MONDAY, JANUARY 27, 1936.

BUREAU OF AGRICULTURAL ECONOMICS

STATEMENTS OF DR. ALBERT G. BLACK, CHIEF; C. W. KITCHEN, ASSISTANT CHIEF; MR. ERIC ENGLAND, ASSISTANT CHIEF; MISS EMILY CLARK, ADMINISTRATIVE ASSISTANT

GENERAL STATEMENT

Mr. CANNON. We will take up the items for the Bureau of Agricultural Economics.

This is Dr. Black's first appearance before the committee in this capacity, but all of us have had very pleasant associations with him when he was in charge of the hog-farming section of the Agricultural Adjustment Administration.

Dr. Black, do you care to make any general statement?

Dr. BLACK: I do not believe that I have any general statement to make, Mr. Chairman. I have been in the Bureau about 9 months now, and have not known very much about the workings of it except in a general way up to that time.

During this period I have been greatly impressed with the demands upon the Bureau for service work of various kinds from many different sources-demands that I know we have been able to meet only in part, but we have tried to do it as best we could. There does not seem to be any evidence as yet of any slackening in those demands, and I have been told that that condition is merely a continuation of a similar situation which has existed during the past several years.

FUNCTIONS OF BUREAU

Mr. CANNON. Generally speaking, Doctor, what are the functions of your Bureau?

Dr. BLACK. The Bureau has three principal functions-research, service, and regulatory; three types of functions that are quite distinct, although in the case of the service and the research there tends to be a little merging so that it is sometimes hard to differentiate.

The regulatory aspects and service aspects use about three-quarters of the appropriations of the Bureau. Those things which we do which we call research use about one-quarter of the appropriations.

REGULATORY WORK OF BUREAU

Under the regulatory work, which Mr. Kitchen will explain later, we have 12 or 14 different acts of Congress to administer. These include the Cotton Futures Act, the Grain Standards Act, the Warehouse Act, the Standard Container Acts, the Perishable Agricultural Commodities Act, and others.

MARKET NEWS REPORTS

In the service field, the Bureau performs a type of work for which there seems to be a constantly increasing demand Perhaps of first importance is the market news work, which reports the market prices and market conditions for almost all important farm com

modities there are some that are not touched on-throughout the country. The Bureau operates a rather extensive leased telegraphwire system in connection with that work.

CROP-REPORTING SERVICE.

There is a crop-reporting service, of course, which is a very old service, dating back to the 1860's. I think all you gentlemen are quite familiar with the work that that service has performed.

More recently the Crop Reporting Board and the data gathered by it have been the keystone of the adjustment work. There have been very heavy demands for these statistics in connection with the administration of the adjustment programs.

GRADING WORK

In connection with the grading work, there appears to be a growing demand for this service wherever it is started. There is a general authorization for that, given to the Secretary of Agriculture a number of years ago, and the work in connection with it has been done by the Bureau. The Secretary is authorized to establish grades for different farm products and promulgate them on a voluntary basis, and the grades have been so established and are being quite generally usedmore so in connection with some products than with others. Then there are some agricultural products that we have not had the facilities to work on at all. For some products the use of the Federal grades is made mandatory under certain conditions by special acts, such as the Grain Standards Act. In addition to establishment of standards, the Bureau is authorized to inspect certain products and to issue certificates which are prima-facie evidence as to the quality and condition of such products in the courts of the United States. Under this authority inspection and grading work is done for fruits and vegetables (including canned products), dairy and poultry products, hay, feed, seed, meats, and other products. Certain types of grading work, such as meat grading, for example, seem to be growing very rapidly. Butter and egg grading also are growing very rapidly. Some cities have made the grading of beef compulsory and have adopted our grading service in connection therewith.

GENERAL ADMINISTRATIVE EXPENSES

Dr. BLACK. The first item, Mr. Chairman, is the general administrative expense item, and there is no change in that particular item. Mr. CANNON. Under the item for general administrative expenses, there is no change?

Dr. BLACK. NO. I submit the following statement for the record, Mr. Chairman, in reference to general administrative expenses:

This appropriation provides for the general administration of the work of the entire Bureau. It covers the activities of the chief and assistant chiefs of the Bureau in formulating general policies to be acted upon by the various divisions of the Bureau, as well as the direction and general supervision of all of the research, service, and regulatory work. The appropriation also covers the various service units connected with the business administration of the Bureau.

The amount has been carried at that figure, I believe, for several years. There was a bookkeeping reduction a year or two ago when

certain items were transferred to the Interior Department, but it did not represent a net decrease in service.

