Pipe Dreams

A speculating fraternity, vaguely tagged as "gamblers," has become the Administration's favorite whipping boy for high commodity prices (TIME, Oct. 27). But speculators could scarcely be blamed for the high price of tobacco, which almost doubled since prewar. In tobacco, as in most commodities, the villain was demand. Last week the villain was confounded.

To save dollars, Britain, the biggest foreign buyer of U.S. flue-cured tobacco (54% of all flue-cured exports last year), abruptly canceled $25 million of scheduled purchases. The price, which had already fallen after earlier cancellations, began to approach the level at which the Government is required to support it. Tobacco markets shut down while Washington made up its mind what to do. Then Washington showed why anyone who gambles in commodities has the odds--and the Government--on his side.

Under the parity program, the Department of Agriculture was already committed to support tobacco at 39.5-c- a lb.* It had advanced $60 million in loans to tobacco farmers who needed cash, but did not want to sell their crop. (They hoped the price might go higher.) When the British withdrew, the Administration went further to support tobacco prices.

Secretary of Agriculture Anderson announced that the Commodity Credit Corp. will spend about $25 million to finance the tobaccomen who had been buying flue-cured tobacco for the British. For example, if a buyer had 10,000,000 lbs. in British orders to place and had bought only 7,000,000 lbs., CCC would finance the remaining 3,000,000 lbs. In effect, the plan made the buyers agents for the Agriculture Department. If the buyers cannot sell their tobacco, the Department will take it off their hands.

As another prop under high prices, the Department decided to set smaller marketing quotas for next year's crop. Less tobacco will keep prices where they are or boost them higher. Said one Department of Agriculture expert: "We'll make a profit on every bit we buy."

*90% of the average price on July 1, start of the market year.

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