in August 1939, when prices received by farmers on the average were only 74 percent of the prices paid by them for commodities purchased. In fact, the low level reached in August 1939 was the lowest at any time during the last 30 years, excepting at the depth of the depression from 1931 to 1934.

The price rise that has taken place in connection with farm commodities during the last 2 years has simply served to bring agriculture closer to parity with the other groups in our national life, and today, as I have already shown, we are still six points short of achieving parity. This is according to the figures compiled by the Department of Agriculture itself, which are accessible to all. If parity were justly computed, the discrepancy would be greater, as I shall point

out.

What the depression and low income combined have done to American agriculture during the past two decades is graphically depicted in the official figures of the census:

In 1920 farm wealth stood at $80,327,000,000, farm debt at $12,321,000,000, with a net worth of $68,006,000,000.

By 1930 total farm values had shrunk to $58,778,000,000, while the farm mortgage debt stood at $12,019,000,000. This brought the farmers' equity down to $46,339,000,000.

The census of 1940 placed the value of all farm property at $42,418,000,000, encumbered by a debt of $8,926,000,000, reducing agriculture's net worth to $33,492,000,000. This is $4,025,000,000 less than the comparable figure for 1910, $33,850,000,000 less than 1920, and $12,203,000,000 less than 1930.

While industry has been accumulating wealth in great volume, farm wealth has declined. For 30 years the farmer has raised the foods and fibers to feed and clothe the Nation at a net loss of over $4,000,000,000.

A more equitable price parity formula based on income would reveal much more accurately where the real cause for this serious situation lies. It would indicate clearly that at no time for over 20 years have farm prices been anywhere near parity, and that they stand far below parity today.

A subcommittee of the Senate Committee on Agriculture and Forestry, headed by Senator Thomas of Oklahoma, has been conducting hearings on the subject of developing a new formula for price parity for agricultural products. In appearing before this committee, spokesmen for the National Grange have advocated the adoption of a formula that would give agriculture the same relative share of the national income which it received during the 5-year period from 1909 to 1914, both inclusive. On the average, during those 5 years, 34 percent of our people were engaged in agricultural pursuits and they received from the products of their farms but 12.5 percent of the national income. By way of comparison, during 1940 22.9 percent of our people were engaged in farming and they received 6.3 percent of the national income. That is a figure that is manifestly absurd.

Under the parity plan proposed by the Grange, it would have been necessary to increase farm prices 29.1 percent in 1940 in order to give agriculture the same proportionate share of the national income and the same relative purchasing power that it had in the base period

1909-14. While farm prices have increased since last year, agriculture is still short of parity, even on the basis of the present unjust formula. Since submitting our proposal to the subcommittee headed by Senator Thomas, the National Grange has held its annual convention and given consideration to this matter. The esesntial features of our proposal have been approved, although we believe that it can be made more responsive to monthly changes by including some factors which will represent wage increases, general price fluctuations, or both.

The whole question of price parity for agriculture should have very definite research, because there has not been sufficient study given to the subject to determine what proportion of the national income each segment of our national life is entitled to receive. Agriculture has been in a position so far below parity during the past 20 years that there has been a continual drain on farm wealth, and this condition must stop if the farmers of the country are going to be effective in producing the food and fiber that is absolutely essential to winning the war and tiding us over the present emergency.

In considering steps to be taken for the control of inflation, two methods are available. First, is the use of economic devices designed to lessen the pressure of surplus income on inadequate supplies. Second is the arbitrary control of prices, wages, rents, commissions, and other factors entering into the problem.

Among the economic controls which may be invoked to prevent prices from skyrocketing, the following may be mentioned:

There should be maximum production of all consumer goods, which can be produced without using up needed defense materials, in order to absorb increased purchasing power.

Credit should be largely restricted to productive purposes and sound investments in order to discourage speculation.

Individuals should be encouraged to invest in Government securities in order to lessen Government borrowing from banks and to make use of excess purchasing power of individuals.

Individuals should be encouraged to save wherever possible and build up reserves to meet the shock of post-war adjustments.

Increased incomes should contribute substantially increased taxes to absorb excess money in circulation and to reduce the amount of money that the Government will have to borrow in prosecuting our war effort.

