place or the other place, but there is a sore spot in the corn belt to that extent. I do not want anyone concerned with agriculture, with the agricultural policy of the United States, to be prepared to dodge that fact. I have urged it on the packers face to face with the greatest possible emphasis, and hope to have our statistical men go into it in great detail with them, because I think they themselves in the interest of their own prosperity are vitally concerned with it. All of us living in the great Mississippi Valley are tremendously concerned in seeing that that thing is worked out.

Senator NORRIS. What is the information that comes to you in regard to the desires and wishes of the hog men and cattle men and sheep men, to be in or out?

Secretary WALLACE. A sheep man came into my office this morning and said he normally fed 30,000 sheep in Colorado, and he pleaded that sheep not come in. He asked what my policy would be in case the sheep men and the packers agreed not to come in. Of course, we would not want sheep in if such were the case.

Senator WHEELER. A stock association wired me that they wanted to be left out, representing most of the cattle and sheep men there. Secretary WALLACE. I would like to put this out for the cattlemen. You know, the cattle cycle is 7 years up and 7 years down. We reached the greatest scarcity of cattle about four years ago. Cattle have been more profitable than most any other farm product, or less unprofitable-put it any way you wish-during the past 4 or 5 years. Beeves most of the time have been quite profitable, and at the present time the tariff is more or less effective on cattle; but when you reach that situation that comes about every 15 or 16 years, when that thing reaches its fruition and you have the overproduction on cattle that would be normally expected in about 1936, I am not so sure that the cattlemen might not change their tune with respect to the export situation of beef cattle. I am just throwing that out for the benefit of the beef-cattle men. I think they have every reason to be relatively sad.

Senator KENDRICK. Mr. Secretary, I may say that in our section of the country we produce but few hogs, and I have a very definite conviction that if the hog producers want to be included in the billand there is information on that point-they should be allowed to be included, allowed to have their commodity handled under the terms of the bill. But I insist that in case those who produce cattle and sheep, do not want to be included, they should be given the right to remain out, and, so far as I know, the sentiment at this time is almost, if not quite, unanimous against the inclusion of these two commodities in the bill.

Secretary WALLACE. Sheep and cattle; yes.

Senator BANKHEAD. Mr. Secretary, is there any way you can help the corn growers without including hogs in this bill?

Secretary WALLACE. I think it would be possible. Of course, you can see, Senator Bankhead, that if, we will say, cotton and wheat are helped the corn-hog people will feel that a great damage has been done to them; they will feel that inevitably, especially if the help that is given to cotton and wheat would actually work out in its economic ramifications to increase the difficulties of their situation. I think it is conceivable, for instance, that if you could work

out in a technically and economically sound way this alcohol proposition, if you could work that out, for instance

Senator KENDRICK (interposing). But that is not in your bill.
Secretary WALLACE. That is not in the bill.

Senator BANKHEAD. Let me ask you this: Is there any way to raise money from processors, either to pay the allotment certificates, if the allotment plan is applied, or to pay for the rental of the land if the lease plan is applied, without including livestock in the bill, to collect the money from the processors? In other words, you do not sell enough corn commercially to raise money enough to apply either the allotment plan or the lease plan to corn growers.

Secretary WALLACE. Almost 50 percent of the Corn Belt corn is fed to hogs. They ordinarily say that 80 or 85 percent, or a little more, is fed to livestock. I suppose 400,000,000 bushels goes into the channels of trade.

Senator BANKHEAD. So practically your own source of revenue is through livestock?

Secretary WALLACE. Corn and hogs must be paired together in the corn belt. They must be approached together. The prices act and react. First one is higher than the other, but over any period of time corn is hogs and hogs is corn.

Senator BANKHEAD. I do not know whether you got the question correct as I am asking it. Can you raise the money necessary under this bill to aid the corn grower without having a processing tax upon hogs?

Secretary WALLACE. It seems to be the only place where you could collect enough money-if each commodity is to stand on its own feet, the only place where you can collect enough money to induce the corn grower to hold corn land out of use is by means of a tax on the hogs. It is about the only way I can see.

Senator BANKHEAD. There is not enough corn moving in commercial channels to get enough money to be helpful to the great mass of corn growers.

