REPEAL OF SPECIAL PROVISIONS FOR PBICE SUPPORT OF TOBACCO

SEC. 403. Section 2 of the joint resolution entitled "Joint resolution relating to the marketing of fire-cured and dark air-cured tobacco under the Agricultural Adjustment Act of 1938, as amended", approved July 28, 1945 (59 Stat. 506), is repealed.

EFFECTIVE DATE

SEC. 404. This Act shall take effect on January 1, 1949.

Senator AIKEN. Mr. Chairman, before we start I would like to say to the committee that Senator Wilson has asked me to let you know that he wants to attend as many of these meetings on S. 2318 as he can but that he has a conflict with hearings now in progress before the Armed Services Committee. I am informed that while Senator Wilson will be prevented from attending some of our meetings here, he will be represented by a member of his staff who will keep him fully informed of our proceedings.

The CHAIRMAN. Very properly, the Secretary of Agriculture is the first witness to appear before us to discuss this new program. We shall be very glad to hear your views on this proposed measure, Mr. Secretary.

STATEMENT OF HON. CLINTON P. ANDERSON, SECRETARY OF AGRICULTURE; 0. V. WELLS, CHIEF, BUREAU OF AGRICULTURAL ECONOMICS; AND W. A. MINOR, ASSISTANT TO THE SECRETARY, UNITED STATES DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C.

Secretary ANDERSON. Thank you, Mr. Chairman.

I would like to proceed in what I am quite sure is an unorthodox fashion this morning. I would like to remind the committee members that there was conducted last year a sort of prolonged hearing on long-range policy to which the Department of Agriculture contributed a great deal of testimony.

At the time that testimony was presented I made a brief introductory statement and then said long range agricultural policy depended in the Department, I felt, upon the people who had administered programs and who would be administering programs over a long period of years and therefore we asked the people within the Department, who were concerned with the making of policy, to develop the individual sections relating to price support, conservation, and a great many other things.

The Policy and Program Committee under Assistant Secretary Brannan, presented their testimony with the individuals who had been chairmen of the groups handling their own sections of it.

Therefore, when the testimony on this bill was being prepared I asked them to follow a similar procedure.

The CHAIRMAN. How long has it been since we have had a measure along lines similar to this and covering pretty much the same field? Secretary ANDERSON. It has been 10 years, it seems to me since there has been a long-range bill.

Therefore, I felt that the committees within the Department, which had worked in the preparation of this long-range testimony and whose testimony ran to more than 100 mimeographed pages, would be the ones

that ought to get together a formal statement of the Department's views.

Now that statement I have here and intend to read to you, but I did feel, if you will permit me to do so, Mr. Chairman, that I would like to present a somewhat more condensed statement at the beginning.

There is nothing in this that is not contained in the other statement. There is nothing in this that is contradictory to the longer statement prepared by the Department.

This is a rather important bill, as you can recognize, and I not only want to give this first summary, which is more personal as far as I am concerned than the complete views of the Department as presented by the committes, but I would like to present also the views of a special group of PMA committeemen. I would like to file those with the committee as well before I conclude.

Therefore, I shall start on this shorter and somewhat summarized statement, if you do not mind, at this time.

I appreciate this opportunity to present the views of myself and others in the Department of Agriculture with respect to S. 2318, a bill to provide for a coordinated agricultural program.

I also wish to thank you for postponing this hearing so that representative farmer committeemen who help carry out certain farm programs could consider various fundamental questions presented by the bill.

Let me start by saying that I should like to make a series of introductory remarks and then raise some questions with the committee as to how we might proceed with respect to the more detailed material which has been prepared within the Department.

At the outset let me say that we have all been impressed by the committee's comprehensive study and report of the factors involved in a long-range agricultural policy or program. I am sure that we all agree that the development of long-range legislation implementing a continuing agricultural program is important. And I am further sure that all of you realize that nothing I shall say this morning is intended as mere criticism but rather as comments which I hope will be constructively helpful.

