CHAPTER I

DEFINING A SUBSIDY

Chapter VII. Agriculture: Prudent investment for today and tomorrow.

Any study of the subsidy principle and its hist

Nation's economy and social structure is compl

There is no unanimous or uniform agreement on

subsidy.

The terms "subsidy" and "subsidize", it seem:

likely to invoke an emotional response. Proponer
program designed to aid a particular industry
enterprise avoid and indeed resent the term su
their program, preferring to call it an aid or an e:
in the national interest or defense. For their pa
program, in their lise of the label "subsidy,'' seek
least to suggest if not demonstrate, that the
benefits certain individuals at a cost offset, if
benefits to the American taxpayer in general.

It is interesting to note that the only Federal sta
"subsidy" are those dealing with ship construction
The terin is also rarely used in Executive orders

The popular attitudes toward subsidies are
following statement by Prof. C. Lowell Harris, pr
at Columbia University: 1

In the United States, and doubtless in other countries
receiving from Government what is labeled as subsidy
add, ample willingness to take benefits from Governme
preference for forms which help conceal the nature of the re

1. Tax exemption, for example, seems far more attracti
payment yielding the same economic benefit. The mo
often takes this form.

2. Business as well as individuals are willing to accept c
from Government at less than cost.

3. A different type of example arises from the developi
systems which replace programs resting on need. When b
by law, do we ever think of the person who gets more tha
subsidy? Not as a rule, I believe. As governmental ex
they have included more of outlays which have a big eleme
General social welfare is no longer the overwhelming crite
Is there, then, a subsidy element?

4. A fourth example arises from governmental assump
of borrowing money. The Treasury's aid is not always
too complex to be measured. Rarely does the persons
some of what he receives is at the expense of someone el:
such aid are numero113.

Some contend the tariff system is a subsidy s
volves Government action that enables protected
more for their goods in the American marke
consider that accelerated tax amortization for o
dizes the owners of these plants, that "depletion
" Harris, C. Lowell. Subsidies in the Cnited States. Public Finance, vol.

CHAPTER II

SCOPE OF SUBSIDY AND SUBSIDYI

A better understanding and appreciation of vasive character of subsidy and subsidylike pri by a listing of various Federal programs whic another, might be considered to involve an elen less of the original intent of any particular prog in such a listing to overlook some program whi just as it would be to expand the listing undi score the many facets of the concept. It wil that in a number of instances the programs lis in more than one category. To avoid duplication made to list each program only in a single categ

I. GRANTS TO Business FIRMS AND CORPORA

SPECIFIC OBJECTIVES

subsidylike benefits to the petroleum and some other industries, that Federal non-interest-bearing deposits of billions of dollars in private banks and certain services of the Federal Reserve System amount to subsidies for large private bankers, that sale of Federal surplus property at a loss is a subsidy to the purchasers, and that the postal deficit on second-class mail is a subsidy to business. Others confine their definition to direct Government payments, to the remission of charges, and to the supplying of commodities or services at less than cost or market price.

There is one concept of subsidy which extends to all persons and enterprises whose economic positions are improved, or whose purposes are advanced, ils the result of Government action. This embraces industries whose profits would be less without protection of the tariff laws and the many other statutes that soften the full force of competition in a private enterprise economy; and this broad definition likewise encompasses all working people whose earnings are greater because of minimum wage, collective bargaining, and immigration law's.

It is pointed out, by those favoring this definition, that the economic benefits accruing to industry and labor, from Government policies, are paid for-as are the costs of the farm program-by the general consuming and taxpaying public.

Thus virtually all the population would seem to be in a subsidy recipient posture and, moreover, almost all are participating in the payment of the costs. It is certain that the total population feels the economic impact of the subsidy programs.

In this overall subsidy concept the Nation's agriculture is : lesser recipient than either industry or labor. Yet the farmer, in some areas of public opinion, seems to have been cast in the role of chief villain in a drauna of Government largesse.

Perhaps an explanation is that public acceptance of a particular subsidy may relate directly to how well it is disguised. It certainly is true that, in the broad definition of subsidy, there is no way to measure in dollars the benefits to industry and to labor from all the laws aiding them; yet the principal costs of agriculture's programs are constantly subjected to strict public accounting.

Currently the subsidy principle is thrust into public attention by the contentions over farm policy. This has brought about a demand for facts and figures relating to subsidies received by agriculture, by industry and business, and by labor, down through the years.

Opposition to the farm program, in and out of Government, may have left an impression on the public mind that a subsidy is something inborn and inherent with agriculture, and entirely foreign to the remainder of the economy. Any such conclusion simply cannot be substantiated by the facts. Subsidy and subsidylike programs currently exist in nearly every facet of American life-both private and public.

Shipbuilding differential subsidy: Varitime Ad
Shipbuilding subsidy for fishing vessels: Interio
Ship-operating differential subsidy.
Subsidies to wartime producers of various ra

sumer items to stimulate production without Land grants and cash contributions for railroud Government subscriptions to railroad securities Subsidies for carrying mail: Ship and civil air c Partial financing of plants to generate electricit

II. AGRICULTURAL SUBSIDY PR Commodity price support program, administer

Credit Corporation, which maintains a flor certain agricultural commodities, by guar

through nonrecourse loans to farmers. Surplus disposal programs, domestic and export Conservation and soil bank payments. International Wheat Agreement, under which

American farmers is maintained at levels abc

market. Sugar Act payments, a subsidy to domestic sug:

certain conditions of employment, production Irrigation and flood control. Grazing rights in national forestry and other pi Agricultural extension services.

III. TAX BENEFITS TO SPECIFIC ECON

Depletion allowances' to minerals producers