Speech

AN ADVANCING SOUTH Address by Chester C. Davis, Member, Board of Governors of the Federal Reserve System, Before the Mid-South Farm Forum for 19S8, In Connection With the Plant-To-Prosper Contest Memphis, Tennessee, Thursday, December 15, 1938. FOR RELEASE IN AFTERNOON NEWSPAPERS OF THURSDAY, DECEMBER 15, 1958. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis I appreciate more deeply than I can say the honor you have shown me by asking me to meet with you today in this, the Mid-South Farm Forum for 1938. It is a profound relief to turn from the confusions, the calcu­ lations and the frustrations of intangibles to solid substances in which one can sink his teeth. I believe in the reality and the value of what you are doing. I wish the example written in the results of this great cooperative effort might spread across the land; that the number of men and women reached directly by the influence of this movement might be multiplied by tens of thousands. I can scarcely imagine a greater good than that the lesson taught by the accomplishments of this company of splendid men and women might sink deep into the hearts of millions of farmers who need it. Only a moment in history, a clock-tick in eternity, has elapsed since the South threw its every power into a struggle which in a material sense set it back for generations. From that point 75 years ago, truly a miraculous recovery has been made. We can take comfort, from that viewpoint, in what an advancing South has accomplished. let viewed from another angle, we are running a race against time. For none of us in America will be allowed to sit down and take his ease as long as we have in this country vast numbers of unemployed men and women and unused physical surpluses and resources on the one hand, with unfilled wants and desperate needs on the other. There are problems in the South which we might debate to Doomsday without accord. The same thing might be said of many other regions. But Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 7,-146 one truth shines forth clear and bright about which there can be no dis­ agreement. The volume of wealth produced in the South is too low in comparison with the numbers of its concentrated population. We must produce more wealth in the form of things people need and can consume if we are to make any real advance toward the goal of a more satisfactory standard of living. The Plant-to-Prosper movement, the annual consummation of which we are gathered here to celebrate, strikes right at the heart of that problem. I congratulate its sponsors - the Commercial Appeal, the Cham­ ber of Commerce, and the Extension Service of the cooperating State agri­ cultural colleges - on its magnificent results. But honesty compels us all to admit that the South as 0 whole is not living up to the examples of those winners whom we honor today. I wonder how many of you read the words which a friend of mine, and a friend and neighbor of yours, wrote on this subject the other day. The Staple Cotton Review carried them in a short article by that philos­ opher and leader of Mississippi, Alfred H. Stone. The writer first quoted these lines from Corper: "Defend me, therefore, common sense, say I, From reveries se> airy; from the toil Of dropping buckets into empty wells, And growing old in drawing nothing up." These significant passages stand in the ensuing article: "Our own people, as well as those beyond our borders, would do well to accept the stubborn fact that we ourselves must work out our own destiny, must solve our own problems, must Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis heal our own wounds. And we should also realize that for the health of our own bodies and the peace of our own souls, it is well that this is so. We are not dif­ ferent from the rest of the world. We are entitled to no special and peculiar dispensation of providence. "There is not a farm in the Southern states which is not potentially a self-sustaining unit. This simply means that our farming population, individually and as a whole, can raise its own vegetables, produce its own melons and fruit, cure its own meat, produce its own milk, butter, syrup, chickens and eggs. These things are too simple and crude for discussion in a learned treatise on rural economics. But through all the ages of civilized man, and in all the countries of the civilized world, they have been the backbone, the beginning and the end, of a sound agricultural economy. It is only in the Soxith that we refuse to produce for ourselves the necessities which we our­ selves consume. It is only here that we blindly and stupidly persist in our determination to buy the neces­ sities of life, rather than produce them. And this is the deepest of our own empty wells. Not in a thousand efforts can we draw from it anything save the bitter water of broken hopes." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 2,-145 -4- Up to this point I have spoken in terms of the southern farm and its problems. But if the South falls short of doing as well as it knows, the nation as a whole must plead guilty to a similar and even broader charge. Before I develop that thought as the main theme of my talk, please bear with me for a short look at cotton, the South's number one crop. Truth is too often trite. It is hard to find a fresh and attrac­ tive dress to replace its commonplace garb. I shall not try to do so. The future for the South is dismal if its agriculture clings to one-crop cotton economy. I offer it merely ns one man's opinion that we are not likely to see the day when the farm resources of the cotton belt can be fully employed to produce cotton for a market return that offers a margin above costs. Too many new factors are at work at home and abroad. We can and should fight for wider cotton markets and satisfactory returns for the staple. I am wholly in favor of the Cotton Council which is developing from this area, and its objective of new uses and increased consumption of cotton. I am in favor of re-shaping our international trade policies to give the cotton producers a living chance at foreign markets. I am opposed to loan policies or any other course that will interfere with the free movement of American cotton to every market that may be .found. And I am wholeheartedly in favor of government assistance to cotton producers to hold their acreage in line with what will abun­ dantly feed all markets, and to speed their adjustment to more diversified forms of farming. