farmer's cost of producing and living will have gone down correspondingly.

As to the other commodities, covered by subsections 302 (c) and (d) of H. R. 5345, there is express authority in subsection (g) for advance announcement of the level of price support and a prohibition against any reduction thereof after it is announced.

(4) Limited scope.-The fourth decision the Congress must make in determining this issue is whether only certain groups of producers, only those producing a few selected commodities, are entitled to the benefit of price support.

Section 302 (b) of the Aiken Act provides support prices on a flexible basis, ranging from 60 to 90 percent of parity, on the six basic commodities, except tobacco.

The same section, paragraph 5, provides a support price for tobacco at 90 percent of parity, regardless of the supply, when marketing quotas are in effect. Section 202 (c) provides supports at from 60 to 90 percent of parity for wool and Irish potatoes. That makes a total of eight commodities receiving mandatory price support.

Section 302 (c) authorizes support prices from zero to 90 percent of parity for all the remaining 250 to 300 commodities, the level of support to be determined by the Secretary of Agriculture after giving consideration to eight factors set out in section 302 (a).

Then section 302 (c) states:

The Commodity Credit Corporation shall not carry out any operation to sup port the price of any nonbasic agricultural commodity (other than Irish potatoes) which is so perishable in nature as not to be reasonably storable without excessive loss or excessive cost.

Three exceptions to this prohibition are authorized, (1) section 32 funds may be used in supporting the price of such perishable commodities in carrying out section 32 programs; (2) the Commodity Credit Corporation may support the price of any nonbasic perishable agricultural commodity by loan, purchase, payment, or other operation undertaken with respect to a storable commodity processed from any such perishable commodity; and, (3) funds in the reserve for postwar price support of agriculture established pursuant to the First Supplemental Appropriation Recession Act of 1946 may be used under certain circumstances.

These exceptions are not too important. There are many demands on uses of section 32 funds, and, in addition, the law now provides that not more than 25 percent of such funds can be expended on any one commodity. Then, trying to support the price of canned or other processed form of a perishable commodity can prove to be most expensive and ineffective. For example, cattle could be supported by supporting the price of the limited quantity of canned beef; possibly cured hams could be bought, probably butter, but not milk.

The real effect of this prohibition is to limit supports to nonperishable storable commodities. This leaves hogs, cattle, dairy products, fruits, vegetables, and many other important commodities, with very little if any support.

(5) Stable economy.-And, finally, the big question the Congress must pass upon in deciding the issue is whether it will try to ensure favorable economic conditions throughout the Nation by maintaining agriculture on a sound, stable, and prosperous basis.

The record shows that agriculture leads the way-up or down. This is due to the great consumer demand of the farm people and their potential buying power. Their income and standard of living on the average is much below that of other segments of the population. They are ready and anxious to buy the products of the manufacturing and industrial plants if they have the income. The American farmers are the greatest market in the world.

The farmers have come to realize the interdependence and community of interest between themselves and the wage earners in the towns and cities. They know that the reason they couldn't sell their commodities in 1932 was because there wasn't anybody in town with money to buy. They understand that the best assurance for prosperous conditions for themselves is steady, full employment at good wages for the workers in the towns and cities. They have supported and will continue to support the measures needed to maintain those conditions.

But they also understand that those working in manufacturing industries cannot receive good wages nor keep a job very long unless farmers have the money with which to buy after paying their production costs.

The committee shares these views and this understanding, and is convinced that without a prosperous and stable agriculture there cannot be a prosperous nation; that without a stable and prosperous agriculture good jobs and good wages will soon be gone; that without a stable and prosperous agriculture the economic and financial stability of the Nation is in danger; and that a serious break in farm prices will throw the Nation into a serious depression.

The committee is convinced that any farm program put into effect by the Congress should ensure as nearly as possible stable and prosperous conditions on the farms of the Nation.

Being of this belief, the committee feels obligated to report that the Aiken Act does not provide a farm program which will insure prosperous conditions on the farms, but that it will, on the contrary, break farm prices, seriously impair the income of farm people, retard conservation of the soil, endanger the economic welfare and financial security of the Nation, and should not be permitted to go into effect on the first of next January.

