billion dollars; now it is almost eleven billion dollars. Of course, credit money has increased very materially. The amount of money in circulation plus turn-over, of course, affects our price level.

It is my contention, gentlemen, that we will be in deflation until the dollar value falls to 100 cents and the price level rises to 100. The managers of our economic system, as far as they could before this war broke a year ago, were trying to keep the dollar at a value of 130 cents and the price level down in the 80's.

Senator TOBEY. Whom do you mean by the "managers of our economic system"?

Senator THOMAS of Oklahoma. The managers of our money-the Federal Reserve Board, the Treasury, and the President.

Senator TOBEY. The Federal Reserve Board and the Treasury are not in complete accord.

Senator THOMAS of Oklahoma. That is correct.

Senator TOBEY. There is a wide gulf between them.

Senator THOMAS of Oklahoma. Yes; there is, and at another time I will make a suggestion. I might make it here: that I should favor a program to delegate all the power that Congress has to one monetary authority. Then give that authority a definite mandate. We can do that under our power to delegate. Give that board a definite mandate to fix the value of the dollar at a given point, at a certain point, in terms of property, and then to keep it there as nearly as it is humanly possible.

Senator BANKHEAD. That was done in the so-called Goldsborough resolution that passed the House.

Senator THOMAS of Oklahoma. That is correct. It never got out of this committee.

I do not want to go too much into this matter, Mr. Chairman. Now, if I may, I want to give you very briefly an explanation of how this formula will work in arriving at parity prices.

I will take cotton, for example. In order to get a parity price of any commodity, two things must be ascertained: First, the base price of the commodity at some period and the index number, at the same period. If you can fix the base price of a commodity in a period and then can get its relation to the value of the index number at the same period, and you carry those right along, you keep them at parity. I have placed in the record data showing that for tobacco the base period was from 1920 to 1929. I think that should be made the base period for all commodities, and I recommend specifically that this bill be so amended as to change the base period from 1909-14 to

1919-29.

Senator BROWN. That roughly is what the Brown amendment does that is, Congressman Brown.

Senator THOMAS of Oklahoma. It in effect does that, but it is not self-executing. The Administrator could do nothing or could do anything under the Brown amendment.

Senator BANKHEAD. How do those years compare with 1926? Senator THOMAS of Oklahoma. 1926 was 100, so far as the index number is concerned. Those 10 years I can give you very briefly. My amendment provides that the base period shall be from July 15, 1919, to June 30, 1929. That is a 10-year period. That was the last 10-year period or the last period of any kind when we had a free

economy in the United States. The depression broke in October 1929. From then on, things went bad, and we have had a controlled, a managed, and a subsidized economy from that time on to this.

So, there is nothing since 1929 that is natural; and for my part I would not agree to make a base period of any year or years since 1929. Since that time we have had controlled production of practically everything, especially of cotton, wheat, corn, and, to a large extent, livestock. Of course, we killed off our cattle and killed off our pigs.

So, I am taking the last 10 years of a free economy. During that period every man could do what he wanted to. A farmer could plant all the corn or cotton or raise all the cattle he wanted to, and he sold his products in the markets of the world and was not restricted. So, the law of supply and demand controlled the price in that 10-year period.

I am going to show for the record just how this matter works. I am taking first, now, the base period. I have gone to the 10 cencentration points for cotton. I am taking cotton because that is the largest single crop. I say it is the largest single crop: It is in 11 States. I have found the average price for the cotton sold during that 10-year period. I have sent to Augusta, Ga., one of the great concentration points; to Houston, Tex., to Montgomery, Ala., to Galveston, Tex., to Memphis, Tenn., to Charleston, S. C., to Dallas, Tex., to New Orleans, La., and to Savannah, Ga. There is one more that has not reported.

I sent to the clearing houses at those points and had them fill out questionnaires giving me the prices at which seven-eighths inch middling cotton sold for on the 1st day of each month and the 15th day of each month in that 10-year period.

