Therefore, I want to list several ways in which we can expect an effective farm production and price-stabilization program to serve the interests of all the people (1) It can help prevent depression. Most depressions have been farm-led and farm-fed. Farm prices traditionally go down before, faster, and farther than other prices. On the down swing of the business cycle, farm people are the major early victims of a squeeze. As their income and, therefore, purchasing power is cut by low prices or production failure, industrial producers find a contracting market for their production. This throws workers out of jobs. They in turn spend less for farm products, which in turn further forces down farm prices, and farm purchasing power is further cut.

I don't mean to say that declines in farm prices are the sole cause of depressions, but they certainly contribute greatly and would do so, more now than in the past because agriculture has become a bigger customer of industry.

Farm-price supports cannot substitute for good markets that come with full employment and foreign demand, and, I believe, almost every farmer now understands the importance and relationship to farm prosperity of good wages for city and industrial workers. Supports are no substitute for city markets, but they can at least slow down declines in farm prices and provide stopping points so as to keep our fluid farm prices from going rapidly into a worse and worse relationship with nonfarm prices.

(2) A farm-production and price-adjustment program can help build markets for industrial goods and help maintain employment for labor.-Industry today is dependent on the farm market to a far greater degree than it has ever been.

Let me illustrate this fact by listing some of the manufactured equipment that is in use on one particular farm today and which has been purchased since the last depression. This happens to be a Michigan farm-not fancy-just a good family farm. Here's the list: A combine, a corn picker, a portable elevator, one additional tractor with equipment to go with it (including a disk, drill, and corn planter), a feed grinder, a pick-up truck, motor and pump assembly for pumping stock water, an electric pump and pressure tank for running water in the house, electric refrigerator, electric stove, and electric hot-water heater. Think of almost any good farm, and you can make a similar list.

Back in 1929 there were only 827,000 tractors on American farms. At this time last year there were 3,250,000. In 1929 we had about 37,000 combines. Last year we had 540,000. The number of corn pickers has jumped from less than 9,000 to more than 300,000. These are only a few examples.

In 1929 less than 600,000 farms were electrified. Today the figure is more than 4,000,000.

Altogether the American farmer has lately been a 30,000,000,000-dollar customer of American business.

Even so, rural people represent a vast untapped market for all sorts of goods. For example, half of the commercial-family farms in this country are small, and in this group only 22 out of 100 homes have running water. For most of the other family farms, the comparable rate is 38 per 100, and in the top group, 58 per 100 have running water.

Farm people want to buy industrial goods, but when their prices go down in relation to the prices they have to pay, they have to out their buying. Again let me illustrate.

A farmer on Route 2, Defiance, Ohio, ordered a tractor last year priced at $1,550. When it arrived at his dealer's, the price was $1,950. His soybeans went down from $3.47 in September to $2.18 in March, and his corn went down in the same months from $2 to $1.23. He cancelled his tractor order.

A farmer who lives on Route 1, Crane Hill, Ala., ordered a tractor in 1945 at a price of $1,500. It arrived last summer, priced at $2,450. He felt uncertain at that time about the future of cotton prices and so, for the combination of reasons, turned down the tractor.

A farmer on Route 1, Gettysburg, Pa., fed 40 steers for 157 days and lost $3,000. He gave up buying a hay baler worth $2,150 and building a machine shed on which he had planned to spend $1,000.

It is important to all of us to maintain balance between farm and industrial prices. A program that helps to stabilize farm prices and incomes will help to stabilize markets for factory goods and will keep thousands and thousands of "main streets" busy.

(3) Stable farm prices and incomes encourage high-level production with the greatest assurance of reasonable prices to consumers.-This is one of the most significant lessons from our wartime experience. With the cost-plus contracts and guarantees enjoyed by many industries, and with only reasonable price

protection, farmers quickly made great shifts in the use of their productive resources to meet war needs. They supplied civilians with a fourth to a third more milk and a fifth more meat than prewar while they were meeting the needs of the armed forces and also sending large amounts of food to our allies. Farmers, like manufacturers, want to produce what their customers want. But usually it is only with advance knowledge of minimum price that small individual producers, planning separately, can unify their efforts efficiently to increase the total supply of a particular commodity.

