CHAPTER VII

IT'S A MATTER OF POLITICS

Weather is near the center of a farmer's life. It controls his production. It creases his face and gives it the texture of hickory bark. It is the first thing he looks at in the morning, and the last thing he consults the sky about at night. The weather report is the part of the radio or television newscast that interests him most.

To the city dweller, the threatening click of metal at his double-locked front door will awaken him at midnight. But to the farmer, it is the sky's clearing of its throat with distant thunder, the sudden mutter of a rain shower on the roof, or the flash of lightning at the window that awakens him in the night.

You think of the seafarer as centering his life around water. But it is more true of the farmer. A pond that is drying up; a stream or bayou that narrows as the drouth progresses; the absence of moisture in dry and dusty soil in his hand. He stands in the rain after a long dry spell, not caring that it soaks his clothes. He walks in his fields that are too wet for plowing and feels rich. And then when weeds start growing and the muddy middles remain, he is beset with the same kind of anxiety that possessed him before the drouth ended.

Dominated as his life is by the elements, it is easy for the farmer to believe that all of the answers to his problems lie directly around him—-in the mud at his feet, in the stars at his fingertips. It is difficult for him to accept the idea that he is hemmed in by a system of economic and political power, that he is no longer a free plainsman of endless earth and sky.

He is fenced in. His problems are because of the economic and political fences around him, not in spite of them.

Farmers are not blind. They know as well as anyone that America has a promise to all of its people--a promise of security and abundance and hope. The promise doesn't even have to be stated. We accept it as a part of our citizenship. Politicians and political parties are forever re-affirming it. But farmers know that the promise is not being kept.

In late July and August, 1968, both major political parties were writing platforms. They faced difficulties. It is not easy to write a platform to fill the

78

THE CORPORATE INVASION OF AMERICAN AGRICULTURE

needs of both the sharecropper and the plantation owner--the exploited and the exploiter.

Tony T. Dechant, the President of the National Farmers Union, told the Republican Platform Committee at Miami Beach, Florida on July 31: "Too many farmers feel let down by both political parties. Unfortunately, both parties have carried party platforms which have been filled with platitudes saying that they are going to aid the family farmer. We hope that this year this platform committee will write some meaningful planks which will spell out a positive program of what this Nation should do to end the long drouth in the farm economy which has brought millions of proud farm families to their knees."

Agriculture, behind economic and political fences, is systematically denied the benefits others receive. Nowhere is this more obvious than in the field of legislation.

Senator Walter F. Mondale (D-Minn.) told a group of Farmers Union women in Washington in May, 1968: "The farm economy is one of the few areas that has to depend on legislation that was passed the year before. Other segments of the economy get permanent legislation, and then come back to improve. But not farmers."

Legislation is on the books guaranteeing the right of steelworkers and automobile makers and every other kind of wage-earning working man the right to bargain collectively. And millions come back year after year to negotiate improvements. But not farmers. Annual increases in income are an accepted part of the American system--except for farmers, whose parity ratio of income and expenses in mid-1968 was at 73 percent.

It is not just the politicians who perpetuate this discriminatory system. Our very system of "free press" shapes the attitudes of politicians and voters alike. Farmers themselves are not immune to the enormous pressures of public opinion that are molded by the media. Few farmers in California know of the corporate farming interests of the publishers of at least two of the most important newspapers in the state--the Los Angeles Examiner and the San Francisco Chronicle. Nor do they know how often the corporate farming issue has been kept from the readers of those newspapers.

Economic and political domination of the society by corporate America generates enormous favors for the corporate beneficiaries.

There is one tie that binds us all to our government--taxes. We may not vote. We may not avail ourselves of police protection. Even our social security may not be necessary. But all of us pay taxes.

It seems to be a carefully guarded secret as far as our great opinion

IT'S A MATTER OF POLITICS

79

molding mass media are concerned that the rich do not pay their share of the taxes. Even the super-respectable New York Times speaks derisevely of “The Rich and Super Rich," a book that states this case in incredible detail.

The history of tax legislation in this country has been a history of the systematic exploitation of those who could least afford to be exploited. Poor people get tax write-offs (such as deductions of $600 each for dependents, interest payment deductions, etc.) that amount to peanuts, while the corporations and the rich take tax write-offs in the millions. In 1959, five persons with incomes of more than $5 million paid no taxes at all. In 1960, six persons reported a combined income of $35.7 million and they paid taxes of only $371,000-a little more than one percent!

They do not always seek favoritism directly, by reducing the tax rate. Sometimes they go at it indirectly by legislating the meaning of the term-profits.

In 1954 and again in 1962, the government speeded up depreciation allowances. Since depreciation of equipment is a cost of doing business, and deductible before taxes, this means that "profits"--as far as taxes are concerned――were legislated downward.

Then, in 1962, the government provided a 7-percent tax credit for business investment on new equipment. In October, 1966, it was removed, and then restored in March, 1967. In 1964, proceeding directly, the corporate tax rate was reduced 7.7 percent.

After a corporation pays its taxes and subtracts allowances for depreciation, the rest of its money is available to spend or pay out in dividends. In the period from 1960 to 1967, corporations had $421.6 billion left over after payments to stockholders. They put $365.8 billion in new plant and equipment. This left $55.8 billion for other purposes. There was then tremendous pressure on them to put this money to useful work. Is it any wonder they looked so greedily at the agricultural establishment, weakened as it is, needing the cash so desperately?

