Mr. DODD. I was with the Farm Board for the year 1929 and the year 1930, acting as supervisor for Mr. Collins. Mr. SMITH. The Farm Board lost about $500,000,000, did it not? Mr. SMITH. And you went with the Agriculture Department in 1933? Mr. DODD. Yes, sir. Mr. SMITH. Under which Secretary? Mr. DODD. I went in first as a county committeeman elected by the farmers of my own county to the wheat committee. Mr. SMITH. Who was Secretary at that time? Mr. DODD. Henry Wallace was Secretary at that time. Mr. SMITH. So you were an employee of the AAA before you became a secretary of agriculture? Mr. DODD. Yes, sir. Mr. SMITH. And you know the AAA was largely a brainchild of Henry Wallace? Mr. DODD. Well, I think a lot of people would question that. Mr. SMITH. You would hardly say, though, that Mr. Wallace did not have a good deal to say in the setting up of the AAA. Mr. DODD. I would agree with that; yes, sir. Mr. SMITH. Would you agree that Henry Wallace also was influential in setting up the various other farm programs, such as Commodity Credit? Mr. DODD. Yes; I think he had a good deal of influence on those programs. He appeared before Members of Congress and before the different committees. Mr. SMITH. So that, whatever we may think of Henry Wallace at the present time, we have his farm program. Mr. DODD. We have parts of his farm program, but there are many Members of Congress who took a very active interest in the present agricultural programs. Mr. SMITH. You were with the Agriculture Department when it instituted that stringent restriction program on the production of crops, were you not? Mr. DODD. Yes, sir. Mr. SMITH. And in the actual destruction of farm livestock and commodities? Mr. DODD. Well, if you are referring to the drought years, to the drought buying program for hogs and cattle, I was with them then; yes, sir. Mr. SMITH. You would not say that the drought was the cause Mr. DODD. The drought of 1934 and 1935 was the reason that millions of head of hogs and livestock had to be moved. There was no feed. Mr. SMITH. They had to be moved, but did they have to be killed? Mr. DODD. Yes; many of them. There was no feed available, and most of them had to be slaughtered and the meat canned and used for relief programs. Mr. SMITH. But you are not telling the committee now that the only reason for killing the pigs and other livestock was the drought, are you? Mr. DODD. Those are the only hogs that I know of that were killed, inless a farmer wanted to comply with the corn-hog program. There were 2 years during which, if he produced more hogs than his quota, he either had to dispose of them or could not qualify for payment. Mr. SMITH. Would you put into the record the number of cattle and hogs that were killed under that program? Mr. DODD. Under the drought program? Mr. SMITH. Well, under the agricultural program. Mr. DODD. I would not have any way of knowing. I would not have any way of knowing about the others, Mr. Smith. Mr. SMITH. You have no figures on them? Mr. DODD. We had the drought program, under which livestock had to be moved. Of course, we do have those because we paid an indemnity on the livestock. Mr. SMITH. On page 3 of your testimony, at the bottom of the page, you say: Corn loans afford an excellent illustration of the operations of the price-support program. The first corn loans were made on the 1933 crop; since that time loans have been made on over a billion bushels of corn. Mr. DODD. That is correct. Mr. SMITH (reading): In 1932 the market price of No. 3 yellow corn at Chicago averaged 44 percent of parity, but in 1933, the first year the loan was in effect, this market price averaged 68 percent of parity. During the 10-year period from 1923 to 1932 the market price of corn averaged 74 percent of parity; during the years that loans have been offered-1933 through 1947-the market price has averaged 107 percent of parity. Do you wish to give the inference, here, that it was the operations of the Commodity Credit Corporation that brought about this change in parity? Mr. DODD. As to the price. There was no change in parity, but as to the difference in the price of corn Mr. SMITH. That is what I meant. Mr. DODD. I very definitely would want to give the impression that Commodity Credit's operations were definitely responsible for raising the price of corn for the producers. For at least a 10-year period there was practically no change in the market price of corn, except after it was forced by Commodity Credit loans. Mr. SMITH. During that period of time, following 1934, when the