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imperative I am fearful that there are certain competent men that we could not get, we will say, for $15,000.
Senator WHEELER. I think you will be able to get them, Mr. Wallace. I think today there is patriotism enough in the people of this country so that you will be able to get help in setting up this organization.
Secretary WALLACE. We have had some very fine offers.
Senator WHEELER. If you start out, Mr. Wallace, paying $15,000 or $25,000 a year, you will subject your whole plan to serious opposition, and I think it is a very grave mistake for you to attempt to do it.
Secretary WALLACE. Well, your judgment is as good as mine on that, I assure you.
Senator McGILL. I believe it would reflect on the administration of the law to have these high-salaried men in there.
Senator CAPPER. That matter was discussed here in reference to the Agricultural Marketing Act. Some one suggested a limitation on salaries, and the same argument you have made was made then, that you would not be able to get men that were absolutely necessary, and then we found that they had salaries there of $50,000 and $75,000, and the farmers were very severe in their criticism of that.
Secretary WALLACE. I really think it might help if we had the privilege of taking on 10, we will say, up to $13,000—something like that. I think there are some men that might come at that figure.
Senator WHEELER. I do not agree with you.
Senator FRAZIER. You would have to get men already employed in these lines of work, drawing salaries now, and you would have to pay them approximately the same salaries that they are getting.
Senator WHEELER. But just stop and think what happens. In the farm marketing they said: “We have got to have this fellow in the grain trade; we have got to have this other fellow in the cotton trade”; and they made as big a mess of it as anybody could make.
Senator NORRIS. Now, Senator, the place where they were wrong, in my judgment, was when they said: “We have got to have this fellow." There is not any fellow that we have got to have.
Senator WHEELER. Not at all. There is no such thing as a superman.
Senator NORRIS. Just as a Senator, you think that, if you go out, the people are going to suffer, but they always find somebody to take your place.
Senator WHEELER. I think you will make a very serious mistake by that.
Senator McGILL. In attempting to create the proper effect on the public mind, especially those engaged in agricultural pursuit, those men, I agree with you, should be experienced in their particular line, and I think you should pay more than $7,500 or $8,000 per annum, that you should make it $10,000, or $12,000, or $15,000; otherwise it will hurt the administration of your act.
The CHAIRMAN. I think we understand this section pretty thoroughly. Now, if the Secretary will proceed to the other sections of the act.
Secretary WALLACE (reading):
(b) The Secretary of Agriculture is authorized to establish, for the more effective administration of the functions vested in him by this act, State and local committees, or associations of producers, and to permit cooperative asso
ciations of producers, when in his judgment they are qualified to do so, to act as agents of their members and patrons in connection with the distribution of rental or benefit payments.
That is to provide the machinery to get the money back to the farmers renting land, or following the allotment plan, to get that money back to the farmers, to utilize State and local committees, which presumably would be paid something.
The CHAIRMAN. Mr. Secretary, from what study I have made of this bill, in lieu of paying the farmer the difference between, or making an adjustment of the parity by paying him, this fund is to be used for the leasing of land rather than going to the farmer as a part of his equity in that tax?
Secretary WALLACE. You can do it either way.
Senator MoNARY. Mr. Secretary, where is that provision in the bill that permits you to retire marginal or submarginal lands and compensate the farmer by rental benefits?
Secretary WALLACE. You will find that under the general powers on page 6, part 1, providing for rental or benefit payments, line 4. You can provide a reduction in acreage or a reduction in production by either route, by the rental route or the allotment plan route, benefit payment route.
Senator McNARY. Then you could retire a vast wheat acreage in Kansas if you so desired, and compensate the farmer in rental benefits through the money raised by this taxing process ?
Secretary WALLACE. Yes.
Senator NORRIS. And this particular provision you are considering now is the method that will get the rental back to the farmer?
Secretary WALLACE. Yes; this (b) on page 10 is the method of getting it back.
Senator WHEELER. Of course, if you rent it from the farmer and paid it direct to him, would you not-in any event, you would have to have a local committee to round the thing out and show you where to place it equitably. The idea is to decentralize payments as much as possible and let them lease it themselves.
Secretary WALLACE. You see it is a matter of checking the past record as to their production in the past. You can use local men for that very effectively.
