The Downside of Imperial Collapse
When Empires or Great Powers Fall, Chaos and War Rise
THE sincere way in which the Middle West is studying foreign affairs these days is one of the worth-while facts to be noted along the relatively difficult trail which it is traveling. This development should mean much in a broader national outlook, for it brings the last section of the country up out of the slough of indifference that so frequently has characterized the attitude of large proportions of our people toward other nations. As is often the case in the United States, the basis of this newly aroused public interest is primarily economic, lying in those commercial trends which have been operating to the disadvantage of the Mississippi Valley country since the World War.
Various domestic aspects of the grief experienced in the great open spaces have emerged -- some very forcefully, as in the McNary-Haugen Bill, which had as one of its main objects the removal of the farm surplus from the domestic market for sale abroad. It precipitated a sharp difference of opinion last winter between the President and Congress, to put the matter mildly, and gives every indication of becoming a major political issue in the coming national campaign. It also has served as a vehicle on which to hang hundreds of yards of impassioned editorial comment, on the one hand by the embattled farm papers and inland dailies, on the other by the conservative publications of the East that profess to have a due regard for the real principles of economics as laid down by Adam Smith and the other high priests of the orthodox camp.
And that isn't all -- although it is quite enough to keep the leaders of both the major political parties wake o'nights into the wee small hours. For while the farmers have been on the warpath with enough of a display of force to jam the McNary-Haugen Bill through a reluctant Congress, the Middle Western business man (speaking generally and with some inevitable exceptions in mind), who was regarded in days gone by as a "pillar of conservative strength, " has also been off the reservation with a crop of complaints of his own, in addition to his belief that the low prices for agricultural products are a sin and a shame. His complaints have been of high freight rates and the need for a more adequate development of the St. Lawrence Waterway in coöperation with Canada. Shippers call attention to the vast advantage the Panama Canal gave to the Eastern manufacturers, and express a belief that this aid and the steep railroad freight rates have placed a ring around the commercial development of the Middle West. With this has come a threat to organize a Middle Western Chamber of Commerce, which "would not concern itself with the interests of the protected East." And now it is alleged by many of the business men of the Middle West, since Congress has failed to take any aggressive action on the St. Lawrence Waterway and the President has vetoed the McNary-Haugen Bill, that the only way in which the "industrial East" can be brought to its senses is by a drastic revision of the tariff and immigration laws.
In other words, wherever we turn we find the Middle West and its economic woes entangled in the elusive "foreign situation," with which it used to concern itself very little. As a natural result of this its leaders are showing more interest in what is going on in other countries, especially if these movements relate to the United States, and are studying how these shifting currents can be made of benefit to the home folks. All of which is a decided reversal from the attitude of almost complete absorption in domestic questions that used to be characteristic of the larger proportion of the people who live west of the Mississippi River.
Originally this neglect of foreign affairs came partly because of the long distances from the Middle West to the oceans, but no doubt mostly from the fact that in the era of settlement which followed the Civil War and extended almost to the World War domestic questions were of paramount importance. That was an agricultural period almost entirely. The tendency was aided by the homestead laws, through which "the government bet a man 160 acres that he couldn't live on a quarter section for five years and not starve to death." It was a time of low returns for farm products; 35 cents a bushel for wheat, 15 cents a bushel for corn and 2 cents a pound for hogs and grass cattle were common prices in the early 'nineties. Such prices really supplied a subsidy, in the opinion of many economists, for the development of the cities and the industries which they were trying to bring into being. Times were "hard." But the settlers remained with the land, with only occasional exceptions here and there, because it was about all they could do, and there was of course some hope for an ultimate increase in the value of their farms.
While the people of the Middle West were not satisfied with their lot in those days, as was well shown by the Grange and Populist movements, which tried to bring about a change in the economic status of the people in various ways, largely through coöperative effort and government assistance, nevertheless the Mississippi Valley problems were regarded as domestic issues. In those days it did not appear that much could be accomplished by a manipulation of foreign relations. Vast quantities of feed were exported to Europe, mostly at low prices, but this movement depended largely on the buying power of the people there. One of the contributing factors in bringing that trade about was the growth of the shipping industry of various European countries, especially England and Germany, but as these vessels were under the control of foreign owners there was little hope of being able to exert any influence on them. And so the prairie regions struggled ahead as best they could with their economic problems, and looked for domestic solutions for them.
