STATE OF BUSINESS: Dollar Wheat

No law of the land, no trust-busting Federal attorney, can interfere when Nature conspires in restraint of trade. In Kansas, No. 1 winter wheat State, the past three months' (September, October, November) "normal" rainfall expectation was 6.09 inches of rainfall; this year, actual rainfall was 1.75 inches. Nebraska, which expects 4.53 inches, got 1.15; Iowa, expecting 7.81 inches, got 2.82. Total U. S. water shortage reached 400,000,000,000 tons, left several States with their next-to-record drought, left Wisconsin with its smallest rainfall on record.

So the crop condition of winter wheat last week was 59.4% of normal, lowest on record, and a harvest of only 389,000,000 bushels is expected (down 43.3% from this year) and the price of wheat soared from 87!^ Nov. 28, past the haloed $1 mark to hit a high of $1.05, a 26-month high.

Any further drastic price rise is likely to be dampened by the 230,000,000 bushels carried over from the last crop year (of which approximately 175,000,000 bushels are in hock to the U. S. Government), but the chances of wheat staying around $1 were helped by news from Argentina that the wheat crop there was also in bad shape. Reason: late spring frosts. November in the Argentine is the equivalent of May in the U. S. Argentina's expected harvest is around 160,000,000 bushels, less than half of last year's crop.

¶ To the bankrupt Rock Island, Missouri Pacific, St. Louis-San Francisco, to the prosperous Union Pacific, Burlington, U. S. winter wheat adds up to a substantial portion of summer revenue. Largest of the winter wheat carriers is the Santa Fe. Wall Street Journal dug up some interesting figures on Santa Fe:

Wheat Tonnage Gross Revenue Net Income

1931 5,915,000 $ 181,181,000 $23,102,000

1938 3,724,000 $154,323,000 $ 8,228,000

¶ Neatest financial trick of the week was accomplished by Secretary of Agriculture Henry Wallace: By reducing the Government subsidy on cotton exports, he helped boost the price of cotton. He originally got a $36,000,000 fund with which to subsidize exports. He spent about $32,500,000, paying 1½¢a Ib. to subsidize exports of 4,344,434 bales. To conserve the balance of this fund, the subsidy was cut in half, midnight, Dec. 5. A few days later, it was cut to 2/5¢, again last week to 1/5¢. Anxious to share in the Government subsidy before it was all gone, exporters rushed into the market and bid cotton up 1¢ to 10.55¢, highest in two years.

Since July 27, the Department of Agriculture has made subsidy commitments on 5,700,000 bales against total exports of only 3,362,000 bales in the cotton year ended July 1, 1939. The balance of the subsidy fund should account for another 600,000 bales at $1 a bale. But if farmers, who have 3,941,950 bales in hock with the Government, start repossessing, they can flood the market all over again, break the price.

¶ Cotton goods prices paralleled raw cotton prices (up an average of