The return of Dust Bowl economics



July 11, 2018 - 11:00 PM

When pork prices collapsed amid a global trade war during the Great Depression, the Roosevelt Administration in 1933 had an idea — slaughter six million piglets. Put a floor under prices by destroying supply. It didn’t work. Now the Trump Administration may try its own version of Depressionomics by using the Commodity Credit Corporation (CCC) to support crop prices walloped by the Trump tariffs: Hurt farmers and then put them on the government dole. How about not hurting them in the first place?

That’s the question as Mr. Trump escalates his trade war, on Wednesday proposing 10 percent tariffs on $200 billion in additional Chinese goods. China says it is “shocked” by the new border taxes and will look to retaliate again — and no doubt U.S. agriculture will again be one of its main targets.

Enter the forgotten but alas not gone CCC, the financial institution that FDR charged with solving the problem of depressed markets caused by weak demand. Farmers were told to plant less in exchange for a floor under prices. The CCC financed the purchase of surpluses through nonrecourse “loans” to farmers, and held the crops in storage.

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