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Washington, D. C., Thursday, June 26, 1930. The following statement was issued in Chicago to-day by Mr. George S. Milnor president and general manager of the Grain Stabilization Corporation :

* The Grain Stabilization Corporation discontinued the sale of wheat when the new crop began moving with the exception of a few small lots to millers who were unable to take care of their immediate needs from any other source.

While the visible supply of wheat in this country is somewhat in excess of that of a year ago—a fact grain traders are emphasizing—the amount of 1929 wheat withdrawn from the market by the Grain Stabilization Corporation is approximately three times the amount of that increase, leaving the amount of wheat on the market substantially below last year's figure.

" The grain trade need have no apprehension of competition from the wheat held by the Grain Stabilization Corporation during the coming months when farmers will be moving the 1930 crop to market unless in the meantime prices rise to the level at which purchases were made. In no event will this 1929 stabilization wheat be thrown on the market in a way to ess prices."

MONDAY, NOVEMBER 17, 1930. In response to inquiries from newspaper correspondents Chairman Legge, of the Federal Farm Board, made the following statement November 16, 1930 :

“Demoralization in world grain markets has made it necessary for the Grain Stabilization Corporation to again enter the wheat market in order to stop panicky selling and to prevent further unwarranted declines in domestic prices. Comparatively wheat is lower in price than other agricultural commodities. The price of flour fully reflects the price of wheat, which, no doubt, is increasing the per capita consumption. While the visible supply of wheat is large, there is no congestion in any of the terminal markets. Receipts at primary markets are unusually light, which suggests the extent to which farm stocks are being used for feeding purposes. Further price declines would be in sympathy with foreign markets and not justified by domestic conditions."

MONDAY, MARCH 23, 1931. For many months the Federal Farm Board and the Department of Agriculture have been urging wheat farmers to reduce acreage as a means of correcting the disastrously low prices that have resulted from increased acreage and overproduction. It has been pointed out that if we continue to raise a large surplus of wheat beyond domestic requirements, growers in the United States will be obliged to take prices that largely are determined by what our exportable surplus will bring on world markets.

Since last November, the Grain Stabilization Corporation has been purchasing sufficient wheat to maintain prices in this country. Because of this, our prices have ranged from 20 to 35 cents above their usual relationship to world-market prices. This policy was adopted to meet a most acute emergency. It has made wheat growers many millions of dollars, and a large additional amount to growers of other grains. Farmers have also gained by prevention of a threatened additional shock to business in general.

Stabilization operations are emergency measures and entail a heavy cost. The Grain Stabilization Corporation has acquired and is acquiring very large stocks of wheat. It can not indefinitely buy more than it sells, or indefinitely hold what it has bought. It can not follow a regular policy of buying at prices above the market, paying heavy storage charges and selling below cost. Farmers know this and would not ask that it be done. It would not be, in the long run, in the farmers' own interest.

It is too early now to set forth in detail what the sales policy of the Grain Stabilization Corporation will be in the new crop year, except to say that stabilization supplies of wheat will be handled in such a way as to impose the minimum of burden upon domestic and world prices. It should be stated now, however, that the Federal Farm Board will not authorize the Grain Stabilization Corporation to make stabilization purchases from the 1931 wheat crop. There will be no alteration or change in the policy of the Grain Stabilization Corporation with reference to the 1930 crop.

In the light of the foregoing facts, growers must recognize the responsibility that rests upon them. The Federal Farm Board is encouraged by reports from the principal wheat-producing regions that growers are organizing to reduce acreage and market cooperatively. These and efficient production are the surest means of permanent relief. Some progress has been made, but it is only a beginning. The movement must be carried to all farmers in all regions. Spring planting of wheat is at hand. Let farmers in that region heed the warning to reduce acreage, and as planting time in other regions rolls around farmers there should do the same.

TUESDAY, APRIL 21, 1931. In response to inquiries from newspaper correspondents relative to press reports that the Federal Farm Board had yesterday decided to dispose of thic stabilization wheat holdings in Europe for what they would bring, Chairmanı James C. Stone made the following statement:

“ There is no foundation in fact for such reports. Tbe subject was not even considered by the Farm Board yesterday. The board has made no decisions in regard to future wheat stabilization operations except those previously announced. These are, (1) that an effort will be made to sell abroad by July 1 35,000,000 bushels of out-of-position wheat stored at Atlantic, Gulf, and Pacific Northwest seaports, and (2) that stabilization purchases will not be made from the 1931 crop.

“Any statement that the Farm Board at this time contemplates any other action is erroneous."

