For this reason, the number of contracts which will be accepted by the Secretary will be limited to the number which can be covered by the funds available from processing taxes. In other words, when a sufficient number of contracts have been signed to use up the estimated processing tax fund of $140,000, the sign-up will be closed.

RESULTS EXPECTED

It is not expected that more than 40 percent of the growers will find it to their advantage to sign contracts under this program. With a full sign-up of 40 percent of the growers, the production of Maryland tobacco in 1934 would be reduced approximately 10 percent below the average of the last three years. Reduction would be made in the low grades, which would help to reduce the surplus of these grades.

VII. CIGAR-LEAF PROGRAM FOR PUERTO RICO

Under the Agricultural Adjustment Act provision is made for extending the commodity benefits to growers in Puerto Rico. A program for adjustment of the production of cigar-leaf tobacco in Puerto Rico is now being developed.

The Puerto Rican cigar-leaf tobacco is of the filler type. Most of this type is shipped to the United States, where it enters into competition with the filler types produced in Pennsylvania and the Miami Valley.

A representative of the Agricultural Adjustment Administration has gone to Puerto Rico for the purpose of developing a program to be applied to this tobacco. A tentative contract has been drawn up under which it is provided that a reduction will be made in the crop to be harvested this year. It is expected that the final contract will be ready to offer growers within the next few weeks.

VIII. CODES OF FAIR COMPETITION

About 50 localized organizations in the tobacco industry have submitted codes of fair competition under the National Industrial Recovery Act to the Administration. Work is now being done to consolidate these codes, and up to this time the following four master codes have been worked out: (1) Tobacco distributors and retail dealers; (2) auction loose-leaf warehousemen; (3) leaf dealers; and (4) cigar manufacturers. A fifth master code which is under consideration would affect the manufacturers of cigarettes and the manufacturers of tobacco.

Pursuant to Executive order, the proposed draft of the code for tobacco distributors and retail dealers was transferred to the National Recovery Administration on January 16, 1934.

A brief summary of the net collections and expenditures for the various tobacco programs, not including Puerto Rico, as estimated for the Bureau of the Budget, is given in table 13.

TABLE 13.-Tobacco program estimates covering marketing period Oct. 1, 1933, to Sept. 30, 1935

NET COLLECTIONS:

The amounts of payments estimated for the different types of tobacco are given in table 14. This includes Puerto Rico.

TABLE 14.-Summary of estimated payments under tobacco production adjustment program with respect to crops of 1933 and 1934

CHAPTER 6

CORN AND HOGS

SALIENT FACTS ABOUT THE CORN-HOG PROGRAM

1. Number of farmers to whom 1934 corn-hog contracts were sent 2. Maximum total available for benefit payments to farmers who sign corn-hog contracts____

3. Percent reduction from average 1932-33 hog production required in contract__.

4. Minimum reduction from average 1932-33 corn acreage required in contract_ _ _

5. Payment per head under 1934 contract for 75 percent of average hog production in years 1932-33---

6. Benefit payment per bushel under provisions of contract for 20 percent of 1932-33 corn production_

7. Amount expended to remove 6,188,177 pigs and 222,140 sows in emergency hog-buying campaign__.

8. Available for loans of 45 cents per bushel on stored corn..

1, 500, 000

$350, 000, 000

25 percent

20 percent

$5.00

$0.30

$34, 000, 000

$150, 000, 000

Since the passage of the Agricultural Adjustment Act on May 12, 1933, action to improve the purchasing power of the basic commodities, corn and hogs, has been completed or begun along five lines:

1. A temporary adjustment in hog supplies to support hog prices during the closing months of 1933 and the early part of 1934 by means of an emergency pig and sow marketing program, was conducted at principal livestock markets, August 23 to October 7, 1933. 2. Loans at the gross rate of 45 cents per bushel on warehoused corn were made available to farmers in the principal corn-growing States in late November.

3. Purchases of live hogs and hog products by the Federal Surplus Relief Corporation were arranged by the Administration as an additional means of supporting the hog market.

4. A corn-hog production adjustment program calling for a reduction in corn acreage in 1934 of at least 20 percent and in number of litters farrowed and hogs produced for market by 25 percent under the average of the past 2 years, involving a maximum of $350,000,000 in benefit payments to participating farmers, was announced in October and put into operation in December.

5. Informal conferences and a public hearing, looking toward the development of a satisfactory marketing agreement with packers, were held during the summer and fall of 1933 and detailed studies with respect to methods of marketing hogs were begun.

I. HISTORICAL AND ECONOMIC REVIEW

When the Agricultural Adjustment Administration came into being after the passage of the act, the corn-hog situation was both acute and

chronic. The price trend line for corn and hogs had been continuing downward over a period of years and an unfavorable price disparity, based on pre-war price relationships, had been in existence, with only one exception for each commodity, since 1921.

Chart 16.-Total Corn-Acreage for Grain, Silage, Forage, and Hogged Off, 1929

The corn-hog problem had been growing more serious from year to year because of fundamental changes in demand, which had come about primarily because of a post-war revival in foreign hog production.