Efficient and economical administration should be demanded in all governmental expenditures to reduce costs to the lowest possible level and to prevent unnecessary expansion in the public debt, which future generations will have to pay.

Nondefense spending should be reduced to a minimum, so as to release all the funds possible for defense purposes, and again to hold down the national debt.

If all these and similar measures should prove inadequate and it becomes necessary to resort to arbitrary price control, the National Grange is firmly persuaded that halfway measures will not suffice. Unless our efforts to control prices are to prove unavailing and abortive, it will be necessary to place ceilings upon wages as well as upon farm products and upon all other commodities. The present bill specifically exempts wages and the argument is made that labor is not a commodity to be bought or sold. Nevertheless, the bill provides

for price ceilings on farm commodities. It is scarcely necessary to say that those who are engaged in agricultural pursuits are workers as well as those who labor in industry. There is no logical reason why one of these groups of workers should be considered sacred and the other not.

How wage increases result in higher costs is well illustrated in the recent award made by the President's fact-finding board in the settlement of the railway labor dispute. In reporting to the President, the board frankly stated that it bowed to expediency in making its recommendations, which will call for wage increases aggregating approximately $300,000,000 a year. The railroads have already petitioned the Interstate Commerce Commission for a 10-percent increase in passenger rates, which it is estimated will raise about $50,000,000 a year. It goes without saying that the carriers will also ask for higher freight rates. All this will be reflected in higher prices for commodities of every sort. Agriculture in particular will be adversely affected, because transportation is the biggest single service change the farmer has to pay.

It could easily be argued there is no necessity for placing a ceiling on the prices of farm commodities. There is nothing monopolistic about agriculture. There are more than 6,000,000 farmers scattered throughout the 48 States, and even if they should attempt to combine for the purpose of raising prices, they could not do so.

The American farmer has always produced in abundance and is today engaged in increasing his production to unheard of totals. Abundant supplies of any commodity are the best possible guarantee against inflation.

In the next place, under our ever-normal granary plan, huge surpluses of agricultural commodities have been accumulated and within certain limits, these surpluses could be dumped on the market to depress prices. Further than that, under the Agricultural Adjustment Act, the Secretary of Agriculture could increase production quotas or remove all restrictions to production, which again would have a depressing affect upon farm prices. Then again the Government can to a large extent regulate the level of farm prices through the operations of the Surplus Commodities Corporation. Foreign competition made possible through our reciprocal trade agreements is no mean factor in holding down farm prices. There is really no necessity for placing ceilings on farm prices.

Notwithstanding all this, so that there may be no appearance of favoritism or discrimination, and to put all the groups in our national life on the same footing in this period of emergency, the Grange is willing that farm prices should be controlled, providing ceilings are applied to wages and all other factors entering into the situation.

However, if Congress should decide not to include labor in its scheme of price control, we feel that it would be both unjust and unnecessary to include agriculture. If experience and changing conditions should later demonstrate the need to control farm prices, the act could be easily amended to provide for it. But before any such attempt is made by the Government, justice demands that a fair and equitable formula be adopted for determining price parity on agricultural products. Any control that may be attempted should be based on such formula, with sufficient flexibility in administration to assure actual parity to farmers.

If agriculture is to be included and labor is left out, some means must be devised for protecting agriculture from the rising costs resulting from such an inequitable arrangement. If no ceilings are to be placed upon wages, an emergency formula for agricultural prices should be devised that will be responsive to wage changes.

Then

We believe that if the present bill is to pass, it should be so amended as to provide for a board to control prices, with a chairman appointed by the President. In the nature of things, the people would have more confidence in the judgment of a well-selected board than they could possibly have in the judgment of one man. again, under one man rule there is the constant danger that unwise or mistaken policies, neglect, or a desire to conduct social experiments could result in irreparable damage. This danger would be lessened by the creation of a board.

An emergency court of appeals should be provided, so that those who consider themselves aggrieved may appeal from the rulings and decisions of the board.

The Constitution gives every man the right to his day in court and the further we get away from the Constitution during this emergency, the harder it will be to get back to it.

If Congress is going to delegate to a single administrator or to a board the authority to control prices, it is highly desirable that provision be made for public hearings so that those affected may have an opportunity to present current and pertinent information. Every separate commodity is influenced by many different factors which are best known to those engaged in its production and distribution. In no important instances has Congress ever delegated legislative authority without providing for public hearings of interested parties.

