Dollars for Goods

Not so long ago John Speculator was talking hopefully of "dollar wheat." Last week wheat was $1.15 and the new watchword was "dollar corn." Rubber, which sold as low as 3-c- per lb. in 1933, was up last week to a four-year high of 17-c-. Silk on Manhattan's Commodity Exchange had the busiest day in months. Cotton hit 14-c- per lb. for the first time since 1930. With few exceptions the raw "things" which the U. S. finds essential to its well-being were in high speculative favor. The number of citizens eager to swap dollars for salable goods was growing at an astounding rate.

From thousands of county agents bumping over back roads inspecting crops, talking to farmers and smalltown bankers, the Crop Reporting Board in Washington last week received the year's most important reports. Led by William Forrest Callander, a jovial, blue-eyed gentleman who was a dirt farmer before he studied law at Georgetown, the Board took its secrets into a room high up in the Agriculture building, locked itself in until its tabulations were completed and its guesses made. Frosted glass windows prevented so much as an eyewink to the outside world. In the centre of another room six or eight newshawks stood in a chalked square, waiting. Finally Mr. Callander emerged, placed mimeographed copies of his mystical figures face downward on tables with telephones, and, full of excitement, cried, "Get ready--go!" The newshawks leaped to the telephone tables. . . .

Within a few minutes, it was clear to the world's markets that Mr. Callander's Board had confirmed the worst fears for U. S. Agriculture. The wheat fields were not quite so bare as private observers had calculated (TIME, Aug 6). But cotton-land had shrunk below the gloomiest private guesses. And the misadventures of corn were a sensation. In a month, 500,000,000 bu. of corn had disappeared from U. S. fields and the 1934 harvest was officially estimated as 1,600,000,000 bu. as against 2,300,000,000 bu. last year. The price of corn jumped quickly to 88-c-.

A very few crops would be better than last year, notably pears, peaches, potatoes. But typical of 1934 unfruitfulness were estimates of:

P:110,000,000 bu. of apples as against a five-year average of 156,000,000.

P:5,300,000 bu. of flaxseed as against a five-year average of 18,700,000.

P:49,000,000 tons of tame hay as against a five-year average of 72,000,000.

Corn into Meat. Most U. S. corn is fed to hogs, steers, chickens. Thus when corn soars so does pork, lard, eggs, beef. Fat corn-fed steers have risen in the past fortnight from a $8.50 per cwt. to $9.50. Top price for hogs last week was $5.60, best level in three years. Meanwhile, however, the stock yards have been overrun with gaunt, stumbling beasts which stricken farmers can no longer feed, and this is why the price of ordinary meat-on-the-hoof has gained little. Government purchases of relief cattle may run as high as 12,000,000 head of livestock (including sheep and angora goats), more than one-half of which will be slaughtered. Such depletion of breeding stock will curtail U. S. meat production for years to come and prices of all meat will eventually rise.*

Corn-into-Eggs. Butter and eggs have almost no zoological connection but their economic and social connection is close and traditional. The statistical position of butter has improved. There are only 800,000 tubs of butter in storage in leading markets as against 1,100,000 tubs year ago. At 27 1/4-c- per Ib. butter was up 1-c- for two weeks--and famed Speculator Jesse Livermore was thought to be in the butter tubs.

It is just as easy to buy a carload of butter (19,200 lb.) as a carload of eggs (12,000 doz.), yet amateur speculators almost always prefer eggs. They know that when hens are not well fed in the great egg districts of the Midwest they seldom lay eggs. And even a well-fed hen dislikes to lay eggs in very hot weather. What most amateur speculators do not know is that the leading trading medium is October eggs, which were all laid in March, April and May--before the drought seriously affected production. There are 9,000,000 cases of eggs in storage which is only 500,000 cases less than a year ago. However, the advancing price of corn is almost sure to make the autumn and winter egg crop small,--a thought which has boosted October futures from 19-c- per doz. to 22-c- in the last few weeks.**

U. S. farm products were by no means the only goods exchanged for dollars last week. Silver trading was soaring to the highest levels in months when the President's order nationalizing the metal halted trading forever. Hastily taken as inflation, it poured volatile fuel on the speculative pile of other world goods. Because U. S. exchange promptly sold off, foreign traders swapped their dollars for pounds, francs, yen, then swapped their currencies for world commodities in U. S. markets. And last week when this market activity was added to inflation talk and both added to the fireworks in domestic farm products, trading in all world staples was whipped to boom-time volume.

Rising prices for manufactured goods are a dubious business blessing but the benefits of rising commodity prices (and even in terms of gold they have been climbing for eight months) are not so questionable. The foreign trade of Brazil and a half dozen other South and Central American republics is almost wholly dependent on coffee, now selling at 9 1/2-c- against a Depression low of 5 1/4-c-. When rubber jumps from 10-c- per lb. to 17-c- as it has in the past six months, five times five million souls throughout British Malaya and Dutch East Indies are the gainers. When cocoa rises 1 1/2-c- per lb. from its year's low of 4 1/4-c-, as it did last week, native growers all along Africa's west coast rejoice. The fact that tin is being held tight by a tight-fisted cartel at 52-c- per lb. means steady employment in Bolivia, Siam, Nigeria, Dutch East Indies and the Malaya States. When silk rises from its Depression low to its price last week of $1.20 per lb., Japan can and does buy more scrap steel from the U. S. Sugar at 2-c- per lb. for the first time in four years may in time permit the U. S. to regain a $150,000,000 Cuban export market, now almost vanished. Better prices for shellac and pepper, favorites of boisterous Speculator Bernard E. ("Sell 'Em Ben") Smith, better prices for jute, hemp, antimony, caraway seed, balm of Gilead and scores of other minor world commodities will eventually result in a rising volume of international trade.

*Lone bright spot in the steel business last week was the increased demand for tinplate wherewith to can drought-stricken beasts. Rut darkest spot in all commodities was the price of hides, down from 6 1/2-c- per lb. to 3 1/2-c- in the past week, or 15% in six trading days, because the market was glutted by Government slaughtering. After strenuous protest from tanners, RFC last week agreed to advance $10,000,000 to hold surplus hides off the market until demand increases or they can be dumped abroad.

**Egg facts: A cold storage egg one year old is fresher than a fresh egg that has stood in a hot room for three days; eggs rank eighth in the value of all U. S. crops; there are 360 eggs in a case.

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