bushel of beans, for which the producer in Florida receives $2.25, with the transportation 50 cents for the 800-mile haul, should not cost the New York consumer $6.40 a bushel. The producer receives 35 per cent of the final price, the transporter 8 per cent, and the dealers 57 per cent. This is not a fair division. The problem is not one of trusts, tariffs, and other Washington matters, but simply one of providing straight and cheap ways open from all gardens and farms to kitchens and tables."
The poorer the country or the less forehanded the people, the harder is the pinch of the usurer and the trader, and all the machinery of trade is likely to be manipulated against the defenseless man who stands stolidly between the handles of the plow.
Of course, such conditions do not obtain with all products. In some of the great staples, as wheat, the cost of transportation and commissions is often reduced by competition and scientific handling to probably its lowest terms. But that there are abuses and extortions, and remediable conditions, in the middleman system—by which I mean collectively all traders between producer and consumer—no one will attempt to deny. The farmer cannot rise to his proper place until the stones are taken off his back.
The abuses must be checked and discriminations removed, whether in the middleman trade itself, rates of express companies and other carriers, or stock-market gambling. The middleman system has had a free field to play in, the wealth of the country to handle; it has exercised its license, and in too many cases it has become parasitic, either protected by law and custom or unreachable by law or custom. It is a shame that our economic machinery is not capable of handling the situation.
Relation of the question to cost-of-living.
It is customary just now to attribute the high cost of living to lessened production due to a supposed decline of agriculture, and to advise, therefore, that more persons engage in farming for the purpose of increasing the product. This position is met by an editorial of the New York Tribune, which holds that intermediary trading combinations are responsible:
"It is true that the raising of cattle for the market has almost ceased in the East and that agriculture generally has not kept pace with the demand for food products. Yet it is hard to believe that agriculture in any part of the Union would steadily decline in the face of an enormous appreciation of the cost to the consumer of all farm products, were there not some powerful disturbing factor operating to deny the farmer the benefits of that appreciation. If the Eastern farmer could have reaped a legitimate share of the increase in the price of farm produce which has taken place in the last twenty years, he would certainly be in position to command all the labor he needs and to develop resources now neglected because it does not pay to develop them. Under normal conditions economic law would certainly drive labor and energy into a field of production in which there had been the greatest relative expansion in the selling price of products.
"Yet economic law has not operated to stimulate agriculture, because the returns from steadily mounting prices have not really reached the producer. Thirty years ago the fattening of steers for the local markets was common in the East. But when the vast Western ranges were opened, and the great packing houses were established, the cheapness of range beef, refrigerated and delivered in Eastern cities, was used as a weapon to kill off the cattle industry of the East. When the Eastern cattleman was driven out of business, the price of beef rose, but virtually all the increase has gone to the packing combinations, which fix their own price to the Western range man and their own price to the consumer and artificially control the supply so as to discourage increased production in the West and to prevent a revival of production in the East. The country is growing in population at the rate of twenty to twenty-five per cent each decade. But Secretary Wilson has shown that the supply of food animals is not being maintained in proportion to population. In the last decade cattle have remained about stationary in numbers, swine are actually decreasing, and, while more sheep are available, the supply has diminished relatively to population.
"It can hardly be contended that with steadily diminishing supplies and steadily increasing prices the law of supply and demand would not work out a new balance, stimulating production through easy profits, were there no artificial interception of the producer's normal share of the advance in price. Were there a free market for the Eastern raiser of stock, milk, and food products generally, with the middleman's commissions properly restricted, Eastern farming would probably be profitable enough to hold its own against manufacturing and to compete successfully with the manufacturer for labor."
The farmer's part.
Of course, it is necessary to teach every farmer how to grow more crops, for this is his business, and it also enlarges his personal ambition and extends his power and responsibility; but merely to grow the crops will not avail,—this is only the beginning of the problem: the products must be distributed and marketed in such a way that the one who expends the effort to produce them shall receive enough of the return to identify him with the effort. Thereafter, social and moral results will follow.
The middleman's part.
I recognize the service of the middleman to society. I know that the distributor and trader are producers of wealth as well as those who raise the raw materials; but this is no justification for abuses. I know that there are hosts of perfectly honest and dependable middlemen. We do not yet know whether the existing system of intermediary distributors and sellers is necessary to future society, but we do not see any other practicable way at present. In special cases, the farmer may reach his own customer; but this condition, as I have suggested, is so small in proportion to the whole number of farmers as not greatly to affect the general situation. We do not yet see any way whereby all farmers can be so organized as to enable them to control all their own marketing. Therefore, we must recognize middleman-practice as legitimate.
A system of economic waste.
But even though we yet see no way of general escape from the system, we ought to provide some means of regulating its operation. The present method of placing agricultural produce in the hands of the consumer is for the most part indirect and wasteful. Probably in the majority of cases of dissatisfaction, the person whom we call the middleman does not receive any exorbitant profit, but the cost of the commodities is piled up by a long and circuitous system of intermediate tolls and commissions.
