effective demand as a demand for goods that will be taken at a profit to the producer, and that is the only thing that a manufacturer, if he is on to his job, considers. He may be very sorry that there is anybody in the country that can not get a warm overcoat. He may be very sorry that a lot of people have to wear their summer clothes through the rigors of a northern winter. The shoe manufacturer may be very sorry if there are any people who have not water-tight and warm shoes. But as far as he can go is to give them his sympathy, because to try to provide for the people who can not obtain those things would lead him into bankruptcy, and soon put him in the position where he could not obtain what he wanted. Then, too, there is another distinction that we must make between the production of food and the production of goods, Food is something that we can only use so much of, irrespective of our financial condition. There is a natural limit to the amount of food that we can consume. It does not make any difference whether we are millionaires or day laborers. Of course, it is true that possibly an economic situation such as we all dream about, an economic and social situation which we all have as an ideal, may come to pass. The time may come when it will be possible for every one in the world to get all the food he wants; when it will be possible for every one in the world to get all the clothing and all the shoes he wants. But we must take these things as they are. This emergency which we are facing is not academic. It has got to be fought out and solved along the lines of things as they are, and not along the lines of things that we hope for. So I say that any proposition of stabilization, price stabilization, which means the raising of prices, which does not hook up with the control of production, has within it an absolutely fatal defect. Now, the Christopherson bill goes quite a long ways along this line. For instance, if we have a burdensome surplus of any one crop one year, the price for the following year would be placed low enough so that automatically enough farmers would drop out of the production of that particular crop to reduce the production. That is simply hastening the doing of what comes off anyway. As prices go down gradually the amount produced reduces. We can work out of our present agriculture the condition eventually, if we can afford to wait and do it, if we can afford to pay the price it can be worked out. It will be worked out in this way. Enough farmers will starve to death, enough farmers will lose their farms to bring about a production low enough to cause prices to advance. A year ago, right after the agricultural conference, Roger Babson, the statistician, made the statement that he regretted very much that the agricultural conference was not told the real trouble with agriculture. He said the real trouble with agriculture was that there were 10 per cent too many farmers. That there should be more plasterers, plumbers, bricklayers, carpenters, etc. On the 3d of December, in a speech in St. Paul, Mr. Roger Rabson said that the trouble with agriculture was that there were 25 per cent too many farmers, and there should be that many more of the skilled artisans. Now, gentlemen, that is simply saying in another way that we need less food production. Of course we have a vicious circle there. Let us assume for the sake of argument that we can transform a farmer overnight into a carpenter, a plumber, a mason, or what not; into some sort of a skilled mechanic. We will then have competition in those lines of skilled labor, 25 per cent greater than we have now. That will cause a drop in wages that will cause the lowering of the purchasing power of the consumer of foods, which will, I think, be reflected back to some extent in still lower agricultural prices. Now as a matter of fact, if we have 25 per cent too many farmers and I am inclined to think that Mr. Babson is about right—it will not be the high-class farmer, it will not be the most intelligent farmer that will be sifted out in this process of elimination. It will be the less efficient; it will be the less intelligent. It will be men that can not by any possibility go into the ranks of skilled labor. It will be men that will have to go into the ranks of common labor, thereby reducing the wages of common labor still lower than they were in the pre-war period. Of course this situation carries its own remedy. When that change is made, when we get fewer farmers on the land, then we will begin to get prices that will yield a profit. But while we are doing that, while that process is going on, we are going to bankrupt thousands-well, I will say hundreds of thousands of our retailers, of our wholesalers and of our manufacturers, because you can not squeeze out 25 per cent of the farmers of this country through a cycle of lowering prices without squeezing out pretty nearly as large a percentage of overy other line of business. Our economic structure is a whole. Agriculture has sustained severe losses. Agriculture has sustained losses that can not by any possibility be absorbed by agriculture. These losses are largely the result of the war. Now, the farmers did not make the great profits during the war that they were supposed to have made. Now, these losses that have come to the farmers since 1920 have got to be absorbed somewhere. In fact, they have been absorbed to a certain extent so far by the stagnation of business, by the reduction of wages, by the reduction of dividends. Those losses have been absorbed by those things. If losses continue, the absorption process must go on. So that when we talk about the expense of the stabilization of prices, it is a bill that has to be paid one way or