Agriculture and direct democracy (part 2)

Rude awakening in the First World War

by Dr rer publ Werner Wüthrich

The first part of this series of articles entitled “From the beginnings to the First World War” was published in number 13 of 18 June. A brief résumé at the beginning: a real agricultural policy did not exist before the First World War. First votes on customs regulations had occurred, which also covered agricultural goods and reinforced border control. Switzerland was heavily involved in world trade. Much was imported and exported, too. Grain in particular was imported to a very large extent, without anyone being much concerned about it.
Many expected that, having been triggered for spurious reasons, World War I would end after a few months. This was not the case. The war dragged on for years, and the food situation deteriorated. It became increasingly difficult to import the much-needed foodstuffs, particularly cereals. The domestic shortage could not be resolved quickly because farms lacked the equipment necessary for the cultivation of land and many farmers were not familiar with the methods of grain cultivation. Life had become difficult on the farms because fathers as well as sons were often at the border as militiamen for a long time (with their horses) and income compensation had not been regulated.
In 1917 the situation escalated. The food situation became critical, and there were famine situations. It was only then that the Federal Government started rationing food and established a national import monopoly on cereals, i.e., they organised the import and distributed the little grain that could still be obtained abroad - also to prevent “war profiteers” from taking undue advantage of this plight and making good bargains with scarce foodstuffs. Only the potato production was sufficient. The prices of many foodstuffs had doubled and this hit the workers especially hard. The price of milk, for example, had risen from 21 to 38 cents. – All these were reasons that led to the general strike of 1918, probably the biggest political crisis in the history of the federal state.

Popular initiative “for the ensuring of people’s rights in questions regarding tariffs” in 1923

After the war, the situation improved only slowly. Virtually all countries continued and intensified their protectionist policy of the prewar period. Even Switzerland, which had pursued a distinctly “free trade” policy for many decades of the 19th century, had no choice. By emergency procedure, i.e. without involvement of Parliament and without the right of referendum for the people, the Federal Council issued a new, more stringent tariff schedule, justifying this with the difficult food situation. However, the population did not accept this. Because the referendum against emergency law decisions was not possible, a broad coalition of Social Democrats, trade unionists (mainly from the free-trader export industry) and members of the cooperative societies launched the popular initiative “for the ensuring of people’s rights in questions regarding tariffs” with a view to abolishing the tariff schedule again. Then again the Swiss Farmers’ Union and some commercial circles also mobilised and defended Parliament’s new tariffs. On 15 April 1923, it came to the vote. The people and almost all cantons rejected the popular initiative and more than 70 percent voted for the maintenance of protective duties.

How to deal with the provision of grain?

While after the First World War the economy and most sectors of agriculture gradually returned to a market economy, this was not the case with cereals. The population had recognised the importance of food security. The Federal Government kept up its import monopoly for cereals after the war, and the supply of bread grain remained a federal task. On the farms, this worked as follows: The harvested sheaves of grain were threshed on the threshing floor, usually during the winter months. The grain was filled into sacks provided by the Federal Grain Administration and loaded at the train stations. After that, officials of the Federal Grain Administration paid out the grain money, mostly in a village restaurant. This policy was quickly successful. The level of self-sufficiency concerning grain increased from 16 to 30 percent, which was, however, still low. This was the beginning of an active and planning agricultural policy of the Federal Government, as we partly still know it today. And it was also the beginning of an agricultural policy which time and again the people as sovereign have in numerous referendums directly helped to fashion – and that up to today.
In the time from 1926 to 1929 there were three groundbreaking referendums, in which the framework and the central points of our subsequent agricultural policy were already evident: In order to ensure food security, the Federal Council, the Parliament and the Swiss Farmers’ Union wanted to keep up the wartime grain monopoly even in normal times. They worked out a corresponding constitutional bill. The text reads as follows:

  1. The Confederation shall take measures to supply the country with bread grain and to promote local grain farming.
  2. By way of legislation the exclusive right to import food grain and its milling products can be transferred to the Federal Government subject to the following principles:
    a.    Implementation will be carried out by general-interest cooperatives supervised by the Federal Government. The Federal Government as well as private sector organizations shall participate in this. Cantons will be free to opt in.
    b.    The purchase prices for domestic food grain should be such that their cultivation is made possible.
    c.    Selling prices shall be set as low as possible, but so as to cover the purchase price of foreign as well as domestic bread cereals, the return on operating capital and other costs. Subject to the creation of reserves for the purpose of inflationary compensation no profit shall be achieved. Allowance shall be made for the mountain areas by measures that are likely to bring about an equalisation of the price of flour.
  3. Further details shall be determined by law.