And in general this was true even after the rise in business activity in the McKinley Administration, which brought increased prosperity to the Middle West, and up to the start of the World War. But through this second epoch agricultural conditions in the Middle West improved greatly, as there was a growth in industrial life, not only in the East but also in the Middle West, and the price trends of farm products were upward. There were only occasional exceptions, as during the alleged panic of 1907. Following this brief period of depression the people of the cities began to talk more and more about the "high cost of living," for farm products acquired a greater purchasing power in terms of industrial commodities. The period from 1909 to 1913 is regarded as a time of prosperity in the Middle West, with a normal relationship between agricultural and industrial life, and it now serves as a base for most of the arguments looking toward a change in the present arrangement; for today things are not nearly so favorable for farmers.
Then came 1914 and the World War.
By a strange chance of fate the Great Adventure arrived in a year when the winter wheat belt produced the largest crop on record; Kansas, for example, grew 180 million bushels. Apparently all of nature's forces had combined in a most delightful way to produce maximum yields. As the Germans started through Belgium, wheat was selling at the local shipping points in Kansas and Nebraska for 57 cents a bushel. By the following spring the price had reached $1.50. As the war demand expanded it became higher and higher (the usual experience in all modern conflicts) until for a brief period in 1917 after we entered the war it was above $3; then the Government established its market control, and the price to the producer became slightly over $2 a bushel.
Something like the same general advance in prices took place with everything grown on the farms of the Middle West -- in response to a demand, from foreign countries and from our own combat units, that was the greatest ever known. The years from 1915 to 1919 were the most prosperous the agriculture of the United States has seen. Despite the fact that after we entered the war most of the young men were away with the army, there was a vast expansion in production, brought about by the plowing up of new fields, long hours of labor, much of it by women and children, and the use of larger and more efficient tools.
Even after the World War ended farm prices continued to advance along with the prices of other commodities. There was considerable speculation in land in some sections, and an optimistic feeling generally, just as there was in the cities. . . . But May of 1920 arrived, with the beginning of the decline. By the fall of the following year farm prices had been more than cut in half. The joy ride for agriculture was over.
Industrial life also suffered from this depression, but it presently staged a comeback which, especially in the last three years, has been one of the wonders of the world. Economists and near-economists have written miles of copy in the effort to explain this commercial rebound, but there does not appear to be complete agreement about it. Certainly improved machinery, mass production and high efficiency in plant management and salesmanship had much to do with it. But farmers also contend that the tariff and immigration laws, which have given protection from foreign competition to both capital and labor, have helped the cities greatly, and also have aided in placing agriculture in an inferior economic position. Obviously our manufacturers have been able to dominate the local market, the richest in the world. But farmers, afflicted with their much discussed surplus in most farm products, which has been as firmly attached to their economic operations as was the proverbial millstone to the gentleman immersed in the lake, have been mostly in the extraordinary position of selling in a market governed largely by world levels and buying in the protected home market. So we soon began to hear about the farmers' 70-cent or 80-cent dollars, which was another way of saying that agricultural products did not have so high a purchasing power as before the World War, measured in commodities required in the operation of a farm and its home.
That is exactly the situation today, and is the basis for what many individuals in the East regard as an undue clamor from the Middle West. When this economic slough became fairly well defined following the depression of 1920 the agricultural leaders turned to a study of how the business of farming could be placed on the "American price level." The late Henry C. Wallace of Des Moines, then Secretary of Agriculture, was quite active in this investigation, and the McNary-Haugen Bill was the result. In brief, this plan provides for the removal of the agricultural surplus from the domestic market, for sale abroad for what it will bring, the expense to be borne by the producers through an equalization fee. Production above domestic needs was thus to be taken care of. Naturally this would "make the tariff effective for agriculture," for the price of farm commodities in the United States obviously then would be the world price level plus the tariff duty, with minor allowances for transportation costs.