FARM MANAGEMENT AND PRACTICE

Mr. CANNON. You are asking for an increase of $22,500 in the item for farm management and practice. Will you explain that? Dr. BLACK. I submit the following statement for the record in explanation of this estimate, Mr. Chairman:

The increase of $22,500 for 1937 includes:

(1) An increase of 5,000 in the project "Agricultural finance.”—This increase is requested to cover the salary and expense of an agricultural economist to devote his entire time to developing estimates of total farm indebtedness. Increasing demands are being made by States for estimates of outstanding longand short-term indebtedness and of interest payments for use in estimating farm income and for showing total debt charges against agriculture. The Farm Credit Administration has also expressed a desire to have this work expanded. Information on farm-mortgage debt is gathered by the Bureau of the Census in census years. These data, however, are not complete, as they cover only owner-operated farms. Life-insurance companies and farm-mortgage bankers also supply us with data covering farm-mortgage indebtedness. Data are obtained from many credit agencies and various checks are available on these data. Certain data are gathered by the Farm Credit Administration and other agencies of the Govern

ment.

With the increase requested, this Bureau proposes to study and coordinate data from all the various sources and to develop sources of additional data, so that a more complete picture of the whole field of farm indebtedness can be shown. Through use of all the available data and by making special surveys, this bureau aims to develop dependable estimates of total farm indebtedness and keep abreast of the changes from year to year for the country as a whole and for individual States.

(2) An increase of $17,500 in the project "Farm population and rural-life studies", as follows:

(a) An increase of $10,000 is needed for a study of population migration in rural areas. The purpose of this project is to discover trends, destinations, sources, and selective influences in the migration of population to and from selected rural areas. The importance of this study cannot be overemphasized at present in view of the pronounced changes due to depression, drought, industrial decentralization, all-weather roads, automobiles, rural electrification, and other factors. The relief authorities have been urging such studies for some time. They are basic to long-time planning, especially as related to land utilization. A corollary ls the problem of the rural young people now at home with little to do, whereas in pre-depression times many of them would have migrated to the cities and found employment. Unusual migrations into areas where 5 to 10 years ago farm abandonment was proceeding rapidly and migration into some of the western States merit special attention in this connection.

(b) An increase of $7,500 is needed for work on rural organization. The participation of various types of farm families in different economic, civic, social, and other organizations available to them and their reactions to such organizations is included in these studies. Previously completed studies of some of the cooperative business organizations and general farmers' organizations have helped these groups to a clearer understanding of their membership relations problems, educational services requisite to maintaining an informed membership, and other matters related to successful promotion and maintenance of a large and loyal membership. Studies of the general farmers' organizations have had the same result. Work of this character was discontinued 3 years ago due to lack of funds. The proposed Budget would provide for a local study involving interviews with perhaps 2,000 farmers in various parts of a single State.

WORK UNDER THIS APPROPRIATION

General.-Projects developed under this appropriation are concerned chiefly with the economics of farm production. These include not only studies of the organization and management of the individual farm but also take into consideration credit, taxation, insurance, farm tenure, utilization, and problems of rural

life. Investigations are made to determine the types of farming in various geographical units and the factors which shape such types. Where it appears that adjustments can be made to advantage these are pointed out. Work is carried on to determine the most effective form of organization of farms, including size crops, and livestock grown, finanical and labor organizations, and other matters concerning the farm as an economic producing unit. Costs of production are studied and various methods of operation are compared with regard to their effect on costs and returns. Analyses are made of the problems of farm-mortgage financing and production and marketing credit. Farm taxation is studied and information published on trend in tax burdens, farm-tax delinquency, and possible farm-tax reductions through economies in rural government and changes in taxation. Studies of farm insurance, farms population movements, standards of living, and various other farm problems are also being made. This work is closely coordinated with the other activities of the Bureau which help to furnish a board foundation of economic data.

Agricultural finance. This project covers studies of farm credit, farm taxation, and farm insurance.

Through the credit studies, information is obtained and made available on amounts, distribution, and trends of farm-mortgage debt, territorially and by tenure of farms, agencies, or sources of farm-mortgage credit; prevailing costs and other terms and conditions of loans from each source, factors affecting terms, and conditions of production and marketing credit as well as of mortgage credit; influences of monetary policies upon supply and cost of credit for agriculture; the place of merchant credit in farm finance; the relation of types of farming to the supply of production credit, etc.

The problems of agricultural credit have become much more acute in recent years. The total farm-mortgage inaebtedness in the United States increased from about $3,320,000,000 in 1910 to $9,468,000,000 in 1928. Since 1928, there has been a considerable decrease due principally to the large volume of foreclo sures. The amount outstanding in 1933 was estimated to be about $8,000,000,000. More than 40 percent of all the farms of the country carry some mortgage indebtedness.

The Bureau's studies have shown that farmers in many sections are paying excessive rates for production loans, especially when in the form of merchant creait. Farmers have suffered severely also from country bank failures and inability to obtain needed credit. The Bureau is investigating a number of phases of the short-term credit situation in cooperation with other governmental and State agencies.

The increasingly heavy burden of taxation upon the farmer led the Bureau of Agricultural Economics to institute studies of the farm-taxation problem in 1924. Since 1927 data have been gathered continuously and have been in great demand by State and Federal agencies.