The bill (H. R. 5345) amends the Agricultural Adjustment Act of 1938, as amended, to provide a new and modern formula for the calculation of parity and to make price supports available to the producers of agricultural commodities. Parity prices are those prices calculated to provide gross cash income from marketings of farm products necessary to make current purchasing power of cash receipts from marketings of farm products equal to the average cash receipts for a recent 10-year period.

The bill provides for mandatory support at parity prices for corn, cotton, wheat, rice, peanuts, tobacco, hogs, milk, butterfat and shorn wool (including mohair). It further provides for mandatory price support for the so-called Steagall commodities and cottonseed at not more than the parity price, and gives the Secretary authority to support the price of all other agricultural commodities. It declares the policy of Congress that prices of these other agricultural commodities be supported so as to bring the prices received by producers into a fair and comparable relationship with the prices received by

producers of other agricultural commodities, taking into account the availability of funds and other factors.

IMPORTANCE OF A SOUND PRICE-SUPPORT PROGRAM

Agriculture is a vital part of our national economy. Every other element involved in the prosperity of the Nation is affected by what takes place on the farms of this country and in the market places where the products from these farms are sold. A sound agriculture is basic to our system of free enterprise and to our economic welfare. We are dependent on agriculture for our very existence. Its products feed the Nation and provide industry with necessary raw materials. Maintenance of a permanently healthy and productive agriculture is in the interests of all the people of this country. This is recognized as established national policy under which price supports have been authorized by the Congress as the main device for helping farmers achieve a reasonably stable income at a level fair both to farmers and nonfarmers. In the absence of a better means by which farmers can accomplish this objective, price supports must remain an integral part of our program for agriculture; otherwise our entire national economy will suffer.

The real function of farm commodity price supports is to maintain the income of farmers at a level below which it is not in their interest or in the interest of other economic groups to permit returns from agricultural production to fall. Time and again this country has seen what happens to our entire economy when there is a collapse in farm income. Whenever the farmer receives a fair return from his labors, he is a good customer for our towns and cities. His readiness to buy means millions of jobs in business and industry throughout the Nation. But when his income drops, the farmer is forced to retrench and the effects of this are immediately reflected in a reduced flow of goods to the Nation's rural communities with resulting unemployment throughout our whole economy. Thus the elements of a major depression are set into motion.

This country cannot afford any unnecessary risk of depression. With the national debt above $250,000,000,000, the Nation has little choice but to maintain high employment and a high level of income. Otherwise, the burden of servicing that debt can become unbearable if not impossible. The Council of Economic Advisers to the President said in its December 31, 1948, report:

* * *

A debt of $250,000,000,000 determines some aspects of every economic policy and comes into the analysis of every economic problem it would be reckless to create uneasiness about the national credit and disorder in financial markets at a time when the Nation must support a vast public debt. The sheer necessity of servicing this debt requires the maintenance of income and employment at a prosperous level. We cannot overlook the importance of the maintenance of a high level of farm prices and farm income to a proper management of the public debt.

We must cope with the problems now in sight. It is the time for positive action-the kind of action so urgently needed now to prevent any sharp reduction from present high employment and high income levels.

Agricultural prices were the first to move downward from the warborn peak. In June of this year, farm prices were 18 percent lower

than they were at the beginning of 1948, while prices paid by farmers. were down only a little more than 2 percent from the peak reached last summer. The buying power of the Nation's farmers turned downward in 1948 and is now at the lowest point in 7 years.

As Secretary Brannan stated to the committee:

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

He could well have added that as long as industry enjoys the protection of laws forcing the farmer to buy in a protected market, the farmers should be given the protection and security of price supports. He could have mentioned the fact that Congress is appropriating $328,393,000 for the fiscal year 1950, has appropriated annually hundreds of millions in the years past, and will appropriate increased millions in the future, to give over 2,000,000 Government employees the security and protection of retirement pensions.

He could have referred to the $1,058,000,000 for 1950 appropriated by Congress this session as a contribution to workers and others under our social security laws.

He could have pointed out the millions appropriated each session of Congress to subsidize our shipowners, our air lines, our newspapers, our mail-order concerns, and others.

All of these benefits and subsidies go to men and women who produce little but eat the food produced on the farms of the Nation. Then can it be wrong to give some protection to the men and women who work in the sun, who labor on the farms and ranches and produce the food to sustain the remainder of our population?