WEDNESDAY, JULY 1, 1931. The following statement was issued by the Federal Farm Board at 9 p. m., Tuesday, June 30, 1931, for publication in the morning newspapers of Wednesday, July 1, 1931, and thereafter:



“On March 23, 1931, the Federal Farm Board issued a statement in regard to dealing with the surplus wheat problem. This statement urged again the reduction in planting and said that 'It is too early now to set forth in detail what the sales policy of the Grain Stabilization Corporation will be in the new crop year, except to say that stabilization supplies of wheat will be handled in such a way as to imposé the minimum of burden upon domestic and world prices.'

“A review of the domestic situation shows an increase in the surplus. The domestic overproduction of wheat, therefore, continues. The board wishes to urge that the only final solution of the wheat growers' difficulty is a sharp reduction in the forthcoming wheat plantings. The situation to-day would have been clear and prices at much hihgher levels had the recommendation of a year ago been more generally followed. It is, therefore, most desirable that organized action should now be taken among the farmers, with the cooperation of the State agricultural authorities, to reduce the acreage of winter wheat planting. Without such reduction there is little hope of any long term continued profitable wheat production in the United States in competition with new wheat countries abroad. With such action there would be an immediate reflection in increased prices of this year's crop.

“ SYSTEMATIC LIQUIDATION OF STOCKS NECESSARY The world market for wheat shows improved prospects for the next year, as it appears that on the present outlook there will be some reduction in the production of commercially important countries outside the United States. This, together with the more favorable international situation that will be created by the President's debt plan, gives hope of a generally more favorable export market for farm products during the forthcoming year.

“The purchase of wheat from the 1929 and the 1930 crops has successfully protected American agriculture from the world-wide panic in agricultural prices, and gave it an opportunity to readjust itself without the enormous losses and bankruptcy which would have resulted from the precipitant fall in prices which took place elsewhere. It would greatly benefit agriculture if a systematic beginning be made to liquidate these holdings and remove their overhang from the market. The improved situation abroad and cooperation in reducing production make this possible.

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Since March 23 wheat stabilization purchases have been completed and the Grain Stabilization Corporation now holds, as actual wheat in storage, uphedged, a large portion of the entire domestic carry-over, bought to protect American farmers, and the new crop is moving in volume. Taking all these factors into account the board is now prepared to announce its plan and recommendations which will be followed until July 1, 1932, in carrying out the policy of March 23.

** The Farm Board has been requested from numerous quarters to have the Stabilization Corporation announce specific prices below which the corporation would not sell its stabilization holdings.

The proposal that prices be fixed at which the corporation would sell is not in the interest of the farmers. If a high price were fixed, then the stabilization holdings would never be disposed of, and would continue to overhang the future of American agriculture. If a reasonable price were fixed on to-day's outlook, such a declaration would tend to keep the price depressed to a point below such limits. It would distort the whole movement of wheat and congest storage by inducing excessive shipments whenever the price began to approach the figure set.

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“The Grain Stabilization Corporation will limit its sales of wheat from July 1, 1931 to July 1, 1932, to a cumulative maximum of 5,000,000 bushels per month. This is approximately 7 per cent of the estimated bushelage of the 1931 crop. This limitation, however, shall not apply to sales to foreign governments or their agencies now being considered. Any sales for the purpose of clearing trade channels or for other efficient merchandising purposes will be promptly replaced by purchase of an equal quantity of wheat. Such transactions will not be considered as a part of the sales program.

“ The sales program will be conducted in such a fashion as not to depress the movement in prices. It is not the purpose of the corporation to make any immediate sales even of those limited amounts at the present range of prices. It is the view of the board that, taking into consideration the world situation, sales of such moderate amounts can be made without interference to the general market.


“ The board is convinced that this method will establish a free market, which any fixed price would interfere with, and will distinctly improve the situation by the knowledge that the present holdings will slowly be disposed of and thus systematically clearing up the position for the future. It must be understood that if the world production should be altered radically, by which the whole surplus could be disposed of, it is in the interest of the farmer that this should be done, but no such policy will be undertaken without ample notice and until the farmers' representatives can be consulted.

American farmers and the Grain Stabilization Corporation, which is their own agency, control virtually all the wheat in the United States. If farmers will cooperate among themselves and with their own agency in the orderly merchandising of these stocks, and reduce their acreage this fall to approximately a domestic consumption basis, and continue such cooperative effort in the future, their surplus problem will be largely solved.

“The American wheat producers, as represented by their cooperative associations, generally concurred in the March 23 announcement. The board is gratified that the plan of operation as set forth in this statement is in harmony with the recommendations made by these associations."

