Ai) /DP

Ag AGRICULTURE ENVIRONMENTAL AND CONSUMER'lri 9 PROTECTION APPROPRIATIONS FOR 1974

GOVERNMENT

Storage

11-1

KANSASi STATE UNIVESUBCOMMITTEE OF THE

,1MENTS

L 2 1973 HEARINGS

BEFORE A

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

NINETY-THIRD CONGRESS

FIRST SESSION

SUBCOMMITTEE ON AGRICULTURE—ENVIRONMENTAL AND CONSUMER PROTECTION

JAMIE L WHITTEN, Mississippi, Chairman

gEORGE E. SHIPLEY, Illinois MARK ANDREWS, North Dakota

FRANK E. EVANS, Colorado ROBERT H. MICHEL, Illinois

BILL D. BURLISON, Missouri WILLIAM J. SCHERLE, Iowa

WILLIAM H. NATCHER, Kentucky J. KENNETH ROBINSON, Virginia

NEAL SMITH, Iowa

BOB CASEY, Texas

GEORGE E. EVANS, ROBERT B. FOSTER, and CHARLES W. SNODGRASS, Staff Assistants

PART 9

FARM PROGRAMS

Printed for the use of the Committee on Appropriations

AGRICULTURE ENVIRONMENTAL AND CONSUMER

PROTECTION APPROPRIATIONS FOR 1974

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

NINETY-THIRD CONGRESS

FIRST SESSION

SUBCOMMITTEE ON AGRICULTURE—ENVIRONMENTAL AND CONSUMER PROTECTION

JAMIE L WHITTEN, Mississippi, Chairman

GEORGE E. SHIPLEY, Illinois MARK ANDREWS, North Dakota

FRANK E. EVANS, Colorado ROBERT H. MICHEL, Illinois

BILL D. BURLISON, Missouri WILLIAM J. SCHERLE, Iowa

WILLIAM H. NATCHER, Kentucky J. KENNETH ROBINSON, Virginia

NEAL SMITH, Iowa

BOB CASEY, Texas

GEORGE E. EVANS, ROBERT B. FOSTER, and CHARLES W. SNODGRASS, Staff Assiatants

PART 9

FARM PROGRAMS

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

96461 0 WASHINGTON : 1973
COMMITTEE ON APPROPRIATIONS

GEORGE

JAMIE L. WRITTEN, Mississippi

JOHN J. ROONEY, New York

ROBERT L. F. SIKES, Florida

OTTO E. PASSMAN, Louisiana

JOE L. EVINS, Tennessee

EDWARD P. BOLAND, Massachusetts

WILLIAM H. NATCHER, Kentucky

DANIEL J. FLOOD, Pennsylvania

TOM STEED, Oklahoma

GEORGE E. SHIPLEY, Illinois

JOHN M. SLACK, West Virginia

JOHN.J. FLYNT, JR., Georgia

NEAL SMITH, Iowa

ROBERT N. GIAIMO, Connecticut

JULIA BUTLER HANSEN, Washington

JOSEPH P. ADDABBO, New York

JOHN J. McFALL, California

EDWARD J. PATTEN, New Jersey

CLARENCE D. LONG, Maryland

SIDNEY R. YATES, Illinois

BOB CASEY, Texas

FRANK E. EVANS, Colorado

DAVID R. OBEY, Wisconsin

EDWARD R. ROYBAL, California

LOUIS STOKES, Ohio

J. EDWARD ROUSH, Indiana

GUNN McKAY, Utah

TOM BEVILL, Alabama

EDITH GREEN, Oregon

ROBERT 0. TIERNAN, Rhode Island

BILL CHAPPELL, JR., Florida

BILL D. BURLISON, Missouri

KEITH F. MAINLAND,

GEORGE E. EVANS

ROBERT B. FOSTER

JOHN M. GARRITY

AUBREY A. GUNNELS

CHARLES G. HARDIN

JAY B. HOWE

F. MICHAEL HUGO

THOMAS J. KINGFIELD

ROBERT L. KNISELY

RICHARD N. MALOW

MILTON B. MEREDITH

H. MAHON, Texas, Chairman

ELFORD A. CEDERBERG, Michigan

JOHN J. RHODES, Arizona

WILLIAM E. MINSHALL, Ohio

ROBERT H. MICHEL, Illinois

SILVIO 0. CONTE, Massachusetts

GLENN R. DAVIS, Wisconsin

HOWARD W. ROBISON, New York

GARNER E. SHRIVER, Kansas

JOSEPH M. McDADE, Pennsylvania

MARK ANDREWS, North Dakota

LOUIS C. WYMAN, New Hampshire

BURT L. TALCOTT, California

WENDELL WYATT, Oregon

JACK EDWARDS, Albama

WILLIAM J. SCHERLE, Iowa

ROBERT C. McEWEN, New York

JOHN T. MYERS, Indiana

J. KENNETH ROBINSON, Virginia

CLARENCE E. MILLER, Ohio

EARL B. RUTH, North Carolina

VICTOR V. VEYSEY, California

LAWRENCE COUGHLIN, Pennsylvania

Clerk and Staff Director

STAFF ASSISTANTS

AMERICO S. MICONI

DEMPSEY B. MIzELLE

ENID MORRISON

PETER J. MURPHY, Jr.

HENRY A. NEIL, Jr.

ROBERT C. NICHOLAS III

BYRON S. NIELSON

JOHN G. OSTHAUS

FREDERICK F. PELUGER

JOHN G. PLASHAL

EDWIN F. POWERS

SAMUEL R. PRESTON

DONALD E. RICHBOURG

EARL C. SILSBY

G. HOMER SKARIN

CHARLES W. SNODGRASS

HUNTER L. SPILLAN

PAUL E. THOMSON

GEORGE A. URIAN

DEREK J. VANDER SCHAAP

EUGENE B. WILHELM

J. DAVID WILLSON

SURVEYS AND INVESTIGATIONS

C. R. ANDERSON

LEROY R. KIRKPATRICK

DAVID A. SCHMIDT

DENNIS F. CREEDON

NOTE.—This Surveys and Investigations supervisory staff is supplemented by selected

personnel borrowed on a reimbursable basis for varying lengths of time from various

agencies to staff up specific studies and investigations. The current average annual fulltime personnel equivalent is approximately 42.

GERALD J. CHOUINARD

PAUL V. FARMER

SANDRA A. GILBERT

EVA K. HARRIS

VIRGINIA MAY KEYSER

MARCIA L. MATTS

ADMINISTRATIVE SUPPORT

FRANCIS MAY

GENEVIEVE A. MEALY

JANE A. MEREDITH

LAWRENCE C. MILLER

MARY ALICE SAUER

DALE M. SHULAW

AUSTIN G. SMITH

RANDOLPH THOMAS

BETTY A. SWANSON

SHARON K. TINSLEY

GEMMA M. WEIBLINGER

;•1'
AGRICULTURE-ENVIRONMENTAL AND CONSUMER

PROTECTION APPROPRIATION FOR 1974

MONDAY, MAY 14, 1973.

FARM PROGRAMS

Mr. WHITTEN. In view of the testimony the committee has received

in connection with the current operation of the farm program, and

in view of the fact that current farm legislation will soon expire,

I ask unanimous consent that earlier hearings pertinent to overall

farm policy be printed in connection with our hearings on the 1974

budget estimate for the Department of Agriculture.

[No objections being made, the hearings follow:]
•

di

r
DEPARTMENT OF AGRICULTURE

APPROPRIATIONS FOR 1956

ADDITIONAL

HEARINGS

BEFORE TH/D

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

EIGHTY-FOURTH CONGRESS

FIRST SESSION

SUBCOMMITTEE ON DEPARTMENT OF AGRICULTURE AND RELATED

AGENCIES APPROPRIATIONS

JAMIE L. WHITTEN, Mississippi, Chairman

FRED MARSHALL, Minnesota H. CARL ANDERSEN, Minnesota

CHARLES B. DEANE, North Carolina WALT HORAN, Washington

WILLIAM H. NATCHER, Kentucky CHARLES W. VURSELL, Illinois

Ross P. POPE, Staff Assistant to the Subcommittee

COMMODITY CREDIT CORPORATION

Printed for the use of the Committee on Appropriations

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON : 1955
•

COMMITTEE ON APPROPRIATIONS

CLARENCE CANNON, Missouri, Chairman

GEORGE H. MAHON, Texas

HARRY R. SHEPPARD, California

ALBERT THOMAS,'Texas

MICHAEL J. KIRWAN, Ohio

W. F. NORRELL, Arkansas

JAMIE L. WHITTEN, Mississippi

GEORGE W. ANDREWS, Alabama

JOHN J. ROONEY, New York

J. VAUGHAN GARY, Virginia

JOHN E. FOGARTY, Rhode Island

ROBERT L. F. SIKES, Florida

ANTONIO M. FERNANDEZ, New Mexico

PRINCE H. PRESTON, JR., Georgia

OTTO E. PASSMAN, Louisiana

LOUIS C. RABAUT, Michigan

SIDNEY R. YATES, Illinois

FRED MARSHALL, Minnesota

JOHN J. RILEY, South Carolina

ALFRED D. SIEMINSKI, New Jersey

JOE L. EVINS, Tennessee

HENDERSON LANHAM, Georgia

CHARLES B. DEANE, North Carolina

JOHN F. SHELLEY, California

EDWARD P. BOLAND, Massachusetts

DON MAGNUSON, Washington

WILLIAM H. NATCHER, Kentucky

DANIEL J. FLOOD, Pennsylvania

WINFIELD K. DENTON, Indiana

JAMES 0. MURRAY, Illinois

GEORGE Y. HARVEY, Staff Director

KENNETH SPRANRLE, Atieistant Staff Director

II

JOHN TABER, New York

RICHARD B. WIGGLESWORTH, Massachusetts

BEN F. JENSEN, Iowa

H. CARL ANDERSEN, Minnesota

WALT HORAN, Washington

GORDON CANFIELD, New Jersey

IVOR D. FENTON, Pennsylvania

JOHN PHILLIPS, California

ERRETT P. SCRIVNER, Kansas

FREDERIC R. COUDERT, JR., New York

CLIFF CLEVENGER, Ohio

EARL WILSON, Indiana

GLENN R. DAVIS, Wisconsin

BENJAMIN F. JAMES, Pennsylvania

GERALD R. FORD, Rt., Michigan

EDWARD T. MILLER, Maryland

CHARLES W. VURSELL, Illinois

T. MILLET HAND, New Jersey

HAROLD C. OSTERTAG, New York

FRANK T. BOW, Ohio
t•

DEPARTMENT OF AGRICULTURE APPROPRIATIONS

FOR 1956

FRIDAY, JULY 29, 1955.

COMMODITY CREDIT CORPORATION

WITNESSES

J. A. McCONNELL, ASSISTANT SECRETARY OF AGRICULTURE

EARL HUGHES, ADMINISTRATOR, COMMODITY STABILIZATION

SERVICE

W. C. BERGER, ASSOCIATE ADMINISTRATOR, COMMODITY STABILIZATION SERVICE

F. M. RHODES, DIRECTOR, COTTON DIVISION, COMMODITY STABILIZATION SERVICE

PRESTON RICHARDS, DEPUTY ADMINISTRATOR, PRICE SUPPORT,

COMMODITY STABILIZATION SERVICE

LARRY MANWARING, DEPUTY ADMINISTRATOR, PRODUCTION

ADJUSTMENT, COMMODITY STABILIZATION SERVICE

MARVIN McLAIN, DIRECTOR, GRAIN DIVISION, COMMODITY

STABILIZATION SERVICE

W. E. UNDERHILL, ASSISTANT TO DEPUTY ADMINISTRATOR,

PRICE SUPPORT, COMMODITY STABILIZATION SERVICE

C. B. HOWE, GRAIN DIVISION, COMMODITY STABILIZATION

SERVICE

Mr. WHITTEN. Gentlemen, the committee will come to order.

I would like for the record to show those who are in attendance

from the Department.

We are pleased to have Mr. McConnell, Assistant Secretary of

Agriculture, and his associates here.

SALES PROGRAM IN WORLD MARKET

Gentlemen, we asked you here to go over this Commodity Credit

Corporation operation, particularly in connection with efforts that

have been made to set up a sales organization within the Department

and as to what the plans and programs you have set up have been.

Briefly, for the record, the Commodity Credit Corporation in its

charter is authorized to sell commodities in world trade at any price;

and this is necessary, in order to protect the Corporation and in order

to retain for the United States its fair share of world markets. For

some several years I, as well as other Members of Congress, have

pointed this fact out in an effort to get action in this regard.

I would like at this point to have inserted in the record the language

from our report on the Agriculture appropriation bill, where these

facts were pointed out.

(The information is as follows:)

(1)
2

FAILURE OF COMMODITY CREDIT CORPORATION TO MEET FULL RESPONSIBILITIES

Any analysis of the present situation confronting farmers must start with a

thorough study of the Commodity Credit Corporation, the Government's arm

established with a dual responsibility to (1) support farm prices within the terms

of the law and (2) protect the investment of the Nation's taxpayers, including

the American farmers, through sales of commodities acquired.

The agency set up to handle the price-support program was established as a

corporation in order to give it more latitude to buy and sell, borrow and repay

money, sue and be sued, etc. In other words, it was created on this basis so that

it would operate on a businesslike basis to carry out its responsibility of supporting

farm prices and protecting the Government's investment through sales. It is

this latter responsibility which has been largely overlooked by the Corporation

and those dealing with the subject.

As to the Corporation's authority and obligation to sell, we need only look to

its charter, which in section 5 (f) authorizes it to export or cause to be exported,

or to aid in the development of foreign markets for agricultural commodities

acquired under price-support programs or specificany procured for export purposes. The Charter Act contains no restriction on the prices for which commodities may be sold by the Corporation for export purposes.

This Corporation has authority to invest up to $10 billion to support farm

commodities. At the present time, it has invested over $7 billion in such

commodities. From this it must be conceded that the Corporation has

discharged its responsibility to support farm commodities as provided by law.

On the other side of the picture, however, there is a serious question whether

the Corporation has met its obligation to protect its (the people's) investment.

Testimony before the committee indicates that, while the. Corporation has the

authority to sell its products in world markets at competitive prices, as of February

1955, nearly $3.7 billion of such commodities have never been offered for sale

abroad at competitive prices, and storage charges are rapidly increasing the

Corporation's investment in these stocks.

There is reason to believe that such products could be sold in world markets

through normal channels of trade if an effort were made to do so on a competitive

basis. During the past year, largely as a result of the urging of this committee,

about $500 million worth of such commodities were sold for dollars by merely

offering them for sale on a competitive basis through United States export traders.

Many countries of the world have dollars and are anxious to buy American

products at competitive prices.

Under an erroneous decision, the President and Board of Directors of the

Corporation have set up a policy of making the American support price substantially the offering price in world markets. As a result the Corporation is placed

in the position of a "residual supplier." This is borne out by the following

statement contained in a news release of the Department dated February, 1954:

"The present season again finds the United States in the position of residual

supplier of cotton to the world, that is, with demand for its exports limited until

other exporters have largely sold out."

While the price-support law fixes the domestic price of Commodity Credit

Corporation sales of basic commodities at the support level plus handling and

storage charges, there is nothing in the law applying this same formula to sales

abroad. With full authority to sell competitively in world trade, the Corporation and the Secretary, according to his testimony, have set our domestic price

as our price in world markets, with relatively minor exceptions. In connection

with wheat sold under the International Wheat Agreement, which is an exception,

our sales are made on a fixed price level, causing CCC to miss many sales.

The committee feels that a price-support system is necessary to offset other

United States costs and to enable the farmer to exist along with the other segments of our economy, most of which have protection by law in one form or

another. It does not believe that losses on commodities taken over by the

Commodity Credit Corporatibn, which have been greatly increased by failure to

sell, should be used to discredit such a valuable part of the broad farm program

of this country.

The Congress authorized sales in world trade at such price as It might take to

move these commodities. Certainly the Congres never intended for the CCC

to restrict United States production to the domestic market by keeping its commodities off world markets at competitive prices. Testimony before the committee indicates that nearly every country of the world makes special concessions
3

where necessary to keep its products moving in world trade channels. Undoubtedly Congress intended that this country should compete in world markets.

This is borne out by the fact that it provided specific authority in the Commodity

Credit Corporation Charter for the Secretary to sell its commodities in world

trade at whatever price he finds necessary to sell such commodities.

COMMODITY CREDIT CORPORATION OPERATING COSTS

Any decreased investment which might result from flexible or reduced support

levels is being dissipated by failure to sell. Of the $588.5 million loss incurred on

CCC commodities disposed of in the fiscal year 1954, about $224 million represents

storage, warehousing and transportation costs and $102.9 million represents

administrative, interest, and similar costs. Of this storage cost, $188 million

covers storage on those commodities which have never been offered for sale in

world markets at competitive prices, even though the Department has the authority to so offer them. These commodities include corn, cotton, rice, tobacco, cheese,

milk, vvocl, cottonseed meal, cotton linters, olive oil, seeds (hay and pasture),

and soybeans, in which the United States has an investment of $3.7 billion.

A large part of these storage costs would have been avoided had the Corporation

used its authority to sell these stocks in world trade through normal channels.

Losses on sales abroad could well have been less than storage costs resulting from

the present policy of holding such commodities off world markets at competitive

prices. For example, on some of the cotton now held, as much as 8 cents per

pound has been added to the Government's investment by storage costs alone.

In view of the large amounts of Federal commodities on hand, no further

increases in storage rates should be authorized under any circumstances. Instead,

the committee feels that storage costs should be brought down by at least 20

percent during the next fiscal year, by reducing stocks through sales. It also

believes that the reduction of stocks of commodities and storage costs should

continue at even a faster rate in the years ahead, until CCC holds only such

supplies as are essential to security reserve for one year.

NEED FOR POSITIVE SALES PROGRAM

It would seem to the committee that the directors of any corporation should

realize that a business cannot operate successfully if it does not sell what it purchases. This is particularly true where holding the stocks continues to add to the

carrying charges due to accrued storage costs and constantly increasing administrative expense. And yet, that is what the Commodity Credit Corporation is

doing.

The committee find that this $10 billion corporation, which now has over $7

billion invested, does not have a sales manager or a sales organization. Actually

it does not even have a sales policy or program worthy of the name.

It has long been recognized by the Congress that, in order to protect the public

interest, Government purchase contracts must go to the lowest bidder. In view

of the soundness of that policy, the committee wonders why the CCC does not

save Government money by selling to the highest bidder. Generally speaking the

Corporation does not do that either at home or abroad. Almost 100 percent of

the commodity sales are offered at a fixed price. Usually, on this basis, CCC does

not sell, thereby increasing storage costs and adding to the United States investment and eventual losses. Last year, when the committee got the Corporation

to offer stocks competitively, the commodities were sold for dollars totaling $500

million.

Certainly, the operating heads of this $10 billion corporation must realize that,

with over $7 billion invested, they cannot keep buying, and cannot keep adding

to carrying charges because of higher storage rates, increasing commodity volume,

and more administrative costs—and not sell for the best available price.

Yet the officials of this corporation will not sell competitively in world trade.

It cannot be because they do not have authority, for the charter itself gives unlimited authority to sell on such a basis.

The charter of the Corporation provides for a president and board of directors.

These officials are—

Ezra Taft Benson, Director (Secretary of Agriculture).

True D. Morse, President (Under Secretary of Agriculture).

James A. McConnell, Director (Assistant Secretary of Agriculture).

Ervin L. Peterson, Director (Assistant Secretary of Agriculture).

Earl L. Butz, Director (Assistant Secretary of Agriculture).

0. V. Wells, Director (Administrator of AMS).

R. L. Farrington, Director (Solicitor of Agriculture).
4

The President of the Corporation, in reporting to the committee on the commodity disposals for the last year, referred to how much the Corporation had

"bartered," how much it had "granted" and how much it had "given away."

He then discussed how much the "disappearance" was, and in an optimistic

note commented on what the current year's "dispositions" will be. On the

basis of such testimony, the committee raised a question as to how long any

private corporation could exist with such a policy of giving away assets, then

merely charging off the losses.

From the Department's testimony, it appears that CCC policy is dependent

upon obtaining agreement among the various segments of the trade as to time

and terms of disposal. Yet within the trade there are many conflicting interests

which cannot be reconciled so as to permit necessary actions protecting the

interests of the Corporation. With general agreement under such circumstances

virtually impossible, except on a giveaway basis, CCC offerings in world trade

are made at such a high pegged price level that other countries are enabled to

offer their commodities just under United States prices and get the markets.

Thus the United States holds an umbrella over world prices and invites United

States capital to move its production to foreign lands.

The committee feels strongly that the officials of the Commodity Credit Corporation must accept their responsibility to properly handle the affairs of the

Corporation so as to protect the Government's investment. The retention of

any farm program will largely be determined by how well the business of the

Corporation is handled.

A sales manager should be provided immediately by the Board of Directors.

He should be made directly responsible to it, with a directive to set up a sales

organization and a positive sales program under which commodities will be sold

for the best price the Government can get and still move them before "storage

costs" become too large.

If, to get this done, it is necessary to make the officers and employees of the

Corporation independent of the Department of Agriculture, Congress should

adopt legislation to accomplish this.

Sale of CCC commodities is essential to American agriculture, for those stocks

not offered for sale on a competitive bid basis have two undesirable results—the

reduction of production goals and the lowering of price support levels. Already,

cotton not offered in world trade on a competitive bid basis has been used to

reduce United States acreage by about 7 million acres in 2 years. As pointed

out earlier, due to such restrictions imposed this year alone, more than 55,000

farm families are without homes and more than 130,000 farm families have had

their gross annual income of $1,000 or less reduced to around $900. And it must

be realized that this is not the result of price supports but is because CCC will not

sell the commodities acquired.

INCREASES IN FOREIGN PRODUCTION

It is imperative that these policies be changed immediately, since foreign acreage

is increased as United States acreage is reduced. Figures from the Department

indicate that reductions in United States production have not cut world production, but have transferred our acreage to foreign lands instead.

Since 1949, foreign production of cotton has increased 49 percent while United

States production has decreased 16 percent. Since 1952, production of cotton

has increassed about 43 percent in Europe, 6 percent in Asia, and 11 percent in

South America. Indications are that further increases are expected in these

areas of the world next year. During this same period, cotton acreage in the

United States has been reduced about 35 percent.

With this loss of income to the economy of the United States, it is distressing

to note that much of the increased production in other countries has been supported by American capital and "know how." The assurance of a United States

umbrella over world prices has enabled these concerns to develop profitable

operations in countries where labor and other costs of production are much below

OUTS.

* * * * * * *

Mr. WHITTEN. The Solicitor of the Department and the Secretary

have agreed in hearings before this committee that such authority

does exist.
5

In January of this year this committee asked for an investigation.

I should like for the questions which the investigators developed, plus

the highlights of their findings, to be incorporated in the record at

this point.

(The information is as follows:)

POINT 1

The increase in agricultural pr6duction in foreign countries during the past 5

years, with particular reference to the basic commodities receiving United States

price support.

"Cotton

"The greatest increases in production and the greatest potentials for future

competition with the United States are Mexico and the Middle East countries of

Turkey, Syria, Iran, Iraq.

"In Mexico cotton production has increased from a prewar 5-year average of

334,000 bales to a postwar 5-year average of 577,000 bales and to 1,780,000 bales

in the crop year 1954-55. Cotton exports have increased for the same periods

from 105,000 to 343,000 to 1,150,000 bales.

"It is reported that Mexico started its program for expansion in irrigation

facilities in 1947, and is proceeding approximately on schedule. It is anticipated

that the program will be completed in 2 or 3 years, at which time the limit of

appreciable expansion will be reached. The Yaqui River project is expected to

increase irrigation substantially in the northwestern section."

In the Middle Eastern countries of Turkey, Syria, Iran

'

and Iraq cotton

production decreased from prewar 5-year average of 459,000 bales to a postwar

5-year average of 390,000 bales and then increased to 1,260,000 bales in the crop

year 1954-55. Cotton exports for the same periods decreased from 157,000 to

85,000 and then increased to 684,000 bales.

"It is believed that there will be continued increases in cotton production in the

Middle East.

"Cotton production in Nicaragua, El Salvador, and Guatemala has increased

steadily from approximately 50,000 bales 4 years ago to an estimated 300,000

bales in 1954-55. A further increase of about 100,000 bales is expected in 1955-56,

and potential annual production estimates after several more years of development

range from 700,000 to 900,000 bales.

"In Peru cotton production has increased 25 percent during the past 5 years

to 505,000 bales in 1954-55. During the same period exports, which are a large

proportion of production, increased 25 percent. However, it is reported the

Peruvian Government holds cotton and sugar production (the most profitable

crops) under strict control in order to insure the production of adequate food crops.

"Wheat

"World wheat production increased from an annual average of 6 billion

bushels in prewar years to 6.6 billion bushels in 1950-51. It continued to rise to

7.4 billion bushels in 1952-53 and 7.3 billion bushels in 1953-54. Lower yields

and a slightly lower acreage resulted in somewhat less wheat production or 6.8

billion bushels in 1954-55.

