War, Central Planning and Corporations

The Corporate State by Dr. Eugene Schroder and David E. Schechter editors Dr. Walker F. Todd and Micki Nellis Buffalo Creek Press Cleburne, Texas Copyright c 1997 by Eugene Schroder and David E. Schechter. All Rights Reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher. Buffalo Creek Press, 603 N. Main Street, PO Box 2424, Cleburne, TX 76031 email purchase@buffalo-creek-press.com Web Page http://buffalo-creek-press.com

Introduction

It was March 1979, and a small group of American Agriculture Movement (AAM) farmers had been invited to the White House to work with Stuart Eizenstat and his staff concerning issues of agricultural policy. President Jimmy Carter, a peanut farmer from Georgia, instructed his chief economics advisor and staff to work with the AAM farmers concerning their demands for higher price supports, production quotas, and acreage allotments.

The years immediately prior to Carter's administration (1977-81) were devastating to American farmers in an economic sense. The Nixon-Ford era had been marked by a period of staggering inflation. Costs for agricultural inputs had increased dramatically. Energy prices had skyrocketed as a result of the 1973 Organization of Petroleum Exporting Countries (OPEC) oil embargo. Agricultural prices had initially soared as well, especially following the "Russian Grain Deal" (1972). The Russians, with the cooperation of large grain companies, had quietly purchased large amounts of grain at a pre-inflationary prices. Prices soared after The Russian Grain Deal was announced, but most farmers had already sold their grain at low prices. Farmers were frustrated when they learned what had happened.

Earl Butz, Secretary of Agriculture, made a public statement following the announcement of the Russian Grain Deal advocating that farmers plant "fence row to fence row," adding that never again would American farmers be able to overproduce for the expanding foreign market. Many farmers, following and believing Butz' advice, expanded their production along with their debt. Prices, however, continued to climb.

President Richard Nixon responded to the economic emergency created by the Russian Grain Deal by issuing a series of executive orders under the Trading with the Enemy Act of World War I to regulate the production, distribution, pricing, and exportation of agricultural products.⁽¹⁾ With the stated goal of fighting inflation, Nixon used an Executive Order to freeze the price of beef. In late 1973 Nixon announced a soybean embargo against the Japanese, and later related embargoes were expanded.

By 1977, when the farmer from Georgia took office, the price of corn had returned to $1.77/bushel, less than half the price of its inflationary high. The farmers had been caught in a trap. The input costs remained at their inflated levels while market prices of commodities plummeted. Farmers who had bought stocker calves for $.69/lb. were forced to sell them for less than $.30/lb. during and after the price freeze. The price freeze cost thousands of farmers millions of dollars. The farmers could not repay the loans and debt they had incurred. As a result, the AAM was formed.

By the late 1970s, AAM farmers took the position that, as an atomistic group of small family farmers, they could not effectively compete with the concentration of economic power wielded when corporations and governments controlled both the price they received for their goods, and the price they paid for their inputs. They believed that as a last resort, the government should use its central authority to establish a parity between prices received and costs of inputs.

Returning to the March 1979 meeting in the White House, as the discussion began, I decided that we should go right to the heart of the matter. I posed the following question to Eizenstat. I said "Under the current prices for inputs and current market prices the family farmers cannot meet their obligations to the Farmers Home Administration, Federal Land Banks, and banks. If we do not change agricultural policy and support the market prices, what is the government going to do? Are you going to nationalize the farmland?"

Stuart Eizenstat was somewhat taken aback by my question and hesitated before responding. Finally he replied, "If we have to nationalize, we will. Agriculture is too important and vital a resource to be left in the hands of individual farmers."

Tummy Fulford, a farmer from Georgia, rose from his chair in disgust and pronounced, "I am immediately going home and sell my farm", which he did.

I was as much taken aback by Eizenstat's response as he was by my question. The full meaning and consequences of central planning authority had finally reached home with me. If, in fact, we conceded that the Federal Government had central planning authority to set production quotas, acreage allotments, and price supports, then we must necessarily concede that it would also have the authority to "nationalize" if it so desired.

It was with this concept firmly planted in our minds that I and others began extensive research into the history of central planning and the influence of economic combinations, especially corporations, on the origination and use of the central planning power of government.