But in the meantime, in addition to its vociferous demand for the McNary-Haugen Bill, the Middle West has been much concerned with the tariff on agricultural products. It grows several products which have a most intimate relationship to production abroad, one of the most noteworthy being wheat. There is a tariff on this grain of 42 cents a bushel, which has been of some help in keeping out Canadian wheat at various times, as in the fall of 1925, although never to the point where it has raised the price in the United States to the full extent of the duty above the world level. But it has had enough effect to awaken the growers to its possibilities, and also to give Frank O. Lowden and other Republican leaders an opportunity to point to it "with pride" in the last Congressional campaign as an example of what the agricultural tariff did when it woke up and went to work.
Then, too, the eyes of the wheat growers have been directed to Canada in the last two years with quite another object in view, namely to see how the folks up there are able to achieve such an amazing success with their wheat pools. The progress the Canadians have made in this direction obviously is all the more remarkable when it is considered that the theory of the pool was really perfected in the United States. The plan, in brief, is that the producers deliver their products to the pool, or coöperative organization, and then all get the same price, except for allowances on the various grades and for storage. The wheat pools of the three prairie provinces of Canada have reached the point where they dominate the market there, and probably at times they have had an influence on world prices, or at least some Canadians so allege. Much of the credit for their organization is given to one of Henry Ford's pet aversions, Aaron Sapiro.
While all this has been taking place in the Northland, the wheat pools in the United States have not made any startling success, either with or without the help of the distinguished Mr. Sapiro. In my home state, Kansas, which now is growing about 150 million bushels of wheat a year, the pool never has handled more than 6 million bushels in a season, and some years less. Its progress is about representative of the other state pools.
Anyhow, the lack of outstanding success with pools in the United States has been a source of great mortification to many of the producers here, and has directed an extraordinary amount of attention to the wheat producers of Canada. Sometime ago the American Agricultural Editors' Association, which includes most of the editors of the farm papers in the United States, made a trip through Canada, and while on the prairies engaged in a special study of the progress in wheat marketing achieved there. Doubtless the Canadians appreciate the complimentary inference of all this attention, and recently have indicated a willingness to return some of the missionary work so kindly performed in the past by Mr. Sapiro. At any rate, at an international meeting of the managers of the nine wheat pools in the United States and those of Canada, held in Kansas City in May, the speakers included such leaders as J. G. Gardiner, Premier of Saskatchewan; C. H. Burnell, president of the Manitoba Pool; A. J. McPhail, president of the pool selling agency at Winnipeg; and Thomas B. Donnelly, manager of the Wheat Growers' Pooling and Marketing Company of Sydney, Australia.
Such meetings will do much, of course, to bring the Middle West to a broader outlook on international questions. And it is well for the wheat growers in this country to keep in mind the increasing competition they will encounter from Canada. That country has much ideal wheat land, especially in the vast stretch of prairie from Winnipeg to Calgary. More than this, experimental work has shown that it is perfectly practicable to grow wheat hundreds of miles north of the present limit. Production is certain to increase there greatly, and it will exert a growing pressure on our crop in the competition to capture the world's markets. Doubtless considerable amounts will be exported to the United States from time to time, in seasons when the yield in this country is low, as has been done in the past.
And that is just what is going on now, in a new and alarming way, in the beef world, much to the wrath of the producers in this country. Cattlemen are dusting off old geographies and the government reports on Canadian livestock production these days! To get a full appreciation of their feelings it is necessary to remember that following the World War the cattle business, which at best is a highly speculative undertaking when conducted on a big scale, went through a period of drastic deflation which ruined a large share of the men engaged in it. The cycle with beef is rather long, so it is only in the last year or two that prices have returned to attractive levels. But now the market trend is decidedly upward, and the growers are making money.