the other; it has got to be paid either by the lost profits, the loss of wages, by bankruptcies, by unemployment, or it has got to be paid for in dollars and cents. Now, I have just a few figures here as to the probable cost of the Christopherson plan of stabilization of prices. Mr. GERNERD. Pardon me for interrupting you, but I would like to ask you this: What crops would you include in that statement? Mr. OWEN. Well, I have not got the list of all here. It is the nonperishables. Mr. OWEN. All of the nonperishables. I have not gone into all of these, because I was rather limited as to time—limited as to time to get them together, and also limited as to time to present them. Now, I have taken here the average carry over of wheat for the past 14 years. In these 14 years we have the greatest crops ever raised in the United States, not only of wheat, but all of the other cereal crops. So that, taking the average of the last 14 years, we have a much higher average probably than we will have in the next 10 years or the next 14 years. Now, in round numbers our average carry over of wheat is 90,000,000 bushels. The average carry over of corn for 12 years is 120,000,000 bushels. This is not simply the visible supply; it takes in the grain in the farmers' hands, as well as the visible supply. Of course the visible supply would be materially less than this. The CHAIRMAN. What was the wheat? Mr. OWEN. Ninety million bushels for 14 years. And corn was 120,000,000 bushels for 12 years. Now, taking up the others: Oats, for 12 years, 50,000,000 bushels; barley, for 12 years, 2,100,000 bushels; rye, for 12 years, 5,300,000 bushels. There is a total bushelage of 267,400,000. Now let us assume the prices that are paid. Of course, these figures are simply assumption; I do not know what they will be, but let us assume for the sake of argument that we pay for this surplus of wheat $1.50 a bushel. That would be $135,000,000; 50,000.000 bushels of oats we would say, at 50 cents a bushel, would be $25,000,000; 5,300,000 bushels of rye, at 90 cents would be $4,770,000; 2,100,000 bushels of barley at 90 cents would be $1,890,000; 120,000,000 bushels of corn at 80 cents, would be $96,000,000. That makes $262,660,000. Now, if we assume that nothing is done with that surplus, that it is not sold in the world's markets at all, but is simply destroyed, or taken out in the ocean and sunk, our total loss would be $262,000,000. But that is food; it has a value. And you could hardly conceive of a situation that would reduce the prices that I have named here one-half. So that it seems to me that even with the large, the unusually large, carry overs which we have had in the years that I have covered here, that the greatest possible loss to the Government in any one year would be only a little over $130,000,000. Mr. KINCHELOE. Now, you have taken these crops. You have not taken cotton nor tobacco. Mr. OWEN. I have not taken either cotton or tobacco. They are in the bill. Mr. CLARKE. No, cotton and tobacco are not in the bill. Cotton, tobacco, milk, butter, cheese, peanuts. Mr. OWEN. Of course, that is not the entire cost. But it is an approximation. Now, take other products. I find that as far as rice is concerned we do not produce as much rice as we use in this country. We import rice. The same is true of flax. Flax will take care of itself to a very great extent, because we import flax. I do not know whether Mr. Young will concur in that or not. But any article that we import I do not think that we need to consider. And as far as the tobacco men are concerned, they have done it themselves to a very great extent. Mr. KINCHELOE. Sure they have. I was wondering why the wheat people couldn't do it. I am in the tobacco district. We take care of it ourselves. Mr. OWEN. Because you have this fundamental situation-there is this fundamental difference between tobacco and wheat, that tobacco is a local crop and wheat is not. Mr. KINCHELOE. Well, how about cotton? The cotton people have taken care o f themselves. Mr. OWEN. The cotton people have taken care of themselves, but we have not the same world condition in either cotton or tobacco that we have in wheat. A very much larger percentage of your cotton and tobacco crop is grown in the United States. The larger percentage of the world's crop is grown in the United States. Mr. KINCHELOE. That is true; but it is export stuff. Cotton and tobacco are exported. Mr. OwEN. It is export stuff. I have no objection to including that. I am simply giving an approximation here of the expense. Now, suppose it runs to $300,000,000. Why, we did not think it anything at all out of the way to spend, I think it was along towards the latter part of the war—and I am quoting from memory here about $40,000,000 a day for war. Now, isn't it more sensible as reasonable and rational human beings to take the chance on spending $300,000,000 a year to rehabilitate agriculture, and to put the business of the United States on a profitable basis as a whole, to see that people have jobs, to have the clothes they want, than it is to let things go as they are, and open this country up to the danger of red revolution, because armies of unemployed men are the materials from which revolutions come? But I think if we can adopt Congressman Young's idea it will not be very long before we won't have any surplus. Mr. KINCHELOE. Well, do you describe to his principle that you are going to tell the American farmers of this country how much they are going to raise? Mr. OwEN. Well, if the American farmer is not amenable to seeing the light when he is told that he must do certain things in order to keep on the farm, then, of course, we are all wasting our time. We have got to assume that the American