Furthermore, we know that American business depends on agriculture for raw materials, and business is starved if farm production goes down. About half of all the business done with United States consumers last year was based in one way or another on American farm commodities.

Price supports should be available at all times to assure the maintenance of this supply. If prices are allowed to remain too low too long farmers are unable to buy the machinery, fertilizer and other materials which they must have to maintain high-level production.

(4) A program that helps maintain farm income helps to maintain agricultural resources.-City people, just as much as farm people, are concerned with the problem of conservation. Our soil, water and forest resources must support a population that is still growing, and our objective is a higher standard of living for the people as a whole. Yet we are still losing productivity on hundreds of thousands of acres every year. Half of all our cropland is still subject to erosion. Obviously, conservation depends on something more than good farm prices. On the other hand, resources can be conserved and improved only if they are used profitably.

The depression taught us that hard times make poor farmers and poor land. Low prices force farmers to abandon their land conservation practices in an attempt to make up for lower price by increasing acreage to get a greater volume. For the short pull, they will be able to pile up bigger production with less outlay. But only a few seasons need pass before even production will be decreased. The low wheat prices of the depression brought increased plantings, at great cost in resources. The dust storms in the Great Plains, as well as gullies and floods elsewhere, gave dramatic evidence that surpluses and low prices can lead a nation to ruin.

Price supports can aid conservation in at least two ways: (a) Bv bringing additional stability into the farm business so that farm people can enjoy a good standard of living without mining their resources; and (b) by directly encouraging types of farming which naturally conserve resources.

It is generally believed that for the sake of keeping our resources permanently productive as well as to meet consumer needs, livestock production should be made a more important, part of our agriculture. I agree with this. I also think the shift is not likely to take place as promptly and fully as necessary without the assistance of a well-adapted production and price adjustment program.

A

(5) An effective farm program is essential to our national security, will provide a reservoir of goods which protects the Nation against crop failure, and will assure supplies for an even flow of world trade.-Reserve supplies above ground and their counterpart-reserve strength in the soil-are essentials of national defense. large livestock population is also reserve strength. Before the last war, when we had to convert our Nation quickly into an arsenal of democracy, we were extremely fortunate in having large reserves of grain and cotton. Without having to wait for another harvest, we were able to start converting grain into the high-protein foods that were sorely needed by our friends abroad. Plenty of cotton was available for war uses. Several years of intensive soil conservation effort had improved many acres of land which had suffered abuse.

Agriculture justly takes pride in the speed with which it converted to defense and war production. But agriculture is glad to share the credit with the people as a whole, for the storage and soil conservation programs were made possible by the general public-by a sharing of responsibility by farmers and the whole people. In terms of dollars alone, our prewar stocks proved to be a great investment.

Reserves also provide security against dangers other than those of war. Although we have never had a drought or other disaster that treatened us with famine or anything close to it, we have had shortages which severely disrupted our economy and caused a great deal of personal hardship. The results of the droughts of 1934 and 1936 are examples. Forced liquidation of livestock temporarily increased meat production and reduced prices, but in 1935 beef and veal production dropped 20 percent and pork production dropped 30 percent. There

were further reductions in 1937. It was not until 1942 that cattle numbers came back to the 1934 level.

A more recent example was the short corn crop of 1947. Farmers had already been selling meat animals faster than they were replacing them. The short crop speeded up the trend, resulting in shorter supplies and higher prices of meat. We are still feeling the effects. Reserves will help us maintain livestock proce tion from year to year and help prevent extreme fluctuations in price. Adequate reserves are essential for still other reasons. We believe that freeflowing world trade is necessary to world peace. To the extent that we can, we want to discourage the tendency of some of our sister nations and traditional good customers to return to nationalistic self-sufficiency with its artificial trade barriers and economic warfare. One means of doing so is to assure importing nations that they will have access to supplies they need year after year. That assurance on one commodity can be given through the pending International Wheat Agreement, and at the same time we and other exporters assure ourselves of regular markets. Wheat reserves will enable us to guarantee our commitments under the wheat agreement. Steady supplies of other export commodities can also be assured to importing nations by means of reserves.

