Oct 20, 2020 in Economics

Economic Nationalism and the Farmer

Economic Nationalism and the Farmer by Arthur C. Brunce is a well-written analysis that provides insight into the historical development of the United States' political and economic policies of economic nationalism from a farmer’s perspective. In the introduction, Brunce shows the origins of the current conflict thriving between farmers, especially those depending on foreign outlets for their products, and the capitalist industrialists. Brunce observes that this dispute dates back to the colonial days and was clearly manifested in the conflict that occurred during the drafting of the Constitution.

Brunce quotes Dr. Schafer`s summary of the early conflict. Dr. Schafer writes that farmers are viewed as igniters of the nationalism unlike the merchants who either oppose them or try to remain neutral. Also, Brunce`s book reveals how the state has historically shaped its economic policies and caused the conflict between farmers and merchants. The contest between Hamilton and Jefferson over the government economic policies left the capitalists more powerful. Based on the government’s economic policies of that time, the president favored the capitalist merchants and strongly attached them to the federal power. The Congress also pledged for a strong government support in funding state debts, protective tariffs on imports, and the establishment of the National Bank.

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Bunce’s work also provides insight on how the economic divisions gave birth to the two major political parties, which are extant to date, through many alterations of policies. Tariff system was introduced during this political stage the country’s history. While the government`s Tariff bill of 1789 was seen as a protective measure by capping duty on 5%, Jefferson objected this decision and favored free exchange of agricultural produce for industrial goods without tariff constraints. Jefferson had the support of the southern farmers who depended on export outlets.

The author provides an outlook on the history of American politics by highlighting how the two parties came to align themselves with divergent economic policies. He clearly indicates how oppressive tariffs come to force in America and discusses actions of the political parties in trying to discredit the ruling government as well as the government’s efforts to disown the blame. The tariff of 1828, which came to be known as `tariff of abomination` neither suited nor helped anyone. The tariff only served to overburden farmers with the high costs of raw materials. As Brunce puts it, the oppression of a common man was hatched from the competition of the two political parties. The author hints that the compromised Act of 1833 pushed through by the farmers was not sufficiently protective during the reign of the Republicans. Instead, it reverted the country to high tariff rates until when the Democrats took over power and enacted the 1846 Act that moderated tax rates to reasonable levels, including placing tea and coffee on a free list.

In addition, Brunce also gives hints at the economic side of the American Civil War. He argues that the 1824 tariff was antagonistic. The Act pitted the northern industrial side on the one hand and the agricultural side on the other hand. The southerners maintained that they constituted the largest share of the U.S exports as well as the import of British products. However, while arguing this statement, Robert. Y. Hyne eloquently presented that they were paying for the government`s expenses as well as enriching the manufacturers from the north. Brunce writes that the nullification of the Act of 1833 caused vibrant discussions. The South claimed that their autonomy had been taken away, and they started to be treated as a minority. They contended that they had not been accorded equal share of the federal land to expand their agricultural plantations. Moreover, the southerners objected the federal government`s control over their independence in the Supreme Court. In light of this argument, Brunce highlights the consequences of the Civil War. The federal government institutionalized the tariffs initially termed as `emergency measure` and made them permanent. New taxes on customs duties were imposed every year to offset the government`s debt.

It was utterly unfortunate that farmers were never safe during both the Republican and Democratic governments. During the reign of President Wilson (Democrat), a moderate protectionist tariff was passed and operated for nine years. The tariff was, however, disrupted by the Civil War. Industries had developed during this period. The prices for the agricultural products had drastically declined, which significantly contributed to the welfare of the industrialists, who had a natural desire for the Civil War to be prolonged. From the other side, farmers were desperately calling out for help, and farmers` organizations lobbied for protectionist tariffs even if they were too high. Later, in 1920, the farmers` woes were not alleviated under the rule of the Republicans. The new party in power passed the emergency tariff of 1921. This Act made the tariffs even higher than those of 1890, 1897, and 1909. The Republicans conferred of raising or lowering tariffs by 50 percent to the president with the advice of Tariff Commission. According to Brunce, it was supposed to determine the cost of the production of the agricultural goods to inform the president`s decision. Its mandate was, however, rendered almost impossible. The committee worked on the assumption that the cost of production obviously had to be lower for a country that could produce, manufacture and sell gaining profit despite the high tariffs. Thus, the farmers were never safe. The prices of farm produce continued falling in the years that followed, from 200 and fluctuating between 100 and 150. These prices were insufficient for farmers to sustain the production with the high costs incurred for inputs and high taxes.