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FRIDAY, JULY 17, 1931. Mr. James C. Stone, chairman Federal Farm Board, to-day issued the following statement:

“ In response to questions of newspaper correspondents at my office Thursday noon, I stated that the Grain Stabilization Corporation has not sold a single bushel of wheat in the Southwest in competition with farmers marketing the new crop; that all sales made in that section to meet mill or storage requirements since the new crop began moving had been placed with purchases of an. equal amount of other wheat.

" In the Northwest spring wheat section some few sales have been made to mills that had to have spring wheat in order to continue their milling operations, but these were made only after the mill had notified the Stabilization Corporation, in writing, that it would have to close down unless it got old spring wheat to take care of its milling requirements. These small sales in no way compete with the price of the new bard winter wheat being marketed in the Southwest.

“I stated further that the Farm Board is doing and will continue to do everything it can under the law to help farmers meet their present difficult situation.

“Any published reports giving a contrary view to my expression have no. foundation in fact."


(In response to Senator Norbeck's question as to Mr. Stone's explanation of

the causes of the present depression)

APRIL 28, 1932. As I stated yesterday, I belive that the war was primarily responsible for the present depression. During the war years productive activity in the United States was largely centered in industries essential to military operations. As a consequence shortages accumulated in all lines of peace-time construction ; railroads and other forms of capital equipment were allowed to deteriorate. In Europe similar developments took place and in addition large areas including certain important industrial areas were devastated. Agricultural production was drastically reduced in European countries but tremendously expanded in North and South America, Australia, and other developing regions.

The war was followed by a short, hectic inflation and a subsequent deflation.. The resulting depression lasted only a short time in so far as industry was. concerned. The shortages in housing, the necessity for reequipping the railways, and the rapid expansion of the automobile and oil industries, paved the way for rapid business recovery in this country.

Agriculture did not fare so well in the postwar period. The acres which had been brought into cultivation for the first time during the war, in our Great Plains, in Canada, in Argentina, and elsewhere, stayed in production afterwards. At the same time agricultural production in Europe recovered much. more promptly than did industrial output—the land was still there, while the factories had been destroyed or worn out. As soon as the farmers were able to get their lands plowed and seeded again, agricultural production began. to come back. By 1925, crop production in Europe (outside of Russia) had returned to its pre-war level, whereas European production of manufactured products was still far below the pre-war level. The rapid recovery of crop production in Europe, and the maintenance of the increased agricultural production in other areas which had been started during the war, resulted in a material expansion in the world's supply of farm products, and depressed prices of farm products throughout the postwar decade.

The vigorous recovery of manufacturing industries in the United States as a result of shortages in this country was accelerated by demands from Europe for products with which to rebuild their shattered industries and by the normal demands from other regions. At first this process of rebuilding was financed by inflation in some countries. Later we advanced tremendous loans to foreign borrowers, which helped to pay for industrial products purchased from us to rebuild and reequip their industries. A similar overexpansion occurred here. The vast and growing demands for industrial products was coupled with an expansion in our security markets, gradual at first, but finally at an increasingly hectic rate. It was cheaper to sell stock than to borrow money,. and this transfer from bond to share capital made industry more resistant to bankruptcy when the depression came. The ease with which new capital could be secured led many of our industries to expand their physical plant on a scale which assumed as indefinite continuation of the rapid rate of growth. occasioned by the post-war rehabilitation and the continued absence of European competition in foreign markets. Only in retrospect did it become clear that much of this expansion was far in excess of that which could have been based on any reasonable expectation of consuming needs.

Overexpansion in many lines of activity produced the inevitable collapse in the autumn of 1929.

As early as 1926 European agricultural production had increased to such an extent that the export demand for our wheat and ho was decreasing, and unsold supplies of these and other products were beginning to pile up here and in other exporting countries.

The effect of this situation on farm prices was further intensified by the international debt and fiscal difficulties of European countries, which caused them to place still further restrictions on imports of farm products, and which created an additional factor making the depression in this country as long and severe as it has been.

This decline in European demand fell with exceptional severity upon farmers, because the prices of wheat, cotton, tobacco, hogs, rice, and other important export products are largely determined in world markets. Incomes of farmers fell drastically, and industry in this country suffered further reduction on account of the decline in farm purchasing power.

From 1922 to 1929 industry in the United States prospered although our agriculture suffered. As I have shown you, however, that prosperity was built on false and flimsy foundations. When we come out of this depression agriculture and industry must come out more nearly together. Not until farmers and city people prosper together will we attain sound and lasting prosperity.

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