The Destruction of a Policy
The gradual destruction of this policy began in the House of Lords. They allowed themselves to be swept away by the popular cry against Government interference with industry, and cut out the power of control of cultivation. The Prime Minister had said that this was an absolutely essential part of the Bill, and of the Government’s policy, but the Government quietly and characteristically accepted the Lords’ amendment and the Bill was passed.
Then troubles began. Other industries began to ask why the Government satisfied agriculture and not them, and as the Government could not plead their control of agriculture in justification, no real reply was possible. Also the cold fit came on as regards national expenditure. The Bill for the corn subsidies threatened to be very high. Though Europe was starving, it could not buy, so cheap American grain flooded our markets; but cost of production here was still at its peak, and, for oats especially, the amount to be paid to the farmer threatened to be large. It was realised that it might cost 25-30 millions to implement the guarantees for the first year, and perhaps 10-12 millions a year later. In short, the guarantees had to go. Instead of four years’ notice of any change, a Bill to repeal the great Act was introduced five months after it had been passed. And it was unfortunately part of the bargain with the farmers who received for the single season perhaps six or eight millions less than they might have been entitled to under the Act, that the Wages Boards should be abolished—and they were. There remained of the original structure only the depreciation of the value of all agricultural landowners’ property by about one-twentieth, owing to the extra compensation for disturbance.
Every one felt that they had been had, and they had been. The industry which had lately been talked up and made much of was dumped into the dustbin. The farmers had lost their guarantees on the strength of which, in many cases, they had bought their farms dear or planned their rotations. The labourers, who particularly needed the protection of Wages Boards during a time of fall in cost of living and unemployment, had lost all legal protection. The landlords, willing enough to give what was asked of them if any national purpose was to be served, found that their loss brought no corresponding national gain. Agriculture retired as far as it could from any contact with perfidious Governments, to lick its wounds.
That is not a good basis upon which to build intensive cultivation or any other active policy. There being now no legal or patriotic call to intensive production, we are driven back to ask, “Does intensive production pay?” and the broad answer is that at a time of low prices it does not. There is no doubt that slowly and steadily education will gradually improve farming, and that farmers will learn to find out what parts of their business pay best and to concentrate upon them. There is also no doubt that even at low prices there is plenty of scope for better farming, and that better manuring, particularly of grass land, will pay. But the farmer is faced with an economic principle—the law of diminishing returns. It may be stated thus: beyond a certain point which rises and falls directly with the value of the product, extra doses of labour and manure do not give a corresponding return. It is this principle which accounts for what we see everywhere—that farmers are tending to economise as much as they can on their labour and to let arable land go back to grass.
And if this is clear to farmers who are thinking of intensive arable farming, still more is it true in comparing arable with grass. If you take the same sort of quantity of arable and grass farms, farmed by men of the same skill and diligence, over a range of seasons under low world prices for farm produce, you will, I believe, find something like this: grass land needs half the capital and one-third of the labour of arable; it produces three-quarters the receipts with half the payments, and yields double the profit per acre and four times the profit on capital. The moral of all this is clear. Unless the nation is willing to go back to protection for agriculture, which I am glad to believe in the general interest unthinkable, and unless it is willing to guarantee the farmer against loss from that method of agriculture which means most production and most employment, we must let the farmer set the tune and farm in the way it best suits him to farm. We must try, in fact, not to talk too much nonsense about intensive production as the cure for agricultural depression. It is useful to remember that all countries overseas which combine high wages with agricultural prosperity have a very low output per acre judged by our standards.