"As compared with the 5-year prewar average world wheat acreage was 9 percent higher and production was 14 percent higher in 1954-55.

"In the United States with acreage allotments and marketing quotas in effect

farmers harvested 3 million or around 6 percent fewer acres of wheat in 1954 than

in 1935-39. With higher acre yields they produced around 211 million bushels

or 28 percent more wheat, however, in 1954 than in 1935-39.

"In the 3 other major wheat exporting countries—Canada, Argentina and

Australia—around 6 million fewer acres of wheat were harvested in in 1954-55

than in the 5 prewar years 1935-36 to 1939-40. Higher acre yields resulted in the

production of about 37 million bushels or 5 percent more wheat in these countries

in 1954-55, however, than was produced in 1935-36 to 1939-40.

"These acreage and production data indicate that the relatively high level of

world wheat production in 1954-55 was not the result of expansion in the major

wheat exporting countries."

Sharp increases in wheat acreage and production have been recorded in a number

of the European and Middle Eastern countries which have received substantial

foreign aid grants in recent years.
6

France, although reducing slightly the acreage devoted to wheat in 1954 as

compared with the 1935-39 average, produced over a third or 100 million bushels

more wheat in 1954 than in the prewar years.

Turkey had almost doubled her wheat acreage since the 1935-36 to 1939-40

average and more than doubled her total production in 1953-54. Unfavorable

yields in 1954-55 resulted in a sharp drop in wheat production as compared with

a year earlier yet it remained a third higher than in the prewar years.

Greece although on a net import basis has increased her wheat acreage 20

percent and production by 50 percent as compared with prewar years.

Most Latin American countries, as a part of their programs to increase home

food production, have expanded their wheat acreage and production. The acreage

in wheat in Mexico has increased 50 percent while production has more than

doubled since the period 1935-36 to 1939-40. Although wheat is a minor crop

in Peru the acrage has increased 50 percent and production has almost doubled

as compared with prewar years.

In the interests of maintaining self-sufficiency wheat production is expected to

continue at recent high levels in most countries which are now on a net import

basis. No definite trends are in evidence in the more important foreign wheat

exporting countries.

POINT 2

The United States interests which have brought about such increased foreign.

production through furnishing of financial support and technical direction ana

assistance.

Anderson, Clayton & Co.

In Mexico, Anderson, Clayton & Co. has increased its net capital investment

account in plants and equipment by $8,911,709 to a total of $12,653,316 during

the period July 31, 1947, to July 31, 1954; and in Brazil by $7,140,303 to a total

of $15,354,158 for the same period. This company has increased total net capital

investment in plants and equipment in all Latin American operations, by approximately $18,791,214 to a total of $33,073,037 for the same period. As of March

1955 Anderson, Clayton's foreign plants consisted of 15 compress and warehouse

units, 22 oil mills, 112 cotton gins, 10 oil refineries, 5 finished product plants, and

5 soap plants. The company operates through a number of subsidiaries in Mexico,

Argentina, Brazil, Peru, and Paraguay, all of which are mostly wholly owned.

Operations were started in Mexico about 1924 and in Peru, Brazil, Argentina,

and Paraguay during 1933-35. Crop loans in all foreign operations as of July 31,

1954 were $14,955,477. (Source: SEC records and company reports.)

Anderson, Clayton & Co. is reported to be the largest buyer, processor, and

exporter of cotton and peanuts in Brazil, and largely responsible for the growth

of the cotton growing industry in that country. Recent expansion in its Latin

American activities appears to be in the field of processing and refining of vegetable oils.

The Nile Ginning Co., a wholly owned subsidiary of Anderson, Clayton & Co.,

operates in Egypt and the Sudan. The net plant and equipment account of this

company increased from $434,094.31 in 1947, to $965,094 in 1954.

The staff has received reports, which it has not yet confirmed, that Anderson,

Clayton & Co. is building 20 new gins in Baja California to handle Mexican cotton

production. Also, that the company financed new wells and promoted cotton

production on a large tract of land in southern Peru. Reports are that the wells

are not fully satisfactory, so plans are supposed to be underway for surface irrigation from lakes some distance away.

The Corn Products Co.

This company has plants and grain operations at Guadalajara, Mexico, in

Argentina, and in Brazil. It manufactures and distributes products using corn

or milo maize as the raw materials. As of December 31, 1954, investment of this

company in foreign subsidiaries built up over some period of time is listed at

$14,749,000.

During 1954 foreign sales of corn products by the company's domestic plants

totaled $11,888,041 or approximately 5 percent of total sales. Latest figures for

sales of its foreign subsidiaries show that in 1953 these amounted to $95,313,550.

(Source: SEC records and company reports.)
7

W. R. Grace de Co.

The W. R. Grace St Co. has one of its principal foreign operations in Peru.

Peruvian subsidiaries of the Grace Co., jointly owned with leading local industrialists, operate 4 integrated cotton mills, the largest in Peru, 2 sugar estates of

approximately 10,000 acres each, and numerous other merchandising, exporting,

and importing activities. These subsidiaries buy large quantities of cotton,

mostly for their own mills, although some is exported. The Grace Co. has other

cotton mills in Colombia and Chile. In the latter country it produces 20 percent

of Chile's cotton and rayon blend cloth and, in addition, some woolen goods.

Overall, Grace's Latin American affiliates produced in 1954, 97,600,000 yards of

cotton, rayon, and woolen fabrics.

W. R. Grace tic Co. owns a large percentage of the stock in the Grace National

Bank of New York City. The foreign branch of this bank is closely connected

with banking institutions in Latin America.

United States capital in Mexico

Mexican cotton production is now being more aggressively encouraged by

United States capital as the irrigation projects, which were started some few

years ago, near completion. New deep-water port facilities being developed in

Baja California will further expedite cotton and grain growing and marketing in

western Mexico. Major banks in the United States consider cotton production

(harvesting) loans in Mexico and some other Latin American countries a sound

investment. Crop-production loans made by the banks of Mexico can readily be

discounted at a number of American banks.

Unconfirmed reports of individual companies' activities in Latin America

Bank of America, California.—In April 1955 the press reported a $10 million

credit. granted to finance cotton growers in Mexico. Press comment included the

statement that this is an indication of "confidence of American banks in Mexico's

economic future and easy sale of a bumper cotton crop."

J. G. Boswell Co., Inc., Los Angeles, Calif.—It is reported that this company

recently formed a new wholly owned subsidiary under the laws of Mexico, called

Boswell de Mexico S. A., to own and operate a cotton gin in the State of Sonora.

The plant is currently under construction and is expected to be operating during

the summer of 1955.

Cargill Inc., Minneapolis, Minn.—This company is engaged in diversified activities and is one of the largest grain merchandising companies of international

scope. It operates a grain elevator in Argentina.

The Continental Grain Co. Chicago, 111.—This company is also one of the largest

international grain merchants and operates in Argentina.

Cook and Cia. de Mexico S. A., Torreon, Mexico.—This company, a subsidiary

of Cook dr Co., Memphis, Tenn., is reported to have received a loan of $300,000

from a Phoenix, Ariz., bank in 1955 and another loan of $400,000 secured by

4,843 bales of cotton at Sao Paulo, Brazil.

R. L. Di:ion & Bros. Dallas, Tex.—This company has a wholly owned subsidiary at Harmossillo, 

Bros.,

operating storage facilities and an 8,500-acre ranch

raising cotton and wheat. R. L. Dixon also is a partner in the Brazilian firm of

Cia. Algodoeeria Wooly Dixon.

Esteve Bros. & Co., Dallas, Tex.—This company sells cotton all over the world.

Its Brazilian, Spanish, and Mexican equity is reported to be in excess of $1

million.

Hohenberg Bros., Inc., Memphis, Tenn.—This company is one of the largest

companies in the cotton business. It finances and gins cotton in Mexico with

its subsidiaries Algodonera Hohenberg S. A. de C. V. in Mexico City, and

Empresas Hohenberg of Torreon. It also owns Hohenberg S. A. in Sao Paulo,

Brazil, and has a substantial amount of business in Europe, Africa, and Asia.

George McFadden & Bros. Co., Memphis, Tenn.—This company is also one of

the largest cotton merchants in the world, with a net worth of over $10 million.

The company sells over 1 million bales of cotton annually and is a leader in the

world cotton market. It has affiliates in Sao Paulo, Brazil, and Torreon, Mexico.

Sternberg-Martin & Co., Dallas, Tex.—This company advertises Mexican

growths and has a subsidiary—Sternberg-Martin de Mexico, at Matamoros,

Mexico.

Eugene B. Smith & Dallas, Tex.—Eugene B. Smith de Mexico S. A. has

branches at Matamoros, Co.,exico City, Torreon, Mexicali, and Hermosillo, Mexico,

which merchandise

'

finance, and gin cotton in Mexico.

Starke Taylor (ft Son, Dallas, Tex.—This company handles Mexican cotton

through Starke Taylor de Mexico, Matamoros.
•

8

Weil Bros., Montgomery, Ala.—This company operates in Mexico and Central

America under the names of Weil Bros. de Mexico S. A. and Algodonera Weil

S. A.

POINT 3

The extent to which such United States financial interests receive special tax concessions from the United States Government on income from production in other

countries.

Federal income tax treatment of United States interests on income from without the

United States corporations •

1. Introduction.—The Internal Revenue Code of 1954 provides certain credits

or tax advantages for United States corporations doing business in United States

possessions or in foreign countries. In some instances the credits are allowed to

avert double taxation; in others special treatment is permitted to encourage

United States trade and investment abroad, particularly in this hemisphere.

The following is an outline of Federal income-tax treatment accorded income of

domestic corporations from without the United States. The section references

are to the Internal Revenue Code of 1954, Public Law 591, 83d Congress, approved

August 16, 1954.

2. Foreign Tax Credit (secs. 901-905).—A domestic corporation may elect to

take credit against its total income tax for any income, war profits, or excessprofits taxes paid or accrued during the taxable year to any foreign country or to

any possession of the United States. The term 'income, war profits and excess

profits taxes" includes taxes paid in lieu thereof, such as taxes based upon gross

sales or unit of production. The credit is not allowed against the following

United States taxes: the tax on accumulated earnings, the additional tax on warloss recoveries or the personal-holding-company tax. The amount of credit for

foreign taxes is limited to the proportion of United States tax applicable to that

particular foreign income.

A credit is also permitted a domestic corporation for the proportionate part of

foreign taxes paid on income by a foreign corporation which results in dividends

to the domestic corporation. At least 10 percent of the voting stock of the foreign

corporation must be held. A further proportionate credit is allowed if such foreign

corporation owns 50 percent or more of the voting stock of another foreign

corporation and receives dividends therefrom, and such dividend becomes part of

the dividend paid to the domestic corporation.

3. Western Hemisphere Trade Corp. (secs. 921-922).—A Western Hemisphere

trade corporation is a domestic corporation all of whose business (other than

incidental purchases) is done in any country or countries in North, Central, or

South America, or in the West Indies, and which satisfies the following conditions:

(1) if 95 percent or more of the gross income for the 3-year period immediately preceding the close of the taxable year (or for the part of of such period

the corporation was in existence) was derived from sources without the

United States; and

(2) if 90 percent or more of its gross income for such period was derived

from active conduct of a trade or business.

A deduction in computing taxable income is allowed Western Hemisphere trade

corporations as follows:

(A) First determine the taxable income of the corporation.

(B) Multiply the amount determined in (A) by the fraction—

(a) the numerator of which is 14 percent, and

(b) the denominator of which is that percentage which equals the sum of

the normal tax rate and the surtax rate for the taxable year.

The effect of this computation is to allow a deduction which results in a 14-

percent reduction in tax rate. It is understood that Western Hemisphere trade

corporations are being rather widely used for United States trade and investment

in Canada, Central, and South America,

4. Income from sources within possessions of the United States (sec. 931).— Domestic corporations engaged in the active conduct of a trade or business within a
9

possession of the United States are exempt from tax on income from sources outside the United States, if for the 3-year period ending with the close of the taxable

year (or the applicable part of that period),

(a) at least 50 percent of gross income is from that trade or business, and

(b) at least 80 percent of gross income is from any source within the possession.

The Virgin Islands of the United States are expressly excluded by statute from

"possessions of the United States."

The credit for taxes paid to foreign countries and possessions, discussed in section 2 above, is not allowed to corporations receiving the benefit of this section of

the code.

5. China Trade Act corporations (secs. 941-943).—Corporations organized under

the China Trade Act, 1922 (15 U. S. C., ch. 4, sec. 141 et seq.) are allowed a special

deduction derived from a proration of taxable income from sources within Formosa

and Hong Kong, such deduction being limited to the amount of the special dividend which must be certified by the Secretary of Commerce to the Secretary of

the Treasury.

China Trade Act corporation benefits are believed to have an inconsequential

effect on the agricultural situation under study.

6. Dividends received from certain foreign corporations (sec. 245).—Foreign corporation dividends (other than from a foreign personal holding company) received

by a domestic corporation are subject to a deduction if—

(a) the foreign corporation is subject to United States income tax, and

(b) if it has derived 50 percent or more of its gross income from sources

within the United States for an uninterrupted period of not less than 36

months, ending with the close of such foreign corporations' taxable year in

which such dividends are paid (or, if the corporation has not been in existence for 36 months at the close of such taxable year, for the period the foreign

corporation has been in existence as of the close of such taxable year).

The dividend received credit is 85 percent but is limited to the percentage which

the gross income ot such foreign corporation from sources within the United States

bears to its gross income from all sources.

7. Tax treaties (sec. 894).—The code in section 894 provides: "Income of any

kind, to the extent required by any treaty obligation of the United States, shall

not be included in gross income and shall be exempt under this subtitle."

The development of United States business abroad and the increasing business

done in the United States by aliens throughout the years have created complex

tax problems. To solve these problems equitably for taxpayers and to protect

United States revenues a number of tax treaties have been concluded, or are in

negotiation.

POINT 4

The extent to which such financial interests are tied into the Department cf Agriculture and national farm organizations, through representation on advisory committees and similar groups.

The Department of Agriculture has furnished the committee staff a listing

which purports to include every advisory committee of the Department as well

as all its consultants. These advisory committee lists have been reviewed to

segregate those which are germane to the survey and those which are not, such as

Farmer Cooperative Service, Rural Electrification Administration, etc.

The staff is presently engaged in studying the composition of relevant committees to determine the extent of representation of private United States interests

which are engaged in agricultural activities in foreign countries. To date it has

been found that the following officials of companies either believed or known to

be engaged in such activities are currently serving on the indicated committees:

Advisory Committee on Foreign Trade and Technical Assistance: W. C.

Schilthuis, Continental Grain Co., alternate; Lamar Fleming, Jr., Anderson,

Clayton & Co., alternate.

Cotton Export Advisory Committee: Lamar Fleming, Jr., chairman, board

of directors, Anderson, Clayton & Co.

Cotton Price Support Advisory Committee: A. M. Crawford, Weil Bros.
10

Grain Export Advisory Committee: Andre Hinschler, Bunge Corp.; Harold

E. Sanford, Continental Grain Co.; W. C. Schilthus, Continental Grain Co.

Wheat Advisory Committee: H. E. Sanford, vice president Continental Grain

Co.

Corn Advisory Committee: William F. Brady, Corn Products Refining Co.;

Robert C. Woodworth, vice president, Cargill, Inc.

Dairy Export Advisory Committee: George M. McCoy, Borden Food Products

Co.; A. W. Sigmund, Kraft Foods, Inc.; Leslie J. Lindell, General Milk Co.

Dairy Industry Task Committee: Arthur W. Sigmund, Kraft Foods, Inc.;

D. M. Dent, Borden Food Products Co.

CCC Storage Committee: Loren Johnson, Continental Grain Co.

National Agriculture Advisory Commission: Jesse W. Tapp, Bank of America.,

In connection with the Cotton Export Advisory Committee listed above it

should be noted that a temporary committee of the same name was appointed

by the Secretary of Agriculture on February 13, 1953, and was comprised of the

following individuals:

D. W. Brooks, general manager, Georgia Cotton Producers Association,

Atlanta, Ga.

C. R. Sayre, president, Delta Pine & Land Co., Scott, Miss.

Everett R. Cook, Cook & Co.

'

Memphis, Tenn.

Lamar Fleming, Jr., president, Anderson, Clayton & Co., Houston, Tex.

William A. McGregor, vice president, Guaranty Trust Co., New York, N. Y.

Charles H. Cannon, president, Cannon Mills, Kannapolis, N. C.

Walter L. Randolph, president, Alabama Farm Bureau Federation, Montgomery, Ala.

This is the Committee referred to on February 28, 1955, by Senator Eastland,

page 49, part I, of hearings before the Subcommittee on Disposal of Agriculture

Surpluses of the Senate Committee on Agriculture. The committee staff has

been informed that it held several meetings during the calendar year 1953, submitted a report to the Secretary of Agriculture (photostatic copy of which is

attached as exhibit 6), and that the Secretary considered it dissolved.

The present Cotton Export Advisory Committee was appointed by the Secretary of Agriculture on May 24, 1955, to serve for the coming year, and is comprised

of the following individuals:

Walter L. Randolph, vice president, American Farm Bureau, Montgomery,

Ala.

Alan G. Patteson, producer, Jonesboro, Ark.

J. B. Hubbard, president, J. B. Hubbard & Co., Cotton Exchange Building,

Dallas, Tex.

Allison Pell, president, Pell Cotton Co., Charlotte, N. C.

Lamar Fleming, Jr., chairman, board of directors, Anderson, Clayton & Co.

Houston, Tex.

E. F. Creekmore, president, Creekmore & Co., Cotton Exchange Building,

New Orleans, La.

S. Y. West, president, S. Y. West & Co., Memphis, Tenn.

D. W. Brooks, general manager, the Cotton Producers Association, Atlanta,

Ga.

The committee staff is continuing its study to determine the extent of remsentation of private United States interests, engaged in agricultural activities in

foreign countries, on advisory committees of the Department of Agriculture and

national farm organizations.

POINT 5

The amount of foreign-aid funds which nave oeen used to encourage increased agricultural production in forcign countries:

As of March 31, 1955, cumulative obligations of the Foreign Operations Administration and its predecessor agencies aggregated approximately $19.1 billion.

Around 63 percent of $12.1 billion represented obligations for assistance activities

in 20 selected countries where agriculture relatively is most important. (See

1 This name is included as the Mexican press has reported that the Bank of America has issued credit of

$10 million for financing cottongrowers in Mexico. Several other banks have representatives on committees but it has not yet been determined whether they finance foreign production.

•
11

table I.) In these 20 countries slightly less than $1 billion has been obligated

for agricultural assistance including health and industrial assistance activities

having a direct bearing on agricultural production and processing. In addition,

approximately $710.8 million in local counterpart funds created by assistance

activities in these 20 countries have been programed for the furtherance of agricultural production and processing.

Because of the outstanding importance of agriculture and substantial increases

in agricultural production, particularly cotton in recent years in Iran, India,

Pakistan, and Turkey as compared with the other countries receiving assistane..

the activities in these countries are being analyzed in detail.

Thus far detailed data are available only for Iran. (See table 2.) As of

March 31, 1955, approximately $201.2 million United States foreign assistance

funds have been obligated for the Iranian program, of which amount $47.3 million

has been incurred for agricultural assistance, including those health and industrial

activities bearing directly on agricultural production. The breakdown of these

funds by field of activity and between projects and technical assistance is as

follows:

[Amount in millions]

Activity field Projects Technicians

and trainees Total

Agriculture $17.7 $5.6 $23.3

Health 9.9 2.5 12.4

Industry, transportation, and community development 11.6 11.6

Total 39. 2 8. I 47. 3

COMMODITIES OFFERED FOR SALE ON COMPETITIVE BASIS

Mr. WHITTEN. I should like to include in the record the commodities which the Department has offered for sale on a competitive-bid

basis at the insistence of this committee.

(The information is as follows:)

96-161 0 - 73 - pt. 9 -2
12

Report of price-support commodities as of Feb. 16, 1955, and as of July 27, 1955,

based on records and known commitments in CSS commodity divisions and offices

Commodity Unit of measure

Estimated total stocks 1

As of Feb. 16, 1955 As of July 27, 1955

Quantity Total cost Quantity Total cost

Commodities offered for export

sale on a competitive-bid

basis: 7'housands Thousands

Butter _ Pound 264, 445, 000 $171,360 182, 218,000 $116, 437

Whey and whey products. do 35,018, 796 1,967 

Barley Bushel 5, 282, 000 7,432 48, 483, 000 62,202

Beans, dry edible Hundredweight 107,000 996 2, 626,000 19,574

Flaxseed Bushel 305,000 1,362 4, 401, 000 14,479

Grain sorghum Hundredweight 4, 378, 000 13,362 44, 431, 000 119,075

Oats Bushel 17, 824,000 15,489 35, 317. 000 32, 174

Rye do 1, 769, 000 2, 781 6, 128, 000 9, 627

Seeds, winter cover crop Pound 26, 668,000 3, 760 679, 000 96

Cottonseed oil do 254, 300,000 45,094 55, 117, 000 8,969

Linseed oil do 58, 278, 000 9,907 798, 433 138

Olive oil Gallon 348, 774 892 

Tung oil Pound 38, 321, 000 0,427 27, 971, 000 7,133

Subtotal 283, 829 389, 954

Commodities which have not

been offered for export sale

on a competitive-bid basis:

Cotton, upland Bale 1, 803, 162 309,711 1, 665, 871 291,358

Cotton linters do 1, 154, 693 67, 364 • 1, 155, 778 66.403

Cheese Pound 343, 500, 000 137,400 268, 108,000 108, 048

Milk, dried do 75, 532, 000 12,312 3 132, 313,001) 3 22,626

Corn Bushel 610, 822,000 1, 010, 300 3 566, 973, 000 3 951,948

Rice Hundredweight 1, 471, 000 15,481 4 12, 690, 000 1 134, 965

Seeds, hay, and pasture Pound 30, 055, 000 15,959 4 19, 292, 000 4 11, 324

Soybeans Bushel 4, 599, 000 12, 937

Rosin Drum (517-pound) _ 667, 474 26,112 619, 144 24,344

Turpentine Barrel (50-gallon) 56,085 1,538 44,398 1,243

Tobacco Pou.nd 2,267, 000 714 231,000 56

Wool do 109, 229, 523 76,674 150, 228, 259 99,289

Subtotal 1,673,565 1, 724, 541

Wheat 5 Bushel 661, 420, 000 1,732,259 939, 363, 000 2, 437, 647

Total 3, 689, 653 4,552,142

1 Estimated total stocks owned by C CC plus commitments to purchase less commitments to sell. In.

cludes cotton and wheat setaside limited as to disposition pursuant to the Agricultural Act of 1954, as follows:

Unit of

measure

Feb. 16, 1955 July 27, 1955

Cotton Bale 1, 000, 000 940,806

Wheat Bushel 400, 000, 000 466, 820, 072

2 Although CCC had no inventories of peanuts and honey on these dates, available quantities of these

commodities were offered and sold for export on a competitive-bid basis.

3 Currently being offered for export sale on a competitive-bid basis.

4 Broken rice, alfalfa seed, birdsfoot trefoil seed and tall fescue seed currently being offered for export sale

on a competitive-bid basis.

'Wheat is offered for export sale at International Wheat Agreement prices.

NOTE.-A regrouping of commodities as of July 27, 1955, to reflect dried milk, corn, rice, and hay and pasture seeds in the category of commodities offered for export sale on a competitive-bid basis would reflect the

following:

Cost (thousands)

Offered $1,510,817

Not offered 603,678

Wheat 

Total 

2,437,647

4,552,142
. 13

INCREASE IN FOREIGN PRODUCTION OF COMMODITIES SURPLUS IN

UNITED STATES

Mr. WHITTEN. Also I should like for the record to show the increase

in foreign production of the commodities which are in trouble in the

United States, and of which the Commodity Credit Corporation has

had a large supply during the period that such commodities have

not been offered by the Commodity Credit Corporation in world trade

on a competitive-bid basis.

(The information is as follows:)

Cotton: Production,' United States and other countries, and percent of change,

1950-55

Year

Production

United Percent of Production

other Percent of

States change countries change

Thousand

bales

Thousand

bales

1950-51 10,014 —37.9 18,093 +19.2

1951-52 15,149 +51.3 20,571 +13.7

[952-53 15, 139 20,681 +. 5

[953-54 16,465 +8.8 21,451 +3.7

[954-55 13,569 —17.6 22,422 +4.5

1 955-56 2 23, 500 +4.8

I Bales of 500 pounds gross.

2 percent of change from previous year.

Preliminary.

Source: Foreign Agricultural Service, Cotton Division, June 24, 1955.

COTTON LINTERS

Actually, no effort has been made to maintain worldwide production figures on

. linters since there are so many variable and undeterminable factors that influence

the production. However, it is estimated that linter production outside the

United States approximates 700,000 to 800,000 bales annually (400,000 to 500,000

felting and 300,000 chemical).

The level of production is influenced significantly by the price that linters are

bringing in the world market. Since information indicates that foreign countries

do not generally have programs that artifically influence the production or price

of linters, it is considered that trade statistics will serve as an indicator of the level

of linters production in excess of domestic requirements.