Turning now to the bill itself, there are two general comments which I should like to make. In the first place, it seems to me that the bill as now drawn goes much too far and in too much detail into the specific organization of the Department. And, second, it seems to me that the economic sections of the bill have been written with too little regard for the way in which they tie into other agricultural legislation, especially the acreage allotment and marketing quota provisions of the Agricultural Adjustment Act of 1938.

With respect to organization, it seems to me that the problem with which we are most immediately faced is that of integrating our conservation and land use activities into a single program. As a result, it may well be worth while to consider the administrative changes necessary to do this and to clearly outline the function of the county and State committees in connection with agricultural program operations. Aside from this field, however, I feel that the Department's current organization is operating very well and I would certainly raise the question as to whether we want to go into this general field before the report of the President's Commission on Organization which, as

you all know, is now at work under the chairmanship of Mr. Herbert Hoover.

There is one other personal comment I should like to add with respect to organization. I feel that S. 2318 as it is now drawn goes into too much detail in several instances in setting rigid administrative formulas or procedures. I believe that flexibility is absolutely essential to efficient administration of such an agency as the United States Department of Agriculture.

The fact that the Department of Agriculture has met its responsibilities during and following the war in an adequate manner is, in my opinion, in very large part due to the fact that the Secretary of Agriculture had actual authority to change or reshape the operations of the Department to fit particu ar needs as they developed. I believe this flexibility should be retained and I would advise the committee against writing in specific administrative procedures with respect to the way in which the Secretary shall select personnel, with respect to the way he shall receive advice from outside agencies or persons, and with respect to the detailed manner in which either research or action programs shall be handled.

With respect to the economic provisions of the bill, let me say that they are necessarily complicated. Again, however, I think that there are a few simple points which are worth making.

First of all, I endeavored to call attention last October to what I considered the two lines of defense against surpluses and low prices. The first line is those measures which help to prevent price and income problems from developing; while the second line is made up of measures which try to correct and minimize our surpluses and price problems when they do develop. For the most part the economic provisions of S. 2318 are devoted to the second line of defense.

I only call this to your attention because I also feel that we should remember the first line. As I indicated last October, the major piece now missing from our farm-program structure is an adequate device to maintain a floor under consumption. It might be well worth your while to endeavor to work out arrangements which would allow us to try out a program of some kind on a small scale in this field before the time comes when we actually need a big effort.

The second line of defense necessarily involves price supports and where and when needed acreage allotments and marketing quotas or similar devices. In this connection, the way in which parity prices are defined is of considerable importance. S. 2318 as it now stands provides that the parity prices for the major commodities shall be either the old parity or parity calculated according to the modernized formula provided in the bill, whichever is highest. I do not feel that farmers can afford to open their parity formula up to the type of criticism which I think would develop under this arrangement. I feel strongly that a single parity formula should be used and that this single formula should reflect recent historical price relationships among commodities.

The CHAIRMAN. That is not covered in the bill we have before us, you say?

Secretary ANDERSON. The bill has an alternative device and I am trying to say to you now that I believe strongly that if the farmers say they are going to take this base or that base, whichever is the

higher, it brings them into a field of criticism that may jeopardize the

whole program.

Parity is, and has to be, a relationship, and once we fix a relationship then I believe at least we ought to hold to a single base.

The CHAIRMAN. You are offering a revised program, are you? Secretary ANDERSON. I am suggesting to you merely that I believe we should hold to one of these methods which are outlined in the bill but not to both. I think the bill provides for a modernized parity. I am completely in sympathy with the desire to write a modernized parity. I think it is important and necessary, but I do not think that the best interests of the farmers are served by a parity formula which says, "You shall use this device or this device or this device, whichever is the higher," because I think that the farmers will be condemned for trying to get someting to which they are not entitled. Now, I think the farmer is entitled to parity, that he must have parity, and we must work out a way whereby he can realize parity. Senator AIKEN. Has that not already been done?

Have we not changed the base period for commodities so as to give them higher prices?

