while supplies during the first half of 1937 are expected to be below a year ago. Heavy slaughter of poultry due to high feed prices has resulted in unusually large poultry supplies. Products that are more plentiful than in 1935-36 are lard, rice, and fresh vegetables. Wheat supplies are at about the same level as a year ago. Supplies of most other foods are expected to be about 5 percent below their 1935-36 level.

IV. COST OF LIVING IN 1936

Living costs rose only moderately during 1936 despite drought reduction in food supplies and increase in consumer demand. The increase in cost was confined to the last half of the year, for during the early months the trend was downward. From June to September drought reduction of food supplies was principally responsible for the rise. During the last 3 months of 1936 advances in other items, principally clothing and house furnishing goods, pushed up costs. Food costs declined almost 2 percent after September but living costs in general remained unchanged because of increases of other items.

Table 12 indicates that the Bureau of Labor Statistics' index of cost of living for wage earners and low-salaried workers increased from 81.3 to 82.4, or 1.4 percent, between January and December. In December the cost of living index was 17 percent below that of December 1929 and about 8 percent above that of December 1932.

TABLE 12.-Indexes of the cost of living in December 1936 and in comparable months of earlier years

Rent and house furnishing goods exhibited the major increases during the year among the six items included in the index. Each of these items went up 3 percent while food and clothing costs, respectively, went up 1.6 percent and 1.7 percent. Miscellaneous items showed practically no net change during the year, while fuel and light costs declined 0.9 percent.

Consumer income increased at a faster rate than either the cost of living or food costs, so that consumers' purchasing power improved markedly during 1936. Food costs and the cost of living went up less than 2 percent. Labor income, as reflected in factory pay rolls, went up about 15 percent from 1935 to 1936 and national income from nonagricultural sources went up 12 percent. Consequently, the average gain in per capita purchasing power was about 10 percent. Table 13 shows total and per capita national income, excluding farm income, in 1936 and other recent years.

TABLE 13.-National income (excluding farm income) by years, 1929-36.

Source: Agricultural Adjustment Administration, based on Department of Commerce reports. V. COST OCCURRING BETWEEN PRODUCER AND CONSUMER The farmers' share of the consumers' retail food dollar went up 2 cents from 1935 to 1936, according to data compiled by the Bureau of Agricultural Economics. Each year since the low level was reached in 1932 farmers have been receiving an increasing portion of the dollar spent by consumers for food, and a smaller share has gone to distributors. While the advance in the farmers' share during the past year was not as large as from 1934 to 1935, it carried it to the highest level since 1929. Most of the increase during 1936 occurred from June through August, for not much change resulted in other months. Distribution of the retail food dollar between farmers and distributors is shown in table 14, based upon the estimated farm and retail costs of the quantities of 58 foods purchased annually by a typical working man's family in recent years. From 1935 to 1936 the average farm value of these foods went up from $138 to $152. Average retail costs advanced from $331 to $342 giving a narrower gross margin or spread between farm and retail costs. As a result farmers received 44 cents out of each retail food dollar in 1936 compared with 42 cents in the previous year. The farmers' share of the food dollar in 1936 was substantially below the amounts received in the years prior to 1920, but changes in distribution services and methods between these two periods limit the comparability of these figures.

TABLE 14.-Farm value, retail value, and gross margin for marketing the annual quantity of 58 foods used by a typical workingman's family, for specified years

1 Includes processing taxes on wheat, rye, rice, hogs, corn, peanuts, and sugar. On the quantity of these products included in annual family purchases the taxes amounted to about $2 in 1933, $10 in 1934, and $11 in 1935.

2 Does not include Government benefit payments to farmers

Source: Division of Marketing Research, Bureau of Agricultural Economics, U. S. Department of Agriculture.

In addition to an increased share in the consumers' retail food dollar, farmers also received benefit payments from the Agricultural Adjustment Administration from 1933 to 1936. These benefit payments have not been included under the farmers' share in the table below. If they were included the farmers' share would be higher than indicated, and the increase from 1935 to 1936 would be smaller. All processing taxes on the amounts of these foods purchased annually have been included as a part of the margin between farm and retail values.

148279°-37- -9

CHAPTER 10

LEGAL ASPECTS OF ADMINISTRATION

I. COURT DECISIONS RELATING TO THE AGRICULTURAL ADJUSTMENT ACT AND RELATED STATUTES IN 1936

GENERAL

A review of litigation during the period January 1, 1936 to December 31, 1936, discloses several important developments relating to the effect of certain provisions of the Agricultural Adjustment Act as originally enacted and as amended on August 24, 1935, and related statutes. The important points of this litigation may be summarized as follows:

1. The provisions of the act as originally enacted relating to production control by means of processing taxes and benefit payments were declared invalid in United States v. Butler, 297 U. S. 1. It was also held in Rickert Rice Mills, Inc. v. Fontenot, 297 U. S. 110, that provisions of the amendatory Act of August 24, 1935, relating to similar production control, were likewise invalid. These cases are more specifically described later in this report.

Orders

2. The marketing agreement and order provisions of the act, as amended on August 24, 1935, whereby the marketing of specified agricultural commodities in interstate and foreign commerce is regulated, were the subject matter of litigation in several cases. relating to (a) oranges grown in California, (b) walnuts produced in California, and (c) fresh pears produced in California were upheld by United States District Courts. Orders relating to the handling of milk in and around Boston, Mass., and the District of Columbia, respectively, were declared invalid by United States District Courts. Appeals are now pending from decisions relating to the milk orders and the orange order. These and other important cases will be more specifically discussed below.

On January 1, 1936, several cases in which the validity of licenses issued prior to the amendatory Act of August 24, 1935, was involved, were pending. These cases were instituted by and against agencies created to administer the license. They involved, for the most part, matters of liquidation.

3. The Bankhead Cotton Act was before the Supreme Court in Moor v. Texas & New Orleans Railroad Co., 297 U. S. 101, in which case the Court held that the record before it did not justify consideration of the validity of the act. The original suit in the Supreme Court of the United States of State of Georgia v. Morgenthau, et al., 297 U. S. 726, was dismissed after the repeal of the act. The District Court for