Senator MCNARY. Mr. Secretary, you alluded briefly to the alcohol remedy. You mean the Belcher plan whereby you extract a certain quantity of alcohol from corn and substitute it for gasoline?

Secretary WALLACE. Yes.

Senator MCNARY. Do you think we have authority in this bill to employ that plan?

Secretary WALLACE. No, I do not think so.

Senator MCNARY. I was just curious.

Senator THOMAS. Mr. Secretary, may I call your attention to an approach to this problem from a different angle? I have here a copy of Collier's of the date of April 1, 1933. On page 8 I find an article entitled "Why the Farmer Doesn't Like Our Dollar." It appears to be the report of an interview given by yourself to Mr. William G. Shephard. I have read this article and I will say that I thoroughly agree with the conclusions reached.

Now, with that statement, the bill before us provides in section 11, title 2, that it shall apply to wheat, cotton, corn, and so forth, and milk products. Is it your understanding that this bill has for its purpose the raising of the price of such commodities to the farmers or producers of such farm products? Is not that the purpose of this

legislation, to raise the pri e of each of these commodities to the people who produce them?

Secretary WALLACE. To the pre-war parity.

Senator THOMas. We will not go into the extent, but to raise the price!

Secretary WALLACE. Right.

Senator THOMAS. Is it or not your opinion that this could be reached immediately, directly, and easily through the placing of more money in circulation !

Secretary WALLACE. You understan. i. of course, that I am not the Secretary of the Treasury.

Senator THOMAS. I understand that.

Secretary WALLACE. You understand that first. In the second place, you understand that that particular interview was given before I became a part of this particular team down here. Now, may I make a general observation on the possible effect of an increase in eurrency or credit on the agricultural situation! I think we will all agree that if an increase in currency or credit brought about a rise in the general price level, the farmer would be beneficially affected because of the lightening of all fixed charges, the debt load, interest. the tax load, railroad rates, utility rates, and the buying of the products of that part of city labor which has not come down. To that extent the farmer undoubtedly would be beneficially affected by a higher general price level, but I will also call your attention to this fact: That if we did have such a higher price level, and if we did continue producing an extra 180.000.000 bushels of wheat for which there is no effective purchasing power inside of this country and apparently no purchasing power abroad, the currency thing in and of itself would not take care of that. There are such things as monetary control and production control. They are both important. This bill, of course, addresses itself merely to the production control end.

Senator THOMAS. Following up your statement. Mr. Secretary, I have before me the United States Department of Labor, Bureau of Labor Statistics. This particular data was released for publication on March 18. I find here that in May of 1920 this commodity index showed the purchasing power of the dollar, as measured by all commodities, to be 167.2. That was at the time when the dollar was the cheapest and commodity prices, wholesale prices, were the highest. I find on the last page that in February the dollar, as made by this commodity index, was down to 59.8. I find on the sheet entirely up to date that on March 4 the commodity index was 59.6. That was the lowest, on March 4 of this year. That shows that in 1920 the dollar would only buy at the ratio of 167; it shows that this time the dollar buys at the ratio of 59.6. It means that the dollar today will buy practically three times as much wholesale commodities as it bought in 1920. That shows the dollar has a fluctuating and varying buying power.

Now, here is my question: How is it possible to legislate for anybody, farmers or anybody else, with a dollar that will change 300 percent in 10 years? My question is this: Do you or not conceive it to be fundamental that before we can make any substantial progress in any kind of legislation for manufacturers, laborers, or what not, we must fix the correct buying power of a dollar,

and then try to maintain that buying power constantly throughout the year?

Secretary WALLACE. I think that is one of the most fundamental problems of civilization, of this country and the entire world.

Senator THOMAS. I agree with you 100 percent.

Senator WHEELER. Mr. Secretary, you said that increasing the amount of money in circulation would reduce the fixed charges, the interest and taxes and railroad rates and utility rates, but that on a crop of which you produced a surplus that had to be sold in the world market it would not affect the world price.

Secretary WALLACE. That is not quite the right shading, perhaps. I said the problem of the surplus would still be with us. You would have that tangible, physical problem still with you and there would be the problem of the ratio, there is always the problem of the ratio. It would affect one part of the farmer's dollar; it might not necessarily affect the other part.