The following statistical table gives figures on linters exports from the three

most important producing countries.

Exports of cotton linters, 1950 to date

[Equivalent bales of 500 pounds gross]

Country of growth

Year beginning Aug. 1

1950 1951 1952 1953 1954

United States 111, 800 270,915 132,887 285,710 1 242,475

Brazil 103,465 108,099 2 226,524 (3) (3)

Mexico 148,450 113,416 128,537 139, 514 1 105, 559

U. S. S. R 

1 August through April 1954-55.

2 August through May 1952-53.

Not available.

Such data as is available indicates no marked changes in linters exports from the U. S. S. R.

2 Calendar year only available data.

Source: Compiled from official sources,
14

Dairy products: Changes in factory production of items in CCC stocks in principal

producing countries, 1953-54

[In thousands of pounds]

Country

Butter Cheese

1953 1954 Percent 1953 1954 Percent

Argentina 

Australia 

Austria 

Belgium 

Canada 

Denmark 

France 

Germany, Western 

Ireland 

Netherlands 

New Zealand 

Norway 

Sweden 

Switzerland 

United Kingdom 

Total 

1954 increase over 1953 

Argentina 

Australia 

Austria 

Belgium 

Canada 

Denmark 

France 

Germany, Western 

Ireland 

Netherlands 

New Zealand 

Norway 

Sweden 

Switzerland 

United Kingdom 

Total 

1954 increase over 1953 

127,280 114,639 90 242,506 198,414 82

350, 186 397, 777 114 106, 707 107, 229 100

1 67, 152 1 69, 167 103 29,494 30,864 105

90, 609 97, 779 108 3 17, 587 3 17, 257 98

1 325,690 1 334, 343 103 81,660 91, 700 112

380,734 397,710 104 192,021 178,793 93

1 606,265 13650,000 107 1 595, 242 1 3 730,000 123

634, 618 668, 329 105 354, 720 343, 289 97

78, 774 88,005 112 '6, 720 '6, 720 100

182,958 179,662 98 312,678 326,503 104

430,662 407,501 95 259,971 246, 198 103

27,877 22,970 82 59,694 65,792 110

215,813 204,095 95 119,714 121,845 102

51, 332 62,754 122 121,277 111,892 92

34,272 51,520 150 3 196, 896 5 182, 776 93

3, 604, 268 3, 746, 251 104 2, 676, 887 2, 759, 272 103

141 983 82,385

Nonfat dried milk Dried whey

1953

(4)

41,073

(64)

34,683

80, 822

12,249

(4)

50,216

(4)

64,641

93, 287

(4)

14,475

(4)

43,680

1954 Percent 1953 1954

(4)

47, 569

176

34,328

81,440

(4)

(4)

44,471

(4)

74,033

79,929

(4)

14,612

(4)

62,496

116

99

101

89

115

as

101

143

(9

3 9,677

(4)

(4)

(4)

(4)

(4)

(4)

(4)

6 14,154

(4)

(4)

(4)

15,456

(4)

6 12 302

(4)

(4)

(4)

(4)

(4)

(4)

(4)

(4)

6 18, 483

(4)

(4)

(4)

6 19, 488

Percent

127

131

126

435,126 439,054 101 39,287 50,273 128

3,928 10,986

1 Includes farm production.

Subject to revision.

3 Estimated.

Not available.

6 Includes dried buttermilk.

6 1952 production = 968,000 pounds.

World tobacco production

[1 million pounds]

1949 1954

World (excluding United States) 

United States 

4, 892. 5

1, 972. 5

5, 596. 5

2, 236.4
15

Foreign production of certain oils and oilseeds, 1952-55

Item and unit 1952 1953 1954 1955 1

Tung oil 2 thousand short tons_ _ 105 104 98 93

Cotton oil 2 do 1,210 1, 260 1,320 1,370

Linseed oil 4 do 840 745 760 765

Flaxseed million bushels_ _ 98 87 88 89

Soybeans 3 do_ 377 382 400 401

I Preliminary forecast.

2 Includes estimate for China at 1954 level. Thus 1955 decrease explained by Argentina and Paraguay.

3 Crude oil basis. Calculated from seed production less other uses and waste.

4 Represents oil yield of flaxseed crushed at home or exported for crushing in other countries.

About 85 percent represents Communist China where production estimates not fully reliable.

Source: U. S. Department of Agriculture, Foreign Agricultural Service, Fats and Oils Division.

Foreign wool production increases, 1955 over 1954

Country

Production

Increase 1955

over 1954

Percent

increase

1954 I 1955 I

Million

Pounds 2

Million

pounds 2

Million

pounds 2

Australia 1, 280. 0 1, 315. 0 35.0 +2.7

New Zealand 450.0 460. 0 10.0 +2.2

Union of South Africa 280.0 290. 0 10.0 +3.6

U. S. S. R 390.0 410.0 20.0 +5. 1

All other increases 795. 5 810.3 14.8 +1.9

Subtotal 3, 195. 5 3, 285. 3 89. 8 +2.8

Total decreases 918. 5 913. 7 4.8 —.5

Net increase 4, 114. 0 4, 199. 0 85.0 +2.1

I Preliminary.

2 Greasy basis.

Grain production in the world excluding the United States

[In million bushels]

Commodity Average,

1935-39

Average,

1945-49 1952 1953 1954

Wheat 5,266 4, 638 6, 121 6, 140 5,855

Rye 1,687 1,508 1,659 1,437 1,546

Barley 2, 123 1,897 2, 509 2,567 2,445

Oats 3,320 2, 554 3, 140 2, 940 2,825

Corn 2,445 2,218 2,305 2, 593 2, 555

Percentage change ire foreign production

Commodity

1954 as

percent of

1935-39

1954 as

percent of

1945-49

1954 as

percent of

1952

1954 as

percent of

1953

Wheat 111 126 96 95

Rye 92 103 93 108

Barley. 115 129 97 95

Oats 85 111 90 96

Corn 104 115 111 99

Source: Grain and Feed Division, Foreign Agricultural Service. June 51185
16

SURPLUS COMMODITIES OFFERED IN WORLD TRADE

Mr. WHITTEN. I should also like to have a list of the commodities

which have been offered in world trade at a price lower than the

domestic price.

(The information is as follows:)

Price support commodities offered by CCC for commercial export sale at less than

domestic (market) prices 1

Commodity 1953 1954 1955 August

1955

Butter X X

kkk Mkk Mk k X 8kk8 8k8kkk kk8 

Cheddar cheese X X

Dried milk X X

Dried whey Wheat •

Corn Rye Oats Barley Grain sorghums 

X

x

X

X

x

X

x

X

X

X

X

x

X

x

X

X

X

x

Rice:

Rough Milled Broken Flaxseed 

' 

x x

X

X

X

x

Beans:

Baby limas x x X

Large limas X x

Red kidney x x x

Small red 

Small white '

Pea 

x 

x

X

x

x

x

Pink X

Pinto x x x

Great northern X X X

Cottonseed oil:

Crude 

Refined . 

x

X

x

X

x

x

Cottonseed, meal and cake X X

Linseed oil, raw X X x

Olive oiL X

Peanuts for crushing 

Alfalfa seed 

Birdsfoot trefoil seed 

Tall fescue seed 

Blue lupine seed 

x

x 

x 

x

x

x

Clover seed x -x

Vetch seed x x

Austrian winter peas X

Honey X 

1 Includes commodities offered for export at (a) stated prices below the domestic market price, (b) on a

competitive bid basis, with no minimum price specified, and (c) at market price for export.

Mr. WHITTEN. I believe that would be sufficient at this point.

PROGRESS TOWARD DISPOSITION OF SURPLUS COMMODITIES IN WORLD

TRADE

Now, Mr. McConnell, it is my information that the Department

has decided to move under the authority of the Commodity Credit

Corporation, and has taken action in connection with the directive

of the Congress to set up a sales organization. At this time we should

be glad to have your report as to what the Department has done in

connection with this, and particularly with regard to cotton. It is

my understanding that cotton is the one commodity that has not been

offered in world trade at a lower price that the domestic price.

Mr. MCCONNELL. It has been my overall responsibility to supervise sales of the commodities owned by the Commodity Credit Cor4.
17

poration. Naturally, we want to move them and we want to get for

them every cent that we can. To that end I think we have in the

last few months offered every commodity for sale at competitive prices

in the world market, as near as we could determine those prices, with

the exception of cotton.

Mr. BERGER. I think that is right.

Mr. HUGHES. There are certain commodities, such as wheat,

• because of the International Wheat Agreement, that are not on an

open competitive-bid basis.

Mr. WHITTEN. But with regard to those exceptions, as to the

offerings in world trade, they are at a considerably lower price than

the domestic price.

Mr. HUGHES. That is correct.

Mr. WHITTEN. In other words, the record would be completely

correct if it were stated that all commodities were either offered at a

truly competitive price in world trade or at a lower price than the

domestic price, with the exception of cotton.

Mr. HUGHES. I think that is right.

Mr. MCCONNELL. I guess that would be a correct statement. I do

not think of any exceptions.

Mr. RICHARDS. There is one exception, Mr. Whitten; that is tung

oil. Of course, you know there is a short crop of tung oil this year.

Mr. WHITTEN. We might modify it to say all commodities of which

you have any substantial supply and for which there is a need to move

the commodity.

Mr. RICHARDS. Yes, sir.

Mr. WHITTEN. You have either made it truly competitive or

offered it at a lower price than the domestic price, with the exception

of cotton.

Mr. BERGER. That is right. Tung oil we have offered on a different

basis.

. Mr. WHITTEN. But that is because the supply is short.

Mr. BERGER. The supply is short because of the freezeout last

spring, and the world supply is short.

Mr. WHITTEN. But it is moving at that level, as stated?

Mr. BERGER. That is right.

Mr. WHITTEN. I am not proposing a "fire sale." I am just trying

to make it possible to buy these commodities.

Mr. BERGER. I agree. That is the proper approach.

Mr. WHITTEN. Mr. McConnell, in connection with that do you

see any way to sell anything, unless you make the price competitive,

if the supplies of the world are adequate, particularly if there is what

might be termed a surplus? Is there any way to really sell commodities unless you make the price competitive with your competitor,

in your judgment?

Mr. MCCONNELL. It has been my experience and it is also my

judgment, Mr. Chairman, that goods of equal quality usually have

to be at competitive price levels in order to move.

Mr. WHITTEN. That is, if you want money for them?

Mr. MCCONNELL. Yes. Of course, if you give them away that is

not a sale.
18

INVESTMENT OF CCC IN SURPLUS COMMODITIES

Mr. WHITTEN. With regard to the Commodity Credit Corporation,

I was recently requested to testify before the Banking and Currency

Committee. The Department has asked now for a $2 billion increase

in the borrowing authority of the Commodity Credit Corporation to

finance agricultural commodities. That will mean $12 billion total.

While I was there, that committee developed the fact that under

the preceding administration the most they ever had invested in com- modities was $634 billion. Now, under your administration it is apparently going up to $12 billion.

It was also developed that the large increase in inventories creating

the necessity for the $2 billion had largely come about from those commodities that are under the so-called flexibles, where the Secretary

sets the base, and where there are no controls, rather than from the

basic commodities, where you have firm price supports and controls.

That was developed in those hearings.

I will ask you this: Do you know of any way that a corporation can

keep buying and buying and buying and not sell, without eventually

reaching the point where it can no longer operate?

Mr. MCCONNELL. Perhaps I could answer that question.

We have, of course, an open-ended contract with farmers to take all

eligible supplies. I think the point of your question was: Had there

been in the history of Commodity Credit—I do not know how many

years back—a permissive sales policy at all times would we have

needed as much money to operate as we do today? I would agree

that under such conditions we would not have needed as much money

to operate CCC as we do today.

Mr. WHITTEN. I am not trying to press you, Mr. McConnell, as

I have to press witnesses now and then, to get an answer. I have

never had that experience with you. I would redirect my question

this way, although I am glad to have the answer you made. If you

constantly buy but do not make your sales price competitive, or for

any other reason do not sell your commodities you are faced with a,

continuing request for increased borrowing authority for the Corporation; are you not?

Mr. McCONNELL. That is right.

Mr. WHITTEN. There are two ways for this Corporation to get

finances to carry out its obligation under the law of supporting farm.

prices. One of them is what we are discussing, for Congress to constantly increase the borrowing authority, and if the borrowing authority is increased and the money is spent for commodities your

storage rates go up and your carrying charges increase. The other

way is through sales, because any money you collect in sales then is

available to carry out the responsibility of the Corporation; is it not?

Mr. McCoNNELL. That is right.

ACTION OF CCC ON SALES PROMOTION

Mr. WHITTEN. Subsequent to our directive and subsequent to the

Congress setting aside $1 million of your administrative funds for the

purpose of setting up and promoting a sales organization, what action

did the Department take toward that end, and what are the dates?

You can fill in the record to make it correct.
19

Mr. MCCONNELL. Since I have been familiar with it I think we

have pressed toward sales.

Mr. WHITTEN. I had reference to your sales manager and the reorganization in the Department.

Mr. MCCONNELL. Well, all of us worked as sort of sales managers

there for awhile until recently, at the direction of Congress, we have

moved to put in a regular sales manager.

Mr. WHITTEN. I should like for the record at this point to show the

orders and other information in connection with it.

(The information is as follows:)

UNITED STATES DEPARTMENT OF AGRICULTURE

COMMODITY STABILIZATION SERVICE

Notice General No. 305

Action by: Deputy Administrators.

Division Directors.

CSS Commodity Offices.

ASC State Offices.

DESIGNATION OF CSS GENERAL SALES MANAGER AND SPECIAL ADVISER TO CCC

Approved:

EARL M. HUGHES,

Administrator.

Effective July 1, 1955, Mr. Frank C. Daniels will serve in the capacity of general sales manager on the immediate staff of the Administrator. He will also

serve as a vice president and special adviser to the Board of Directors, CCC.

As general sales manager, Mr. Daniels will have immediate responsibility for

determining and directing policies and programs to expand sales. He will consult

and advise with, and report to the Board of Directors, CCC, through the CSS

Administrator (executive vice president, CCC), on such policies, programs, and

related problems.

Mr. Daniels, as the need arises, will bring in from industry merchandising specialists in individual commodity fields. The sales manager will also enlist the assistance and consultative services of advisory committees, and marketing and distribution trade groups.

UNITED STATES DEPARTMENT OF AGRICULTURE,

Washington, June 29, 1955.

F. C. DANIELS NAMED GENERAL SALES MANAGER OF CSS AND

VICE PRESIDENT CCC

Secretary of Agriculture Ezra Taft Benson today announced the appointment of

Frank C. Daniels, of Binghamton, N. Y., as general sales manager of the Commodity Stabilization Service, Vice President of the Commodity Credit Corporation, and special adviser to the CCC Board of Directors, effective July 1.

In his new positions, Mr. Daniels' primary responsibility will be to "expand and

strengthen the sales efforts" in moving CCC stocks, in line with the intent of

Congress as expressed in its report on the Department of Agriculture's appropriation bill for the coming fiscal year.

Mr. Daniels will be on the immediate staff of the CSS Administrator, who is

also executive vice president of CCC. Reporting through the Administrator,

he will consult and advise with the CCC Board of Directors in determining and

directing policies and programs to expand sales of all CCC commodities.

To supplement his sales staff as needed, Mr. Daniels will bring in from industry

merchandising specialists in individual commodity fields. He will also enlist the

assistance and consulting services of advisory committees, and marketing and

distribution trade groups

The Commodity Credit Corporation is at present holding in inventory agricultural commodities costing about $4% billion. These surpluses were acquired

in carrying out farm price support programs. Addition of nonrecourse loans

advanced under the support programs brings the total CCC price-support invest-
20

ment to about $7% billion. CSS is the administrative agency of the Department

which is responsible for carrying out price-support programs.

The size and scope of the sales program, to dispose of surplus holdings, has

grown steadily as the price support operations have increased. Broadened and

intensified sales effort, with Mr. Daniels in direct charge, is planned to help meet

the need to move larger volumes of surplus holdings through normal commerial

channels.

Mr. Daniels has had many years of experience in the field of merchandising

agricultural commodities. He has also recently been serving as a consultant to

the CSS Administrator in the development of special programs to sell CCC commodities, and is already familiar with the operating areas in which he will assume

his new responsibilities.

Before entering Government service, Mr. Daniels was secretary and general

manager of a large agricultural supply distributing organization. Before that,

he spent several years in the sales departments of agricultural product manufacturers, including a period as assistant sales manager for one of the largest teed

manufacturing companies in the eastern part of the country. He also served as

a director and chairman of the feed rules committee of the National Grain and

Feed Dealers Association.

Mr. Daniels was born in Marquette, Mich., and graduated from high se ool

and college in that city. He served with the 85th Division of the Army during

World War I.

UNITED STATES DEPARTMENT OF AGRICULTURE

COMMODITY STABILIZATION SERVICE

Notice General No. 308

Action by: Deputy Administrators

Division Directors

CSS Commodity Offices

ASC State Offices

EXPLANATION OF FUNCTIONS OF GENERAL SALES MANAGER AND DESIGNATION

OF DEPUTY GENERAL SALES MANAGER

Approved:

EARL M. HUGHES,

Administraar.

Notice General No. 305 announced the designation, effective July 1, 1955, of

Mr. Frank C. Daniels as general sales manager. Effective July 14, 1955, Mr.

John H. Dean, formerly Assistant Deputy Administrator for Price Support, CSS,

has been designated to serve in the capacity of deputy general sales manager.

There follows for the guidance of all concerned an explanation of the functions

of the general sales manager (instruction 101-3, Reporting Lines and Working

Relationships within CSS, is being revised accordingly).

I. Overall policy on sales

The general sales manager is responsible for all policy determinations relating

to CCC sales, including pricing. He acts on behalf of and for the Administrator,

and the Associate Administrator of CSS in this capacity. Commodity divisions

shall obtain all sales policy determinations from him rather than from the Administrator, Associate Administrator, or Deputy Administrator, Price Support. It is

part of the sales manager's responsibility to consult with the Administrator

Associate Administrator, and the CCC Board of Directors as he deems it desirable.

2. Sales operatior,s

The general sales manager shall direct all sales operations in Washington

divisions and field units. He will issue instructions directly to CSS commodity

di v isions. He will issue instructions to CSS commodity offices through the

Deputy Administrator, Operations, and to ASC offices through the Deputy

Administrator, Production A djustment

Commodity di v isions will deal directly with-the general sales manager on sales

operations matters. CSS commodity offices and A.SC offices shall not deal

directly with the general sales manager, but shall make all necessary telephone

communications directly to the commodity division involved and shall address

all written communications (by wire or by mail) to the Deputy kdministrator

to whom they report.
21

8. Reporting lines

Only the immediate staff of the general sales manager will report directly to

him administratively. Present reporting lines for all CSS and ASC units as

defined in CSS Instruction 101-3, dated January 24, 1955, are not changed.

As indicated above, however, all Washington divisions involved in CCC sales

policy formulation, or interpretation and/or sales operations will obtain necessary

determinations directly from the general sales manager.

4. Coordination of sales and other related activities

The general sales manager shall not be concerned with policy formulation and

determination for and operations of barter transactions, donations under section

416 and Public Law 430, FOA requisitions, and other similar disposal activities,

except as they may affect sales policy or operations. Sales for dollars will have

top priority in the commodity disposal field and the general sales manager shall

have final veto power with respect to any disposal policy or operation which in

his opinion may adv ersely affect sales expansion. It shall be the responsibility

of the Deputy Administrator for Price Support, who has responsibility for policy

formulation for and direction of disposal operations other than sales, to obtain

necessary clearances from the general sales manager.

5. Staff of general sales manager

The general sales manager may arrange for such assistance as he may require

to carry out his responsibilities. This staff shall not supplant the existing sales

personnel in other CSS organizational units. All personnel employed by the

general sales manager shall report directly to him, and not to the head of any

other organizational unit in CSS.

UNITED STATES DEPARTMENT OF AGRICULTURE

COMMODITY STABILIZATION SERVICE

• Instruction 101-3

• Action by: CSS Divisions and Offices

ASC State Offices

REPORTING LINES AND WORKING RELATIONSHIPS WITHIN CSS

Approved:

EARL M. HUGHES,

Administrator.

I. PURPOSE

This instruction pro vides information concerning the reporting lines and working relationships between Commodity Stabilization Service and Agricultural

Stabilization and Conservation organizational units involved in carrying out the

assignments of responsibilities indicated by the attached functional organizational

chart for the Commodity Stabilization Service. This instruction supersedes

Instruction 101-3, dated January 24, 1955. (Chart for later distribution.)

II. REPORTING LINES

A. TO THE ADMINISTRATOR

1. The following report directly to the Administrator:

Associate Administrator

General Sales Manager

Deputy Administrator, Price Support

Deputy Administrator, Production Adjustment

Deputy Administrator, Operations

Executive Assistants to Administrator

Consultants Staff

Audit Division

Compliance and Investigation Division

Food and Materials Requirements Division

(a) The Associate Administrator is authorized to act for the Administrator

with respect to the responsibilities of each of the above units, and, to the maximum practicable extent, the line of reporting should be to the Associate Administrator.
22

(b) The general sales manager acts for the Administrator in the determination

and direction of CCC sales policies and operations. To the maximum possible

extent he shall utilize the existing organizational units reporting to the three Deputy Administrators in performing his responsibilities. He will deal diredtly with CSS commodity divisions in the determination of CCC sales policy and direction of CCC sales operations.

B. TO THE DEPUTY ADMINISTRATOR, PRODUCTION ADJUSTMENT

1. The following report to the Deputy Administrator, Production Adjustment:

Area Directors

Performance and Aerial Photographic Division

ASC State and County Offices

(Under responsibility assigned to the CSS by the Secretary of Agriculture,

pursuant to Reorganization Plan 2 of 1953, ch. 11, Administrative Regulations, USDA.)

C. TO THE DEPUTY ADMINISTRATOR, PRICE SUPPORT

1. The following report to the Deputy Administrator, Price Support, concerning

all aspects of their operations except program policy formulation with respect to the agricultural adjustment program, the payment and production adjustment

aspects of the Sugar Act, and CCC sales policy and operations. (See sec. III

on "Operating relationships.")

Cotton Division

Grain Division

Livestock and Dairy Division

Oils and Peanut Division

Sugar Division

Tobacco Division

Commodity Disposal Coordination Division

Price Division

Barter and Stockpiling Division

D. TO THE DEPUTY ADMINISTRATOR, OPERATIONS

1. The following report to the Deputy Administrator, Operations:

Administrative Services Division

Budget Division

Fiscal Division

Personnel Management Division

Information Division

Transportation and Storage Services Division

CSS Commodity Offices

(a) The Information Division will report direct to the Administrator for

overall information policy determination and relationships with the press.

III. OPERATING RELATIONSHIPS

A. RELATIONSHIPS OF DEPUTY ADMINISTRATORS

1. Each division and office of CSS has full responsibility for performance of its

functions within policies approved or determined by the Administrator, the Associate Administrator, the General Sales Manager and the respective Deputy

Administrators.

(a) In the case of a number of important commodities, the program policy

formulation function involves not only price support and other similar programs

which are the responsibility of the Deputy Administrator, Price Support, but

also the production adjustment program and the payment and production adjustment aspects of the Sugat Act which are the responsibility of the Deputy Administrator, Production Adjustment and CCC sales policy and operations which are

the responsibility of the General Sales Manager. Also, the actual operation of

both the price support and similar programs and the production adjustment

program, the payment and production adjustment aspects of the Sugar Act and

CCC sales at the State and county levels are the responsibility of the Deputy

Administrator, Production Adjustment. The actual operations of all programs

in the CSS commodity offices are the responsibility of the Deputy Administrator,

Operations. The Deputy Administrator, Operations, also has overall responsibility for the general field of services performed by the Administrative Services,
23

Budget, Fiscal, Personnel Management, Information, and Transportation and

Storage Services Divisions. There follows a delineation of the functions of each

Deputy Administrator with reference to each of the other two Deputy Administrators and their respective relationships to the several organizational units of

CSS, including the General Sales Manager.

1. Policy Determinations and Interpretations

(a) The General Sales Manager is responsible for determination of all policy

relating to CCC sales, including pricing.

(b) The Deputy Administrator Price Support, is responsible for program

policy determinations and interpretations thereof relating to CCC price support

and other commodity 1 programs carried out by CSS.

(c) The Deputy Administrator, Production Adjustment, is responsible for program policy determinations and interpretations thereof relating to the production

adjustment program and the payment and production adjustment aspects of the

Sugar Act, carried out by CSS, and for operations within established policy of all

CSS and .ACPS programs through ASC State and county offices.

(d) The Deputy Administrator, Operations, is responsible for all operating

policy determinations with respect to the services performed by the divisions reporting to him, for operation of the CSS commodity offices, within established

program policy, and for the technical adequacy of the systems and procedures

governing operations of all CSS and ASC units within the fields of work assigned

to him.

(e) The Sales Manager and each Deputy Administrator is authorized to act for

the Administrator within his field of responsibility, clearing with the Associate

Administrator or Administrator only those matters which in his judgment are of

sufficient importance to require clearance.