In Augusta, Ga., the average price at which cotton sold during the 10-year period was 22.68.

At Houston, Tex., the average price for the 10-year period was 22.86.

At Montgomery, Ala., the average price was 22.44.

At Galveston, Tex., the average price was 23.15.
At Memphis, Tenn., the average price was 22.82.
At Charleston, S. C., the average price was 22.67.
At Dallas, Tex., the average price was 22.35.
At New Orleans, La., the average price was 22.79.
At Savannah, Ga., the average price was 22.57.

That shows the average prices. By striking the average of the nine places, we get the general average at which the then standard grade of cotton sold for during the base period.

Senator BANKHEAD. Those prices were at what market? What difference was there, if any, between them and the farm prices? Senator THOMAS of Oklahoma. The farm prices were lower than these; but these are the prices which the mills had to pay for their cotton. I contend that this is the price cotton sold for. The farmer did not get this much money for his cotton on the farm. The amount

of freight and the commissions were taken out of his selling price. He paid the freight and he paid the commissions. This is the amount that the mill had to pay for the cotton, 22.7 cents per pound. That is the average price at which cotton actually sold in those nine concentration points during that 10-year period.

Now, to show that my figures are correct, I sent the same questionnaire to the Bureau of Agricultural Economics, and the figures that were sent back to me tallied and did not vary as much as one-tenth of 1 percent. The average price, as cataloged by the Bureau of Agricultural Economics of the Department of Agriculture, is exactly 22.7 cents a pound. So the figures from my research and the figures of the Department are exactly the same, and the average price or the base price of cotton during the 10-year period was 22.7 cents. If the index number was 100, the parity price would be 22.7.

Senator TOBEY. The farmer was not getting 22 cents for his cotton. I hate to have it appear that the farmer got 22 cents for his cotton when he did not.

Senator THOMAS of Oklahoma. I agree with you, he did not; but I will show you why I use this as a formula. It is arbitrary, but if we can arrive at an arbitrary mathematical formula that will do exact justice to the farmer, to the wage earner, then the formula, although arbitrary, is fair and certainly merits consideration. That is the base price.

At the present time the farmer can buy the things he has to buy at a less price than he could have bought them for in 1926, because the price level instead of being 100 is 92.22.

So to get the present parity price of cotton under this formula you multiply 22.7 by 92.22. That gives the present parity price of cotton under this formula. It was 20.9 cents on last Thursday.

The exact figures for wheat and the exact figures for corn under this formula are as follows: The average price of corn during the 10-year period was 92.32 and the average price of wheat during this 10-year period-No. 1 wheat-was 1.57.

Mr. Chairman, unless we do define what is parity and how to arrive at it, we will simply be groping in the dark. The Bureau of Agricultural Economics has worked out a system. Its system is not written into law. It would take a Philadelphia lawyer a long while to understand how they arrive at their index number for their parity prices.

My suggestion is very simple and, if adopted, the base price never changes; and as the index number changes the parity price changes. Mr. Chairman and gentlemen, I think that is all that I have to suggest at this time.

Senator BROWN. Thank you very much, Senator Thomas.

(Tables showing the average prices of cotton, wheat, and corn, as submitted by Senator Thomas, of Oklahoma, are as follows:)

TABLE 15

Cotton.-General average for the 10-year period 1919 to 1929:

Average price

(cents)

22.68

22.86

22.44

23. 15

22.82

22.67

22.35

22.79

22.57

204. 33

22.7

Wheat.-General average for the 10-year period 1919 to 1929:

Corn.-General average for the 10-year period 1919 to 1929:

Average price

$1.616

1. 528

1.551

1.506

1. 560

1. 704

9.465

1.577

Average price

$0.954

897

.893

.949

3.693

92. 32

St. Louis, Mo..

Total

General average

Senator BROWN. We shall next hear from Dr. Benjamin M. Anderson, professor of economics at the University of California.