gold dollar was devalued 40 percent, there were poured into the credit structure of the country many millions of dollars of fiat credit. Are you in a position to say to the committee that those operations had nothing to do with raising prices? Mr. DODD. I would not know about that, Mr. Smith. That is out of my field. Mr. SMITH. Well, you have made a statement here that Commodity Credit was responsible for raising prices. If you would look up the literature you would find that some other Government officials claimed credit for that raise in prices through the operation of these other procedures. Mr. DODD. All I was talking about were facts that I know, because I took part in them and saw them happen. When farmers were unable to sell their commodity for anywhere near as much money as provided by a Commodity Credit loan, the first Agricultural Adjustment Act provided for loans to be set up by the Secretary at a sliding scale, between 52 and 75 percent of parity. Most of our early loans were set up relatively close to between 50 and 60 percent of parity. But I know there were millions of bushels of grain that farmers could not find sale for at those prices. I recall distinctly the 1934 loan, when we loaned 25 cents a bushel on corn, when the farmer could not get 25 cents for it at the elevator. But the next year, because of weather conditions, and so on, corn was worth $1.25 a bushel to the farmer on the farm. He was able to realize much more money for it than he would have if he had gone direct to the market. I have seen many, many falls, when the wheat harvest would start in the Northwest, where farmers could not sell the wheat at prices as high as their loan level. That is why I think the Commodity Credit was very responsible for raising the prices received by farmers for those commodities. Mr. SMITH. What did the restriction on crop production have to do with raising prices of farm commodities? Mr. DODD. I do not think it had very much to do with it. We limited the production of some crops, but, pretty generally, the farmers used their better land, and they put the other acres into something else. In total, I do not think it made very much difference. Mr. SMITH. The AAA, then, was a useless institution? Mr. DODD. I would not say that. Mr. SMITH. How do you justify it, then, if it did not have the effect it was intended to have? That was its principal task, was it not-to limit crop production? Mr. DODD. Oh, no. Mr. SMITH. What was its principal task? Mr. DODD. I think it was to set up goals as to what we needed in the way of commodities in this country and for export. The 1939 law says very explicitly that the Secretary of Agriculture shall determine and set up goals for production, first, for all we can consume in this country, plus all we can export, plus a reserve, at least up to a minimum. Most of those reserves are set at 30 percent, and that is a higher reserve than we ever had in this country before those times. So that the law, actually, is a law of abundance, rather than a law of restricted production. Mr. SMITH. Well, now, Mr. Secretary, is it not a fact that you had only a very few wheat farmers vote on determining the amount of wheat that each farmer would be allowed to raise? Mr. DODD. Yes, sir. Mr. SMITH. And that was a restriction in crop production, was it not? Mr. DODD. That was a restriction on what a farmer could sell. But after you had produced all you could use in this country Mr. SMITH. Wait a minute. You said the farmers themselves. It was initiated in Washington, was it not? Mr. DODD. Well, the law that was passed-the 1939 act-says that after you have available, for supply, all you can use in this country, plus all you can export, plus more than 35 percent as a reserve, you have got to ask the farmers to support marketing quotas or vote on marketing quotas. If they do vote on marketing quotas, then there is a restriction on what you can sell. Mr. SMITH. That is my point-that restriction of crops entered into ? price. Mr. DODD. To a small extent; yes. Mr. SMITH. To a small extent? Mr. DODD. Yes. The CHAIRMAN. Because you had supplies larger than you had ever had before. Mr. SMITH. Mr. Dodd, you speak about cotton. You say that you had a carry-over of 13,000,000 bales of cotton. Mr. DODD. That is correct. Mr. SMITH. How did you get rid of that cotton? Mr. DODD. The Commodity Credit Corporation, before this country was involved in war, tried to find some people who would take our cotton and tried also for the other commodities. One of our deals was to trade cotton for