246 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
ernment early attempted to foster the Holding Movement by the 
Act of September 3, 1915, which provided for special rediscount 
privileges with the Federal Reserve Banks for commodity paper. 
In 1923, through the passage of the Intermediate Credit Act, 
cheap and abundant credit was put at the disposal of the 
cooperatives, and by an act exempting them from the application 
of the anti-trust laws, their freedom of action was guaranteed. 
The failure of the cooperatives, even with the assistance of these 
acts, to accomplish their purpose has led to an insistent demand 
for direct Government action, and there are now before Congress 
many bills which practically commit the Government to the con- 
trol of the production and marketing of the staple crops through 
the medium of the cooperative associations.’ 
The chief arguments of the advocates of credit to enable 
farmers to hold their crops for higher prices may be briefly stated 
as follows: (1) The prices obtained by farmers immediately after 
harvest do not reflect the true relation between supply and 
demand because the volume of the products thrown on the market 
at this time creates such a glut that orderly marketing is impos- 
sible. The farmer is therefore at the mercy of the speculator, who 
takes advantage of his necessity and drives prices below their 
normal level. (2) Even when prices do actually reflect the rela- 
tion between supply and demand, they are seldom satisfactory 
because they do not cover the cost of production plus a fair 
profit. (3) The inability of the farmer to hold his crops for a 
sufficient time after harvest brings about lower prices, because 
it enables an army of useless middlemen to exact toll from 
both the farmer and the consumer. 
The first contention, if true, would be a sufficient reason for the 
holding of crops for higher prices, because, other things being 
equal, unduly low prices at harvest time would be followed by 
unduly higher prices later in the year, and it would be a com- 
paratively simple matter for the farmer to warehouse his non- 
perishable products and wait for these higher prices. Such a 
procedure would be a good thing for the farmer and a good thing 
for the consumer, because it would prevent the abnormally 
low after harvest prices and the waste which comes with over- 
1 One of the more radical of these measures—the McNary-Haugen Bill 
passed both Houses of Congress but was vetoed by the President on 
February 25, 1927.