loan agreement, to purchase $10,000,000 worth of wheat and flour under the marketing agreement between the Secretary of Agriculture and the North Pacific Emergency Export Association.

(2) The price to be paid for such wheat and flour will be a bid price plus 5 cents per bushel of wheat.

(3) The Secretary agrees to direct the North Pacific Emergency Export Association to sell wheat and flour to the Chinese Government when its bids have been approved by the Secretary. This obligation on the part of the Secretary is in conformity with his power under the marketing agreement.

(4) The Secretary reserves the right to reject any bid submitted by the Chinese Government at any time: Provided, however, That if the Secretary approves bid or bids submitted, the Secretary agrees to allocate equitably the available wheat or flour between the bids submitted by others and the bids submitted by the Chinese Government if the bid price is the same.

(5) The Secretary reserves the right to terminate the agreement with China at any time upon the termination of the North Pacific marketing agreement by the Secretary.

The elevator operators, exporters of wheat, and mills exporting flour have, under the North Pacific marketing agreement, secured a return for their operations which was fixed in the agreement and which would have been fair under normal competitive conditions. The differential payments have been held to a minimum, the average having been around 22 cents per bushel. At no time has the differential payment been as large as the 25 cents per bushel estimate made before this agreement became effective.

REMOVES PRESSURE IN MIDWEST

Aside from the value of this agreement to the producers and handlers of wheat in the North Pacific area, a distinct advantage has occurred to wheat producers in the Midwest. Before the negotiation of the agreement the relatively low price of wheat on the Pacific coast, and the large surplus in that area, permitted wheat and flour to move in volume from the North Pacific ports to Galveston, Tex., and other Gulf ports for sale at interior markets in the Midwest. Considerable quantities of flour from the Pacific coast moved to the Atlantic seaboard, and were sold at a price considerably under that of flour milled in the Buffalo area. As a result of this abnormal flow of white wheat to the eastern parts of the United States, prices of all classes of wheat and flour in the Midwest and on the Atlantic coast were depressed. The agreement has diverted the flow of this surplus wheat to foreign markets where, under normal conditions, it finds its outlet, and prices of other classes of wheat at interior markets of the United States have benefited accordingly.

The first purchases of wheat under this agreement were made on October 19 at 67 cents a bushel. On November 29, the association was paying 74%1⁄2 cents per bushel. From October 19 to December 1, the association purchased 7,753,000 bushels of wheat and sold 7,228,000 bushels for export. Of these sales, 5,973,000 bushels were wheat and 1,255,000 bushels were in the form of flour.

TABLE 9.-Exports, wheat and wheat flour, in terms of wheat from ports in Oregon and Washington, 1931, 1932. Average 1931-32 and Oct. 19-Dec. 1, 1933. Sales for export under terms of marketing agreement, only a part of which has been exported [In thousands of bushels, i.e., 000 omitted]

Owing to the agreement with China to buy $10,000,000 worth of wheat and flour, the sales to that Government, under the marketing agreement, have been relatively larger than during previous years. The shipments of relief wheat accounted for a large part of the exports to China during 1931.

VII. MARKETING AGREEMENTS AND CODES

In addition to the acreage reduction program, and the Pacific Northwest marketing agreement, a number of codes affecting wheat and its products have been considered by the Administration. Among these are codes covering the following industries:

The Administration is also consideraing codes affecting competing products, including rye, corn, and hay.

VIII. CURRENT WORLD SITUATION

The current wheat production and supply condition for the world may be summarized as follows:

Production of wheat in the world, exclusive of Russia and China, for the 1933-34 crop year is estimated at 3,600,000,000 bushels compared with 3,788,000,000 for 1932-33, and an average of 3,281,000,000 for the period 1921-22, 1925-26.

The 1933-34 crop is smaller than any other crop during the last 5 years. Its distribution, however, is probably of more significance than its size.

The production in Europe during 1933, exclusive of European Russia, totaled 1,693,000,000 bushels, or about 200,000,000 more than the record crop of 1932. France, Germany, and Italy, the countries which formerly imported large quantities of wheat, produced in 1933 the largest crops on record. The exporting countries of the lower Danube Basin likewise produced record crops in 1933. Surplus available for export in these Danube Basin countries has been larger than usual, and considerably larger than last year when those countries produced a subnormal crop.

CROP SMALL BUT SUPPLIES LARGE

The North American crop in 1933 was very much smaller than the 1932 crop and considerably below average. Supplies available for export at the beginning of the current year July 1, 1933, were, however, well above average in the United States and Canada.

Surpluses available for export or carryover as of January 1, 1934, in the four principal exporting countries, indicate that the surpluses in Canada are 63,000,000 bushels less than those of a year earlier, in the United States 80,000,000 less, and in Australia about 57,000,000 less. In Argentina there was an increase of about 11,000,000 bushels during the year. The net change during the year for these four countries shows supplies about 189,000,000 bushels smaller than in the year earlier. This reduction, however, is more than offset by the larger supplies in European countries and in Asia. These larger supplies in Europe have to a considerable degree reduced the imports of those countries during the first 6 months of the current marketing year. International trade in wheat, as indicated by Broomhall's reports of shipments, was considerably smaller during the period July 1 to December 31, 1933, than for the corresponding period in 1932. The total shipments of wheat for this period in 1933 were reported to be 257,157,000 bushels compared with 281,890,000 for the corresponding period a year earlier.

Although the shipments were considerably smaller in 1933 than in 1932, the exports from the Danube countries and from Russia were increased very materially over those of the year earlier. Argentine exports were somewhat higher also. Exports from the United States and Canada were correspondingly lower. In the Southern Hemisphere, where the crop year coincides with the calendar year, it should be noted that the exports from Australia during the calendar year 1933 totaled 173,000,000 bushels, compared with 169,000,000 for 1932. Argentine exports during 1933 were about 149,000,000 bushels compared with 130,000,000 for 1932.

Prices of wheat at the principal wheat markets of the world during the last week of December 1933 reflected the relative location of the wheat stocks of the world. May futures at Liverpool at close on December 31 were 67% cents per bushel compared with 83% cents at Chicago for the May option. A year earlier this comparison was Liverpool 48 cents per bushel and Chicago 45 cents.

Representative prices of wheat at the principal world markets during the last week of December 1933 are compared with the corresponding week a year earlier in table 10.