rubber. Mr. SMITH. In other words, we had to have a war to get rid of that cotton. Mr. DODD. This was before the war. Mr. SMITH. All the records show that we were actually in the war long before we even put lend-lease in force, or before the time of which you are speaking. Now, if there had not been a war, what would be the supply of cotton on hand? Mr. DODD. If we had not had better times-you see, you are running your spindels, at the present time, and you have for the last couple of years, at the highest rate ever known, and I think if we had not had an increase in purchasing power-whether caused by the war or in some other way-we would still have pretty big stocks of cotton. Mr. SMITH. Mr. Dodd, is it not a fact the men are working on the long-range farm program, have definitely taken the position that farm support prices are inadequate and that we must supplement the farm support prices with crop restriction? Mr. DODD. I think, after you have as much of a commodity produced as you can possibly use, either domestically, for export, or for any other purpose-I do not think you could have price support because at that time you would continue to pile up goods just as we did formerly. Mr. SMITH. Then it is a fact that in drawing up the long-range farm program the real basis for maintaining farm prices is not going to be the Commodity Credit Corporation, but it is going to be the restriction of farm crops? Mr. DODD. I do not believe you could get any security of agricultural prices without Commodity Credit or some other such corporation. Mr. SMITH. You are not answering my question. Mr. DODD. I think you have got to have a corporation authorized to support prices, either by loans or purchases, if you are going to have any stability in agriculture prices. It will take more than that, of itself, to stabilize prices. Mr. SMITH. I did not get that last statement. Mr. DODD. It would take more than just the corporation. Mr. DODD. That is right. Mr. SMITH. All right. 74833-48- -4 Tell me this: What do you want with the corporation, if you are going to use another instrument? Mr. DODD. Well, any instrument Mr. SMITH. You do the whole thing with crop restrictions, so why do you want the corporation? Mr. DODD. I do not think you can do it with crop restriction. Mr. DODD. Because I think the total supply that you would want to keep that is, of commodities in this country-would be so great that it would crucify farmers just as they were crucified several other times before, when you attempted to get a pretty large stock of any of those commodities into their hands. I think if you had a minimum of 150,000,000 or 200,000,000 bushels of wheat without support by Commodity Credit, your prices will go to pot. I think it would be true of tobacco and other things. Mr. SMITH. They went to pot in 1933, did they not? Mr. DODD. They went to pot in 1921. Mr. SMITH. I mean in 1930. Mr. DODD. I happened to have a warehouse full of wheat in 1919. In the fall it was worth more than $2. The next fall it was worth 85 cents. I know; I paid for that. Mr. SMITH. Yes; but, Mr. Dodd, did you ever go into the reason for that? Mr. DODD. We thought we did. Mr. SMITH. I know you thought you did. You know, after all, it seems to me that we must go back and try to find out why these things really did take place. You come in here representing the Commodity Credit Corporation. Here is the AAA, whose business it is to restrict farm crops. Commodity Credit is tied up with AAA. Commodity Credit and AAA are a single instrument, in my opinion, and part and parcel of the same process. So, in order to get a true view of the operations of the Commodity Credit Corporation, we have to take that into consideration. We have a lot of other factors. The Federal Reserve banking system, at the present time, is engaged in finding a formula to control, as it says, the national debt and the credit of the country more stringently than it has been controlling it. Do those things have any effect on farm prices? Mr. DODD. I would not know. I am not a student of finance. Mr. SMITH. Well, of course, they do. It is this segmental consideration, Mr. Dodd, of these various political functions which causes us to lose sight of their true significance. Mr. Dodd, are you acquainted with Mr. Tom Linder? Mr. DODD. The commissioner of agriculture in Georgia? Mr. SMITH. Yes. Mr. DODD. Yes, sir. Mr. SMITH. Have you seen the statement that he has made with respect to this long-range farm program, in which the Commodity Credit would be involved? Mr. DODD. No, sir; I have not. |