Senator McNARY. Have you made any estimate as to the probable cost of retirement of the number of acres necessary to increase the price levels and bring about domestic parity between production and consumption? Suppose you were asked on the floor what would be required in the issue of funds for rental to bring about a balancing of market demands, in cotton acreage and wheat acreage? Have you got anything on the amount of acreage and the amount of cost?
Secretary WALLACE. On the rental feature alone, dealing only with land—this is rather a guess on my part, but I would guess that you would want to take out of use something like 50,000,000 acres. It depends on whether you are getting the 50,000,000 forest acres or 50,000,000 average acres. The rental probably would be around $3.
The CHAIRMAN. There are 300,000,000 acres.
Secretary WALLACE. No; that does not mean all commodities; that means all land.
Senator McGILL. Wheat land, corn land, cotton, and so forth? Secretary WALLACE. Yes; crop land.
The CHAIRMAN. Well, Mr. Secretary, there is estimated to be 300,000,000 acres of land in cultivation in this country.
Secretary WALLACE. 350,000,000, if you include hay land, which is part of the rotation.
The CHAIRMAN. Putting it at 350,000,000, if you were to reduce that 15 percent, you would have out then about 40,000,000 acres ?
Secretary WALLACE. It would be nearer 50,000,000 acres from 350,000,000 acres.
The CHAIRMAN. You would want to reduce that 15 percent, which would be about 41 or 42 million acres out, if you reduced it 15 percent I am taking it that if you start out to reduce 20 percent, not all would avail themselves of the opportunity under this act.
Secretary WALLACE. Yes; that is a point to keep in mind.
The CHAIRMAN. And I estimated that there would be about 15 percent, which would make about 41,000,000 acres.
Secretary WALLACE. No; your arithmetic is a little off there, is it not?
The CHAIRMAN. If you will just take 15 percent-yes; that would be about 46,000,000 acres. I was just figuring that if it was 50,000,000 acres at a rental value of $4, it would be $200,000,000; therefore, your tax that you would contemplate raising for the purpose of retiring this land, and benefits, would be about $200,000,000.
Secretary WALLACE. Mr. Ezekiel calls my attention to the fact that the acreage value of cotton is about $9, and therefore my estimate is rather too low on cotton. Perhaps you had better make a statement on that, Mr. Ezekiel. I am not so familiar with the cotton situation as I might be.
Mr. EZEKIEL. In the case of cotton, where the farmers have now reduced their cash cost to practically nothing except the taxes and interest, which they would be required to pay in any case, it is very doubtful, other than by the operation of Senator Smith's plan, if additional acreage could be secured except by paying the farmers substantially at least what the value of the cotton on that acreage otherwise would be worth. At present prices that would be approximately $9 an acre for land in an average year.
The CHAIRMAN. You mean $9 an acre rental ?
The CHAIRMAN. I have got about 1,100 acres that I would like to rent to you for half of that.
Senator BANKHEAD. I think the chairman is a right big landowner, but you take the average farmer, he rents a few acres of cotton, and he is not going to reduce it to half at the normal price, when he is going to have the same cost for stock, the same feed, the same expense.
The CHAIRMAN. The Senator from Alabama must recognize that the largest percentage of these small cotton producers are renting land.
Senator McGILL. What are they going to do after we pass this bill?
Secretary WALLACE. It would probably take more than $2 an acre if this bill is passed and they think cotton is going up. It will take more than $2 an acre to get the land, will it not?
The CHAIRMAN. If cotton goes up to the proper parity, you will not need this bill at all; but what I am figuring on is if it stays anywhere near like it is. I have never rented, even in prosperous times, my cotton land at as much as $9 an acre except in some exceptional localities where the ground is naturally very rich.
Secretary WALLACE. What we are trying to do is to figure what it would cost us to get 50,000,000 acres of land out of use.
Senator MCGILL. The average rental is what we want to determine.
Secretary WALLACE. I am a little fearful as to $3 an acre. That is a figure customarily-$2.60 to $3 is the figure customarily used by the processors in their approach to the rental idea, and personally I am a little fearful of that.
Senator BANKHEAD. That is based upon woodland and all, the size of the ownership, not upon the cultivated land.