The vote of 5 December 1926 resulted in the closest electorate’s refusal in the history of our Federal state. 366,507 voters said yes and 372,049 said no. 14 cantons confirmed the no. Voter turnout was again extremely high with 72.7 percent.

The “daily bread” becomes the focus of popular initiative and counter-proposal

Everyone was in agreement that the state should take the helm in the question of grain supply. But must there truly be a monopoly in peacetime? Opponents saw the liberal economic system at risk. Although they said yes to an active agricultural policy, they objected to “so much state”. The opponents, who had “overthrown” the proposal in the vote, launched a popular initiative in which their different ideas were clearly expressed immediately afterwards. Although the text differed only slightly from the above-cited parliamentary document, it contained a commitment to the market economy. So it was stated in the initiative text:

“[...] Subject to a wartime predicament, an exclusive right of importation of cereals (monopoly),  [may] not be established for either the Federal Government or for a private organization.”

Federal Council and Parliament took up the challenge and responded with a counter-proposal. This gave the Federal Government control in the field of grain supply; admittedly not in the form of a monopoly, but with clear guidelines and tasks: The Federal Government was to regulate the import of cereals and to frame rules concerning the storage and stock keeping. Further they should have to promote the cultivation of bread cereal and ensure the preservation of the grain milling profession. And they would guarantee the farmers the acceptance of their grain at a fixed price – especially in mountain areas. There was little mention of market economy in this.
The word “monopoly” however, which many citizens had objected to in the vote, or words to that effect only occurred in connection with the importation of baking flour for bakeries. The text of the counterproposal was as follows:

Article 23 bis:
1 The Federal Government shall manage the grain stock necessary for the supply of the country with bread cereals. It may oblige millers to store bread cereal or to take over its own stock, so as to facilitate its replacement.
2 The Federal Government shall encourage the domestic cultivation of bread cereals, promote the cultivation and the provision of high-quality domestic seed, and support self-sufficiency with special attention to mountain areas. It shall acquire good domestic grain suitable for milling at a price which will allow the cultivation of grain. Millers can be obliged to take over this grain on the basis of the market price.
3 The Federal Government shall ensure the preservation of the domestic grain milling profession; it shall likewise protect the interests of flour and bread consumers. Within the framework of the tasks entrusted to it, the Federal Government shall supervise the marketing of bread cereals, baking flour and bread as well as their prices. It shall take the necessary measures concerning the importation of baking flour; and it may reserve its exclusive right to import baking flour. [...]

Vote on 3 March 1929 shows the way of agricultural policy

Voter turnout was again very high at 67.3 percent. The result was so clear and unambiguous as it is rarely to be had. The popular initiative (which wanted to specifically prohibit a monopoly) only reached 2.7 percent of the vote and was not accepted by any canton. The counterproposal of Parliament was adopted with 66.8 percent of the vote and by almost all classes. This result shows the population’s trust in the authorities and its appreciation of the state precautions concerning food supply for the people. At this time a circumstance became apparent that one would be able to observe frequently in the coming decades. Popular initiative and counterproposal had interacted in a fruitful manner. Today we may observe that direct democracy has lead to very sophisticated proposals and referendums.
On 3 March 1929 steps were taken for the agricultural policy in the coming decades: “No state economy” was the motto, but clear guidelines and tasks were given to the Federal Government so as to preserve an efficient agriculture and to ensure food security. The question “market or state” has remained a point of contention in discussions to date.
After World War II there were several votes on the continuation of crop regulation, and almost always these were approved by the people in principle. Only in 1956 the voters again rejected – as in 1926 – a renewed bread cereal regulation by which Parliament wanted to establish a monopoly even in peacetime. More recently, state functions were reduced and standards gradually relaxed. In 1998 there was another vote. After a transitional period, the last remnants of the bread grain regulation of 1929 were to be abolished in 2003. In media headlines this regulation was referred to as “an old hat”.
Today we live in abundance in Switzerland. The wide range of products sold in bakeries is a delight. Anyone knowledgeable about the way in which modern Switzerland came into being will marvel at the importance “our daily bread” had for previous generations. Among the approximately 20 percent of voters against the abolition of bread grain regulation in the Constitution in 1998, some will still have witnessed the time when the Federal Government decreed that bakeries keep the fresh bread and sell it only after one or even two days (because less would be eaten that way). They still understood why the Federal Government levied a tax on white flour to make dark bread cheaper. For their generation the phrase “give us this day our daily bread” in the Lord’s Prayer had a different meaning from what it has today.
Today the question arises whether the massive reduction of risk management in recent times was really so clever – not only in connection with bread cereals. Today, the crop cultivation and milling are supported by way of the general agricultural policy – with a greatly reduced tariff protection at the border. The world before the First World War was at least as global as that of today. Anything and everything might be bought somehow and somewhere in the world. But – as we now know – this did not last.
Let us for the following return once more to the year 1929 – when an economic depression of global proportions began, with the Wall Street stock market crash on Black Friday, which was to result in the Second World War.