(f) The General Salem Manager and each Deputy Administrator shall be responsible for ascertaining that each of the other Deputy Administrators is enabled to participate in the process of program or operating policy determination

at the policy formulation or development stage, or at the time consideration is

being given to changes in existing policy, whenever such determinations will have

an ultimate effect on the performance of the responsibilities of another Deputy

Administrator or those of the General Sales Manager. This participation should

include, but not be limited to, appropriate representation at meetings, conferences,

etc., with commodity and other divisions, ASC State offices and others.

(g) It shall be the responsibility of each Deputy Administrator to make such

recommendations to the other Deputy Administrators for changes in program or

operating policy which appear desirable from the standpoint of improving the

performance of his own responsibilities. Similarly, the General Sales Manager

shall make such recommendations as apply to his responsibilities.

2. Issuance of procedures and instructions

(a) All formal operating procedures issued under the CSS procedure manual

system given the CSS commodity offices, wherever they may originate, shall

be cleared through and signed by the Deputy Administrator, Operations.

(b) All formal operating procedures issued to ASC State and county offices

snall be cleared through and signed by the Deputy Administrator, Production

• Adjustment.

(c) The Deputy Administrator, Production Adjustment, shall clear with the

Deputy Administrator, Operations any instructions issued the ASC State offices

which will affect CSS commodity office operations. The Deputy Administrator,

Operations shall clear with the Deputy Administrator Production Adjustment,

any instructions to CSS commodity offices which will affect ASC State or county

office operations.

(d) The Deputy Administrator, Operations, shall issue to all Washington

units of CSS and the CSS commodity offices all formal operations policy determinations and interpretations with respect to the work of the Administrative Services,

Budget, Fiscal, Personnel Management, Information, and Transportation and

Storage Services Divisions. Such determinations and interpretations which

involve ASC offices as well as the CSS commodity offices and Washington CSS

Divisions, shall be issued jointly by the Deputy Administrator, Operations, and

Deputy Administrator, Production Adjustment.

1 As used herein, the term "commodity program" does not include the production adjustment program

(acreage allotments and marketing quotas), the payment and production adjustment aspects of the Sugar

Act, and CCC sales programs and operations.
24

3. Correspondence between Washington and field offices

(a) CSS commodity offices if urgently necessary may request and may be given by telephone program policy determinations and interpretations directly from the Deputy Administrators, the general sales manager and CSS divisions, subject to immediately subsequent confirmation in writing. Such confirmations shall be cleared through and signed by the Deputy Administrator, Operations. .

(b) All written communications involving program or operating policy de- terminations or interpretations, wherever they may originate, shall be cleared through and signed by the Deputy Administrator, Operations, when addressed to CSS commodity offices and by the Deputy Administrator, Production Adjust- ment, when addressed to ASC offices.

(c) CSS commodity offices and ASC State offices shall ordinarily direct all inquiries and other correspondence relating to day-to-day work of CSS diviBions to the respective division directors, but correspondence requesting policy determ- ination or interpretation or making other special inquiries shall be addressed by CSS commodity offices to the Deputy Administrator, Operations, and by ASC State offices to the Deputy Administrator, Production Adjustment, or the ap- propriate area director. It shall be the responsibility of the Deputy Adminis- trator, Operations, and the Deputy Administrator, Production Adjustment, respectively, to ascertain that the information desired is obtained from the ap- propriate source. ASC offices shall furnish copies of all correspondence directed other than to the Deputy Administrator, Production Adjustment, to the appro- priate area director.

(d) Commodity divisions and other divisions may communicate directly with CSS commodity offices and ASC State offices on detail day-to-day operations and shall send directly to these offices such items as shipping authorizations containing

program and shipping details, abstracts or copies of contracts, designation of offices to order shipments, ocean freight arrangements, nominations of freight forwarders, requests for availability reports, etc.

Information copies of all correspondence addressed to CSS commodity offices shall be furnished the Deputy Administrator, Operations, except routine trans- mittals and other categories specifically excepted by the Deputy Administrator, Operations. Copie, of all correspondence with ASC offices shall be furnished the appropriate area director.

(e) Any verbal instructions given a CSS commodity office or ASC State office shall immediately be confirmed in writing.

4. Field visits

Field visits by Washington personnel other than the General Sales Manager,

Deputy Administrators, area directors, auditors, ard investigators shall be arranged with the concurrence of the Deputy Administrator, Operations, in the

case of visits to the CSS commodity offices and with the concurrence of the Deputy Administrator, Production Adjustment, in the case of ASC State or

county offices.

5. Administrative functions

(a) With respect to those Divisions which have responsibility for the production adjustment program (cotton, grain, oils and peanuts, and tobacco) and the Sugar Division with respect to the payment and production adjustment aspects of the Sugar Act, the Deputy Administrator, Price Support, shall consult with the Deputy Administrator, Production Adjustment, with respect to any proposals

to change the organization, staffing level or key personnel of the branches in these Divisions which perform work in the agricultural adjustment program or the payment and production adjustment aspects of the Sugar Act. The Deputy Administrator, Production Adjustment, shall make such recommendations to the Deputy Administrator, Price Support, as appear to him desirable with respect

to these branches to facilitate the performance of his program responsibilities. (b) Similarly, the Deputy Administrator, Price Support, shall consult with the General Sales Manager with respect to any proposals to change the organiza- tion, staffing level or key personnel of the units in CSS Commodity Divisions which handle CCC sales activities. The General Sales Manager may propose such changes as appear to him to be desirable with respect to such units to facilitate the handling of CCC sales.
25

(c) The Deputy Administrator, Production Adjustment, shall consult with

the Deputy Administrator, Price Support, with respect to any changes in the

method of carrying out established CCC price support or other commodity

program policy through the ASC State and county offices which might affect the

adequacy of policy execution.

(d) The deputy administrator, operations, shall consult with the general sales

manager and/or the deputy administrator, price support, with respect to any

changes in methods of operations in the CSS commodity offices which might

affect the adequacy of the performance of established policy.

(e) While the deputy administrator, operations, has overall responsibility for

the services rendered by the administrative services, budget, fiscal, personnel

management, information, and transportation and storage services divisions,

any change or modification in these services affecting divisions and offices reporting to either the deputy administrator, price support, or the deputy administrator,

production adjustment, shall be cleared with the appropriate deputy before

execution. The deputy administrator, production adjustment, and the deputy

administrator, price support, shall make such recommendations to the deputy

administrator, operations, for improvement in these services as appear desirable

in order to facilitate the performance of their respective responsibilities. The

deputy administrator, operations, will furnish field assistance to ASC State and

county offices and make surveys of operations as requested or concurred in by the

deputy administrator, production adjustment.

(f) The deputy administrator, operations, shall coordinate the development of

CSS budget policy, consulting with the general sales manager, the deputy administrator, price support, and deputy administrator, production adjustment, with

respect to estimates of funds required to carry out their respective program

responsibilities, and with respect to the actual use of funds available for each

activity in each organizational unit of CSS. Recommendations made by the

deputy administrator, operations, to the administrator shall either be in agreement with those of the General sales manager, the deputy administrator, production adjustment, and deputy administrator, price support, or shall indicate

clearly the respective differing recommendations.

(g) Each CSS and ASC organizational unit is expected to deal directly with

the appropriate CSS division handling service functions in connection with its

requirements. It is the responsibility of the service division to obtain such clearance as is required by the deputy administrator, operations, and it is'the responsibility of the deputy administrator, operations, to clear with the deputy administrator, price support, or deputy administrator, production adjustment, the

general sales manager, or the administrator, as appropriate.
U. S. DEPARTMENT OF AGRICULTURE

COMMODITY STABILIZATION SERVICE

EXECUTIVE ASSISTANTS

ABS

CONSCILEANIS ADKINISTRATCR SATOS CENTRAL MANAGER

DEPOTS ALICINISTRATCR,

AttcoocTiox AwysTxua

EOM MID MATtRIALS

REQUIRENENTS

DIVISION

MUMMA= AND

AERIAL PHOTCORAPHIC

DIVISION

AREA DIRECTORS

ABC

STATE OFFICES

ABC

couvrr trEICES y

GERMS ADMINISTRATOR,

PRICE SUPPCRT

AUDIT DIVISICN 5/

COTTON DIVISION GRAIN DIVISION

DENTS ADICINISTRATCR,

OPERATIONS

CCMPLWCE

AND I NMI IGATION

DIVISION 5/

LIVESTOCK AM)

DATA! DIVISION

OILS AN) PEANUT

DIVISION SUGAR DIVISION TOBACCO DIVISION

COMMITS

DISPCSAL COORDINATION

DIVISION

PRICE DIVISION

BARTER AND

STOCEPILDIG DIVISION

ADMINISTRATIVE

SERVICES

DI VISION 5/

PaSONtEL MANAGEMENT

DIVISION 5/

BUDGET DIVISION INFCRMATICN DIVISION

FISCAL DIVISION 2/ TRUISPORTATION AND STORAGE SERVICES

DIVISION

CSS

CC/VA-O.:IT OFFICES 5/

RuponsIbility far the administrative supervision and direction of Agricultural Stabilisation and Conservation

State and county officee has been assigned to the CSS by the Secretary of Agriculture pursuant to Reorganisation Plan No. 2 of 1953.

?taintaine and directs an Eastern Laboratory St Usartingtm, D. C. and a WesUrn Laboratory at Salt Lake City, Utah. One office in each State, In Alaska, the Territce-y of Havati, sod in Puerto Rico.

VOs. offiu in each agricultural county (over 3,000 in number).

,/ Mai ntains and cLtrects the operati out of f ie Id off So...

5/ Offiu locations: Boston, Masa.; Chicago, Ill.; Cincinnati, Ohio; Dallas, Texas; Easuas City, Mo.; Minneapolis, Minn.; tiv Orleans, La.; arsi Portland, Oregon.

Prepared by,

Personnel Planagement Division

Classification and Organisation Branch

Agric-Wash

• .N•
4.

27

EXPANSION OF COTTON PRODUCTION IN OTHER COUNTRIES

Mr. WHITTEN. I think our investigator's report clearly showed that

this umbrella that the United States is holding over world prices of

cotton has caused the tremendous development or expansion of cotton

acreage in South and Central America and other areas. In fact, the

Secretary of Agriculture at Bakersfield, Calif., recently said this price

umbrella has resulted in the expansion of cotton production in Guatemala—I believe his illustration was—sixfold in 5 years.

Producing less than 40 percent of the world supply of cotton, we

have learned, as Dr. Paarlberg said in a speech he made in Texas, that

by controlling the United States production and United States price

it was not possible to control world production or world price.

In our report it was pointed out that this expansion in Central and

South America, and in Mexico particularly, was largely American

financed. Many of the international American business interests

were in rather key positions with the Department to advise you not to

sell United States cotton competitively. I released a statement to

that effect, based on our investigator's report.

Among those companies was Esteve of Houston, Tex.; and

Anderson-Clayton, which has doubled its interests in foreign countries.

I believe the record shows it has 112 cotton gins, 22 oil mills and various and sundry other activities, and $14 million advanced in crop

loans this year; and yet Lamar Fleming of that corporation, president

of the board of directors, is on the Cotton Export Advisory Committee

of the Department of Agriculture.

Subsequent to that, is it not true that the Advisory Committee on

Exports recommended that United States cotton be offered in world

trade on a truly competitive basis, the single exception being Mr.

Fleming of Anderson-Clayton?

Mr. MCCONNELL. Could I answer that in this way 

MT. WHITTEN. Yes, sir.

Mr. MCCONNELL. I have forgotten whether 7 or 8 or 9 members

were present.

Let me point out, however, that this is an advisory committee, not

a policy committee.

Mr. WHITTEN. Yes.

Mr. MCCONNELL. All of the members of the committee, after

several meetings, finally made the suggestion to the Department that

the only effective way that they could see to clear up this whole cotton

situation and get it back on the track was to become competitive in

world markets and to do it at the earliest possible moment. It was

one suggestion, they called it—that is the way they headed it on the

piece of paper—that that was premature at this time.

96-161 0 - 73 - pt.9 - 3
28

STATUS OF POLICY DECISION TO ENTER WORLD COTTON MARKET

ON COMPETITIVE BASIS

Mr. WHITTEN. Subsequent to that, what action did the Department take toward moving off of dead center on this problem?

Mr. MCCONNELL. Mr. Chairman, the final decision on this has not

yet been reached.

Mr. WHITTEN. You are speaking of the final decision within the

Government. I am asking about the Department of Agriculture,

Mr. Secretary.

Mr. MCCONNELL. Yes. The decision which was reached in my

division with the cotton people was that the best policy that we could

recommend with all of its drawbacks and all of its side issues was to

enter the world market on a competitive basis.

Mr. WHITTEN. It does not mean you had contemplated offering all

of this 8 million bales of cotton which you will have on your hands

here in the next few days?

Mr. MCCONNELL. No, sir.

Mr. WHITTEN. Under the authority of the Corporation you had the

continuing authority to determine from day to day and week to week

how much you would offer and how often you would offer it?

Mr. MCCONNELL. It was our belief that if we did enter the competitive market that it should be done as carefully as possible, not to

break world markets, and to get every cent from our cotton we could.

Mr. WHITTEN. That was a matter you could watch from day to

day!

Mr. MCCONNELL. Yes.

Mr. WHITTEN. It was never your purpose, was it, Mr. Secretary,

to do more than to regain the United States normal share of wonM

markets? You had no intent to go beyond that; did you?

Mr. MCCONNELL. That is absolutely right. We felt that the traditional position of the United States in world cotton markets was all

we were trying to regain.

Mr. WHITTEN. Let me develop that further. That was a recommendation of your organization. Actually, you then reached the

point where the Department itself was ready to make such an announcement—I have forgotten the day—in July, and it was supposed

to have been announced after the market closed on that day; is that

not correct?

Mr. MCCONNELL. No, it never got that far along, Mr. Chairman.

Mr. WHITTEN. Where did it bog down?

Mr. MCCONNELL. I was perfectly aware that there were many

interests in Government, that would have to be consulted as to policy,

even though we had the legal right to take action without such consultations. While we would have liked to have gotten ready to

announce such a policy I also realized that while I think we know

how to sell cotton if we have the opportunity there might be many

overriding influences to come into the picture, and those had to be

explored. They are in the process of being explored.

Mr. WHITTEN. You had every reason to believe in your section in

the Department, though you recognized these other things, that it

had been cleared and was going to be done; did you not?

Mr. MCCONNELL. I would not say that. I was in hope it would be

cleared but I had some doubts, Mr. Chairman.
29

Mr. WHITTEN. I have tried so hard and thought I had made some

progress on this. But something has happened so many times until

like you, I keep my fingers crossed also. The point, however, is this:

These various other groups in the Government—and it could be

the Department of Commerce, or it could be the White House or it

could be others—you never could get the proposal cleared by the

Government; could you?

Mr. MCCONNELL. Not as yet.

Mr. WHITTEN. Not as yet?

Mr. MCCONNELL. No, sir.

Mr. WHITTEN. The matter is still under consideration?

Mr. MCCONNELL. That is right.

Mr. WHITTEN. Why do you treat cotton differently? These

various other people in the Government have cleared you to sell all

the other commodities—some 19 of them—either on a competitive-bid

basis, or at least at a lower price than the domestic price in world

markets.

Can you tell us why these other influences in Government would

single out cotton and make it the only commodity which they would

not let you make competitive in world markets?

Can you speak for them?

Mr. MCCONNELL. I cannot speak for them.

Mr. 'WHITTEN. But, they did not prevent you from doing it with

regard to the other commodities; did they?

Mr. BERGER. I think that in regard to dairy products they did put

on some limitation.

Mr. MCCONNELL. On dairy products they gave us only 10 million

pounds to work with. ,

Mr. WHITTEN. But they let you sell some of the commodities below

the domestic level; did they not?

Mr. BERGER. Some of them.

There was no strict limitation on some of them.

Mr. WHITTEN. But they would not let you sell a single bale of

cotton; would they? And they will not let you do that today; will

they?

Mr. BERGER. That is what I understand.

Mr. WHITTEN. Anderson-Clayton, Esteve, Boswell, and the E. W.

Cook & Co., according to the Secretary, are riding high, wide and.

handsome. He did not call their names, but he pointed out what

was happening under this United States price umbrella. They are

riding high, wide, and handsome in Mexico.

Mr. MCCONNELL. Can I comment just a second?

Mr. WHITTEN. Yes, sir.

Mr. MCCONNELL. The ability to sell these other commodities has

not always been achieved easily. It has taken a lot of talk and discussion. I might point out that we still have not written the final

chapter on cotton.

Mr. WHITTEN. I am glad to have you say that.

I think the record should show at this point that foreign mills as of

today are buying cotton below the United States support price,

because Mexican cotton is being sold at 4 cents a pound less, and

various other cottons are being sold just enough under ours to move

that cotton.
30

That is right; is it not?

Mr. MCCONNELL. That is right.

Mr. WHITTEN. Also, I would like to have the law inserted at this

point in the record.

(The statute referred to follows:)

SECTION 22 OF THE AGRICULTURAL ADJUSTMENT ACT (OF 1933), AS REENACTED

AND AMENDED—IMPORTS 1

SEC. 22. (a) Whene% er the Secretary of Agriculture has reason to believe that

any article or articles are being or are practically certain to be imported into the

United States under such conditions and in such quantities as to render or tend

to render ineffective, or materially interfere with, any program or operation

undertaken under this title or the Soil Conservation and Domestic Allotment

Act, as amended, or section 32 Public Law numbered 320, Seventy-fourth Congress, approved August 24, 1935, as amended, or any loan, purchase, or other

program or operation undertaken by the Department of Agriculture, or any

agency operating under its direction, with respect to any agricultural commodity

or product thereof, or to reduce substantially the amount of any product processed

in the United States from any agricultural commodity or product thereof with

respect to which any such program or operation is being undertaken, he shall so

advise the President, and, if the President agrees that there is reason for such

belief, the President shall cause an immediate investigation to be made by the

United States Tariff Commission, which shall give precedence to investigations

under this section to determine such facts. Such investigation shall be made

after due notice and opportunity for hearing to interested parties, and shall be

conducted subject to such regulations as the President shall specify (7 U. S. C.

624 (a)).

(b) If, on the basis of such investigation and report to him of findings and

recommendations made in connection therewith, the President finds the existence

of such facts, he shall by proclamation impose such fees not in excess of 50 per

centum ad valorem or such quantitative limitations on any article or articles

which may be entered, or withdrawn from warehouse, for consumption as he finds

and declares shown by such investigation to be necessary in order that the entry of

such article or articles will not render or tend to render ineffective, or materially

interfere with, any program or operation referred to in subsection (a) of this section, or reduce substantially the amount of any product processed in the United

States from any such agricultural commodity or product thereof with respect to

which any such program or operation is being undertaken: Provided, That no

proclamation under this section shall impose any limitation on the total quantity

of any article or articles which may be entered, or withdrawn from warehouse, for

consumption which reduces such permissible total quantity to proportionately

less than 50 per centum of the total quantity of such article or articles which was

entered, or withdrawn from warehouse, for consumption during a representative

period as determined by the President: And provided further, That in designating

any article or articles, the President may describe them by physical qualities,

value, use, or upon such other bases as he shall determine.

In any case where the Secretary of Agriculture determines and reports to the

President with regard to any article or articles that a condition exists requiring

emergency treatment, the President may take immediate action under this

section without awaiting the recommendations of the Tariff Commission, such

action to continue in effect pending the report and recommendations of the Tariff

Commission and action thereon by the President , (7 U. S. C. 624 (b).

1 Sec. 22 was added to the Agricultural Adjustment Act of 1933 by Public Law 320, 74th Congress, approved August 24, 1935 (49 Stat. 773). As originally enacted this section authorized the President to restrict

the importations of any agricultural commodity or product whenever he found, after investigation by the

Tariff Commission and on the basis of its findings and recommendations made pursuant thereto, that such

importations were adversely affecting programs or operations under the Agricultural Adjustment Act of

1933. Sec. 22 has been amended several times and the President is now authorized to impose quantitative

restrictions (quotas) and fees on any agricultural commodity or product whenever he finds, pursuant to

appropriate proceedings by the Tariff Commission, that imports of such commodity or product adversely

affect or seriously threaten any program or operation undertaken by the Department of Agriculture. The

Secretary of Agriculture has the responsibility of advising the President regarding the need for action under

sec. 22. In addition, the Secretary of Agriculture is charged with the responsibility of determining the

need for emergency action under sec. 22 with respect to perishable agricultural commodities. Presidential

Executive Order No. 7233, dated November 23, 1935, contains the regulations governing investigations

under this section. For statement of the policies and procedures of the Department of Agriculture in

discharging its responsibilities under sec. 22, see 17 F. R. 8287 (September 16, 1952).

2 paragraph added by sec. 104 of the Trade Agreements Extension Act of 1953, Public Law 215, 83d Cong.,

67 Stat. 472.
31

(c) The fees and limitations imposed by the President by proclamation under this section atid any revocation, suspension, or modification thereof, shall become effective on such date as shall be therein specified, and such fees shall be treated for administrative purposes and for the purposes of section 32 of Public Law numbered 320, Seventy-fourth Congress, approved August 24, 1935, as amended,

as duties imposed by the Tariff Act of 1930, but such fees shall not be considered

as duties for the purpose of granting any preferential concession under any inter- national obligation of the United States. (7 U. S. C. 624 (c).)

(d) After investigation, report, finding, and declaration in the manner provided in the case of a proclamation issued pursuant to subsection (b) of this section, any proclamation or provision of such proclamation may be suspended or terminated by the President whenever he finds and proclaims that the circumstances requiring

the proclamation or provision thereof no longer exist or may be modified by the President whenever he finds and proclaims that changed circumstances require such modification to carry out the purposes of this section. (7 U. S. C. 624 (d).)

(e) Any decision of the President as to facts under this section shall be final. (7 U. S. C. 624 (e).)

(f) No trade agreement or other international agreement heretofore or hereafter

entered into by the United States shall be applied in a manner inconsistent with

the requirements of this section.3 (7 U. S. C. 624 (f).)

Mr. WHITTEN. The law also authorizes the President of the United

States in the event that imports into this country of either cotton or

cotton goods or finished products or a great deal of other commodities

where it endangers any farm program, to levy a duty of 50 percent

of its value. You are also authorized to put on import limitations

on anything below the domestic level; are you not?

Mr. MCCONNELL. Yes, sir.

Mr. WHITTEN. I also would like to have pointed out in the record

at this point the reductions in cotton acreage in the United States in

the last 3 years and, also, the report of the Department on the effect

of last year's reduction.

(The matter referred to is as follows:)

REDUCTION IN COTTON ACREAGE

Upland cotton acreage

In cultivation, July 1, 1953 24, 534,500

1954 allotments 21,379,358

1955 allotments 18, 113,208

EFFECT OF REDUCTION

Number of counties with 1,000 or more acres of cotton and number of counties

reporting

State

Number of

counties

having

1,000 or

more acres

of cotton

Number of

counties

reporting

State

Number of

counties

having

1,000 or

more acres

of cotton

Number of

counties

reporting

Alabama 

Arizona 

Arkansas 

California 

Florida 

Georgia 

Illinois 

Kentucky 

Louisiana 

Missouri 

67

7

63

8

11

138

0

2

46

8

67

7

54

9

27

139

3

2

29

8

Mississippi 

New Mexico 

North Carolina. 

Oklahoma 

South Carolina 

Tennessee 

Texas 

Virginia 

Total 

77

11

55

59

46

35

205

6

so

10

64

74

44

44

212

14

844 887

3 The provisions of this subsection (f) were substituted for the original provisions by sec. 8 (b) of the Trade Agreements Extension Act of 1951, approved June 16, 1951, Public Law 50, 82d Cong., 65 Stat. 72, 75.
32

Summary of answers from 887 counties to the following question:

"How many renter families (tenants and sharecroppers) have been or will be

forced off farms due to 1955 reduction in cotton allotments? The question is

concerned only with the number of renters (as defined above) forced off farms

due to the 1955 reduction in cotton acreage allotments and not for other causes

uch as mechanization, drought, etc."

Renter families Renter families

Alabama 7,554 Mississippi 11,981

Arizona 127 New Mexico 137

Arkansas 4,246 North Carolina 2,783

California 0 Oklahoma 1, 477

Florida 279 South Carolina 4, 147

Georgia 8, 157 Tennessee 3,075

Illinois 40 Texas 5,580

Kentucky 60 Virginia 108

Louisiana 3,395

Missouri 2,202 Total 55,348

Summary of answers from 887 counties to the following question:

"How many small cotton farmers (i. e., those with 5,acres or less of cotton

allotted in 1954) will have net income for the farm reduced by $100 or more due

to the 1955 cotton acreage reduccion? Do not include in this estimate the number

who may have income reduced due to not planting full allotments. The value of

crops produced on acres diverted from cotton shc•uld be considered in arriving

at the net income loss."