This is true in such cases as the Interstate Commerce Commission, the Tariff Commission, and the Federal Trade Commission.

The American system of free enterprise must not be destroyed while we are attempting to devise ways and means of escaping the dangers of inflation. It must be clearly recognized that the enactment of this bill in anything like its present form will give the Executive Department of the Government the power of life and death over agriculture, industry, and business. While this is to be done to save the institutions of our democracy, let us not forget that there can be no such thing as democracy without a system of private enterprise.

Senator BROWN. When you say the present bill you do not mean the bill that passed the House?

Mr. BRENCKMAN. Yes, sir.

Senator BROWN. Because that contains a price-control board that I understand you people wanted.

Mr. BRENCKMAN. As I understand it, Senator, that contains a board of review.

Senator BROWN. It pretty largely places real control in the Board of Administrative Review, composed of five members. Your point is that you want a five-man commission in the first instance to handle prices?

Mr. BRENCKMAN. Yes, Senator Brown.

Senator BROWN. In the first instance?

Mr. BRENCKMAN. Yes, sir; and then there should be an emergency court of appeals back of that board.

Senator BROWN. I see. I just wanted to get your idea. I did not want to interrupt you.

Mr. BRENCKMAN. The bill contains three methods of terminating. the extraordinary delegation of legislative powers contained therein. It seems to us that a provision should be included under which Congress simply by passing a concurrent resolution could at any time recapture the powers it has delegated, if it should appear that these powers are being abused, or when the need for exercising them no longer exists. The lend-lease bill furnishes a precedent for such action. We consider this one of the most important safeguards that could be written into the bill, and it would have a sobering effect on those who would be called upon to administer the act.

In conclusion, Mr. Chairman, I wish to file for the record a statement on the subject of inflation adopted at the recent annual convention of the National Grange. This is a comprehensive statement of our position on the subject.

Senator BROWN. Thank you, Mr. Brenckman.

Senator BANKHEAD. How many members are there in the Grange? Mr. BRENCKMAN. In round numbers, 800,000 members, distributed over 37 States.

Senator BROWN. Thank you very much, Mr. Brenckman.

(The document referred to and submitted by the witness is here printed in full as follows:)

RESOLUTION OF THE NATIONAL GRANGE ON INFLATION ADOPTED AT SEVENTY-FIFTH ANNUAL SESSION, AT WORCESTER, MASS., NOVEMBER 13, 1941

INFLATION

The right to store up the results of skill and labor in the form of property is fundamental to the preservation of the American way of life. One of the greatest dangers this country faces is from inflation, which, unless controlled, may destroy the foundations of our democracy. There are two methods of control. First is the use of economic devices designed to lessen the pressure of surplus income on inadequate supplies. Second is the arbitrary control of prices, labor, rents, commissions, etc.

Among the economic devices are:

1. Encouraging savings and building individual reserves to meet the shock of post-war adjustments.

2. Increase in income taxation, coupled with efficient and economical administration of government, which will serve to retard inflation and prevent the passing of an unnecessary debt burden to future generations.

3. Encouraging investment (by individuals in preference to banks) in Government securities which finance the borrowing from which employment and excess income are derived.

4. Maximum production of all consumer goods, which can be produced without hampering production of needed defense materials.

5. Restricting credit to productive purposes and sound investments in order to discourage speculation.

6. Voluntary reduction of selling prices, when increased volume results in lower costs and increased profits. This will promote the benefits of a cycle of plenty by reducing living costs, reversing the trend of the evils leading to inflation, and laying a firm foundation for post-war adjustments.

If these measures do not serve to prevent prices advancing unreasonably, it may be necessary to resort to measures of arbitrary price control. In that event, certain definite principles should be borne in mind:

First, some advance in price is a natural accompaniment of the great destruction of wealth as a result of war. This advance is not inflation. It is an unavoidable cost which all must bear. Any adjustments of prices, wages, rents, or commissions which relieve any group of bearing its share of the cost will result in increasing the burden of others, and are unsound.

Second, any effort to increase profits because of the increased demand is inflationary. If arbitrary control is necessary, it should be limited to profiteering. 65913-41-23