The Bureau obtains information by States of (1) average tax per acre on farm land, (2) total taxes paid on farm property, and (3) relation of taxes to value of farm real estate since 1913. Estimates have been obtained also by States of the amount of rural tax delinquency each year from 1928 to 1932, amounts of delinquent taxes paid each year, acreage, assessed valuation, types of property involved and other characteristics of the delinquency, etc. Corresponding information is being obtained also on tax sales, records of land transfers, and other data.

The central point in the farm-tax problem is the undue burden of the general property tax upon real-estate owners and particularly upon owners with meager incomes, such as most farmers and small-home owners. Recommendations on this problem were made in June 1934 in a report entitled "The Farmers' Tax Problem, published as House Document 406, Seventy-third Congress, second session. This report touches on the necessity of coordination of State and Federal taxes to facilitate desirable State tax revision, outlines the fundamental nature of the farm-tax problem, and contains much basic information resulting from the Bureau's research.

The farm-insurance studies deal with problems of insurance protection for farmers against loss from fire, windstorm, hail, liability, and other hazards to property and persons on the farm.

Economic studies of land use. This project covers studies of land resources and probable future trends in land use. Information is gathered from every available source and is compiled and analyzed for the purpose of furnishing information on changes in land utilization and probable future land requirements. The work is part of the effort to formulate a definite and unified land policy which

will provide a planned utilization of all land resources according to the uses for which the various types and grades of land are best fitted.

The work is closely associated with that of the Resettlement Administration The plan of the Bureau of Agricultural Economics is chiefly to carry on research which includes the fact-finding and analysis necessary to provide a sound basis for the practical steps involved in actively establishing purchase areas, acquiring title to land, and arranging for its management.

Cooperative studies are carried on with State and local agencies which aim to outline for each area studied the economic and social conditions, problems, and tendencies and to develop for such area a detailed program that will facilitate needed readjustments. General surveys are made also to determine the extent, distribution, location, and present economic status of lands which private owners have found difficult or impossible to utilize and to determine desirable public policies to bring about the readjustments indicated. An annual survey is made for the purpose of providing a critical and unbiased appraisal of current changes in the farm real-estate situation with particular reference to changes in values, frequency of voluntary and forced sales of farms, and the effects on values as such factors as income taxation, credit policies, methods of handling distressed real estate, and other economic problems. The tenth number of the series, The Farm Real Estate Situation, 1934-35, has recently been completed. Assistance is given also to other departments in appraising land to be acquired by the Federal Government. Studies are made also of the methods and experiences of public and private land settlement agencies for the purpose of supplying unbiased information to persons desirous of purchasing lands or of establishing settlement projects. Assistance is given also to various agencies in directing the exapnsion of agriculture to those areas best suited to farming, and to assisting prospective settlers to establish themselves in accordance with sound economic principles. Information is assembled also concerning the farm tenancy and ownership situation.

Farm population and rural life.—This project covers studies of composition and changes in the rural population, rural community organizations and institutions, and the social and economic factors involved in expenditures of farm families for living purposes.

Information is compiled on the trends of farm population, the causes of movements to and from the farm and other economic aspects of population shifts, including an annual estimate of the number of persons living on farms. Population migration is a vital factor in maintaining the balance between agricultural and industrial activities, and information on the subject has been eagerly sought by agricultural workers throughout the United States. Population research underlies land-use planning, rural rehabilitation, and agricultural adjustments. Information is being gathered covering the extent to which farmers find parttime employment in local industries and the effect of such activities on the farm family living. Expenditures of farm families have been obtained and analyzed as an index to the economic situation in various localities.

Farm management studies.-This project studies the internal management of the farm for the purpose of finding out how farms can be organized as to size, kinds of crops, combination of crops and livestock, etc., to produce the best results. As a result of this work the Bureau is able to point out adjustments that may be made on individual farms and in various regions and type of farming areas to reduce costs, increase net returns, and adjust production to demand and market outlets. As a basis for these adjustments there must be adequate information. This project, therefore, presents to farmers, farm organizations, and agricultural workers the current facts on production and demand and probable future trends which will aid them in their farm plans. Continuous adjustments based upon full information are needed in bringing about improvements in present conditions and in helping to prevent their recurrence.

The closest cooperation is maintained between this work and the other activities of the Bureau as well as with other Federal and State agencies. For example, in the past year a Nation-wide project has been conducted in cooperation with all the State experiment stations, the object being to determine the extent and nature of production adjustment in various parts of the country that would conform to sound farm-management and soil-conservation practice. Information is gathered, compiled, and published annually on the costs of producing a number of the principal agricultural products. The figures are published for separate localities, regions, and groups of producers. The finding of costs of production represented by these figures is only a part of the work of the Bureau on costs. The other and more important phase has to do with economy in farm organiza