Alabama 17,595 Mississippi 34,414

Arizona 38 New Mexico 64

Arkansas 1,496 North Carolina 17, 397

California 0 Oklahoma 378

Florida 2,348 South Carolina 10,400

Georgia 14,888 Tennessee 14,944

Illinois 147 Texas 6,129

Kentucky 203 Virginia 1,632

Louisiana 6,649

Missouri 1,881 Total 130,603

ECONOMIC Loss TO NATION

The acreage of cotton in cultivation July 1, 1954, was 19,776,000 acres. This

was 5,468,000 acres less than on July 1, 1953. Multiplying this acreage times

the 1949-53 average yield per planted acre of 275 pounds of lint cotton gives

3,133,000 bales of cotton. The value of this cotton at the 1954 average support

level of 31.58 cents per pound ($157.90 per bale) would be $495 million. On the

basis of the average relationship of production of cottonseed to lint, production of 3,133,000 bales of lint cotton would be accompanied by about 1,285,000

tons of cottonseed. Valuing these seed at the 1954 support rate of $54 per ton

would give a value of $69 million. Totaling the value of lint and seed gives $564

million.

The planted acreage of wheat in 1954 was 61,971,000 acres or 16,818,000 less

than in 1953. Multiplying this acreage by the 1949-53 average yield per planted

acre of 14.3 bushels gives 240.5 million bushels. The value of this amount of

wheat at the estimated average price received by farmers for the 1954 crop of

wheat ($2.12 per bushel) would be $510 million.

Five-year (1949-53) average yields were used in the above calculations for

both wheat and cotton since they are assumed to more nearly represent an average or normal situation. Yields of cotton were record high in 1954 and those

for wheat were somewhat above average. In both cases 1954 yields were probably influenced to some extent by the fact that acreage allotments and marketing quotas were in effect. If, however, the 1954 yields of 329 pounds per acre

for cotton and 15.6 bushels per acre for wheat were substituted in the above calculations with the other factors remaining constant, the results would be value

of cotton lint, $592 million; value of cottonseed, $83 million; total, $675 million;

value of wheat, $556 million.
33

The acreage of several important crops increased from 1953 to 1954. The

acreage increases for some of the individual commodities are:

Thousand

acres

Oats 3, 409

Barley 4,858

Flaxseed 1,319

Sorghum harvested for grain 4,614

Soybeans harvested for beans 2,358

Multiplying these acreage figures by average yields and the resulting production figures by estimated season average prices for 1954 gives a total of $467 million. In this case it makes practically no difference whether 1954 or the

1949-53 average yields are used.

The value of cotton and wheat indicated above would be gross values and

not net. The production of these increased amounts would, of course, involve 

additional production expenses on the part of producers. Also this increased

production of wheat and cotton would be additions to our already large price

support stocks of these commodities. Eventually it would be necessary to dispose of these stocks. When they were released they would undoubtedly reduce

farm prices and farm incomes from these commodities below what they would

otherwise be at that time.

Mr. WHITTEN. I request that for the record to show that our farm

program is being threatened. That is evident when you look at these

figures on the cutbacks on the American farmers and when you look

at who is being put out of business. Then, when you see a request

here in the last days of Congr 3ss for $2- billion more in borrowing

authority, certainly, that is evidence to show that it is threatened

from some source. If that doesn't justify action under the law, I just

do not know what it would take; do you?

Mr. MCCONNELL. No, sir.

Mr. Chairman, may I make one remark?

MT. WHITTEN. Yes.

Mr. MCCONNELL. Even had we broken cotton loose, I still think

CCC would have had to have some more money for its operations.

I do not think we could have sold fast enough on any of our commodities to avoid needing more borrowing power in the season of

peak use.

Mr. WHITTEN. That all depends. If you had started selling cotton when you came in 2 years ago, you might not have. If you had

started selling it last January a year ago when I tried to get you to,

you might have. If you had started this January when I begged and

pleaded with you, you might have had enough money.

Mr. MCCONNELL. We did not have enough cotton.

Mr. WHITTEN. If you wait until August 1 of this year to do it, or wait until December to do it, you would probably be right. However, you will agree that if you and I could have gotten the Department and the Government off center earlier, it would have been a

different situation.

Mr. MCCONNELL. I do not think cotton alone would have done the

job. I want to point out that I think the policy had to have been

that we would move stuff back years ago so that we never would have

gotten into this position in which we are now involved. What I am

trying to point out is that the monkey is not entirely on my back.

Mr. WHITTEN. Mr. McConnell, I think I should say that you have

tried hard to help develop these things, and anyone who has had any

experience with sales must know that you tried hard to use your

knowledge to help bring about some improvement in that situation.
34

You know the 'various ramifications of the operations of the Government. When you look at this cotton situation and find that Mr.

Everett Cooke, of Memphis, Tenn., of the E. W. Cooke and

Mr. Clayton and Mr. Fleming, and Mr. Adams in the White Co.,ouse,

who was more or less in charge during the President's absence, were

the ones who objected to the Department's efforts to sell this cotton.

Do you know anything about that?

Mr. MCCONNELL. I have no personal knowledge of such a move—

absolutely none. As a matter of fact, I have never talked to Mr.

Adams about this question.

Mr. WHITTEN. Well, you do not usually talk to Mr. Adams personally about these things which come to the White House.

Mr. MCCONNELL. No.

Mr. WHITTEN. The point of it is that you could not get clearance,

or have not been able to get clearance, for what you and the section

dealing with this problem want to do?

Mr. MCCONNELL. NO, Sin

Mr. WHITTEN. The Commodity Credit Corporation is a $10 billion

corporation, and it has not been able to get clearance as far as you

know; has it?

Mr. MCCONNELL. From the administration; yes, sir.

Mr. WHITTEN. Mr. Berger, I believe you are head of the Commodity

Credit Corporation now; are you not? Does it not come directly under

you, or does it come under Mr. Hughes?

Mr. BERGER. It comes under Mr. Hughes. He is the Executive

Vice President.

Mr. HUGHES. Mr. Morse is President. He is the Under Secretary.

Mr. WHITTEN. Do you have any knowledge, Mr. Hughes, as to

why you did not get this clearance or what influences may have controlled the White House in this stop order?

Mr. HUGHES. I do not. I have not entered actively into this cotton

picture. It was a matter in which a great deal of heat was generated

and it was handled at Mr. McConnell's policy level.

Mr. MCCONNELL. We have had so many of these' problems, Mr.

Chairman, that we have had to sort of divide them up and cotton has

been one of the things on which I have been working.

Mr. HUGHES. We thought we needed all the prestige we could get

on this one, and Mr. McConnell's position was at a higher level than

ours.

Mr. WHITTEN. I was just trying to find out if any of you were in a

position to actually know.

My information is that the Dow-Jones ticker and the Wall Street

Journal recently carried a story about what happened in the White

House at high policy levels on this matter. That statement clearly

indicated that it was due to the influence of these international traders

who benefited by the United States holding the price umbrella over

their products in foreign countries.

At this point in the record I would like to insert the article on this

subject contained in the Wall Street Journal dated July 28, 1955.

(The article is as follows:)
35

[Wall Street Journal, July 28, 1955, p. 14]

GOVERNMENT SHELVES COTTON EXPORT SUBSIDIES; MAY RECONSIDER LATER

(By a Wall Street Journal staff reporter)

WASHINGTON.—The Eisenhower administration has shelved, for the time

being, anyway, a plan to subsidize cotton exports in the 1955-56 crop year.

The decision against cotton subsidies was reached at a recent hush-hush

meeting of the President's Council on Foreign Economic Policy, headed by

former Budget Director Joseph Dodge. A high administration official said the

Council composed of top officials of the Departments of State, Treasury, Commerce, and Agriculture, as well as other agencies, voted 8 to 1 against subsidies,

with the Agriculture Department the lone dissenter.

Secretary of Agriculture Benson has promised to make known the Department's—and the administration's—view on cotton subsidies before next Monday,

the official beginning of the new crop year. He's been under heavy pressure

from cotton-State politicians to adopt a subsidy arrangement under which the

Government would unload its stocks on the world market, making up to exporters

the difference between world market prices and the support rate in the United

States. It would be roughly similar to the present wheat export subsidy, which

makes our high-price-propped grain more alluring to foreign pocketbooks.

WOULD NOT BE NOVELTY

Export subsidies are no novelty for cotton. But the Government hasn't

subsidized cotton sales abroad since 1950. Then the rate was a relatively

modest 10 cents a bale or 0.02 cent a pound. Cotton subsidies ran as high as

4 cents a pound from 1944 to 1947 and amounted to 1.5 cents a pound in 1939.

There have been no indications just how big a subsidy Agriculture Department

officials have in mind.

In anticipation of a possible cotton subsidy, foreign fiber buyers have been

holding back and United States cotton export markets have been stagnating.

Exports shrank to around 230,000 bales when last counted in May from nearly

500,000 at the recent peak last December. In May last year, shipments were

336,000 bales.

The top-level administration veto of cotton subsidies doesn't mean titt Mr.

Benson will rule out possibility of a cotton subsidy scheme later in the crop year.

In fact, officials predict Mr. Benson will leave the door open to just such a move,

if cotton sales abroad continue their current decline. But he won't announce

subsidy aid to exports at the outset of the season, as cotton-State lawmakers

have been advocating, unless there's a sudden and unexpected reversal of the

Dodge Council's decision.

Moreover, administration officials close to the red-hot cotton question very

much doubt the Agriculture Department could win approval of a subsidy scheme

even later this crop year. Reason: Opposition to the idea within the administration has grown mightily in recent weeks. Secretary of State Dulles and his

diplomats fear heavy sales abroad, sparked by United States subsidy payments,

would anger such cotton-producing nations as Egypt and Pakistan.

OTHER GROUNDS FOR OPPOSITION

But opposition is based on other than diplomatic grounds. Both the Treasury

and the Budget Bureau are worried about the heavy cost of such a plan. Assist,-

ant Secretary of State Samuel C. Waugh has noted that the export of 6 million

bales of cotton under a subsidy of 10 cents a pound—as some cotton growers

have suggested—would cost the United States taxpayers $300 million a year;

the total cost of the wheat subsidy over the past few years has been several

times that much.

The Commerce Department fears that cheaper cotton exports would enable

foreign textile manufacturers to undersell United States textile firms in the

American market.

"A lot of agencies are against cotton subsidies," says one high Government

official. "It's been discarded pretty much by common consent.'

Mr. WHITTEN: I note that the same day the Eisenhower administration shelved the sale of cotton competitively, it also announced it was

asking Congress for $2 billion more to buy more commodities. The
36

CCC is paying out about $800,000 a day storage now so it doesn't

look to me that costs are controlling factors. It will cost more to.

hold than to sell. By holding we put 55,000 cotton farmers out of

business this year. Mr. Humphrey, Secretary of the Treasury,

should know this.

All countries except the United States offer their cotton in world

trade at competitive prices. Mr. Dulles, Secretary of State, should

know that.

The Democratic administration made cotton competitive by an

export subsidy. The present administration should be told that.

But the present administration pays export subsidies on perishable 3-

commodities and offers all commodities in world trade, except cotton,

on a lower than domestic price. Someone should point these facts

out to President Eisenhower.

In this connection, I would like to insert an article from the same

edition of the Wall Street Journal concerning the request for more

borrowing power for CCC.

(The article is as follows:)

[Wall Street Journal, July 28, 1955, p. 14]

CCC ASKS FOR A $2 BILLION INCREASE IN BORROWING POWER

WASHINGTON.—The Commodity Credit Corporation urged the House Banking

Committee to approve immediately a $2 billion increase in the CCC's borrowing

power.

True D. Morse, CCC President and Under Secretary of Agriculture told the

Banking Committee the present $10 billion authority was inadequate to cover

price-support operations in the coming year.

The present $10 billion borrowing power will be exhausted by November 1955,

he said, and peak use of borrowing power through fiscal 1956 Will be between $11.1

billion and $12.6 billion next February. He said sales and repayments on loans

this year have been running much smaller than anticipated. In addition, latest

crop reports indicate record or near-record crops for 1955 on half a dozen commodities, he added.

Mr. Morse promised the CCC will continue to try to sell CCC-owned commodities. He se :l sales were about $1.7 billion in fiscal 1955 compared with $1.3

billion in fiscal 1954.

Mr. WHITTEN. I know that in Congress there are Members who

feel that if we hold this cotton and create a synthetic situation, some

few farmers will get more money for their cotton in 1 year. It is

my belief that that may come from selling a little share of his farm if

he gets a high price for his cotton the next year.

That cotton shows up in Mexico under the Anderson-Clayton *t_

influence, and he is cut from 100 acres to 80 acres here. He might

have received a little money; but if he knew it, he sold a part of his

farm—he sold his right to produce 20 acres of cotton. It has been

happening to us for some 20 years now.

Is there anything further which this committee could do to help

get the Government to treat cotton farmers like other people?

You are selling all other commodities below domestic levels and the

Secretary of Agriculture points out what is happening. Our investigators show what is happening also. You have recognized that

and you got ready to sell this cotton. Do you know of anything we

can do to help get this Government to give equal treatment to the

American cotton farmer?

Mr. MCCONNELL. Let me say this: Not all of the opposition, if it

can be laid there, is with the international traders. My office has had
37

a stream of cotton people in and many of them have been small people

who have implored us not to enter competitive markets, and we have

had many conferences with various people in Congress.

Mr. WHITTEN. That is some more of this trade which Was preventing the Secretary from acting in January largely, though; is it not?

Mr. MCCONNELL. No; this has been recent.

MT. WHITTEN. I say it is a part of the trade.

Mr. MCCONNELL. Well, it includes merchants, and so forth. I

think that we will break this logjam but we may not do it awfully

fast. However, I feel very definitely, Mr. Chairman, that I am not

competent to judge what overall policy is. I do not think I am that

good, but I do feel that the cotton industry which includes the whole

across-the-board operation i ncluding the growers cannot live under

the present system.

I think to take our cotton out of the world market completely

would eventually destroy the domestic market as well. That is my

honest conviction.

Mr. WHITTEN. The mills have been disturbed because in recent

months the Government has let the Japanese bring a lot of cotton

into this country. As the record will show, there is a law which permits the President to protect the mills in the event they sell cotton in

the world markets competitively.

With the higher cost of labor in the United States, with minimum

wages and the bargaining power of labor unions in regard to wages,

with wages going up to $1 an hour, and all those things, do you not

think the American cost is such as to require some kind of support for

American prices?

Mr. MCCONNELL. I do not quarrel with that. I am of the opinion

that the present support is too high to be realistic on what you want

to do in competition with synthetics.

Mr. WHITTEN. That is the domestic level. That does not restrict

you at all at the world level.

Mr. MCCONNELL. No; but I feel that is a part of it, and that is an

honest conviction on my part which may be wrong.

Mr. WHITTEN. Whether you are right or whether I am right, there

is no restriction on what you would do so far as sales in world trade

are concerned.

Mr. MCCONNELL. I feel the way to get at it is to take these restrictions off and then you can get at this other problem. That is my

conviction, although it is not shared by very many.

PROVISION FOR BALES MANAGER

Mr. WHITTEN. There is one other question which I want to ask:

We have just finished our section of the conference on the supplemental bill for 1956. One of the issues before us was whether to give

your sales manager—and the record will show his standing in the

Department—a grade GS-17. This committee recommended that,

but due to the House parliamentary situation it went out on a point

of order, but was restored by the Senate.

I am a great believer that you cannot run a $7 billion corporation

without a sales manager, and a sales organization. We have so

expressed it, and we were highly pleased to see you follow our recommendation up. However, if the Government is not going to let you
38

sell, what basis is there for setting up a high-priced sales manager,

and all these other things?

Mr. MCCONNELL. Mr. Chairman, I do not think we ought to bog

down our sales management policy on the fact that we have not been

able to clear this cotton matter up yet, because we have so many other

commodities which need to move.

Mr. WHITTEN. In other words, we will set it up to sell the other

19 commodities, even though they will not treat cotton like the others.

MT. MCCONNELL. Well, I feel 

Mr. WHITTEN. I am inclined to agree with you, but it does not

make me too happy.

Do you have any questions along this line, Mr. Deane?

Mr. DEANE. I would like to ask one or two questions.

Mr. McConnell, I appreciate the squeeze which it looks like your

office or those involved has been placed in. We had this off-therecord general discussion here some days ago. Were you present at

that time?

Mr. MCCONNELL. I do not think I was. I might have been, but

I have forgotten.

Mr. DEANE. This discussion took place when the gentleman was

here who had been named as the Sales Manager. What was his name?

Mr. MCCONNELL. Frank Daniels.

Mr. DEANE. Who was present here at that time, when Mr. Daniels

was here?

Mr. MCCONNELL. I was here at that one; yes.

Mr. DEANE. Am I correct in thinking that Mr. Daniels indicated

that as of approximately August, they expected to move cotton into

the world market?

Mr. MCCONNELL. I do not recall that.

Mr. HUGHES. I do not think so. Mr. Daniels is a very vigorous

salesman, and he expects to move on everything we have in inventory.

Mr. BERGER. Mr. Deane, I do not recall the date of August being

mentioned.

Mr. MCCONNELL. He did talk about cotton products such as cottonseed oil and other products.

Mr. DEANE. Mr. Chairman, I was directing a question to the Secretary to the effect that a few days ago our committee held an informal

meeting, no record was made of the hearing, in order to meet Mr.

Daniels, the new sales manager, and as I recall cotton very definitely

came into the discussion. There was an indication at least, as I recall

it, that around August they would move into the sales of cotton.

Now, the Secretary says he does not recall anything to that effect,

and I was just wondering if any member of the committee recalled

any of the conversation at that time.

Mr. WHITTEN. Well, it is clearly my impression, and I am not

quoting anyone, that the Department had every reason to believe

that they were going to announce these sales, about 3 weeks ago.

I think our conversations with various people in the Department

clearly showed that that was their thought and their belief. I know

that members of the advisory committee of the Secretary also

thought that was to be done.
ft,

39

Subsequent to that, the announcement was not released. I have

indicated here the information which I have, some of which is secondhand, and some of it is more or less firsthand, as to where the influences

came which kept this order from clearing.

Mr. DEANE. Mr. McConnell, I follow next with this observation:

COTTON PRODUCTION BY AREAS AND IMPACT ON AMERICAN MARKET

Would you furnish for the record the areas of the world which are

producing cotton and the production over the last few years, and to

what extent it is having an impact on the American market?

Another analysis I wish you would prepare would be the American

firms that you have mentioned in the testimony this morning who

are actively engaged in the cotton industry abroad, and to what

extent there is in your opinion an impact by those groups on the

cotton industry in America.

Also, whether or not there is some justification in believing that

these American producers abroad are preventing an increase in the

cotton acreage in this country.

I would not want you to go into that right now.

Mr. MCCONNELL. I thought, perhaps, we had the answer to that

first question here.

Mr. RHODES. As I understood his question, he is asking for that

information by countries. We have it here in total, but if you would

like each country which produces cotton in the world and the acreage

in those countries, of course, all we can do is give you the international

figures. We do not have in the Department a figure on that.

Mr. DEANE. You can get it by countries; can you not?

Mr. RHODES. We can get the reports of the International Cotton

Advisory Committee which compiles that kind of data.

Mr. DEANE. I think that information certainly should be in the

Department of Agriculture.

Mr. RHODES. It is published monthly now. We get it every month

from the International Cotton Advisory Committee.

As to the second question, I do not know how we could get that

answer unless we send out investigators to investigate the operations

of private United States firms. We have nothing in the Department

on it.

Mr. DEANE. I would like for the record to show what you can bring

together.

Mr. Chairman, I have asked certain questions involving these

American producers abroad, and I have asked them to furnish for the

record the names of the 'carious firms involved and the extent in their

opinion that there is any or no impact on the growth in this country,

on the production and the distribution in this country, and they have

just indicated that they did not know whether they had that information or not.

I do feel that it would be interesting to have the information.

(The information requested is as follows:)
40

-Cotton-Acreage and production in specified areas, averages, 1985-39 and 1945-49,

annual, 1952-54

(In thousands)

Continent and country

NORTH AMERICA

El Salvador 

Guatemala 

Mexico 

Nicaragua 

United States 

British West Indies 

Haiti 

Total 4

EUROPE

Bulgaria 5 

Greece 

Italy 

Rumania 

Spain 

Yugoslavia 

Total 

U. S. S. R. (Europe and Asia) 

ASIA

Aden 

'Cyprus 

Iran 

Iraq 

Syria 

Turkey 

Afghanistan 

Burma 

China (including Manchuria) 

French Indochina 

India 

Korea 7

Indonesia 

Pakistan 

Thailand 

Total 

SOUTH AMERICA

Argentina 

Brazil 

Colombia 

Ecuador 

Paraguay 

Peru 

Venezuela 

Total 4 

AFRICA AND OCEANA

Anglo-Egyptian Sudan 

Belgian Congo 

Kenya 

Nyasaland 

Tanganyika 

Uganda 

Canary Islands 

Egypt 

French Equatorial Africa 

French North Africa 

Acreage Production 2

Average

1952 19533 19543

Average

1952 1953 3 1954 3

1935-39 1945-49 1935-39 1945-49

Acres Acres Acres Acres Acres Bales Bales Bales Bales Bales

9 35 71 54 73 5 21 47 57 75

8 22 27 40 2 5 16 27 35

725 1,034 1,937 1,860 1,820 334 577 1,250 1,210 1,780

9 11 64 100 190 5 7 57 109 175

27, 788 21, 258 25, 921 24,341 19, 251 13, 149 12, 104 15, 139 16,465 13, 679

20 12 13 13 5 4 4 3 

37 40 40 50 22 10 7 7 8

28,642 22,403 28,095 26,461 21,459 13,523 12,730 16, 531 17, 888 15, 765

85 82 35 20 

168 111 203 220 269 76 52 111 139 184

56 40 118 124 125 21 11 32 35 42

8 102 2 

46 130 150 175 185 10 18 65 75 85

8 18 18 29 3 3 4 8

372 511 689 867 938 147 127 256 323 389

5, 087 3, 697 

_

3, 430 2,328 

11 22 45 9 18 32

11 5 13 13 13 3 1 3 3 3

453 239 450 555 620 171 85 165 240 275

53 22 125 51 100 11 5 13 17 35

85 59 457 370 460 28 32 207 220 350

667 645 1,869 1, 495 1,440 249 268 690 638 600

100 80 49 16 62 60 40

428 178 450 400 400 97 32 110 95 93

7,038 5,831 9,350 10,200 9,600 2,855 1,939 2,900 3,200 2,950

36 6 2 

624, 204 11,306 15,693 17,027 18,000 , 5,348 2,304 3,005 3,730 3,900

564 344 225 198 89 74 75 80

27 9 4 2 

(6) 2,965 3,467 3,100 3,400 (6) 1,024 1,525 1,215 1,245

16 84 97 100 7 26 32 39 

33,805 21,827 32, 158 33, 727 34, 571 9,038 5,835

_

8,809 9,563 9,654

770 962 1,316 1,352 1,350 289 427 575 635 500

5,562 4,520 4,500 4,000 4,500 1,956 1,352 1,560 1,465 1,600

98 150 200 230 23 27 50 92 122

40 41 31 36 36 13 11 10 12 12

111 123 130 150 173 40 47 53 62 62

428 345 482 531 540 379 308 450 475 505

50 35 30 50 11 11 12 13 16

7,000 6, 177 6, 648 6,306 6,885 2,711 2, 184 2,711 2,756 2,820

439 371 620 652 685 248 246 386 400 409

874 745 900 900 900 172 195 208 240 235

51 56 87 13 6 8 14 11

84 12 8 13 9 10

207 190 50 38 65 42 82

1,477 1,321 1,468 1,611 1,728 281 227 267 331 300

2 7 5 1 6 3 

1,821 1,367 2,042 1,375 1,639 1,893 1, 456 2,047 1,461 1,508

390 625 700 41 104 130 130 150

1 5 35 28 (6) 2 17 15 

See footnotes at end of table, p. 41.
, 41

'Cotton—Acreage and production in specified areas, averages 1985-89 and 1945-49,

annual, 1952-54,—Continued

[In thcusands]

Continent and country

Acreage Production 2

Average

1952 19533 1954 3

Average

1952 19533 19543

1935-39 1845-49 1935-391 1945-49

AFRICA AND OCEANA—continued

French West Africa 

Acres Acres Acres Acres Acres Pales

23

Bales

1

Bales

282

Bales

48 

Bales

Mozambique 557 700 700 710 33 104 185 145 130

Nigeria 36 48 90 135 165

Angola 73 120 13 24 29 29 30

Southern Rhodesia 2 5 10 (°) • 2 3 2 

Union of South Africa 12 60 60 2 3 19 20 22

Australia 53 5 10 9 20 11 1 4 4 8

Total 6,176 5, 710 7,585 7,091 7, 797 2,840 2,483 3,513 3,020 3,212

World total 81,142 60,325 81,975 81,450 79. 450 31,689 25,687 35,820 38,050 36,840

I Years refer to crop years, beginning Aug. 1, in which major portion of crop was harvested.

2 production in bales of 478 pounds net prior to 1946 and 480 pounds thereafter.

3 Preliminary.

Includes estimates for minor producing countries not listed above and allowances for other figures not

.available.

Figures for 1943 to date are not comparable with prewar figures because of boundary changes.

Pakistan included with India.

7 South Korea only, after 1941.

Less than 500.