CoÖperation of farmers will not solve it.
It is commonly advised that farmers "unite" or "organize" to correct middleman and transportation abuses, but these troubles cannot be solved by any combination of farmers, because this is not an agricultural question. It is as much a problem for consumers as for producers. It is a part of the civilization of our day, completely woven into the fabric of our economic system. The farmer may feel its hardship first because he must bear it, while the consumer, to meet higher prices, demands more pay of his employer or takes another stitch out of somebody else. But it is essentially a problem for all society to solve, not for farmers alone, particularly when it operates on a continental basis. This also indicates the futility of the arbitrary control of prices of the great staples by combinations of farmers (page 126).
Of course, temporary or local relief may be secured by organizations of producers here and there, or of consumers here and there (probably consumers can attack the problem more effectively than producers), and by the establishment of public markets; but no organization can permanently handle the question unless the organization is all the people.
The present agitations against middleman practices and stock-market gambling ought to compel Congress to pass laws to correct the evils that are correctable by law, and the organizations then should keep such touch on the situation that the laws will be enforced.
It has been suggested that the superabundant middlemen go into farming; but no one can compel them to go to farming, and they might not be successful farmers if they should attack the business, and the farming country might not need them or profit by them,—for it is not demonstrated that we need more farmers, although it is apparent that we need better farmers.
It is the business of government.
It is the business of any government to protect its people. Governments have protected their countries from invasion and war, but the greatest office of government in modern times is to develop its own people and the internal resources of its realm. We are beginning to protect the people from the over-lording of railroads, from unfair combinations in trade, and from the tyranny of organized politicians. It is just as much the business of government to protect its people from dishonest and tyrannous middlemen lying beyond the practical reach of individuals. The situation has arisen because of lack of control; there is no conspiracy against the farmer.
It is said that competition will in the end correct the middleman evil, but competition does not correct it; and competition alone, under the present structure of society, will not correct it in most cases because "agreements" between traders restrict or remove competition: the situation does not have within itself the remedies for its own ills.
When we finally eliminate combinations in restraint of trade, the middleman abuses may be in the process of passing out. It is to check dishonesty on the one hand and to allow real competition on the other that I am now making suggestions.
Must be a continuing process of control.
I have no suggestion to make as to the nature of the laws themselves. There are many diverse situations to be met; and I intentionally do not make my remarks specific. Of course, any law that really attempts to reach the case must recognize the middleman as exercising a public or semi-public function, and that, as such, he is amenable to control, even beyond the point of mere personal honesty. The licensing of middlemen (a practice that might be carried much further, and which is a first step in reform) recognizes this status; and if it is competent for government to license a middleman, it is also competent for it to exercise some oversight over him. It is not necessary that government declare an agency a monopoly in order to regulate it. Commercial situations that unmistakably involve service to the public are proper for governmental control in greater or lesser degree. The supervision of weights and measures is a good beginning in the regulation of middleman trading.
But the enactment of laws, even of good laws, is only another step in the solution. A law does not operate itself, and the common man cannot resort to courts of law to secure justice in such cases as these. There must be a continuing process of government with which to work out the reform and to adjust each case on its merits. Whatever the merits of the laws, their success lies in the continuing application of them to specific cases by persons whose business it is to discern the facts rather than to prove a case.
There are three steps in the control of the middleman: (1) an aroused public conscience on the question; (2) good fundamental laws for interstate phases and similar state laws for local phases; (3) good commissions or other agencies or bodies to which any producer or consumer or middleman may take his case, and which may exercise regulatory functions. The interstate commerce commission has jurisdiction over so much of the problem as relates to the service and rates of common carriers; no doubt, its powers could be extended to other interstate phases. Perhaps departments of agriculture, in states in which public service commissions have not been established, could be given sufficient scope to handle some of the questions.
Of course, some of the middlemen and associated traders will contend that all this interferes with business and with private rights, but no man has a private right to oppress or defraud another or to deprive him of his proper rewards; and we must correct a faulty economic system. There is little danger that the legitimate business of any honest middleman will be interfered with.
I know that commissions and similar bodies have not always been wholly successful. This is because we have not yet had experience enough, have not consciously trained our people for this kind of work, and have not been able to make water-tight laws. Neither do older systems now prove to be adequate. New economic conditions must bring new methods of regulation and control.
I have no desire that society (or government) engage in the middleman business or that it take over private enterprise; but no government can expect to throw back on the producer the responsibility of controlling the middleman. I look for the present agitation to awaken government to the necessity of doing what it is plainly its duty to do. In future, a government that will not protect its people in those cases in which the people, acting to the best of their individual and coÖperating capacity, cannot protect themselves, will be known as either a bad government or an undeveloped government.