STATEMENT OF DR. BENJAMIN M. ANDERSON, PROFESSOR OF ECONOMICS, UNIVERSITY OF CALIFORNIA, LOS ANGELES, CALIF.

Dr. ANDERSON. Mr. Chairman and gentlemen: At the suggestion of my old friend and yours, Senator Gore, under whose tutelage I have several times appeared before senatorial committees, I am going to tell you something of my work with respect to my competence to talk about this subject.

I was teacher of economics at Columbia University and at Harvard University from 1911 to 1918. I was economist of the National Bank of Commerce, in New York, for 2 years, until 1920; then for 19 years, 1920 to 1939, I was economist of the Chase National Bank, New York; and since then I have been professor of economics at the University of California, at Los Angeles.

During the last war I studied this price fixing in operation very closely. I studied particularly the way it was worked in copper, in anthracite and bituminous coal, and in the grain and fuel control, with some attention given to price fixing in sugar, and I knew in some detail what was actually being done and how it worked.

I worked from the theory of the thing and made studies. These are summarized in a paper I read before the American Economic Association at the December meeting of 1917, a copy of which I think Senator Gore can provide for your record, if you wish to have it. I think it is a useful document. Would you wish that in the record? Senator BROWN. How long is it?

Dr. ANDERSON. It was an address before the American Economic Association.

Senator BROWN. I think we may receive it.

(The address referred to appears at the close of Dr. Anderson's testimony.)

Dr. ANDERSON. Yes, sir.

Now, I have been seeing what has been going on in the price-fixing picture as well as I could from a distance, though last summer I was in New York and Washington and saw it then. I have gone through virtually all the testimony given before the House committee. I do not believe many men can say that.

Senator TOBEY. Not many Senators can.

Senator GLASS. How do you happen to be alive?
Dr. ANDERSON. I omitted some things.

Senator GLASS. Maybe that accounts for it.

Dr. ANDERSON. I have come to the conclusion that the Senate must not merely amend this bill; it must radically rewrite this bill throughout from the standpoint of philosophy and administrative provisions, if it is going to be a good bill.

I want to say something about the philosophy of the bill first. The great function of price control in a war is to conserve scarce commodities needed for war, and scarce necessities of life for the people, and to make sure that they are better distributed and better allocated for war purposes and for the life and health of the people than they would be if left to the play of the open markets.

Scarce necessities of life and scarce things needed for war: When the problem is put in those terms there is a definite philosophy and a manageable problem. There is a recognition that you have got to connect your priorities, your rationing, and your allocations very definitely with price fixing. There is a holding back in edict to what can be administered.

But we have a different philosophy behind this price-fixing bill. We are told by Mr. Henderson, for example-and I quote him exactly:

I think that one of the most acute necessities in price regulation is the necessity for having a low price level for the future.

That is from the unrevised hearings, page 343.

We are told again and again by Mr. Henderson that the relaxing of price control after the war was over-after the last war was overallowed a 40 to 50 percent rise in commodity prices and that, therefore, the price control should not be limited in time, but should be left to the discretion of the President, so that a post-war slump may be avoided.

Now, parenthetically, Mr. Henderson is quite wrong in saying that there was a 40 to 50 percent increase in commodity prices after the war. On the 1913 basis, prices rose to 207 at the peak of the war; and then at the peak of the post-war boom, in May of 1920, they went to 248. That is a 20 percent increase, not a 40 to 50 percent increase. That is the old series of Bureau of Labor Statistics number. The new series started in 1929 on the 1926 basis, with more commodities in it, and shows approximately the same post-war rise, about 21 percent.

Congress must make a very sharp determination as to whether its purpose in providing a price-fixing bill is to meet the practical exigencies of scarce essentials during the war, or whether its purpose is to create a vast machine for post-war governmental economic planning. I emphatically do not believe that price fixing should last after the war. Having in mind that in the last war legislation