'Exports.

Source: Foreign Agricultural Service. Prepared or estimated on the basis of official statistics, reports

of United States agricultural attach& and other United States representatives abroad and results of office

research.

NOTE.— As to the impact which increased foreign production of cotton is having

on the American cotton market, it is believed that the amount ot increased foreign

cotton production, which is not offset by increased foreign consumption. will generally displace the sale of an equivalent amount of American cotton and that the

United States is now the residual supplier of cotton for the world.

The table referred to above and data available in the Department Indicates that,

so far as cotton is concerned, the greatest increase in production and the greatest

potential for future competition with the United States are in Mexico and the

Middle East countries of Syria, Turkey, Iran, and Iraq.

Anderson, Clayton & Co.

In Mexico, Anderson, Clayton & Co. has incieased its net capital investment

account in plants and equipment by $8,911,709 to a total of $12,653,316 during

the period July 31, 1947, to July 31, 1954: and in Brazil by $7,140, 303 to a total

of $15,354,158 for the same period. This company has increased total net capital

investment in plants and equipment in all Latin American operations, by approximately $18,791,214 to a total of $33,073,037 for the same period. As of March

1955, Anderson, Clayton's foreign plants consisted of 15 compress and warehouse

units, 22 oil mills, 112 cotton gins, 10 oil refineries, 5 finished-product plants and

5 soap plants. The company operates through a number of subsidiaries in Mexico,

Argentina, Brazil, Peru, and Paraguay, all of which are mostly wholly owned.

Operations were started in Mexico about 1924 and in Peru, Brazil, Argentina, and

Paraguay during 1933-35. Crop loans in all foreign operations as of July 31,

1954. were $14,955,477. (Source: SEC records and company reports.)

Anderson, Clayton & Co. is reported to be the largest buyer, processor, and

exporter of cotton and peanuts in Brazil, and largely responsible for the growth

of the cotton-growing industry in that country. Recent expansion in its Latin

American activities appears to be in the field of processing and refining of vegetable oils.
42 .

The Nile Ginning Co., a wholly owned subsidiary of Anderson, Clayton & Co.,

operates in Egypt and the Sudan. The net plant and equipment account of this

company increased from $434,094.31 in 1947 to $965,094 in 1954.

The staff has received reports, which it has not yet confirmed, that Anderson,

Clayton & Co. is building 20 new gins in Baja California to handle Mexican cotton

production. Also, that the company financed new wells and promoted cotton

production on a large tract of land in southern Peru. Reports are that the wells

are not fully satisfactory, so plans are supposed to be underway for surface

irrigation from lakes some distance away.

The Corn Products Co.

This company has plants, in grain operations at Guadalajara, Mexico, in

Argentina, and in Brazil. It manufactures and distributes products using corn

or milo-maize as the raw material. As of Decemger 31, 1954, investment of this

company in foreign subsidiaries built up over some period of time is listed at

814,749,000.

During 1954 foreign sales of corn products by the company's domestic plants

totaled $11,888,041 or approximately 5 percent of total sales. Latest figures for

sales of its foreign subsidiaries show that in 1953 these amounted to $95,313,550.

(Source: SEC records and company reports.)

W. R. Grace & Co.

The W. R. Grace Co. has one of its principal foreign operations in Peru. Peruvian subsidiaries of the Grace Co., jointly owned with leading local industrialists,

operate 4 integrated cotton mills, the largest in Peru, 2 sugar estates of approximately 10,000 acres each, and numerous other merchandising, exporting, and

importing activities. These subsidiaries buy large quantities of cotton, mostly

for their own mills, although some is exported. The Grace Co. has other cotton

mills in Colombia and Chile. In the latter country it produces 20 percent of

Chile's cotton and rayon blend cloth and, in addition, some woolen goods. Overall, Grace's Latin American affiliates produced in 1954, 97,600,000 yards of cotton,

rayon, and woolen fabrics.

W. R. Grade & Co. owns a large percentage of the stock in the Grace National

Bank of New York City. The foreign branch of this bank is closely connected

with banking institutions in Latin America.

United States capital in Mexico

Mexican cotton production is now being more aggressively encouraged by

United States capital as the irrigation projects which were started some few

years ago, near completion. New deepwater port facilities being developed in

Baja California will further expedite cotton and grain growing and marketing

in western Mexico. Major banks in the United States consider cotton production

(harvesting) loans in Mexico and some other Latin America countries a sound

investment. Crop production loans made by the banks of Mexico can readily

be discounted at a number of American banks.

Unconfirmed reports of individual companies' activities in Latin America

Bank of America, California.—In April 1955, the press reported a $10 million

credit granted to finance cottongrowers in Mexico. Press comment included

the statement that this is an indication of "confidence of American banks in

Mexico's economic future and easy sale of a bumper cotton crop."

J. G. Boswell Co., Inc., Los Angeles, Calif.—It is reported that this company

recently formed a new wholly owned subsidiary under the laws of Mexico, called

Boswell de Mexico S. A., to own and operate a cotton gin in the State of Sonora.

The plant is currently under construction and is expected to be operating during

the summer of 1955.

Cargill Inc., Minneapc!is, Minn.—This company is engaged in diversified

activities and is one of the largest grain-merchandising companies of international

scope. It operates a grain elevator in Argentina.

The Continental Grain Co., Chicago, Ill.—This company is also one of the

largest international grain merchants and operates in Argentina.

Cook and Cia de Mexico S. A., Torreon, Mexico.—This company, a subsidiary

of Cook & Co., Memphis, Tenn., is reported to have recei -ed a loan of z3300,000

from a Phoenix, Ariz., bank in 1955 and another loan of $400,000 secured by 4,843

bales of cotton at Sao Paulo Brazil.

R. L. Dixon & Bros.

'

Dallas, Tex.—This company has a wholly owned subsidiary at Hermosillo, Mexico, operating storage facilities, and an 8,500 acre
43

ranch raising cotton and wheat. R. L. Dixon also is a partner in the Brazilian

firm of Cia Algodoeria Wooley Dixon.

Esteve Bros. & Co., Dallas, Tex.—This company sells cotton all over the world.

Its Brazilian, Spanish and Mexican equity is reported to be in excess of $1 million.

Hohenberg Bros., Inc., Memphis, Tenn.—This company is one of the largest

companies in the cotton business. It finances and gins cotton in Mexico with its

subsidiaries Algodonera Hohenberg S. A. de C. V. in Mexico City, and Empresas

Hohenberg of Torreon. It also owns Hohenberg S. A. in Sao Paulo, Brazil, and

has a substantial amount of business in Europe, Africa, and Asia.

George McFadden & Bros. Co., Memphis, Tenn.—This company is also one of

the largest cotton merchants in the world, with a net worth of over $10 million.

The company sells over 1 million bales of cotton annually and is a leader in the

world cotton market. It has affiliates in Sao Paulo, Brazil, and Torreon, Mexico.

Sternberg-Martin & Co, Dallas, Tex.—This company advertises Mexican

growths and has a subsidiary, Sternberg-Martin de Mexico, at Matamoros,

Mexico.

Eugene B. Smith & Co., Dallas, Ter.—Eugene B. Smith de Mexico S. A. has

branches at Matamoros, Mexico City, Torreon, Mexicali, and Hermosillo,

Mexico, which merchandise, finance and gin cotton in Mexico.

Starke Taylor & Son, Dallas, Tex.—This company handles Mexican cotton

through Starke Taylor de Mexico, Matamoros.

Weil Bros., Montgomery, Ala.—This company operates in Mexico and Central

America under the names of Weil Bros. de Mexico S. A. and Algodonera Weil S. A.

Foreign activities of farm-machinery and food-processing companies

The International Harvester Co. manufactures, assembles, or sells in most

major producing countries of the world. The same is generally true for Deere &

Co. The following United States companies—Swift, Armour, Kraft, Borden, and

National Dairy Products—have gone into many countries in Europe and Asia to

process, manufacture, and distribute their traditional products.

An American-Australian syndicate called Mainguard-Australia, Ltd., headed

by Allen Chase, of Los Angeles, has been actively interested in promoting rice

production in the northern territory of Australia.

American cotton gins are used in practically all cotton-producing countries.

The Continental Gin Co., of Birmingham, Ala., is reported to be the largest

manufacturer of cotton-gin machinery in the world. It sells to all cotton-growing sections of the world. This company along with the John E. Mitchell Co.,

Murray Gin Co., Lummus Cotton Gin Co., and several others, manufactures and

sells 99 percent of the saw-type gin machinery used in the world. Most countries

raising American upland-type cotton use saw gins.

ACTIVITIES OF FOUNDATIONS

The Rockefeller Foundation has supported crop breeding and extension work

which has resulted in substantial increases in corn, wheat, and bean yields in

Mexico and improved seed stocks of these three crops in Colombia. Corn improvement work has also been started in Central America.

The Ford Foundation overseas development program has concentrated its

efforts in Burma, India Indonesia Pakistan, Egypt, Iran, Iraq, Israel, Jordan,

Lebanon, Syria, and Turkey. It; rural and agricultural development program

includes the financing of a technical consulting group based at Beirut, Lebanon;

surveys of the opportunities for development and expansion of small-scale village

industries; assistance in organizing agricultural credit systems; and general agricultural education projects.

ANALYSIS OF COTTON SITUATION

Mr. DEANE. As a guide for your assistance, I have made an analysis

of this cotton situation. So far as cotton is concerned, based upon

the information which I have been able to bring together, the greatest

increases in production and the greatest potential for future competition with the United States are in Mexico, the Middle East and the

countries of Turkey, Syria, Iran, and Iraq.

Mr. WHITTEN. Does that include Central America?

96-161 0 - 73 - pt.9 - 4
44

Mr. DEANE. Further based upon the information which came to me,.

world production of synthetic fibers last year was the equivalent to approximately 12 million bales of cotton. This year it is expected to

be the equivalent of about 14 million bales.

If you find that I am wrong in any of this analysis which I am giving,

I want you to follow with any corrections so far as your statistics are

concerned.

The United, States production of synthetics has not been substantially chaiq;ed during the past 4 years, and cotton has held its

own on a per capita basis. The price of cotton has a definite effect

on rayon production and consumption, but the recent expansion of

the other higher priced synthetic fibers, nylon, orlon and dacron, has

been largely independent of the price of cotton.

That was the first point in this analysis.

Going to the second one, this survey indicates that the major proportion of the private United States capital investments, finance and

management has been concentrated to a large extent on one of the

basic commodities, cotton, and that this activity has been substantially

limited to Mexico, Central and South America, and here the increased

agricultural production has been in cotton, but also to a lesser degree

in other basic commodities which has been generated to an important

degree by United States private interests.

This investigation shows that one of the large American cotton

factors abroad was the Anderson-Clayton Co., doing a large business

in cotton production in Mexico. It shows that the Bank of America

finances cotton growing in Mexico.

Moving to the third division of this study, the extent to which the

United States financial interests receive special tax concessions from

the United States Government on income from production in other

countries, the Internal Revenue Code of 1954 provides for certain

credits or tax advantages for United States corporations doing business

in the United States concessions, or in foreign countries. In some

instances the credits are allowed to avert double taxation and other

special treatment is permitted to encourage United States trade and

investment abroad.

The sections of the Internal Revenue Code involving the foreign

tax credits are sections 901 and 905 and the Western Hemisphere

Trade Corp. is covered in sections 921 and 922.

As to the extent to which such financial interests are tied to the

Agriculture Department and national farm organizations through

representations on advisory committees and similar groups. I understand from the investigation that approximately 34 officials of companies having foreign capital in cotton production overseas are serving

in an advisory capacity to the Department of Agriculture. Studies

as to officials of national farm organizations are not completed.

Coming to the matter of tax concessions, contact was made with

the public relations office and the Bureau of Internal Revenue reports

latest figures available on tax advantages for United States corporations in foreign countries for the fiscal year ending June 30, 1951,

indicated that they did not have such advantages in later years but

would after January 1, 1956, which we will try to bring together.

A breakdown of the 70 items in the income-tax category list shows

under agriculture there was a tax credit in 1951 involving agriculture

of $8,807,000.
45

I mention this, Mr. Chairman, to indicate that there is a real serious.

problem existing and it is possible that the Department of Agriculture

is facing an iron curtain or a stone wall in trying to break through.

Personally I certainly want to share with you the responsibility for

the problem.

I do not know whether you or any of your associates can answer

this question or not, Mr. Secretary. To what extent were you able

to move in and try to move cotton at competitive prices in the world

market?

4 MOVEMENT OF COTTON UNDER AGGRESSIVE SALES POLICIES

Mr. MCCONNELL. Well, getting back to the matter we discussed

a while ago, the amount of cotton we can move depends on how

aggressive our sales policies are. If you wanted to move a lot of

cotton such as you would at a fire sale, as mentioned by the chairman,

that is one thing. We felt whatever was done in that field should be

done cautiously, but we had to get the shackles off.

Mr. WHITTEN. Will you permit me to interpose? That is a ques—

tion that those who oppose this frequently raise. How do you know

you could sell more cotton? How do you know others would not

reduce further and further?

On that point I would like to say this: If we did not sell a bale of

cotton, the fact we were retaining our fair share of the world market

and intend to continue by competitive sales, would be worth its weight

in gold, in my opinion. I say that for this reason: Through foreign

aid we are helping these products in Mexico and elsewhere, and through

the import-export banks we are helping that sort of thing. We are

hurting ourselves more by holding the cotton; this assurance of price is.

doing us more damage.

Mr. DEANE. Had you moved into the market, it would only be on a

cautious basis; is that right?

Mr. MCCONNELL. That is right. I do not think I could have

moved in without that assurance.

Mr. DEANE. Did you reach a point where you had any feelers out

as to what the price would have been?

Mr. MCCONNELL. We knew what the price was:* In Mexico it was:

3 cents under us.

The chairman has said something I believe in very thoroughly.

The way to stabilize a market, in my humble judgment, where you

have a big supply, is to be in that market. You do not need laws and

shackles to prevent you from being a salesman. You know it has to

move. The very fact you are in there and can meet prices has a

stabilizing influence, and I agree with the chairman, and I am sure

of this from things I have heard, that this is not all American capital

doing this job; there is plenty of capital abroad. They will not move

if they feel that the United States is going to be competitive. It has

the power to be competitive.

Mr. WHITTEN. Foreign capital may not have the same courage

American capital has. Foreign capital does not have the same door

open to the White House or the Department of Agriculture.

Mr. MCCONNELL. But if you pull all the American capital back

today, you would find other capital moving in.
46

Mr. WHITTEN. Not with the same assurance American capital has.

American capital can get assurance from the Department of Agriculture. As far as the Commodity Credit Corporation is concerned,

the law does not give the State Department, the Commerce Department, or anybody else the authority to stop you from using it. I

know how things are run and I know your situation. But I must

point out there is no restriction in the law to selling competitively.

Under Public Law 480, where you do give away those commodities

for foreign currencies, where you are not supposed to hurt anybody,

Commerce, State, and everybody is on the committee. But when

it comes to sales, they have nothing to do with it as a matter of law.

Of course they have more influence in the Government, from my

observation, than the Department of Agriculture.

PROSPECTS OF INCREASED DOMESTIC COTTON PRODUCTION UNDER

PRESENT SITUATION

Mr. DEANE. Is this a correct assumption, that assuming this

overseas production of cotton continues showing a gradual rise year

by year in competition with the American exports of cotton, in view

of that situation do you see where there will be any hopes of an increase in cotton production in this country at any price commensurate

with the price that the farmer should receive?

Mr. MCCONNELL. I do not quite understand your question, but I

think you are asking me, if we continue the present policy if we will

have any chance to increase acreage in this country. Perhaps we can

preserve the domestic market, I do not know, but I doubt it.

Mr. WHITTEN. You will agree to this, that under the present acreage

allotment and marketing quota act it is based on estimated exports.

That is one of the factors, is it not, expected consumption plus the

normal carryover, which has been estimated az, around 30 percent.

If you hold your commodity off the market it will cut your exports

and cut your acreage?

Mr. MCCONNELL. That is right.

Mr. WHITTEN. Does it not follow that if you do sell cotton and get

into exports, since it is one of the factors, it would tend to give more

acreage?

Mr. MCCONNELL. I do not know how it works.

Mr. WHITTEN. It would tend to. If you had sold it and did not

have it on hand it would tend to increase acreage?

Mr. MCCONNELL. Yes.

Mr. WHITTEN. The only reason you cannot say it will increase the

next year is because we have followed the policy of holding it so long;

but if we push on out you will feel it along the line; will you not?

Mr. MCCONNELL. I thought Mr. Deane's question was if we continue the same policy whether we could expect an increase in acreage.

Mr. WHITTEN. I think he meant domestically.

Mr. DEANE. Yes, I meant domestically. I am thinking of 1 or 2

small cotton counties in my district. They are squeezed down to the

point that it is not practical to grow cotton. They are gradually

being squeezed out. The little cotton farmer is going out of existence.

Mr. HUGHES. I think it should be pointed out that even though we

do have a policy, we have competition within our own borders from

the synthetics that have taken a. substantial part of the cotton market.
47

Mr. DEANE. You are making a strong argument that we must begin

to face that problem of moving the cotton. Otherwise the cotton will

be forced off the market.

Mr. HUGHES. It is not only a loss in export markets but in domestic

markets.

Mr. WHITTEN. I read where the National Cotton Council said the

farmers would have to reduce the price of cotton because of competition from synthetics. Then I read where the National Cotton

Council said production had increased 3 million bales. Sitting on this

committee I am sure the end use of.the commodity will determine if

you will have synthetics or cotton. Anybody who believes the American farmer can grow cotton cheap enough and live to outdo Du Pont

and the highly organized chemical industry is ribbing himself.

POSITION OF TEXTILE INDUSTRY

Mr. DEANE. Mr. Secretary, you indicated that various and

sundry groups visited with the Department opposed to this idea.

What position did the textile industry take?

Mr. MCCONNELL. The textile industry, as far as I am concerned,

has never taken a position against the Department or the Government entering the competitive market if when they did that there was

provision to protect them.

Mr. DEANE. In other words, if you had moved into the world

market it would not have injured the textile industry so far as their

purchase of cotton is concerned?

Mr. MCCONNELL. Yes. This is sort of academic. A foreign

spinner today can buy the cheap world cotton and come into this

country with his finished product, and I expect that will become more

true if we continue the present policy. However, I think the textile

people felt if we sold cotton competitively they would have to have

some protection under section 22 or something like that. That is

one of the things blocking this.

Mr. BERGER. Or even a subsidy.

Mr. MCCONNELL. Yes, for export.

Mr. DEANE. Do you know how much below the American price of

cotton they are paying for cotton they are buying overseas?

Mr. MCCONNELL. You mean foreign mills?

Mr. DEANE. No. Do you have evidence of cotton mills in this

country buying cotton from overseas areas?

Mr. MCCONNELL. They cannot. There is an embargo against

most of the cotton. They are confined to this market.

Mr. DEANE. When your stop order cam.e through, I assume you

had no immediate plans so far as moving any cotton into the world

market at competitive prices?

Mr. MCCONNELL. Mr. Deane, I have never stopped trying and

am still working on it.

Mr. DEANE. But you have been stopped; is that true?

Mr. MCCONNELL. Yes.

Mr. DEANE. That is all.

MT. WHITTEN. I think I pointed Out in the record earlier that a

group of Senators and Congressmen have an appointment with

President Eisenhower at 10 o'clock Monday morning to try to present
48

to the President what is happening to the southern cotton farmer,

and to point out that the Government is singling out one commodity

and holding it back when other commodities are being treated differently. I hope we can have some influence with him. We will do our best.

COOPERATION FROM CONGRESS IN PERFECTING PRICE SUPPORT AND

ACREAGE ALLOTMENT LAWS

Mr. HORAN. Are you getting good cooperation from the Congress?

Mr. MCCONNELL. On this?

Mr. HORAN. I assume in administrating the basic law on price

supports and acreage allotments and marketing quotas that you may

see places where you have to modify existing law. Are you getting

good cooperation?

Mr. MCCONNELL. I do not know what you mean by that.

Mr. HORAN. Take wheat for example.

Mr. MCCONNELL. Well, I think that with respect to any problem

which has been brought to Congress on any of these things they have

been sympathetic and have worked toward a solution where they

thought the solution was sound. We have a law, 2170, where people

involved work very diligently to give us that tool to work with, and I

expect sometime will.

Mr. HORAN. I understand there is a monastery down in Georgia

that raises its own feed grains. Under existing law you have to charge

that monastery $1.13 penalty on each bushel of wheat, even though

they do not take a bushel off the monastery grounds. Have you

tried to have that corrected by the Congress?

Mr. MCCONNELL. We have suggested that wheat produced on the

grounds and not for market purposes be allowed to be used on the farm.

Mr. HORAN. What success have you had?

Mr. MCCONNELL. So far it has passed the Senate, but no action

has been taken in the House.

Mr. HORAN. Why?

Mr. MCCONNELL. I suppose somebody felt it was not a wise bill.

Mr. HORAN. You have made an effort, though?

Mr. MCCONNELL. Yes.

Mr. HORAN. When?

Mr. MCCONNELL. Within the last month.

Mr. HORAN. When did it pass the Senate?

Mr. MCCONNELL. I cannot say. I think it was probably 3 months

ago.

Mr. HORAN. That is all, Mr. Chairman. I hate to see the Department trying to make suggestions as to laws that should be modified to

get better administration, and then not get cooperation from Congress.

Mr. WHITTEN. Of course when you say "Congress" you do not

mean this committee. I think they have gotten a lot of things they neither asked nor solicited from this committee.

The illustration of my colleague from Washington brings up a ques- tion. On the face it seems ridiculous for you to have to collect that

money. But when you come up with a bill to correct that, the word- ing may lead to a lot of problems. Turning to another point for a moment, in connection with cotton. The Solicitor of the Department
49

tells me he has never rendered a decision that you had to export the

specific cotton that you sold on competitive bid. Administratively

since 1947 you have acted as though you had to, but there has been

no legal opinion to that effect. All anybody has ever contended is

that cotton is the only commodity that could be in that position.

However, the bill you send up—I do not know who wrote it—applies

to all commodities. It provides that if an exporter ships the sam.e

kind of commodity of the same value, he can buy on the domestic

market on a competitive bid basis. But, if he sent some bad cotton

across the Rio Grande to Mexico, he would be eligible to buy some

better cotton on a competitive basis. You would be subject to

every kind of proposition under that unlimited legislation.

The other thing I would raise in answer to my colleague from

Washington is that, when folk will not use the laws they have got,

they are hardly in good shape to ask for the new ones.

Mr. HORAN. I do not agree with your basic premise.

Mr. WHITTEN. I was going along with the requested legislation

with the hope that if we gave it to you you would have no excuse

not to use the law you have.

Mr. HORAN. If you are going to maintain a healthy market, the

Commodity Credit Corporation has to hold on to those things when

there is overproduction. The basic law was faulty in that it did not

take into consideration the sending abroad of our know-how and all

of that to build up the production of other countries. The basic law

ought to be changed. It ought to be changed in that particular,

because if you are going to dump this on the world market you will

depress the market, so the Commodity Credit Corporation has to

bang on to these commodities. The basic argument was that it would

be a stabilizing factor because it would withhold from markets a

certain proportion of our commodities.

Mr. WHITTEN. If I had the privilege of rewriting all the agricultural laws I would make a number of changes. I would rather have

the authority under the Corporation's charter than any compulsory

law, because it gives you full authority to do from day to day. I do

not have the privilege of rewriting the law. I think the thing that is

causing me to stay on this subject so much is that we finally faced

up to the fact that, with this export of American know-how and

capital, we in the United States can no longer control world production or price by regulating our own production and offering price.

That is the thing that has become more and more evident in the last

3 or 4 years.

I want to thank you for your discussions along this line, Mr.

.McConnell. Now, Mr. Marshall has some other subjects he would

like to discuss with you.

STORAGE FACILITIES

PURCHASE OF ADDITIONAL BINS

Mr. MARSHALL. Mr. Secretary, you have determined that you

need to buy some additional bins this year. How many bushel

capacity have you estimated you need to purchase this year?

Mr. BERGER. 47 million bushels.

Mr. MCCONNELL. I am not too familiar with the details of that

matter.
50

Mr. MARSHALL. You issued a press release, and I would like to

read from it:

CCC is requesting bids for supplying only standard circular steel bins of approximately 3,250-bushel capacity. This type of bin is required in order to give

greater flexibility in moving and disposing of CCC's emergency storage. This

problem becomes increasingly acute as each additional CCC purchase !of storage

pushes the CCC total toward the billion-bushel mark.

The circular steel bins can be moved while erected or they can be taken down

easily for removal to new sites in the event storage shortages show up later in

other areas. This feature permits more satisfactory lease negotiations when bin

sites leases expire. Because of their smaller size, when these bins are no longer

needed for CCC storage they are suitable for disposal to farmers in the areas

where located, thus adding to the total of efficient on-farm storage.

Now, as I understand this problem, these steel bins are of 3,250-

bushel capacity. If wood manufacturers furnished to you a bin

made of wood of 3,25)-bushel capacity, could they come under the

requirements of the bins then?