Senator MURPHY. Mr. Secretary, I would like to inquire: I understand about 65 percent of the cotton now raised is raised for export, and about 1 percent of the corn is raised for export, so that there is very much more cotton land that would be retired from production than corn land. Would that be true?
Secretary WALLACE. No; I think not.
Secretary WALLACE. There might be more cotton land than corn land, but not in the proportions that you indicate, not anywhere near the proportions you indicate. We might make a cut of, say, 10,000,000 acres in cotton and be sound, but we would not make a cut of 65 percent. We could not do that, because we want to consider our part in the world cotton market. In corn, on the other hand, we could make a much greater cut than 1 percent, because while although we export about 1 percent of the corn only, we do export in normal times from the packing houses a large quantity of lard, and when you express corn in hogs, we might find that, considering all the ramifications of the corn situation, we might want to make a cut of 10,000,000 acres in corn, and I am inclined to think that we would make a cut, roughly, of 7,000,000 acres in corn and 10,000,000 acres in cotton, possibly more than that.
Senator BANKHEAD. Mr. Secretary, in your rental prices it seems to me that what you have got to take into consideration on the list of commodities is the yield per acre over some representative period, say, 18 bushels of wheat and 175 pounds of cotton, and then fix the price for that representative period per acre. In other words, if your wheat runs 18 bushels per acre and sold for a dollar, you would have been getting $18 an acre for that land gross return, and in order to tell what you are going to pay for land you have got to take into account the gross return. Take tobacco, the gross return might be more than $100 an acre, but there is a big difference in the cost of production.
Secretary WALLACE. Considering land and labor.
Senator BANKHEAD. The cost of labor and cost of land. So when you take the yield per acre of the commodity and apply it for the same period to the price paid for the commodity, then you get a gross return on it, and you have got a basis then that the farmer can afford to take. Still I think that is purely a matter of administration.
Senator McNARY. I would like to find out from you, Mr. Secretary, on that processing tax, that is the sum which the consumer must pay in addition to the price now prevailing, in order to bring about what you call the benefit payments? Is not that true?
Secretary WALLACE. That is the way it ought to work. That means the amount the consumer will pay.
Senator McNARY. How are you going to arrive at this processing tax! You start out here and you say we have got 50,000,000 acres in excess called “ marginal land” that you are going to lease from
Secretary WALLACE. If we took sub-marginal land, which is the lowest-yielding land, it would be more than 50,000,000 acres.
Senator McNARY. Well, you have got to come to some idea sometime, and quickly, as to what this tax is to be on the acreage. You have got say, 200,000,000 acres, and that must come out of the higher price that the consumers pay for the products, necessarily. Is not that true?
Secretary WALLACE. Yes; although I do not say—I would take exception to your statement that we can estimate it with absolute precision, because that depends on how successful we are through these commodity councils in using control to affect price.
Senator McNARY. Then you can employ the allotment plan under this bill. How much is that going to cost ? That must be collected by a tax.
Secretary WALLACE. I beg pardon.
Senator MoNaRy. I say, you said a while ago you have the power to invoke the so-called domestic-allotment plan, and that will benefit the farmer by the higher price level, which must come out of this processing tax?
Secretary WALLACE. Yes.
Senator McNARY. How much is the whole thing going to cost ? Have you made an estimate, to determine what the tax will be ?
Secretary WALLACE. You mean if you followed the allotment plan only rather than the rental plan, if that is the only method used ?
Senator McNary. The first thing that the people from the cities will want to know, and all their Representatives, is how much is this going to cost the consumers of the country and what plan are you going to pursue to collect it?
Secretary WALLACE. You can not give a precise answer to that, because we do not propose to reach parity at once; that is, we feel that it is impossible to do it. We would like to do it, but we fear it is impossible to reach parity at once. If we did reach parity at once, it might cost $800,000,000, some figure like that would cost the consumer something like that.
Senator McNary. That includes the retirement of this vast acreage as well as employment of the allotment plan?
Secretary WALLACE. That is, assuming you are using the allotment plan and reaching parity at once, and also it assumes, moreover, that the price level, the general price level, is where it is today and that the farm commodities are where they are today, and that in order to close that gap between the parity price and the present price it would take today somewhere in the neighborhood of $800,000,000, if you are going to do that thing all at once.