farmer is willing to cooperate with you people down here in Washington to help himself. If he is not willing to do that, then we are through. Mr. CLARKE. Well, isn't that one of the great troubles right now, that the farmers in different necks of the wood have shown that they are not willing to cooperate in so many different lines? You get them organized for a little time, and they lose interest and drop out of organizations of one kind and another. Mr. OWEN. Well, Mr. Young's idea is somewhat different from that. It is a legislative enactment which makes him come into the fold if he wants to reap the benefit of that law. Mr. KINCHELOE. It is the same principle as that of this cooperative marketing system, except there is nothing to compel him to come in. Mr. OWEN. There is your whole answer. Now with regard to your cooperative marketing I wish I had time to go into that, but my time is getting short, and I must not spend any time on that-that is a wholly different proposition. The cooperative marketing is an entirely different proposition from this. Mr. GERNERD. Well, let us not go into that. Let us stick to this proposition. Mr. OWEN. Yes. Now, I have here some figures that I want to have go into the record. I got them into the Senate record, but it will not do any harm to have them here, because they are rather startling. The value of the farms of the United States on January 1, 1920, and this includes he land, the buildings, and the live stock, was $77,924,100,338. For easy figuring we will call that $78,000,000,000. The value of the grain crops for 1921 was $7,027,500,000, the value of live stock and dairy products sold in 1921 was $5,338,800,000, giving a total gross production of $12,366,300,000. That is a gross production. Now, it is not good bookkeeping, because it is not true bookkeeping, to figure all of the live stock and dairy products sold as a separate item, because a great percentage of this $7,000,000,000 worth of grain crops had to be used to produce the live stock. But we will figure this both ways. If we take the $7,000,000,000 alone we find a 9 per cent gross return on the investment. But for the sake of the argument we will take the whole production of $12,366,300,000, and we find that we have on that basis 15 per cent gross. But out of that gross we must take first of all taxation, which amounts now on the farms of the United States to approximately $1,150,000,000 a year. Now we have a mortgage indebtedness of $4,000,000,000 on the farms of the United States. Mr. GERNERD. Over against the $77,000,000,000? Mr. OWEN. Yes. Mr. GERNERD. Is that all? Mr. OWEN. Yes. Mr. CLAGUE. $4,000,000,000, is that all? Mr. OWEN. Yes. Mr. CLAGUE. I think that is pretty small, Mr. Owen. Mr. OWEN. Well, these are the figures. Mr. GERNERD. I can hardly believe that is correct. That seems pretty small to me. Mr. SINCLAIR. I think that is about right. It might go to $5,000,000,000, but the total mortgage indebtedness of the United States is about $8,000,000,000. Mr. OWEN. These figures are taken from the Federal reserve bank report of November 28. Now, as I say, I have not verified them, but it is given as $4,000,000,000. Those are the figures given in the Federal reserve bank report. Mr. SINCLAIR. They are approximately correct. Mr. OWEN. But that is only a part of a farmer's indebtedness. That does not take into consideration his bank loans; that does not take into consideration his chattel mortgages, of which he has a great deal too many at this time. Mr. GERNERD. All other business men have. Mr. OWEN. Oh, yes. But if we assume, let us say, 8 per cent on his $4,000,000,000, why there we have $320,000,000, and the other items, bank notes, etc., would, Í think, conservatively speaking, run that up to about $400,000,000 of interest. Now if we deduct the taxes of $1,150,000,000, and the interest from the $7,000,000,000 we have a gross return of 7 per cent. If we deduct it from the $12,000,000,000 we have a gross return of 13.9 per cent. Now, I submit to you gentlemen, what would happen if the Steel Corporation, for instance, was only getting 13.9 per cent return gross on their investment? What would happen if the railroads of the country were only getting 13.9 per cent gross return on their investment? Mr. CLARKE. May I interrupt you right there? Isn't there a fallacy in your Steel Corporation illustration in that mines are consuming capital assets all the time? Mr. OWEN. Well, even so, as far as that is concerned, so are the farmers, because they are reaching a point, and they have long reached a point in many parts of the country, where it is necessary to put back in the shape of commercial fertilizers, in some parts of the country, as high as $25 or $30 an acre. Now, there is no consideration given in these figures of mine to the decreasing fertility of the soil, which should be considered. Mr. VOIGT. What I am interested in is to get your precise remedy, if you have one, for the farmers' economic ills. If you have any ideas on that subject I would like to have you state specifically now what your proposed remedy is. Mr. OwEN. It will be just in the nature of summing up, because I think I have already stated it here in the body of my remarks, that some system of controlled production that will cut production down to a point where we will "eat it up clean, as the stock feeder says, must be had, and the thing will take care of itself. Mr. VOIGT. Well, now, in addition to that, do you recommend some form of governmental agency that will buy up this carry over that you speak of? Mr. OWEN. The Christopherson bill, or a bill containing Mr. Young's idea, will, I believe, educate the farmers along the lines of economic production. Mr. VOIGT. Well, you are in