Mr. HUGHES. We do not think so, Mr. Marshall. Our experience

with wood bins has indicated they are not as flexible, particularly

with regard to moving, and establishing the bin site someplace else.

The maintenance costs have been much higher. I believe, from the

total of our experience to date, it is fair to say as long as we have the

responsibility for the preservation of this inventory we think we

should select the type of bin that does the best all-around job and

shows the most flexibility. That was the reason for the statement.

Mr. MARSHALL. This committee has repeatedly expressed the

statement that they have felt this program to be a satisfactory program must be one in which the best storage facilities are provided.

When you are talking about movability of bins, are you talking

about the Government, or moving it from the bin site to a farm?

Mr. HUGHES. We are talking about both.

Mr. MARSHALL. You are talking about both?

Mr. HUGHES. Yes. We have some bin sites where maybe a local

school district has decided they would like to put up a school there

and want to get the site cleared. They want to make arrangements

with us to get our bins off there. I mention that because there is a

particular instance just like that.

If we have structures that have cement foundations, such as the

quonset-type hut, it is difficult without a lot of expense for these bins

to be moved.

Mr. BERGER. Mr. Marshall, we also have the serious problem of •

where you have the ground leased and you find you cannot re-lease it,

and you have to pick up the bins and move them some other place.

Mr. MARSHALL. I recognize your problem of moving bins from one

site to another. Your determination is somewhat surprising to me •

that you can move a steel bin, with the danger of bending and warping

the seams, easier than you can move a wooden bin.

It would seem to me that a steel bin, set as it is on a certain level

ground, that the wooden bin would have less danger of warping and

bending and going out of position than the steel bin.

Of course, you have a number of different types of wooden bins

and a number of different types of steel bins. Are you basing your

opinion on just part of your experience with certain bins, or on the

overall?
51

Mr. HUGHES. We are basing it on the overall. If the bin were

moved only for a short distance it could be moved intact and your

statement is correct. But if it has to be taken down and moved any

distance at all it becomes impossible to disassemble a wooden bin,

as we can do with a steel bin.

It is true you do run on steel bins a chance of warping, but with

careful workmanship there has been good experience in the past in

moving the steel bins.

Mr. MARSHALL. Your determination is made, then, more on the

basis of taking the bin apart and reerecting it, than it is in moving the

bin itself?

Mr. HUGHES. Well, it is partially that; yes.

Mr. MARSHALL. There is one other thing we noticed in your report.

Mr. HUGHES. Excuse me. The maintenance costs have been much

higher on the wooden bins than on the steel bins, also.

Mr. MARSHALL. Could you supply to this committee the figures

you used in arriving at those conclusions?

Mr. HUGHES. Mr. McLain, do we have such figures compiled?

Mr. McLAIN, I do not know that we have them broken down by

different types of bins. We have our maintenance costs by States.

Your question was: Could we break it down as to maintenance cost

for wood as compared to steel? I think that would be kind of difficult

to do, with the records we have. I think it is fair to say that the observation of our State and county people has been in conformance with

what Mr. Hughes just said. Their feeling is that the maintenance

cost has been higher.

I think it has partially been brought about because we have had

some unfortunate experiences with certain people who have fabricated

wooden bins that are not the type of people you are talking about, but

when they come in with a low bid it is pretty difficult to turn them

down, if they meet the specifications.

Mr. MARSHALL. Our investigation report shows, Mr. McLain,

that certain companies in furnishing wooden bins to you furnished bins

of a very inferior type.

Mr. McLAIN. That is correct.

Mr. MARSHALL. When you reflect that type of bin into your overall,

that might not be exactly a fair basis of determination. What I

think ought to be done, if you have not already done so, is to determine what the repair cost or maintenance cost is on the bins which are

suitable. You have had steel bins which have been very inferior.

Mr. McLAIN. That is true.

Mr. MARSHALL. You have had wooden bins which have been

extremely inferior. I am dealing with the overall, and not just what

the inferior items reflect into it. I am interested in what a good,

acceptable storage bin would reflect into it. That would be the

thing I would be interested in. Otherwise, as far as furnishing the

figures for the record is concerned, it would not provide us with much

information.

Mr. McLAnsr. I can think of another point that you ought to be

aware of. A little over a year ago we made an effort to buy—I

personally am prejudiced to wood, because I have seen what wood

will clo—we made an effort to buy smaller wooden bins, but in all

cases they just could not be competitive. It is difficult to make a
52

3,250-bushel bin out of wood, and there are a good many reasons for it, at a competitive price with steel. There have been several people interested in this over in the Department. We met with about 12 of them yesterday in the Under Secretary's Office. They all admitted that was so.

In order to be competitive, if you get up to about the 10,000-

bushel size, which is much more difficult to dismantle, you can do it. However, it is harder to move than this smaller size. That is

one of the big factors in this.

I am sure even if we had permitted a 3,250-bushel bin to have been made of wood, they could not have been competitive.

These people we met with yesterday indicated that. In order to be competitive they have to get up to about the 10,000-bushel size. We feel that is too large for movability, and also feel if these bins go back

to the farms eventually—and with the supply we currently have on

hand they certainly ought to go, or at least some of them—the resale

value would be much less from the Commodity Credit Corporation

standpoint, because the average farmer does not want that size. That

was one of the factors that did enter into it.

There is no prejudice against wood in the Department of Agriculture; I assure you of that.

Mr. MARSHALL. In the sale of steel bins to farmers, there were some

bins that were sold, both steel and wood, at various times. Most of

that I think took place in 1949.

Mr. McLAIN. Yes. Quite a few years ago.

Mr. MARSHALL. There are many things a farmer can do with a

wooden bin to salvage material from it which he cannot do with a

steel bin.

Mr. McLAIN. We were speaking if he wanted to have farm

storage for grain. There are other things he can use them for. Many

of them that were bought prior to the time I had anything to do with it

they got just whatever they could get for them. Many of them were

inferior because of the shortage of many things. Many of those

were real small.

Of course, some of those were used for various things when they

were resold back, but they were resold at a very nominal figure. Not

very much was realized out of the resale.

Mr. MARSHALL. I believe in the State of Kansas our investigative

report showed that the field bins were purchased, and I am trying to

recall from the testimony—it seems to me that those steel bins in

Kansas City were prepared and accepted from a manufacturer, and

that manufacturer did not provide a steel that fit, so that it was

necessary for the bin crews to repunch the holes and reshape. Was

that Kansas, Mr. McLain?

Mr. McLAIN. That is right.

Mr. MARSHALL. I was trying to remember. What have you been

doing about that situation?

Mr. McLAIN. Of course the Government has asked and the company has, agreed to make everything right that was wrong. We hired

some engineers. In addition to our own Department engineers we

hired outside engineers to check on what was wrong. We are in the

process of having the company make it right.

Mr. MARSHALL. Have you at this time collected any damages from

the company?
53

Mr. McLAIN. We are not approaching it on the basis of damages.

• We are approaching it on the basis of them making what we purchased

right. We do not think it was right.

Mr. MARSHALL. I think the record should show at this point, Mr.

Chairman, that this committee has consistently insisted that the bins

that are accepted should be bins of quality. Tip to this time this cbmmittee has not made any differentiation between steel or wooden bins.

We have felt that the bin, whether it was made of steel or wood, if it

was inferior would be equally unacceptable.

Mr. McLAIN. That is right.

Mr. MARSHALL. That is what this committee feels.

Mr. McLAIN. In the press release you will notice we said nothing

about inferiority of wood compared to steel. It was the movability

and the things Mr. Hughes mentioned that were behind the complete

decision on the purchase of steel.

I think your wood people would tell you it is impossible to be competitive with a bin this small, with steel. If they can be in the future—

Miss Durkee up in Minnesota indicated her company is going to try

to be—certainly we will give consideration to any future purchases we

might have to make.

Mr. MARSHALL. It is my understanding also, Mr. McLain, that a

number of the bins which were furnished to us in the past, which

have been made of wood, were very satisfactory for storage purposes.

Mr. McLAIN. That is correct. I would say that we have got as

many good wood manufacturers of bins as we have steel manufacturers

of bins, proportionately.

Mr. MARSHALL. I am wondering, in the consideration you have

given to it, if you perhaps have not been a little bit discriminatory

so far as the material is concerned in the making of these bins? You

say that you have bins which have proved to be of good service,

coming from certain companies, made of wood. If the facts you

base some of your opinion on took that into consideration, I wonder

if you have not been a bit discriminatory because of some data in

your study as to the inferior quality bins.

Mr. McLAIN. Well, we do not feel that way. As we indicated in

the press announcement, we had reasons for doing what we did. Of

course, we have been scrutinized closely and wisely, I think, by this

committee and others, as to our operations. We feel as long as we

have the responsibility that we ought to be able to determine what

does the job best under the conditions to save the most we can for

the taxpayers and Commodity Credit. That is why this decision

was made the way it was.

STORAGE COSTS

Mr. MARSHALL. Last winter when we had some discussion here,

Mr. McLain, this committee called to the attention of the Commodity

Credit Corporation people the fact that storage costs had increased

in some areas of the country. Have you been able at this time to

lower any of your storage costs?

Mr. McLAIN. You are talking aboa commercial warehousing?

Mr. MARSHALL. Yes, warehouse storage.

Mr. McLAIN. Every 2 years we renegotiate a uniform storage

grain agreement, which is a working agreement we have between
54

Commodity Credit and the warehousing industry. That will be up for review again this fall. The new contract will be effective the middle of next year.

I point this out to you: When the stocks of grain bulge out every- where it is a little difficult to bring storage rates down. I think we

are going to review it very carefully.

Of course, we have the problem in negotiation, that if we do not offer them enough they are not interested in storing our grain. We have the problem of what to do with our grain. Naturally, when we have everything full it is not a very happy time to have to renegotiate

a storage agreement. I think you would agree with that. Certainly it will be looked into closely, and the top officials of Commodity Credit will approve any decision on that.

ROTATION OF STOCKS

WHEAT PROBLEMS

Mr. MARSHALL. The Secretary, when he was before us, I think about

3 years ago, talked to this committee about the desirability of rotating stocks. How much of that has been done in connection with wheat?

Have you rotated the wheat stocks considerably?

Mr. BERGER. It is being done all of the time. They are always trying to get rid of what they consider to be the oldest supplies and putting away the newest. The best illustration would be the corn sale last year of the 1948-49 corn, to get that out of the way and take back in the new. s

Mr. MARSHALL. If you do not mind, I would rather stick to the wheat proposition right at the moment.

When you rotate your stocks of wheat, you replace the grade with

the grade you dispose of?

Mr. BERGER. It depends upon whether you have the grade available.

Mr. RICHARDS. Mr. McLain may want to supplement this, but wheat is ordinarily stored commingled, Mr. Marshall. The elevator

or the warehouse is responsible for delivering the same grade and quality as was placed in storage. By and large I think rotation of stocks is accomplished by the elevator.

Except there is one thing that should be kept in mind: With the large stocks that we have even the elevator stocks are getting older all the time. We have made an effort in your area to correct part of that by at least getting storage space down the lakes and moving it into export position where we can get rid of it.

There is a problem on small lots where we have taken advantage of selling those lots out, where an elevator has had only a small amount.

However, the rotation of stocks, I think, in wheat is accomplished primarily by the elevator, in simply delivering to us the grade and quality that we put in. It is commingled storage rather than identity

preserved.

Mr. MARSHALL. Let us give a specific example here. You have a

quantity of Commodity Credit stocks of No. 1 Dark Northern Spring wheat..

Mr. RICHARDS. Yes, sir.
55

Mr. MARSHALL. You dispose of that No. 1 Dark Northern Spring

wheat by rotating it, but in return, because you have other parts of

the country which are bettei adapted for storage, perhaps, or .not

crowded for storage, you have replaced that with winter wheat in

your stocks.

Mr. RICHARDS. Well, let me say firstMr. MARSHALL. You make the replacement on a bushelage basis,

do you not?

Mr. RICHARDS. I think what you are thinking about is that we

have tried to move in the direction of making some exchanges.

Mr. MARSHALL. Yes.

Mr. RICHARDS. Where we have exchanged mostly stocks in country

position or stocks in terminal position.

We hold in the case of No. 1 Dark Northern Spring a warehouse

receipt. The elevator with whom we hold that grain is obligated to

deliver that grade, with some tolerance, of course.

Mr. MARSHALL. That is right. They are obligated to deliver that

grain.

Mr. RICHARDS. It does not have to be the identical wheat.

Mr. MARSHALL. But they are not obligated in making the rotation

to take in return that grade. You have been able to take other

wheat on the bushelage basis.

Mr. RICHARDS. Well, in cases where we are making exchanges it is

impossible to get the identical grade.

Mr. MARSHALL. All right. Of course that is right.

Mr. RICHARDS. We make some adjustments. Either the elevator

would owe us or we would owe them.

Mr. MARSHALL. Of course that is right. What has developed out

of the demand for No. 1 Dark Northern high-protein wheat in the

milling industry is more than it has been for some of these other types

of wheat, is it not? Is that not right, Mr. McConnell?

Mr. MCCONNELL. I would think so; yes.

Mr. MARSHALL. Surely. The next question I have, in mind is:

What do you do to protect the interests of the Government where this

wheat which is being disposed of is of a more acceptable market wheat

quality and brings more on the market than the other type of wheat

on your rotation basis?

Mr. BERGER. You take the market factor into consideration, Mr.

Marshall. There are discounts, or premiums being paid on a like

quality on that day.

Mr. MARSHALL. When you are trading do you collect on the matter

of grade and on the matter of protein content?

Mr. BERGER. That is right; just exactly what the market is doing

that day.

Mr. MCCONNELL. We get something.

Mr. BERGER. We either get better quality or something else.

Mr. MCCONNELL. Something in form or something to boot.

Mr. BERGER. We do not make a transfer like that unless there is a

specific advantage to Commodity Credit. We do not do it just

because they want us to do it.

Mr. MARSHALL. Well, on the wheat proposition presently we have

some people who have been doing a lot of talking about the fact

that the Commodity Credit stocks are being filled up with wheat

which is not as marketable as the No. 1 Dark Northern Spring wheat,
56

for example. But when you have made this exchange on that basis, and done it legitimately—I am not saying you have done it illegiti- mately—that does not give a true picture of the wheat program, when you use the present stocks of Commodity Credit, because it would naturally show that you have more bushels of wheat that are in less demand in the market than the other, because you have rotated it; have you not?

Mr. BERGER. Mr. McLain, can you help out on that?

Mr. Mchkusi. This, I think, is a true statement: Under our operating

program, we are pretty well not going to have the best quality wheat. In the first place, the market for the premium wheats has been higher than the lower grade. It has been in the beginning of harvest. The millers go out and buy all they can. We are the residual taker

on the quality of wheat when we get it.

In other words, when they go through this commingled process I

think there is no denying that we get the value as determined by the loan, and if we make exchanges, we do it on the market-price basis

as of the day we make the exchange, but the free trade is going to try to get the premiums prior to the time we get them. I do not think there is too much wrong with that. When we get them in our stocks, when we export them--

Mr. MARSHALL. I am afraid you have missed the point I was getting at, Mr. McLain. The point I was making in this discussion was that by quoting the present stocks of Commodity Credit you are not giv- ing a true picture of the wheat proposition, because you have rotated the No. 1 Dark Northern Spring wheat, for example, and you have replaced it with other wheat, and therefore you have larger stocks in proportion to the wheat that you would have of your more acceptable high-protein marketable wheat; have you not?

Mr. McLAIN. Well—

Mr. MARSHALL. People who quote those figures should not use those figures for the purpose they are using them.

Mr. McLAIN. I think there is some truth to that. Of course, I am

one who does not like to discredit the quality of wheat we have in

our stocks. Frankly, I think with all the wheat we have the time will come or could come when it will be very usable. I think we do not sell products too well if we discount them. I think we ought to be careful about that.

Mr. MARSHALL. Can you furnish for the record the quality of wheat that has been rotated and what has been taken in exchange for that rotation?

(The information is as follows:)

STATEMENT ON EFFECTS OF EXCHANGES AND ROTATION OF CCC WHEAT STOCKS

For a number of years CCC has made exchanges of wheat largely with domestic mills and in some cases with port elevators where such trades could be made to the financial advantage of CCC. As a matter of policy, trades also have been made with interior mills dependent on wheat produced nearby in order for them to continue operations and be competitive with mills operating at terminal markets. Generally such exchanges have been made on the basis of grade for grade. However, in some cases wheat of one class is exchanged for wheat of a

different class, such as hard red winter for western white wheat. In those instances where there is a difference in grade or class, settlements are made on the basis of premiums and discounts recorded in the record of cash sales provided daily by the grain exchange where the transaction was made.
57

Exchar ge transactions involving acquisition by flour millers of qualities of

wheat desired for milling usually have resulted in the Corporation maintaining

its stocks with comparable grades of wheat, but, in some cases, the class of wheat

or the protein content has been less desirable for domestic milling than the wheat

traded by CCC. Of course, any differences in the values of wheat occasioned

•either by protein premiums or by differences in class resulted in a mat settlement

to the Corporation as a part of the exchange. Since the Corporation obtains

settlement in cash for the lower value of wheat traded to CCC, the exchanges are

to the advantage of the Corporation in that the principal outlet for CCC wheat

is in the export market. In recent years no protein premiums have been paid by

exporters for export wheat. Classes of wheat considered less desirable for

milling in the United States have moved fairly readily into export.

Briefly stated, CCC exchanges of wheat have tended to increase the proportion

.of CCC stocks which are less desirable for domestic milling but the wheat acquired by CCC is generally acceptable in export markets. Furthermore, the

large stocks of wheat now held by CCC are sound, merchantable, and of good

.average quality.

Detailed figures on actual exchange transactions are maintained only in the

five CSS Commodity offices which handle grain, namely, Chicago, Dallas, Kansas

City, Minneapolis, and Portland. A complete analysis of such exchanges would

require considerable time. The totals of such exchanges for the fiscal year 1954

and for the period beginning July 1 through May 31, 1955, are as follows:

July 1, 1954, through May 31, 1955: Bushels

Acquisitions 30,332,706

Dispositions 31,445,683

Fiscal year 1954:

Acquisitions 26,559, 169

Dispositions 26,523,432

Under the authority contained in the Agricultural Act of 1954 with respect to

the rotation of setaside stocks, the Corporation hag recently initiated a program of

purchases and sales of like quantities of wheat. This program involves the sale of

CCC wheat in country position to the operator of the country elevator and the

purchase of a like quantity or value in a terminal elevator located in the market

area where the wheat in the country elevator would have been shipped if it had

been loaded out on CCC order. In these purchase and sales transactions the

Corporation does not allow for any premium for protein on wheat that it buys but

it does collect a protein premium on any wheat sold if such wheat is eligible for such

premium. Further, wheat of a lower grade is frequently sold and wheat of higher

grade is purchased. That is to say, under this program, wheat grading No. 4

might be sold to the country elevator but only wheat grading No. 2 or better would

be acquired at the terminal elevator. The effect of this program is to upgrade

stocks of wheat held by CCC. The volume of such purchase and sales transactions up to the present time has not been large. Through May 31, 1955,

340,000 bushels had been purchased and 338,000 bushels sold.

Mr. McLAIN. Of course, the exchanges we have had have been

very limited. That is a very small part of most of our wheat that

moves. Most of it moves by loading order. We take it from where

it is. If it goes to export it just goes there.

The exchanges have been a very nominal part of our operations.

We have had some exchanges over the years with mills, but it has

only been recently under the authority we have under the setaside

order that we have done this in any expanded way. So it has been

very limited up to this point.

There are some dangers in there, and we want to be very careful

of the way we handle it.

Mr. MCCONNELL. I take it, Mr. Marshall, what you are after here

is like this: Let us say you have 100 million bushels of hard winter

wheat 

Mr. MARSHALL. That is right.

Mr. MCCONNELL. That is not actually the stocks delivered to us

originally.

Mr. MARSHALL. Yes.
58

Mr. McCoNNELL. It came about finally because of swapping

around. Therefore it does not show the true picture of what came

to us on support.

Mr. MARSHALL. That is why I was interested in it.

Mr. MCCONNELL. Yes.

Mr. RICHARDS. Mr. Marshall, in that connection I think while it is true that CCC trades involve different qualities of wheat, in the limited amount of trading we are doing we are not trading completely

unlike qualities of wheat.

Mr. MARSHALL. I do not know that I have the facts which would

indicate that you people have been doing anything indiscriminately

or illegitimately or anything else along that line. What I am trying

to say out of this is that the people who are quoting figures of Commodity Credit stocks are not giving the true picture, because there

have been some changes there. That is the point I am trying to

make out of this. •

Mr. Berger, you made the statement a moment ago that when you

disposed of the Commodity Credit stocks that had a high protein

content you sold them on the premium basis on the market as it existed at the time; is that correct?

Mr. BERGER. That is right. We ordinarily work out an exchange

with premiums and discounts taken into consideration on both grades

of wheat.

PRICE SUPPORT OF COTTONSEED

Mr. WHITTEN. We are having made at the present time a thorough

inspection of the operations of the Commodity Credit Corporation.

We have tried to have it continue all along, so I know we will have

your cooperation in connection with all of that.

It may be that these matters will be pursued a little further. I

have not had time to go into this matter of the cottonseed support

prices, which I discussed in the Department with you several times

earlier. It was my understanding that you had turned down the

request to support cottonseed oil, notwithstanding the fact that

when you had the oil before, you offered it for sale and sold it. Now

it appears that tung oil is also in short supply.

Mr. Hughes, it has been told to me that you have hesitated to

support the end product. As a matter of fact, cottonseed has always

been supported by the end product; is that not correct?

Mr. BERGER. You have had a package deal.

Mr. WHITTEN. That is hardly an answer to my question, Mr.

Berger.

It was the end product that you supported?

Mr. BERGER. That is right.

Mr. WHITTEN. So if you support an end product, it is no change

from that.

Now, if you support cottonseed, as you are, and you get the cottonseed, where are you going to put it?

Mr. BERGER. We do not figure we are going to get any cottonseed.

Mr. WHITTEN. If you turn out to be wrong where will you put it?

Mr. BERGER. We think the world situation is such that the oil will

move in the market, at the support price or more.

Mr. WHITTEN. But if it turns out you are wrong, what are you

going to do?
59

Mr. BERGER. We will have to do something else.

Mr. WHITTEN. If you have to buy cottonseed where are you going

to put it? How are you going to keep it?

Mr. BERGER. We have ways we can go to, if the cottonseed does

not move into the market.

Mr. WHITTEN. Now you have no excuse for not answering my ques- tion, because you tell me you have ways of doing it. What are those

ways?

Mr. BERGER. It depends on the quantity, whether it is just a little local area or whether it is a national situation. You may have to

go right back to your package deal.

Mr. WHITTEN. I asked you: If you should get the cottonseed how

are you going to handle it? We agree that you have ways. Now

I want to know the ways of handling the cottonseed.

Mr. BERGER. In the first place, you might have to go right back

to the package deal.

Mr. WHITTEN. Then you will not be handling cottonseed; you will be handling the end product.

Mr. BERGER. That is right.

Mr. WHITTEN. So this is not turned down because we are ask;ng

to handle an end product?

Mr. BERGER. No.

Mr. WHITTEN. I was told some producer group is against this proposal. Who are they?

Mr. BERGER. Producer?

Mr. WHITTEN. I was told some producer group had opposed it on cottonseed oil. .

Mr. HUGHES. Had opposed, or proposed?

Mr. WHITTEN. Had opposed.

Mr. HUGHES. I have had letters from farmers.

Mr. WHITTEN. Could we have the record show who they are?

Mr. HUGHES. I think that could be done.

Mr. WHITTEN. I would be glad to have the record show it. (The information is as follows:)

LIST OF PRODUCERS FROM WHOM LETTERS WERE RECEIVED OPPOSING PURCHASES

OF COTTONSEED OIL AND SOYBEAN OIL

Mr. Otto Steffey, president, Illinois Agricultural Association, 43 East Ohio Street, Chicago, Ill.

Mr. Hassil E. Schneck, president, Indiana Farm Bureau, Inc., 130 East Wash- ington Street, Indianapolis 4, Ind.

Mr. E. Howard Hill, president, Iowa Farm Bureau Federation, Des Moines, Iowa.

Mr. WHITTEN. The reason I ask this is that we have a support price on cottonseed.

Mr. BERGER. Mr. Chairman, with the soybean oil you do have the producer groups opposed to the buying of soybean oil, so there is where cottonseed oil would come in.

Mr. WHITTEN. I just want the record to show the facts. The

reason I say that is that we have a support price on cottonseed and I know you cannot store cottonseed.

Mr. BERGER. That is right. So do I.

Nfr. WHITTEN. Knowing that and knowing you have the program,

I think you had better have your plans set up so that the minute you

start getting cottonseed you can act. Otherwise you are going to have a lot of answers you will be expected to present.

96-161 0 - 73 - pt. 9 - 5
60

Mr. BERGER. As long as cottonseed is selling at $9 or $10 above

the support price I am not worried.

Mr. WHITTEN. I am just saying that now is the time to get some

of those plans ready. The fact that you do have them may help you

in your immediate problem.