General situation of the Swiss economy in the thirties

Over the years, most notably the United States returned to a stricter protectionism. With the Smoot-Hawley Act they raised tariffs on over 20,000 products massively in 1930. For example, US importers had to pay a duty of 60 percent on the value of goods for Swiss watches. Today, all economic historians agree that such tariff barriers (which were tantamount to import bans) did not help the US to cope with the severe economic crisis of the 1930s. But they had consequences for the global economy. Switzerland’s high foreign trade figures, which had at the beginning of the century still amounted to a very high 61 percent, had nosedived first in First World War and once again afterwards. Individual industrial sectors, such as the famous embroiderery, had almost completely disappeared. Tourism, which had experienced a Golden Age in the years before the First World War and had subsequently recovered to a certain extent, was now reduced to only a shadow of itself, and should revive only after the Second World War. The watch industry, which was strongly anchored in Switzerland, was able to export only marginally because of the US tariffs, as the United States were its most important market. There were companies playing with the idea to relocate their production facilities to the United States – that is behind the “tariff walls” which made exports from Switzerland almost impossible. The Federal Council put a stop to such plans by issuing emergency legislation. It could be seen even then that the US were able to exert massive pressure on Switzerland by political means. In 1936 Switzerland succeeded to conclude a trade agreement with the United States and so to somewhat improve the situation. Yet the watch tariff was not to be abolished until in the context of GATT 30 years later. – The Swiss population became increasingly aware of how vulnerable their country was in global crises.

Agricultural policy at the time of depression

In the Great Depression of the thirties, Switzerland’s Federal Government took numerous planning measures in the field of agriculture and implemented them by means of emergency legislation. These included protective tariffs, and in part also fixed prices and quotas. It is interesting to note that even then farmers occasionally produced too much milk, making the milk price drop and so cause the income of farmers to decrease. The Federal Government stepped in with emergency legislation. The measures taken were mostly instruments which would be used again in the decades after the Second World War. In the thirties they infringed the freedom of trade, so that the call for a dependable constitutional foundation grew louder. But this came to pass only after the Second World War, when the protection of agriculture was included in the Federal Constitution in 1947 in form of the following remarkable sentence:
“If justified by the common interest, the Federal Government shall, if necessary in derogation from the freedom of trade, make provisions [...] to preserve a healthy farming community and an efficient agriculture as well as the consolidation of agricultural property.”

The “Plan Wahlen” in the Second World War

When the Second World War broke out, the government wanted to do a lot of things better than during the First World War. The food supply was to be carefully planned and organized. Action to promote agriculture was taken as early as 1939. When Hitler’s Germany attacked France and forced it to surrender in 1940, Switzerland was encircled by the hostile-minded Axis Powers, and there was danger of being attacked itself. It became difficult to import goods. Friedrich Traugott Wahlen, professor of agricultural economics at the ETH, held a lecture in Zurich in which he presented the public his plan for the so-called “Anbauschlacht” (cultivation battle). He assumed that farmers would be able to sustain up to ten times more people using 1 ha of arable land than with 1 ha of grassland producing milk and meat. Therefore agriculture would have to be massively expanded at the expense of livestock farming. For many farmers, who were used to the dairy industry, this was a huge adjustment, and applause was not all that Wahlen reaped. His speech ended with a question something like the following: “Do we want to lose our freedom and independence for a piece of bread?” This speech became programme and outlook for the Swiss; if need be they would survive without food imports. The farming community cooperated in a thankworthy way, which earned them a lot of sympathy and benevolence, and would later help them in several referendums in the postwar period – up till today. A country service programme for students was set up to support the farmers. The militia showed as much consideration as was possible in view of the enormous challenges farmers had to meet doing their work. Even the municipalities and industrial firms planted unused meadows and even parks with food crops and so made their contribution to the food supply.
After a short time the results were already impressive: Compared to 1939 the production of bread grain had been doubled, three times more potatoes were harvested, vegetable production had been quadrupled – so that food supply was significantly better in the Second World War than in the first.
In part 3 of this series of articles we will elucidate the agricultural policy of the postwar period, which was – not surprisingly – again marked by numerous referendums. This will be stimulating to read.    •

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(Translation Current Concerns)