Senator WHEELER. I agree with you entirely. I mean, for instance, when they had the inflation in Germany and in France and in Austria, they were able to raise farm commodity prices within the country, but it did not affect world commodity prices, but I do not want to get into the subject of the remonetization of silver; the reason I am advocating the plan to remonetize silver is because of the fact that 60 percent of the people of the world are on more or less of a silver-standard basis, and if you can remonetize silver you would affect world commodity prices as distinguished from a paper inflation, which would only affect the commodity prices within your country and would not affect world commodity prices. Secretary WALLACE. One of the most important things is to raise world commodity prices.

Senator KENDRICK. Mr. Secretary, there are two points that I want to suggest to you and ask your indulgence in connection with the livestock question.

First, because of your familiarity with the law, it is unnecessary to point out to you the fact that the marketing system on livestock is vastly different, necessarily, from that of nonperishable commodities. I have extreme apprehension as to what the effect will be on the movement even of hog products through the processes of this bill, because of the apparently necessary obstruction in the movement of the commodity from the producer to the consumer. 1 am apprehensive that in the show-down anything that will in any way interfere with that movement will be calculated to compel congestion in the stockyard, where it is impossible to sell and imposible to hold. As you know all about that, it will not be necessary to enlarge upon the picture, but there is reason for apprehension lest anything interfere there that will send the livestock home without a market. Since I have been in Washington, I have endeavored in every way I could to remove from the handling of livestock commodities any obstruction, and as I have noted the situation, anything that interfered with the movement has invariably resulted in decreasing the price paid the producer and increasing the price paid by the consumer. As I see it, the more deadly thing would be the denial to some of the producers of any market at all. I ask you to consider that, because you know all the facts; you are familiar with the movement from the producer to the consumer.

Another thing about this bill is that everybody agrees it is an experimental piece of legislation. To limit the number of commodities in the bill would almost unfailingly increase its chances of success. As you said a moment ago, if the plan is successful, every farm commodity that can be accepted will want to be included. Therefore, it seems to me that if livestock and livestock products were eliminated it would almost certainly conduce to the successful operation of the bill.

Senator BANKHEAD. Mr. Secretary, I want to ask you this: Is it your opinion-I presume that it is, but I will ask you that the reduction of an excess, a surplus of any farm commodity, is necessary in order to bring about an effective price increase in that particular commodity?

Secretary WALLACE. You are asking if the law of supply and demand ordinarily works?

Senator BANKHEAD. You can construe it to suit yourself.

Secretary WALLACE. I think the law of supply and demand ordinarily works sooner or later.

Senator BANKHEAD. Under regular, normal conditions?

Secretary WALLACE. Other things being equal, the result is always

that.

Senator BANKHEAD. An excess surplus tends to keep down an increase in price of that commodity where there is an excess?

Secretary WALLACE. Yes. The Department of Agriculture and many of us have made extended studies over long periods of years where we tried to hold other things equal. The thing undoubtedly works, and the market men know it works; everyone in the trade knows its works. It is a truism, Senator.

The CHAIRMAN. Therefore, Mr. Secretary, it is a reduction of the amount of the commodity either through the elimination of acreage or through the reduction of production on any given number of acres. You consider that vital?

Secretary WALLACE. It is vital under the situation in which we find ourselves today.

Senator MCNARY. Mr. Secretary, please refer to page 15, line 22: If the Secretary of Agriculture finds, after investigation and due notice and opportunity for hearing to interested parties, that such disadvantages in competition exist, or will exist, he shall proclaim such finding. The Secretary shall specify in this proclamation the competing agricultural commodity and the compensating rate of tax on the processing thereof necessary to prevent such disadvantages in competition. Thereafter there shall be levied, assessed, and collected upon the first domestic processing of such competing agricultural commodity a tax, to be paid by the processor, at the rate specified, until such rate is altered pursuant to a further finding under this section, or the tax or rate thereof on the basic agricultural commodity is altered or terminated.

I think that section must be construed as including an almost unlimited number of agricultural products not heretofore defined as basic commodities as included in the bill?

Secretary WALLACE. Undoubtedly it is referring to those not included which are found to compete seriously with the specified basic commodities.

Senator MCNARY. For instance, poultry may be a substitute for pork or mutton. If, by reason of the processing tax, the consumption of pork or mutton has been interfered with or diminished and