It should also be remembered that a democracy with reserves and great productive power is a great comfort to nations fearing either famine or foreign aggression. Our practical ability to serve as a friend in need will determine how well we can meet our responsibilities of leadership-how well we can serve the cause of world peace and democracy

Reserves of storable commodities are a natural adjunct of price supports. They are an aim as well as a result of the farm program. They represent an important part of the insurance which the public buys with the funds it invests in maintaining a healthy agriculture.

(6) A price support program which safeguards our rural economic strength can help stabilize the rural community and help maintain individual opportunity in our free enterprise system.-One bulwark of democracy may be found in the prosperous rural community mainly composed of economically strong families farming in the traditional American pattern. It is an ever-present answer to communism.

We should be aware that for many years there has been a steady increase in the number of large-scale, industrialized type of farming units. Many of these are absentee and corporate-owned. According to the 1945 census, about 100,000 of the largest units-fewer than 2 percent of all farms-are selling products valued at nearly one-fourth of all the farm products marketed in this country. This is more than is sold in total by two-thirds of all our farms, including half of our family farms.

If we are to have stable and prosperous rural communities with schools, churches, health, and other facilities, it is plain that many farm people need greater economic security and opportunity.

Price supports are the farmer's equivalent of the laboring man's minimum wage, social security, and collective-bargaining arrangements.

Of course, the price support does not meet the fundamental problem of the operator who cannot produce a large enough volume to make a good return at any price. But it does help on the price side of the farm income equation. There are a great many farmers on the economic border line-they can make a fairly good living when prices are in reasonable balance, but a small drop cuts sharply into the income they have available for living expense and leaves only operating expenses or less. These people are a very considerable percentage of all the independent producers in our entire free enterprise system. While price supports alone will not solve their problem, I see no reason to think it can be solved without some kind of a sound and effective program for maintaining stable and reasonable prices for the goods they produce.

MEASURING RESULTS

I have listed six ways in which a good farm income and price-support program can serve the interests of all the people. It can help do these things: Prevent depression, build bigger industrial markets and employment, maintain high-level production of farm commodities, conserve natural resources, maintain reserves for national security, and strengthen the rural community.

A program that will meet the test I have outlined will cost money, and the returns will have to justify the cost. We may not be able to set up a balance sheet in terms of dollars and balance it every year But then, that is not the way we have measured the public cost and the returns from the tariffs with which we have protected various industries, the value of less-than-cost postal rates, the

public investment and returns from the railroads, merchant marine, and air lines, and the public cost and returns from the minimum wage law and social security. We do know that agriculture is a basic segment of the economy. It must be highly productive, and permanently so. It must contribute to the prosperity of the Nation, and in turn those engaged in agriculture must be able to share equitably in that prosperity.

I believe we can have that kind of an agriculture if we really want it. We won't get it easily or automatically. We won't get it all of a sudden. But we have already made great progress toward it, and if we will work together we can make more progress.

In my opinion, production and price adjustment with a definite income objective must be the core of our united effort.

Here then is a yardstick by which the worth and effectiveness of a program to protect agricultural prices and income from collapse can be measured. In its consideration of needed price-support legislation, this committee has weighed the alternatives against these simple objectives. The plain fact is that legislation now available to farmers does not provide adequate and realistic means for meeting the problems of agriculture that are now in sight. Neither does that legislation afford the Nation the protection it must have against another farmborn and farm-fed depression. The urgent need now is for a pricesupport program that will serve the best interests of all our people. It is the committee's view that this is the only kind of program for agriculture that farmers and nonfarmers want or expect.

PREVIOUS PRICE-SUPPORT PROGRAMS

Price-support programs have been carried out by the Government for the last 15 years. The Agricultural Adjustment Act of 1938, as amended, provided mandatory price-support operations with respect to certain basic commodities and made provision for discretionary price-support operations with respect to other agricultural commodities.

