The Agricultural Problem of the United States

December 17, 1927

Report Outline
Nature of the Agricultural Problem
Background of the Agricultural Problem
Special Aspects of the Farm Problem

To the casual observer a striking anomaly is presented by the continued unrest among large classes of American farmers and the unabated call for farm relief, in the face of official reports which record a steady recovery of American agriculture from the post-war depression. Progress is officially reported not only in better balanced agricultural production but also in advancing prices for most crops and especially in a continued improvement in the relationship between the prices of farm products and non-agricultural commodities.

The Secretary of Agriculture points with satisfaction in his annual report for 1927 to the fact that on September 15 the farmer's purchasing power1 stood at 92, with 100 representing the average for the five years preceding the war. Compared with an average of 85 for the calendar year 1926, and of 69 for 1921, the figure 92 appears very encouraging.

“It is important to bear in mind, moreover, that the improvement thus registered…does not show the full extent of the recovery effected,” Secretary Jardine continues. “Index numbers indicating gains in the exchange value of farm commodities tell only part of the story. They do not accurately reflect advantages accruing from increased efficiency. In the last few years the productivity of American agriculture, as measured in output per farm worker, has increased greatly. On fewer acres, and with a farm population 3,000,000 less than in 1919, the agricultural industry since 1923 has averaged a larger volume of production than in the years immediately following the war. This suggests the practical certainty that relative costs of production have been reduced despite continuing high overhead and labor expense, a view that is strengthened by data recently made available showing a tremendous recent increase in the use of large power units in agriculture. Another indication that the purchasing power index does not record all the progress achieved is the fact that since 1921 net farm incomes, with some recession in 1926–27, have increased more rapidly than the unit purchasing power of farm products. It is a reasonable inference that the farmers, through increased efficiency, are offsetting, to some degree at any rate, the effect of unfavorable relative prices.”

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