Unless the Congress takes positive action to deal effectively with the price and income problem now confronting our farmers, history will repeat. In the 1920's we thought our national economy was getting along fine but overlooked the fact that agricultural prices were slipping. The result was the greatest depression this country ever had. We must not repeat that experience. We cannot afford it. Our agricultural industry came out of the war with the greatest capacity to produce the world has ever known. It supplied the food needed by ourselves and our allies to win the war. When the shooting stopped, it kept us here at home well fed and furnished unprecedented quantities of food and other essentials desperately needed to help bring half the world back on its feet. As agricultural production is restored in other parts of the world, the extraordinary foreign demand for our farm products diminishes. Already our farmers are being confronted with the necessity of changing their pattern of production. in order to avoid surpluses. They need to bring about a balanced agriculture in keeping with good business and farming practices. The accomplishment of these objectives is not solely the concern of farmers. It is vital to the future well-being of the rest of our population.

Considering the time and investment needed to make the desired shifts, our farmers cannot afford to take the necessary risks without some reasonable assurances that they will not suffer unduly in the process. Fortunately, through the last two decades we have laid a firm foundation and have gained much good experience. We can now act on this to provide the kind of incentives and assurances that our farmers must have to serve both their own and the national interest.

Our greatest natural resource is the fertility of our soil. We have been told that with another 50 to 100 years of soil depletion like that

H. Repts., 81-1, vol. 5—16

we have suffered during the last 100 years, we would not be able to feed our own people. We must build and preserve our fertile farm land at any cost. We are told of the need of stock piling strategic materials, including food and fiber, for time of war or other great emergency. There is a very definite limit to storing farm commodities, due to the cost, the inadequacy of storage, the loss from damage and deterioration and the price depressing effect. But there is one thing we can store, with equal effect, and that is the fertility of our soil. It will then be ready to produce almost without limit in the hour of need.

But it takes money-lots of it-to build and preserve the rich topsoil.

The Government alone cannot pay such a cost. It can contribute only a small part. The principal cost, in labor, time, machines, and materials must be borne by the farmers themselves. But they cannot do it, and they will not do it, unless the price they receive for the commodities they produce is adequate to pay the cost of production, living expenses, and the cost of soil building and conservation. When the people, through their Government, protect the farmer's returns to this extent they are serving their own best interest and their future welfare and security.

WHAT IS REQUIRED OF A PROGRAM

In his testimony before the committee Secretary Brannan ably presented the requirements of a farm production and stabilization program. His views are so much in accord with those of the committee that we quote as follows from his statement:

First. The program must effectively serve the farmer and his family. As an isolated individual, the farmer has no control over the prices he will receive, and no adequate way of adjusting the total market volume of his commodities to changing demand. After he has planted a crop, he is at the mercy of weather, price, and many other forces with which he is powerless to cope. On many occasions in the past, he has labored all season and produced a good crop only to find that, because of circumstances beyond his control, his labor would go uncompensated and sometimes his cash investment in seed, fertilizer, and other operating costs would be only partially recovered. A program to help him meet those basic difficulties is the very minimum for which we should strive.

Second. In serving the farmer the program must not discriminate unfairly against any group. It should be fair to consumers and to processors, shippers, wholesalers, retailers, and others in the distribution system.

There is no real

conflict between farmers and either consumers or business people. The customers of agriculture want plentiful and steady supplies, and they have a right to expect that a program supported by the public will help meet this need. Farmers want to furnish plentiful supplies regularly.

Third. The program must be efficiently operated and the cost must be commensurate with the benefits to the Nation.

Fourth. It must serve general policy objectives, including national security, the maintenance of high-level employment, and cooperation with other nations in the interests of peace and prosperity. It can do this by conserving and strengthening our basic productive resources, providing reserves against national emergencies, and encouraging free-flowing world trade by reasonably assuring sufficient products for export.

In short, the farm program must serve the best interests of all our people, and in my opinion that is the only kind of program the farm people want or expect. Unfortunately, too many people still think of a farm program as some kind of class legislation. There is too little appreciation of the direct and definite ways in which it can benefit all the people and can help make this the kind of a country they want it to be.