Under the impact of the war, with its necessity for increased food and fiber production to meet war and essential civilian need, mandatory price-support legislation was greatly expanded. Section 8 of the Stabilization Act of 1942, as amended, required that loans be made available to producers of the basic commodities (corn, cotton, wheat, tobacco, rice, and peanuts), through the 1948 crop, at rates equal to 90 percent of parity in the case of all except cotton, for which the rate was 92% percent.

Section 4 (a) of the act of July 1, 1941, as amended, the so-called Steagall amendment, provided price support until the end of 1948 at not less than 90 percent of the parity or comparable price for producers of nonbasic agricultural commodities for which the Secretary of Agriculture requested an expanded production for war purposes. These Steagall commodities are hogs, eggs, chickens weighing 3%. pounds or more (excluding broilers) and turkeys, milk and butterfat, dry peas of certain varieties, dry edible beans of certain varieties, soybeans for oil, flaxseed for oil, American-Egyptian cotton, potatoes, and sweetpotatoes.

Title I of the Agricultural Act of 1948, Public Law 897, Eightieth Congress, extended for one crop or one calendar year the price supports which had previously been in effect, except that the level of price support for the Steagall commodities, other than milk and its products, hogs, chickens, and eggs, could be reduced to a minimum of 60 percent of the parity or comparable price.

Title II of the same act (the Aiken Act) would, by its terms, become effective January 1, 1950. The principal differences between the provisions of that title and H. R. 5345 are important.

COMPARISON OF TITLE II, AGRICULTURAL ACT OF 1948 AND H. R. 5345

The price-support alternative is now clear-cut; it is either H. R. 5345 or title II of the Aiken Act. This committee believes that title II has such serious weaknesses as price-support legislation that enactment of H. R. 5345 is imperative.

This committee never had an opportunity to hold hearings or even study the Aiken Act prior to its enactment because the Congress was scheduled to stand adjourned sine die upon the adjournment of the daily session of Saturday, June 19, 1948.

The Senate passed the bill on the evening of June 17, 1948, when all members of this committee and of the House of Representatives were in constant attendance upon the closing sessions of the House and when numerous important measures were being brought up in rapid order for final consideration. This committee had no time even to read the bill as it passed the Senate, much less to make a full analysis of its provisions. Several amendments had been adopted to the bill while it was under consideration in the Senate. The bill, as amended, was passed as a substitute for H. R. 6248, which had previously passed the House. The House bill is now title I of the Aiken Act, continuing for the present year substantially the support price program in operation in 1948.

After passage by the Senate, H. R. 6248, including the titles that are now titles II and III of the Aiken Act, was transmitted to the House on June 18, 1948. On the motion of the chairman of this committee the House disagreed to the Senate amendment and conferees were appointed on the part of the House and Senate.

Realizing that such a radical change in the farm program required extensive hearings and consideration by this committee, the House conferees were unable to accept the Senate amendment in the absence of an opportunity to hold such hearings and give such consideration, and so advised the conferees on the part of the Senate at the first meeting of the conferees.

Two subsequent meetings of the House and Senate conferees were held the afternoon and evening of Saturday, June 19, 1948, at which the House conferees urged agreement on the bill as it passed the House, while the Senate conferees urged agreement on the bill as it passed the Senate. Neither yielded.

Finally about 4 a. m. Sunday morning, June 20, 1948, the majority conferees on the part of the House agreed to accept that portion of the Senate bill which is now titles II and III of the Aiken Act, and the Senate conferees agreed to accept the bill as it passed the House. The two bills were combined into one and are now titles I, II, and III of the Aiken Act. In doing so, the chairman of the House conferees stated that such arrangement was being agreed to solely in order to preserve the current support program for 1949, with the understanding that titles II and III would be given special study, and hearings would be held thereon by this committee during the next session of Congress (the present session) and that this committee would take appropriate action with respect thereto.