Then here come the Canadians, running trainloads of cattle right across the tariff line, and paying the duty of 1½ cents a pound on stockers with ease. They have made shipments recently as far south as Nebraska. All of which is bad enough. But to follow it up, some of the powerful Eastern dailies, which doubtless have more interest in the welfare of the beef eaters than in that of the producers, have entered the arena, with about as much grace as a bull in a China shop according to the viewpoint of the farmers, and demanded the lifting of the embargo against beef from the Argentine. They allege that the foot-and-mouth disease has been eliminated from the herds there. All of which may or may not be true, but the proposal has awakened no enthusiasm in the hearts of the cattlemen, who fear the South American competition as well as the foot-and-mouth disease, which is one of the most destructive pests the business knows anything about. American producers point to England, with its repeated scourges of foot-and-mouth, as a horrible example of what occurs when beef from the four corners of the earth is welcome. Organizations of livestock men, such as the American Live Stock Association of Denver, have taken up this matter in an energetic way, both to foresee what foreign competition will mean and in an effort to avoid as much of it as possible.
But the cattlemen are not alone among the livestock interests in a study of foreign economic geography. For the dairymen also have been reading up on this subject, especially on the capabilities of the cows kept by the brethren in such foreign lands as Denmark and New Zealand. In a good many ways the dairy farmers are in the same relative position as the beef growers. Following a considerable overproduction of milk in 1924, due largely to an unusually fine growth of grass in the pastures, which resulted in great losses to the business in many states, the industry has been working into a more advantageous position, until this year practically all the producers are doing fairly well. But these higher market levels have caught the eyes of folks in other lands, and they have started their products this way. Several times in recent months quality butter has been quoted at 16 cents a pound higher in New York City than in Denmark, which made it perfectly practicable for foreign shippers to ride over the tariff wall of 12 cents a pound. The dairymen here do not object so much to the actual amount of these importations as to their psychological effect in depressing prices out of all proportion to their size. But in the meantime many of them have taken a leaf from the experience of the farmers in Denmark, which has received much prayerful study here, and have made great strides in coöperative production and selling. In the Land O' Lakes Creameries, operating largely in Wisconsin and Minnesota, with 84,000 farmer members and 402 coöperative creameries, the dairymen have developed one of the most successful coöperative commodity marketing organizations in the world. It sold more than 80 million pounds of butter last year, and did a business amounting to 40 million dollars. It has made a determined effort to raise the quality of the product and has greatly increased the proportion of 93-score butter available for the Eastern markets. I feel that much of the inspiration for this splendid success has come from the outstanding results produced by coöperation among dairymen in other lands, especially Denmark.
Such products as sugar and wool are always involved in the tariff debate. The profits of the growers of both these commodities depend to a considerable extent on the extent of foreign competition. Perhaps this is especially true with sugar; the beet producing districts in the Middle West could not maintain their business without the aid of tariff protection. I think that as a matter of broad national policy, and considering our experience with the monopolies in rubber and coffee, and with sugar in 1920, it is far better to maintain enough sugar production in this country to regulate the profit-desiring tendencies of foreign growers than to throw ourselves on their more or less tender mercies.
But it is not alone in commercial problems that the Middle West is looking abroad. The interest extends to cultural matters as well. For example, the International Country Life Conference will hold its meetings next August in the Michigan State College at East Lansing. This organization, of which the president is F. Graftiau, of Louvain, Belgium, is absolutely world-wide in scope, its object being the development of a higher standard of rural living over all the earth. The agricultural colleges in the Middle West have also been quite active in promoting a broader outlook toward other lands. The Kansas State Agricultural College is an excellent example; F. D. Farrell, its president, has insisted especially that in the department of agricultural economics adequate attention must be given to the increasing competition which American farmers are encountering from abroad.
The World War also had its influence. Hundreds of thousands of the very flower of the young men of the Middle West were brought into contact with strange lands and peoples. This did much to widen their horizon. Any man who followed the trail of the American Expeditionary Force along the Marne or the Vesle or the Meuse acquired at first-hand a picture of world movements which will remain in his memory all through his life. And this in turn doubtless has had much to do with the increasing amount of foreign travel that has been developing in the Middle West. Lower ocean passenger rates have helped, along with the more aggressive sales methods used by the steamship companies; but these probably developed because the primary urge for travel and fresh experience was there.
And so the Middle West has turned its eyes abroad as it never has done before. This is a signpost of hope in the development of our nation as a world power. Out of it will come a richer knowledge of life, a greater sympathy with peoples in other lands, and a larger appreciation of what it means to be an American citizen.