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 2-145 ■-rreuter industrial activity and increased national income will raise domestic consumption. But while every effort is justified along <.lx these lines, we cannot shut our eyes to forces that are inexorably working in other directions. The year 1958 has ushered in new develop­ ments in synthetic fiber and in rubber that threaten to take another cut out of the uses for cotton. And the development of controlled trade, and blocked exchanges among the nations of the world is anything but a hopeful sign. I am afraid that to depend on cotton alone as the prop for rural prosperity in the South is just "dropping buckets into empty wells." You who are gathered here today believe that the rich resources of the South can support its civilization on a higher standard, and you are striving mightily to hasten the day. You have thought much about how Southern farmers ought to be using their farms to produce a richer living. But have you stopped to iace the question whether the United States as a whole is doing a much better job handling its resources than the Southern farmer is doing with his farm? lie have millions of men unemployed; we have the greatest endowment of natural and mechanical resources known to the world; and ?;e have the monetary basis for an expansion of productive activity far greater than heretofore existed. Yet we line up against this in stark paradox an almost unlimited parade of unfilled human wants and needs, j- submit that the challenge presented by that specta.de is, after all, the nation's economic problem number onel Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -6- i'-145 The reason I refer to it as a challenge is that other nations seem temporarily at least to be making headway through forms of govern­ ment and at a price ”rhieh we do not favor here. The price they pay is the complete subordination of the individual to the State. Tile tdSK ahead of us is to bring about such a rate of production that all of our effective man-power may find useful employment. Most of us favor accomplishing this expansion under private initiative nnd direction if possible. Ihc needs of the people are great enough to absorb production in the aggregate at a much higher rate than we have ever attained. Expansion to that point is safe as long as we produce what the people need and at prices at which production will be absorbed. I should say that from the point at which we stand in December 1958, economic activity can rise and continue to expand provided (l) increasing purchasing power can be generally distributed; (j?) industrial prices and wages do not rise because of restricted production: and (Z) if speculation and bad price dislocations can be avoided. AH of us need oo address our attention to this central problem. I do not offer to solve the equation - merely to point out the- "x" in it, and to offer some suggestions. I do not oelieve we are going to meet this challenge unless the government, the employers of labor, and the leaders of organized labor themselves, re-appraise their policies and true them up with the all- important objective of getting the unemployed into useful work and main­ taining conditions that will give them work to do. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis -7- Z-145 I submit two questions for your consideration: Would not manufacturers and other non-agricultural producers be better off if they held to lower prices and larger continuous produc­ tion when demand starts to revive, looking to volume production in­ stead of increased prices for their profits? And would not labor get higher real wages if its leaders fixed their eyes on the amount earned at the end of the year through steady employment in producing things people need, rather than on the highest attainable hourly wage for a minimum of production? The principles suggested by these questions for industry and l£ft>or are the principles agriculture has always followed. If they are put to work, the farm problem will become far simpler to handle than it is. How do these principles, which I have suggested in partial answer to the basic question, apply to the South? I cannot agree with those who isolate the South in their thinking as the nation's foremost economic problem. The South needs the chance to put its man—power and its resources to work. The trend toward broad­ ening and diversification in the industries of this section is unmistak­ able. , I could supply plenty of figures to support that statement, but I i have promised myself that for a change I will forswear figures and per­ centages in this talk. I 'There are some adjustments which the South needs and must have. But -above all it simply needs the chance to work. This it will have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis --8- 16-145 whenever a national program gets under way that really means for in­ dustry, profits through production, and for labor, higher annual wages, under fair conditions, earned through greater and not through less pro­ duction. Given that setting, I'll take my chances with the South. Given its part in that picture, the South will become not the nation's number one economic problem, but the nation's number one economic opportunitv. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Chester C. Davis (1938, December 14). Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/speech_19381215_davis

@misc{wtfs_speech_19381215_davis,
  author = {Chester C. Davis},
  title = {Speech},
  year = {1938},
  month = {Dec},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/speech_19381215_davis},
  note = {Retrieved via When the Fed Speaks corpus}
}