Glut & Rally

Early last month while farmers stolidly eyed their burning pastures, another group of U. S. citizens whose living is also made from an agricultural product began to fear not shortage but glut. This group-- the tanners--have the misfortune to use as their principal raw material a commodity in which demand has no bearing whatsoever on supply. Hide production depends not on the use of shoe leather but on beef consumption. Cattle are slaughtered for meat and the hide is merely a byproduct.

So when the Government started to slaughter 200,000 half-starved cattle every week, the tanners raised a terrific howl. And they had a reason: in two months the price of hides had plunged from 9-c- per Ib. to 6-c-, seriously threatening the tanning industry. (Shoe prices fall with falling leather prices.)

Under the Government slaughtering program, the meat is being canned for the unemployed. The gory details of the job are handled by the big packing houses in return for the byproducts, of which hides are by far the most valuable.

Fortnight ago RFC offered to advance $10,000,000 to buy Government hides from the packers, thus permitting the tanners to hold the hides off the market until they could be absorbed. Because this plan left the market with a surplus overhanging, hide prices hardly stirred off bottom. Last week it was announced that beginning Sept. 5 Federal Surplus Relief Corp. would buy all hides from Government cattle, eventually distribute them in direct relief as shoes and other leather goods. Hide prices proceeded to rally smartly.

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