NOVEMBER 17, 1943
NEW YORK, Tuesday—I find there is a very wide misunderstanding of the meaning of the word "subsidy." There must be a great many people who do not look up words in the dictionary, because here is the definition in Funk and Wagnalls' Dictionary: "Subsidy—pecuniary aid directly granted by a government to an individual or commercial enterprise... Money furnished by one nation to another to aid in war against a third."
We have been using subsidies in this country in one way or another for many years. For instance, we subsidized our railroads when we granted them rights of way through different parts of our country. The tariff which many of us have approved for many years, is nothing more nor less than a subsidy, a subsidy to industry which all of us pay.
A farm subsidy is now proposed to prevent a rise in farm prices. The big farm organizations for the most part, seem to disapprove of a subsidy and demand a rise in the farm prices to cover what they claim are higher costs for them. If this should happen, the public would pay increased prices, not just for farm products, but for all the products in which farm products are used.
For example, the price of meat would go up because the price of feed went up. If these prices went up, it would be natural for people who worked for wages to ask for higher wages, because their money would not buy as much as it bought in the past. Then all manufactured articles in which labor is involved would go up and the farmer would be paying a higher price for the things he bought. Therefore, he would really be no better off than he was before he was paid more for his own products.
The people who would suffer most would be the people who are not covered by any organization which could negotiate a change in wages. This group includes many white-collar workers, government employees, firemen, policemen, teachers and people living on small fixed incomes derived from annuities or insurance policies.
But the worst feature of this policy of allowing prices to be increased is that there is no limit once you begin. If prices can be raised twenty cents, why not fifty cents? A subsidy is proposed, therefore, to be given the farmers in order that they may still sell at the regular price, which is now stable, and still make a fair profit. A subsidy is paid for by all the people, but in the end it costs us far less than runaway prices, which pile up indefinitely and cause a state of inflation.
The subsidy keeps all prices at a stable level. A grant from us all to keep farm prices down, is a subsidy to the farmer. In the long run it will pay the whole nation many times over not to allow all costs to go up.