Another contributing aspect is the failure of institutional bodies created to protect farmers` rights. The Federal Farm Board formed in 1929 failed almost instantly after its inception. The Board`s mandate was to facilitate organized marketing of farm products to prevent surpluses occasioned by low prices. Ironically, however, the prices considerably fell within the same year. The failure of the Farm Board left the farmers in the traditionally brutal policies of the country’s administration, who resorted to the old retrogressive methods. Thus, the government passed the Smooth-Hawley Tariff. The tariff was even more disastrous for farmers than the previous ones. It aggravated the ills brought by the 1922 Act, which had made many European countries shun America in their imports. The Smooth-Hawley Tariff made countries like Canada refuse from the American agricultural products and instead resorted to the Great Britain`s Ottawa Trade Agreement. Brunce hints that the United States` government was ignorant of its policies, as it passed tariffs that hindered sales in an attempt to contain surpluses despite the fact that raising sales was the only solution to the surplus problem.

However, the government’s decision of 1931 deserves particular attention. A select committee coined to spread the vision of `America self-contained` did a remarkable campaign to popularize the idea of `buying American`. Many articles, magazines, and pamphlets have been spread and circulated among farmers to instill such attitude and culture. According to Brunce, this campaign was far much better in positioning farmers to make profits than the old protectionist tariffs.

An awkward fact that emerges from the government`s taxes is that such acts were sponsored by self-centered industrialists who worked to gain a monopoly over the international markets. Overall, it is believed that farmers were subjected to oppressive tariffs to safeguard the interests of a small group of capitalist industrialists.

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Brunce, nonetheless, highlights the progressive steps that subsequent administrations took to address the disparities between the agricultural and industrial sectors of the United States` economy. The Democrats recognized the adverse consequences of the failure of the agricultural policy such as redundancy, bankruptcies, and bank collapses. Particular attention should be paid to the government`s extraordinary step to establish a Federal Deposit Insurance Corporation to cushion the industrial sector while addressing the price disparities and, on the other side, to support farmers. These measures were aimed at ensuring that the ratios of input prices to those of output were adequately addressed to enable farmers to improve their standards of living and enjoy the fruits of their labor.

The politics of agriculture highlighted in the book have, however, changed. The condition of the agricultural sectors are becoming more favorable in many countries of the world. A case example is China. China have been an agricultural nation for long. High taxes on agricultural products was the norm in China. When the People`s Republic of China was formed in 1949, agricultural tax made 40 percent of its economy. However, it has grown rapidly in the recent years and has progressively become an industrial nation. The government of China has continuously reviewed its agricultural laws and by 2002, the contribution of agricultural taxes to China`s revenue dropped to 2.5%. Nevertheless, many countries of the world still practice a similar approach to the one taken by the United States long ago. From high taxation to the lack of markets for their produce, farmers are exposed to oppressive policies from the state working to raise revenue.

Proper policies fair to all the members of the society can bring the country to prosperity. Measures that may benefit the representatives of the agricultural sector include restrictions on foreign products, local industries subsidies, protectionism and free trade, loans and investments, and many local constraints related to the development of the industrial sector. Governmental economic policies should aim at developing the state as a closed unit, as well as enhance its capacity to exist autonomously of other countries. Economic nationalism transformed the United States from a debtor country to a creditor nation.

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