Small farmers have been fooled into believing that the tax system is very kind to them. When they build a pond, or terrace a field, for example, they can deduct the cost from their taxable income. What they fail to realize is that their wealthy neighbors get a much greater tax subsidy for the very same improvement.

Suppose a farmer with $20,000 gross taxable income builds a $10,000 pond. If his income tax bracket is 30 percent, he has received a $3,000 subsidy on the pond. But if his gross taxable income is $100,000, and his tax bracket is 70 percent, he has received a $7,000 subsidy on that $10,000 pond.

80

THE CORPORATE INVASION OF AMERICAN AGRICULTURE

Such is the deception inherent in our tax system.

The corporation that decides to diversify its operations into farming can write off its losses against its profits in other businesses, thus transferring much of the cost of going into business to the government (i.e., other taxpayers).

In 1965, 119 Americans with farming interests had incomes of $1,000,000 or more; 103 of them had losses on their farming. In that year, 202 Americans with farming interests had incomes between $500,000 and $1,000,000; 170 of them had losses on their farming.

In the 100 largest cities of America, corporations or individuals showed net losses in farming in 31 of them during 1965. The total loss was $141,551,000, according to the Internal Revenue Service. More than half of this occurred in the Dallas-Fort Worth, Houston, and Los Angeles areas.

Assuming that these losses were written off against profits in other businesses at a tax rate of--say 30 percent (and corporate taxpayers often pay at no higher rate)--then these ventures in farming resulted in nearly $50 million not being paid in taxes in that year alone. To put it another way, these farming ventures were paid for out of the public treasury to the tune of $45 to $50 million.

An important question is: Should the taxpayers be asked to make this investment at a time when we already have over-production in agriculture?

The fact is that our tax laws don't bother to be consistent. Some sense can be made of the depreciation allowance and the extra tax credits on new equipment——although they give the most benefits to the corporations who need such benefits least. Wealthy individuals and wealthy corporations use the purchase of new equipment as a systematic way of avoiding taxes. Still, it can be argued--if you accept the notion that people invest money in order to avoid paying taxes--that rapid depreciation allowances and extra tax credits on new equipment encourage new investment.

But few clearer examples of proof could be found that this sort of logic is only incidental and not a part of the tax system's purposes than in the oil depletion allowance.

Philip M. Stern of "The Great Treasury Raid" estimated that the oil depletion allowance costs the government $1 billion a year. He asks the question: "When we are deliberately holding out foreign oil and holding Texas oil wells to 30 percent of capacity, do we really need to spend $12 billion a year to encourage finding more?"

There is an interesting coincidence in the enormous cost of these oil subsidies and the tremendous tax losses in such oil-rich cities as Dallas and Fort

69-133 72 pt. 2 15

IT'S A MATTER OF POLITICS

Worth and Houston.

81

With the tax advantages they have, and with the congenital greed of the corporations, you might expect that they could be generous with the American farmer.

But they do business with each other.

The cooperation and the interlocking relationships of the giant corporations were illustrated when the newspapers carried a story telling of the Gates Rubber Company loading a 90-car train of feeder cattle from its A-Bar-A and State Line ranches in Wyoming on September 28 and 29, 1964--for shipment to the Kern County Land Company's Gosford Feedlot on the outskirts of Bakersfield, California.

(And don't overlook the tie between Kern and Safeway. Ernest C. Arbuckle of the Kern board was also a member of the Safeway board.)

They deal in terms that are incomprehensible to most farmers. There are hundreds of examples, but let us look at only one, selected because information on it is available in considerably more detail than in most cases.

400,000 Shares for Sale

The Arizona-Colorado Land & Cattle Company issued a preliminary prospectus on June 12, 1968, offering 400,000 shares of common stock for sale. According to the prospectus, the company intends to improve and expand its cattle feeding operations at the Queen Creek Feedlot. Immediately, however, it plans to reduce its bank indebtedness--some of the $5,972,625 in shortterm notes at 74 percent interest, or perhaps some of its 5-6 percent long-term notes due from 1968 to 1996. Included in the prospectus is a map showing locations of its operations over a five-state area that includes Arizona (where the Queen Creek Feedlot is located), New Mexico, Nevada, Utah and Colorado. It owns or leases 1,220,472 acres. The company owns the Alamosa National Bank at Alamosa, Colorado, which is 35 miles north of the company's 163,960-acre Baca Grant Ranch. Other operations include: Box T Ranch, 144,175 acres in South Central Colorado; Gamble Ranch, 554,337 acres in Northeast Nevada, with some acreage across the border in Utah; Grounds Ranch, 114,447 acres in Western Arizona; Douglas Ranch, 111,678 acres in South Central Arizona; Butler Ranch, 83,000 acres in Southeast Colorado; and Mays Ranch, 48,875 acres in Central Colorado. Douglas, Butler and Mays ranches are all leased. On April 30, 1968, the company had 28,722 head of cattle, including breeding herds of 5,859 cows and 445 bulls.

The chairman of the board of directors is Dan W. Lufkin, who is