favor of limiting by some method the production of the staple nonperishable products? Mr. OWEN. Certainly. Mr. VOIGT. Now, in addition to that, do you favor the creation of some agency to purchase any part of the crops? Mr. OwEN. I do, for the simple reason that it will be necessary to create some such an agency as that in order to get the farmers to restrict their production. Mr. VOIGT. Now, you favor buying some of this product in general, or what you call this carry over? Mr. OWEN. It is the carry over. Now, I do not go as far as the Johnson proposition, of the purchase by the Government of the entire crop, because that I believe, without a controlled production idea, would simply lead us into repudiation of the whole scheme. Mr. VOIGT. Now, when would you buy the carry over? Mr. OWEN. At the end of the crop year. But I would announce at the beginning of the crop year what that price would be, and that price would be determined by the extent of the previous year's carry over. Mr. VOIGT. Now, if you do buy it through a governmental agency and there should be an appreciable carry over of wheat, let us say, what do you propose the Government shall do with it after it is bought? Mr. OWEN. Sell it on the world's markets. It is carrying out the tariff idea of protecting the home manufacturer and permitting him to sell his surplus at whatever he can get for it. Mr. VOIGT. Then, let the Government either take the profit or the loss on the sale of the carry over? Mr. OWEN. Yes. Mr. VOIGT. If the price that the Government had announced at the beginning of the crop year should be lower than the world market price, would the producer still be at liberty to export on his own account? Mr. OwEN. Well, now, we want to get that statement the other way. If the Government made a bad guess at the world price, or if there had been crop failures over the world that made the price higher than the price the Government set, they would not be under any obligation to take it at all? Mr. VOIGT. Nor would the producer be under obligation to turn it over to the Government? Mr. OWEN. No. Mr. VOIGT. Then the result of that would be that every time there would be a loss the Government would stand the loss, and if there is a profit in sight the Government would not get the profit? Mr. OWEN. No; but as a matter of fact I believe that as a practical matter it would not be very long before there would not be any question of a governmental loss. Mr. GERNERD. On what theory, if there is a surplus? Do you mean control? Mr. OWEN. We get back to Mr. Young's proposition. You have got to have controlled marketing on any of these plans, or they will fall of their own weight. Mr. VOIGT. Isn't there a vast difference between what you call the carry over of crop and the so-called exportable surplus of a crop? Mr. OWEN. Well, the exportable surplus would be taken just as it is now. Mr. VOIGT. I understood you to say that the carry over is what determines the price. Do you mean to convey that impression? Mr. OWEN. No; it is the exportable surplus. Mr. VOIGT. It is the exportable surplus that determines the price-that is, as generally assumed? Mr. OWEN. Yes. Mr. VOIGT. Now, if that is true, and you are going to help the farmer on the price by some governmental agency, then hasn't that agency got to deal with the exportable surplus, and not only with the carry over? Mr. OWEN. Yes; but we want to get away from the exportable surplus. Mr. CLARKE. Just a moment. Supposing your exportable surplus here runs against an exportable surplus on the other side, then what? Mr. OWEN. Well, as a matter of fact, while we say that Liverpool makes the price, nevertheless I believe that if the United States was out of the export business-and that is what I have in mind, and that is what we must ultimately come to, gentlemenwhy, the world price will take care of itself pretty well. Now, I want to go into the matter of the cost of the production of wheat in the Northwest, briefly. The acre cost, 1919, in Minnesota, was $23.49. The acre cost, 1919, in North Dakota, was $23.19. The figures for 1922 are estimated, but are arbitrarily reduced 25 per cent, which is very conservative. We are averaging at the farm in the three States named about 90 cents a bushel at the station. So that even if our average yield was 14 bushels, it would give $12.60 an acre, showing a net loss of approximately $5 an acre on the wheat crop in the three States named. The CHAIRMAN. There is a call of the House. We have a number of other gentle. men from the Northwest who want to appear and be heard on this question. I regret that it will not be possible to give them any time just now. Mr. SINCLAIR. I move that we continue the hearing on the stabilization question until to-morrow morning at 10 o'clock. (The motion was duly seconded and carried.) PUBLICATION OF INFORMATION PRESENTED AT THE WORLD DAIRY CONGRESS. The CHAIRMAN. Mr. Van Norman has a matter that should receive prompt considera tion. We will take that up now. It is H. R. 12790, which is as follows: "[H. R. 12790, Sixty-seventh Congress, second session.] "A BILL Authorizing the publication of information presented at the World's Dairy Congress to be held in the United States during October, 1923. "Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of Agriculture be, and he is hereby, authorized and directed to make available to the public the information which may be presented or developed at the World's Dairy Congress to be held in the United States during October, 1923, and that there is hereby authorized to be appropriated the sum of $30,000, or so much thereof as may be necessary, for paying for the interpretation and transcription of discussions and the printing and distribution of the |