Business: Harvest Moon

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"Because of the tremendous crops, nothing can stop business improvement this fall." When famed Economist Roger Babson spoke thus before the Boston Chamber of Commerce last week, he enunciated what is currently the No. 1 bullish hope of the country. In theory bumper crops sold at fair prices provide the huge farming class with such extensive buying power that all commerce benefits. How bumper are crops was last week summarized by revised estimates of the Department of Agriculture, indicating that total value for three major crops of corn, wheat and cotton will be $4,500,000,000, largest since 1930. Total farm income from the sale of all crops plus payments by the Agricultural Adjustment Administration will total up to nearly $9,000,000,000. largest since 1929's $10,479,000,000, and more than a billion greater than last year. Though bears suggested that most of this fat income had already been spent in anticipatory or installment buying, leaving only a wrung-out remnant for fall business, joy reigned in most rural hearts as the nine billion dollar harvest moon approached its full.

Corn. Present estimate for this year's corn crop is 2,549,000,000 bu.—109,000,000 bu. less than estimated a month ago but a billion more than last year. At present prices of 63¢ a bushel for December corn in Chicago, the crop is worth about $1,606,000,000. Last week, with this huge harvest due to begin pouring on the market about Oct. 1, by a freak of commerce the corn futures market on the Chicago Board of Trade was threatened by the tightest "natural squeeze" or corn shortage in years. This was due to the fact that last year's short crop left the smallest carryover of this century. As a result, corn brokers anticipated trouble fulfilling their contracts for September futures which come due on Sept. 30, before the new crop reaches market. There were only some 4,000,000 bu. of visible supply for September delivery. Prices soared as high as $1.16 a bushel, longs grinned, shorts hunted frenziedly for stray kernels.

A similar situation occurred last July when potent Cargill Grain Co. held the long interest, and potent Farmers National Grain Corp. the short. At the last minute Farmers suddenly pulled 500,000 bu. of previously invisible corn out of the hat, gave Cargill a severe drubbing as the price fell 27¢. Last week brokers suspected that Cargill was out to get even. However, there was little chance that a serious squeeze would materialize, for the Secretary of Agriculture has power to extend trading to prevent such things. Last week the Commodity Exchange Administration was visibly disturbed, uttered warnings about manipulation and presently the Chicago Board of Trade Clearing House Association doubled the margins on September corn (from 4¢ to 8¢) to discourage new speculation. At week's end longs reluctantly liquidated enough corn to ease the squeeze materially.