No 1931 Pegging

The Federal Farm Board last week issued a point-blank warning to wheat growers throughout the land which was enough to send their hearts to their boots. It was:

"The Board will not authorize the Grain Stabilization Corp. to make stabilization purchases from the 1931 wheat crop. . . . Spring planting of wheat is at hand. Let farmers heed the warning to reduce acreage."

The Farm Board began its price-pegging policy through open market operations early in 1930 when it bought in the 1929 wheat crop surplus (TIME, March 10). Since last Autumn it has been buying heavily into the 1930 crop. Fortified with its full appropriation -- $500,000,000 -- from the Treasury, its actual and future wheat holdings are now estimated above 200,000,000 bu. Its operations have kept domestic prices of the 1930 crop from 20-c- to 35-c- per bu. above the world level. Until last week the biggest question was: "Will the Board continue price-pegging when the 1931 wheat crop starts rolling in upon the market about July 1?" The answer: "It will NOT." Result: U. S. wheat prices must now adjust themselves downward to the world's supply & demand level. Declared the Board:

"This [price-pegging] policy was adopted to meet a most acute emergency. It has made wheat growers many millions. . . . But [the Board] cannot indefinitely buy more than it sells or indefinitely hold what it has bought. It cannot follow a regular policy of buying at prices above the market, paying heavy storage charges and selling below cost."

Wheat prices in the Chicago pit slumped sensationally.

Explained Chairman Stone by way of justifying the Board's old policy: "Let's assume we're going to lose $50,000,000 out of the Treasury. . . . [Without our intervention] I believe prices would have gone to 40-c- per bu. There would have been many bank failures . . . a debacle."

Discouraging reports reached the Board on the amount of crop acreage reduction. Southwestern planting foreshadowed a harvest of 45,000,000 bu. over last year.

Meanwhile President Hoover found a man to take the place of Alexander Legge and thus complete the Board's membership. He was 67-year-old Samuel Henry ("Sam") Thompson of Quincy, Ill., president of the potent American Farm Bureau Federation. Mr. Thompson owns a 500-acre corn farm which his son operates. He heads a country bank but for years his real profession has been organizing agriculture. In 1924 he was advocating the Equalization Fee form of Farm Relief before a House Committee when a Congressman challenged his right to speak for farmers. Mr. Thompson hustled back to Illinois, returned to Washington and the committee 48 hours later with a petition in which some 67,000 husbandmen authorized him to represent their views. As a representative of organized agriculture he was appointed to the Farm Board. His prime tenet: Relieve farmers and Depression will fade away.

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