Secretary ANDERSON. Yes; and I am willing to say to you, Senator, that I assume you probably will not get much testimony out of Secretaries of Agriculture to the effect that we should not do that sort of thing, but I have a conviction that we should not.

I do not think you should take a 1910-14 base if that is advantageous one time, then take a 1926-27 base or a 1948-49 base or some other base and say that the only thing that represents the equality for the farmer or that parity for the farmer is the most favorable of those things.

I think we should try to see if we cannot hit upon a parity formula that does bring parity to the farmer with one single base. I believe it can be done and I believe the bill in its alternative provision comes close to it.

Senator AIKEN. Are you giving that formula this morning?

Secretary ANDERSON. I think we have suggested the formula. You have the device in here, the alternative, which we are willing to say is a good basis.

Senator AIKEN. Does that meet with your approval?

Secretary ANDERSON. As I recall the provision, I think that is all right. The thing that I object to is the statement that we should take the higher of the two devices. In bringing a formula up to date I would like to use a 10-year moving average. I would like to see it completely modernized. I have said steadily that I do feel that the farmers of this country have come to rely upon parity, have come to feel that they have waged a long fight to achieve parity. They finally got it and I would hate to see it changed without full approval of farm organizations and farm representatives.

My opinion may not necessarily be the right one.

Senator AIKEN. The bill was written this way and that provision was put in it for the expressed purpose of bringing out the discussions and viewpoints such as you have presented here because you realize there are some on the other side.

Secretary ANDERSON. I understand that.

Senator AIKEN. We felt that by putting the alternative formula in the bill that we would bring out all the arguments on both sides.

Secretary ANDERSON. I am sure of this, Senator. I am sure that my testimony this morning is going to conceal the fact, and I am going to try to bring it to the surface at once, that I think this committee has done a fine thing in bringing out a full and complete bill and bringing about full and complete discussion of the long-range programs.

I am afraid that an attempt is going to be made to just pass stopgap legislation for a period of a year or 18 months or 2 years and that may be all that can be accomplished.

I commend this committee for wading in at once into the question of long-range programs. When I speak as I do about this parity situation it is not to be critical that you put both things in the bill. I realize that there are many people and probably many of them are in this room who have far more experience than I have had with the operation of these agricultural programs, who believe very strongly that we should have alternative provisions, and quite obviously the Congress has agreed with them because they have written into the bill different bases to be used at different times.

I simply am trying to express by personal conviction and the conviction shared by people, I am sure, through all the Department that we strengthen the farmer's hand when we use one single base and try to get the Secretary, by his operations of price-support programs, to bring about the necessary flexibilities to insure complete equality to the farmer.

Senator LUCAS. Mr. Secretary, right on that point, assuming that the corn farmer out in my State of Illinois had the opportunity of exercising the option of taking one of two or three formulas that are written into this bill on parity, do I understand that it would be necessary for that individual farmer each year to make a declaration as to which parity formula he was going to follow before he could get the benefit of parity?

Secretary ANDERSON. No.

Senator LUCAS. Just how would that operate in an administrative way? Would the Department make that decision for him? I am trying to find out the mechanics of the administration, if you have two parity, formulas, for instance, on corn.

Secretary ANDERSON. It was our opinion that the Department would decide at the beginning of the year which of the two bases would be used. That decision would be made by the Department and not by the individual farmer.

Senator BUSHFIELD. How would the Department arrive at that decision, Mr. Secretary?

Secretary ANDERSON. It would decide from what statistical information it had which seemed to give the higher support price to the farmer and it could easily shift back and forth. It might be one basis one year and one basis the next, back and forth, whichever gave the higher figure to the farmer.

Senator LUCAS. The farmer would have nothing to do as far as making his own decision as to which parity formula he would accept then? Secretary ANDERSON. No. The Department would have to determine which of the figures would be the higher, or the highest if there were several of them with which to work.

Senator LUCAS. Would that create any administrative difficulty? Secretary ANDERSON. No; I think not. I think the Department