Mr. BERGER. Well, they know that we know how to put in a

package program overnight, very rapidly, if we have to have it.

Mr. WHITTEN. I know that you know how to do it, and that is the

reason we have been pressing you to do it.

Mr. BERGER. Why do it ahead of time?

Mr. WHITTEN. Goodness, I do not want anything moved through

the Government if you can handle it, but I am pointing out some of

the dangers. If you do not handle it you are going to be stuck.

Mr. MARSHALL. Mr. Chairman, you want to be prepared.

Mr. WHITTEN. Absolutely.

Mr. BERGER. Nobody is more conscious of that than we are.

Mr. WHITTEN. We would like to have a full statement or full

discussion in connection with the proponents, opponents, and de-.

cisions, and what the plans are in the event you run into trouble. I

think it may keep yoli from having trouble.

(The information is as follows:)

1955 PRICE-SUPPORT PROGRAM FOR COTTONSEED

For several years the Department has administered a price-support program

for cottonseed, effectuated primarily through a guaranty to purchase oil, meal,

and linters in specified quantities and at specified prices from mills which had

paid not less than support prices for cottonseed. This type program has been

used primarily because of the lack of storage and the perishability of cottonseed.

During the 4 years in which the package program has been in effect (crops of

1951 through 1954) cottonseed prices were successfully supported; in fact in 3

years of the 4, farmers received approximately $7 to $10 above support and during

the 4-year period prices exceeded support by an average of about $7 a ton.

When measured strictly on the basis of effective support to farmers, the package

program has been extremely successful. But at the same time it has maintained

prices at or above support levels, CCC has acquired cottonseed products amounting to from 7.6 percent of the crush of the 1951 crop to over 47 percent of the 1952

crop crush. Losses on the cottonseed price-support program commencing with

the 1949 crop (when a profit was realized) had exceeded $55 million as of May 31

this year and estimated losses on products still remaining in inventory at that date

approximately ,another $51 million, making an expected total loss of about $106

million on these programs.

From the Government standpoint the package program has presented real

problems in connection with the disposition of the products as well as the heavy

financial losses and from the cottonseed-industry standpoint has prevented their

products from moving to market in the normal fashion and injured their competitive position.

In view of the continued expansion in United States production of fats and oils

and oilseeds, price-support levels for all three of our major oilseeds; that is, soybeans, cottonseed, and flaxseed, were reduced in 1955. In establishing the reduced price-support levels it was expected that reduced levels of support would

permit greater export movement at competitive world prices. It was also believed that 1955 crop cottonseed prices would likely equal or exceed the announced

support levels in view of reduced cotton acreage

'

reduced level of support and the

fact CCC-owned cottonseed oil had been largely disposed of. Consequently, 1955

was considered to be a logical year to discontinue the package program in an effort

to move cottonseed products through normal channels of trade rather than through

CCC hands. If this is possible we believe that market factors will establish a

proper balance between United States exports of the various fats and oils and oilseeds and that such a balance is much preferred over the imbalance created by

CCC-subsidized exports of oil.
61

Meetings were held with cottonseed crushing industry representatives to explore whether some program at the mill level other than the package program

could be developed for 1955. After a preliminary exploratory meeting it was

agreed that CCC would attempt to develop a program incorporating the purchase of cottonseed from the mills. A section of the industry committee also

desired some type of product-purchase option. A tentative program along these

lines was presented for discussion to the industry committee at the time of the

annual meeting of the National Cotton Products Association in New Orleans on

May 23, 1955. At that time, however, the whole approach was not favored by

the committee. Since that time some Interest has developed in a section of the

cottonseed-crushing industry favoring a cottonseed and soybean oil purchase program in order to effectuate price support for cottonseed.

As indicated in our discussions on Friday, we in the Department believe there

is an excellent chance that cottonseed prices will remain generally above support

levels with the result that no additional price-support program on the part of the

Department will need to be developed. If for any reason prices should approach

support levels and local conditions should be such that prices in some areas go

below support, we would anticipate managing the program by outright cottonseed purchases in the areas. Cottonseed thus bought probably would be resold

on a competitive-bid basis or could be toll processed and the products stored or

sold for export, depending on what seemed to be the best procedure at the time.

Should conditions necessitate any additional program for cottonseed, it would

likely be a mill-type operation. In event such a mill program is needed, we would

expect to develop it primairly on the basis of an offer to mills to purchase cottonseed which they had purchased at not less than price-support levels. It is also

expected that any such program would contain provisions for some product

acquisitions at the option of CCC.

Mr. WHITTEN. We wish to thank you gentlemen.

Mr. MARSHALL. Yes, sir.
•

INDEX

Page

Commodities offered for sale on competitive basis 11

Cotton:

Acreage, reduction in 31

Analysis of situation 43

Increased domestic production under present situation, prospects of_ _ 46

Movement under aggressive sales policies 45

Policy decision to enter world market on competitive basis, status of _ 28

Production by areas and impact on American market 39

Production in other countries, expansion of 27

Textile industry, position of 47

Cottonseed, price support of 58

Disposition of surplus commodities in world trade, progress toward 16

Investment in surplus commodities 18

Rotation of stocks 54

Wheat problems 54 '

Sales manager, provision for 37

Sales program in world market 1

Sales promotion, action on 18

Storage facilities:

Costs 53

Purchase of additional bins 49

Surplus commodities offered in world trade 16

(I)
PRESENT CONDITIONS IN AGRICULTURE

HEARINGS

BEFORE THE

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

EIGHTY-FIFTH CONGRESS

FIRST SESSION

SUBCOMMITTEE ON DEPARTMENT OF AGRICULTURE AND RELATED

AGENCIES APPROPRIATIONS

JAMIE L. WHITTEN, Mississippi, Chairman

FRED MARSHALL, Minnesota

WILLIAM H. NATCHER, Kentucky

JAMES B. BOWLER, Illinois

H. CARL ANDERSEN, Minnesota

WALT HORAN, Washington

CHARLES W. VURSELL, Illinois

Ross P. POPE, Staff Assistant to the Subcommittee

Appearance of Secretary of Agriculture

Printed for the use of the Committee on Appropriations

UNITED STATES

GOVERNMENT PRINTING OFFICE

WASHINGTON: 1957
COMMITTEE ON APPROPRIATIONS

CLARENCE

GEORGE H. MAHON, Texas

HARRY R. SHEPPARD, California

ALBERT THOMAS, Texas

MICHAEL J. KIRWAN, Ohio

W. F. N ORRELL, Arkansas

JAMIE L. WHITTEN, Mississippi

GEORGE W. ANDREWS, Alabama

JOHN J. ROONEY, New York

J. VAUGHAN GARY, Virginia

JOHN E. FOGARTY, Rhode Island

ROBERT L. F. BIKES, Florida

PRINCE H. PRESTON, Georgia

OTTO E. PASSMAN, Louisiana

LOUIS C. RABAUT, Michigan

SIDNEY R. YATES, Illinois

FRED MARSHALL, Minnesota

JOHN J. RILEY, South Carolina

ALFRED D. SIEMINSKI, New Jersey

JOE L. EVINS, Tennessee

HENDERSON LANHAM, Georgia

JOHN F. SHELLEY, California

EDWARD P. BOLAND, Massachusetts

DON MAGNUSON, Washington

WILLIAM H. NATCHER, Kentucky

DANIEL J. FLOOD, Pennsylvania

WINFIELD J. DENTON, Indiana

TOM STEED, Oklahoma

HUGH Q. ALEXANDER, North Carolina

JAMES B. BOWLER, Illinois

KENNETH SPRANKLE, Clerk and Staff Director

(II)

CANNON, Missouri, Chairman

JOHN TABER, New York

RICHARD B. WIGGLESWORTH, Massachusetts

BEN F. JENSEN, Iowa

H. CARL ANDERSEN, Minnesota

WALT HORAN, Washington

GORDON CANFIELD, New Jersey

IVOR D. FENTON, Pennsylvania

ERRETT P. SCRIVNER, Kansas

FREDERIC R. COUDERT, JR., New York

CLIFF CLEVENGER, Ohio

EARL WILSON, Indiana

BENJAMIN F. JAMES, Pennsylvania

GERALD R. FORD, JR., Michigan

EDWARD T. MILLER, Maryland

CHARLES W. VURSELL, Illinois

HAROLD C. OSTERTAG, New York

FRANK T. BOW, Ohio

HAMER H. BUDGE, Idaho

CHARLES RAPER JONAS, North Carolina

MELVIN R. LAIRD, Wisconsin
PRESENT CONDITIONS IN AGRICULTURE

TUESDAY, FEBRUARY 26, 1957.

WITNESSES

EZRA TAFT BENSON, SECRETARY

TRUE D. MORSE, UNDER SECRETARY

EARL L. BUTZ, ASSISTANT SECRETARY

MARVIN L. McLAIN, ASSISTANT SECRETARY

R. L. FARRINGTON, GENERAL COUNSEL

DON P.AARLBERG, ASSISTANT TO THE SECRETARY

WALTER C. BERGER, ADMINISTRATOR, COMMODITY STABILIZATION SERVICE

FRANCIS C. DANIELS, GENERAL SALES MANAGER, COMMODITY

STABILIZATION SERVICE

F. MARION RHODES, DIRECTOR, COTTON DIVISION, COMMODITY

STABILIZATION SERVICE

HOWARD J. DOGGETT, DIRECTOR, SOIL BANK DIVISION, COMMODITY

STABILIZATION SERVICE

ROBERT P. BEACH, ASSISTANT DEPUTY ADMINISTRATOR, OPERATIONS, COMMODITY STABILIZATION SERVICE

RALPH S. ROBERTS, ADMINISTRATIVE ASSISTANT SECRETARY

Mr. WiirrrEN. Gentlemen, I would like to ask the committee members that we adhere to the regular order in this hearing and let the

chairman complete his line of interrogation. I have some definite

points I would like to develop, after which the witness will be passed

to Mr. Marshall and Mr. Natcher and to Mr. Andersen, Mr. Horan, and

Mr. Vursell.

Mr. Secretary, I think that the committee has concluded that, since nothing is more important right now to agriculture than the overall policies of the Department and the activities in the Congress in connec- tion with farm income and things of that sort, that we should have a

special hearing on this phase of the Department's program at this time, rather than wait for your regular appearance on the 1958 budget.

Mr. BENSON. Mr. Chairman, I believe everybody has been handed a

copy of a statement which is an attempt to cover the items which I

understood that you wanted us to discuss particularly, soil bank, the price support levels, which we have set, and the relationships between the two.

Mr. WIIIITEN. Those are the major things that we should have in mind. I believe that we might delay the presentation of your statement briefly, so that I might develop some things that might not have had your detailed attention in it.

(1)
2

Mr. Secretary, it is no great secret that I have differed with your

views in agriculture, as good Americans can, and that some members

of this committee from both parties have seriously questioned the

correctness of some of the views which you and your administration

have had with regard to price supports.

REDUCTION IN PRICE SUPPORTS

Now, what really led us to request that you appear at this time was

your recent anouncement making reductions in price supports for

several commodities. What were those commodities and how much

was the reduction in 1957 as compared to 1956, Mr. Secretary?

Mr. BENSON. That is all covered in this statement, taken up commodity by commodity, Mr. Chairman. I wonder 

Mr. WHITI'EN. Could you give us that information at this time?

Mr. BENSON. I have a table in here, page 9, under the caption of

"Price Supports," which shows the 1957 supports, the support level

in dollars and cents and in percentage of parity, and the average price

received by farmers as of January 1957.

Mr. WHITTEN. We would like to have a table included in the record

at this point showing changes in price supports announced in the election year of 1956 and those announced this year.

(The table referred to is as follows:)

Announced Price Supporta

Commodity

1956 1957

Percent of

parity

Price Percent of

parity

Price

Corn bushels__ 84 $1. 50 77 $1.36

Wheat do_ 82.6 2.00 82. 5 2.00

Cotton pound_ _ 82.5 .2934 77 .2815

Rice hundredweight_ _ 82.5 4.57 80 4.43

Barley bushels_ _ 76 1.02 70 .94

Grain Sorghums hundredweight_ _ 76 1.97 70 1.83

Oats bushels_ _ 76 . 65 70 .60

Rye do_ 76 1.27 70 1.15

Cottonseed ton_ _ 70 48. 60 65 46. 20

Flaxseed bushels. 70 3.09 65 2.92

Soybeans do_ 75 2.15 70 2.09

PRICE SUPPORT CORRELATED TO FARM INCOME

Mr. WHITTEN. Mr. Secretary, in going over a review of your Department in the years that you have been Secretary, I notice that you

have reduced price supports on cotton by 12 percent. You have reduced price support on cotton from 32 cents to approximately 28

cents. You have reduced price support on corn by 20 percent,

on barley by 26 percent, on cottonseed by 33 percent, flaxseed by

25 percent, oats by 25 percent, rye by 21 percent, sorghum by 20 percent, soybeans by 21 percent, butterfat by 19 percent, and milk by 19

percent. That is the reduction that you have made in price-support

levels during your tenure in office. During that same period, farm
•

'411

a.

3

income has gone down something in excess of 20 percent. These figures are evidence of the soundness of myself and other members of the

committee in the belief that the price received by the farmer is a,

very key factor in farm income. A comparison between the reduction in farm income from 1952 to 1957 and the reductions you have

made in price-support levels during this period, certainly bear out

such a conclusion.

In your advocacy of reduced price supports, you have always taken

the view that to reduce supports would increase consumption. What

evidence do you have that there has been any increase in consumption

in these commoditiess that you have reduced?

RECOGNITION OF FARMERS' PLIGHT

Mr. BENSON. Mr. Chairman, you have raised several questions:

First of all, in adjusting the price supports—there have been cases

where we have also shown some increases—we try to look at each commodity and do what we think is best for that commodity, particularly

in the long run.

Mr. WHITTEN. Do you mean that you consider what is best for the

middlemen or do you mean the farmers who are engaged in producing

the commodity?

Mr. BENSON. Our concern is for the farmer. Our major concern is

for the farmer; I am sure you know that.

We recognize that one of the most serious depressing effects on farm

income—in the last couple of years, particularly—has been the very

heavy accumulations of surplus commodities in Government warehouses. Our career economists estimate that our surpluses have

brought about a reduction of some 20 percent in the total farm income

or about $2 billion. To pile up surpluses in Government warehouses,

which in turn depress farm prices, is not helping agriculture.

So, we tried to set the supports at levels that would permit these

commodities to flow into consumption. Then we put our emphasis on

marketing, for which you have been very strong, Mr. Chairman. We

put our emphasis on markets, the expansion of markets at home and

abroad. We want to move these supplies into use rather than into

Government warehouses, which are not a market. Once it gets there,

only three things can happen to it; eventually it will have to move out

into domestic markets or into foreign markets, or just stay there and

accumulate storage charges until it spoils. So we have tried to set

these supports at a level that will tend to promote orderly marketing

and tend to permit these commodities to move into consumption.

SALE OF COMMODITIES IN WORLD MARKETS

Mr. WHITTEN. Mr. Secretary, I could buy that a little easier if the

record did not show that for 3 separate years you had unlimited

authority to sell these commodities in worldwide markets, that there

were no restrictions whatsoever. Such statements will be found on

page 99 of the CCC hearings in the 84th Congress, in 1956. Further
4

evidence will be found on page 49 of the 1955 hearings, second session,

in which you listed all the various commodities that you had responsibility for but flatly refused to offer in world trade on competitive basis.

I realize you took the view that other countries didn't have the

money with which to buy our products. We had to correct that by

showing that the foreign countries did have dollars.

The next argument that you made, as I recall it, was that the trade

was opposed to these competitive sales. So we in turn had to have

an investigation as to where the trade stood on this matter. Also, I

believe there was some other argument as to the policies of the State

Department. So we had the State Department before us. As I recall

it, they testified that they had never opposed competitive sales, though

they kept their hands in the Public Law 480 disposals.

Finally in 1956, for the first time, we got you to offer this cotton,

because of the supply on hand. Yet for 5straight years I was trying

to get you to do the very logical thing of offering it for sale at competitive prices. It is my understanding from your reports that, once

we got you to move, you sold about 6 or 7 million bales in 1956. If

you ha a been offering that cotton for sale in 1954, 1955, and 1956,

what. is your judgment as to how much cotton you would have

moved? What is your view as to how much of this 35 percent cut in

cotton acreage that you visited on the cotton farmer could have been

avoided? By your own survey, you showed that in 1955, 55,000 farm 

families were put off the farms in the South under the acreage reduction for cotton in that year. If you had offered this cotton, as you,

are authorized under law, for sale competitively during those 5 years,

how much of this terrible situation would have been prevented?

Mr. BENSON. First of all, Mr. Chairman, I think it would be difficult to show that these people who have left the farm have done so

because of our sales policy.

Mr. WrirrrErr. It is not sales policy. It is lack of sales policy and

your own survey said they were put off farms as a direct result of

acreage cuts.

Mr. BENSON. Call it what you will, I am sure it is not due to policy

or lack of policy, as you want to call it. In the case of cotton, there

are a number of factors in the situation, as you well appreciate, I am

sure. It is part of the trend that has been going on for many years

in agriculture. The number of farmers has been declining. The

greatest declines took place before this administration came into

office, not due to Government policy but due to the play of economic

forces. The great demand for labor in the cities at high wages, mechanization of agriculture, and many other factors have played a very

important part in that trend. The trend is still going on, in a limited

way.

EFFECT OF ACREAGE REDUCTION IN 1955

Mr. WHITTEN. Mr. Secretary, in connection with that, I would like

to include in the record at this time the report of your own survey

as to the effect of your acreage reduction in 1955 for cotton.
5

(The report is as follows:)

Number of counties with 1,000 or more acres of cotton and number of counties

reporting

Number of Number of

counties Number counties Number

State having of coun- State having of noun1,000 or ties 1,000 or ties

more acres

of cotton

reporting more acres

of cotton

reporting

Alabama 67 67 Mississippi 77 so

Arizona 7 7 New Mexico 11 10

Arkansas 63 54 North Carolina 55 64

California 8 9 Oklahoma 59 74

Florida 11 27 South Carolina. _ .. 46 44

Georgia 138 139 Tennessee 35 44

Illinois 0 3 Texas 205 212

Kentucky 2 2 Virginia 6 14

Louisiana 46 29

Missouri 8 8 TotaL 844 887

Summary of answers from 887 counties to the following question:

"How many renter families ( tenants and sharecroppers) have been or will be

forced off farms due to 1955 reduction in cotton allotments? The question is

concerned only with the number of renters (as defined above) forced off farms

due to the 1955 reduction in cotton acreage allotments and not for other causes

such as mechanization, drought, etc."

Renter families Renter families

Alabama 7,554 Mississippi 11,981

Arizona 127 New Mexico 137

Arkansas 4,246 North Carolina_ 2,783

California 0 Oklahoma 1,477

Florida 279 South Carolina 4,147

Georgia 8,157 Tennessee 3,075

Illinois 40 Texas 5,580

Kentucky 60 Virginia 108

Louisiana 3,395

Missouri 2,202 Total 55,348

Summary of answers from 887 counties to the following question:

"How many small cotton farmers (i. e. those with 5 acres or less of cotton

allotted in 1954) will have net income for the farm reduced by $100 or more due

to the 1955 cotton acreage reduction? Do not include in this estimate the number

who may have income reduced due to not planting full allotments. The vPlue

of crops produced on acres diverted from cotton should be considered in arriving

at the net income loss."

Alabama 17,595 Mississippi 34,414

Arizona 38 New Mexico 64

Arkansas 1,496 North Carolina 17,397

California 0 Oklahoma 378

Florida 2,348 South Carolina_ 10,400

Georgia 14,888 Tennessee 14,944

Illinois 147 Texas 6,129

Kentucky 203 Virginia 1,632

Louisiana 6,649

Missouri 1,881 Total 130,603

Mr. BENSON.

Chairman, you

the formula in

ought to have

Of course, when you say our acreage reduction, Mr.

must realize that the acreage reduction was caused by

the law. We followed that. I know you maintain we

been selling more cotton competitively. There are a
6

number of factors in that situation—you have mentioned some of

them—and I think there was a limitation on dollars. Nobody knows

exactly what that limitation was. We were anxious, too, to get some

flexibility into our support mechanism. Otherwise, it would simply

mean that the Government would receive all the cotton at one figure

and then sell it out at some other figure.

Mr. WHITTEN. Which is what the law contemplates, isn't it?

Mr. BENSON. I am not sure that the law contemplates that. We

have the authority to do it, that is true, but certainly 

Mr. WurrTEN, If the law authorizes you to support prices, and sets

the basis on which you support, and then provides for sales in world

trade competitively, would it not seem that Congress had intended

that or would not have written it into law?

Mr. BENSON. May I answer it in this way: I am sure that the Congress did not intend that we become the sole marketer of cotton and

have all the cotton flow into Government hands. In time this would

dry up our private marketing machinery.

Mr. WHITTEN. Your action was taken because of the middleman?

Mr. BENSON. No, it was not. We think it is in the interest of the

farmer to preserve our marketing machinery.

COMPETITIVE SALE OF COTTON IN WORLD MARKETS

Mr. WHI TTEN. I would like to ask you again, if the Congress wrote

into law price supports and provided for sales in world trade on competitive basis, wouldn't you think that Congress intended that?

Mr. BENSON. I think Congress intended that we use that authority, with wisdom, of course. We felt that the course we pursued was

the wise course and of course you mentioned that there was some opposition from other departments. We did have a problem of getting

support for the sale of cotton abroad. You know that. We first obtained approval for the sale of 1 million bales of the lower quality

cotton and many people thought then that we would not be able

to move the million bales.

Mr. WHITTEN. Was that approval from the White House level?

Mr. BENSON. Yes, and from other departments of Government.

And then there

Mr. WHITTEN. May I keep the record straight, Mr. Secretary? At

the time we had this cotton problem, this committee had finally persuaded you to offer all 19 other commodities in world trade on competitive basis. Were you not, when you were having trouble getting

clearance for cotton, offering all other commodities?

Mr. BENSON. I am not sure whether we were offering them all but

Dr. Butz could answer that, I think.

Mr. WHITTEN. At the time we finally received clearance to move

cotton on a competitive basis you were offering all other commodities

in world trade on a competitive basis, were you not?

Mr. BUTZ. Yes, sir.

Mr. BENSON. I think we did supply a statement on that—Dr.

Paarlberg reminds me.

ACREAGE FORMULA

Mr. WRITTEN. Your own survey showed that, in addition to all the

farmers that were being squeezed out economically, acreage reductions
7

put 55,000 farm families off the farm. In doing that, you said you

were following the formula. I agree with that, but that formula also

provides that you shall add expected exports, expected domestic consumption, plus 30 percent, in fixing the acreage.

Now, by holding this cotton off world markets for 3 straight years,

though the law authorized competitive sales and I think contemplated it, your exports were down so that cut the farmers' acreage.

Because your exports were going down, you had that extra cotton on

hand. So when you figured that into your acreage allotments, you

hit the farmer again.

So, I am saying that this policy of holding our cotton off world

markets competitively, ruined many American cotton farmers.

Now, I don't, mean to belabor the record, Mr. Secretary, but I would

point out again, the law provides and has provided that, notwithstanding the formula, in time of an emergency you had authority to

increase acreage with regard to any commodity. As I pointed out at

that time, and I would like to have the record show here the pertinent

parts of Proclamation No. 2914, on December 16, 1950, the President

of the United States declared that a state of national emergency

existed.

(The requested information is as follows:)

PROCLAIMING THE EXISTENCE OF A NATIONAL EMERGENCY BY THE PRESIDENT OF THE

UNITED STATES OF AMERICA

A PROCLAMATION

Whereas recent events in Korea and elsewhere constitute a grave threat to

the peace of the world and imperil the efforts of this country and those of the

United Nations to prevent aggression and armed conflict; and

Whereas if the goal of Communist imperialism were to be achieved, the people

of this country would no longer enjoy the full and rich life they have with God's

help built for themselves and their children * * *.

I summon our farmers, our workers in industry, and our businessmen to make

a mighty production effort to meet the defense requirements of this Nation * * *.

Mr. WHITTEN. So here we had the emergency declared, and here

was the law that gave you the right to increase acreage in time of

emergency, and here were 55,000 farm families, according to your

own survey without a thing to do. I have always differed with you

about your failure to use that power under the law. You will recall

that, before you became aware of having that authority under the

law, you had made the speech to the southern governors in Virginia,

in which you stated that the situation was so serious, if it were within

your power, you would do something to relieve the situation of these

farm families put out on the roads. Then I called your attention to

the fact that in time of emergency you had a right to relieve it, as the

President had declared an emergency. But, as I recall it, you said

that you had gone over it and your conscience would not let you

reach the proper determination.

Mr. BENSON. There was no emergency insofar as the supply of cotton was concerned.

Mr. WHrrrEN. That is correct. But the law doesn't say an emergency insofar as the supply of cotton. It says in time of emergency.

Mr. BENSON. Just because there was a military emergency, it did

not mean that we go to extremes on any commodity program.

I would like to say again that the fact that people have left farms

in the South and elsewhere has not been due to any particular agricul-
•

8

tural policy. In my judgment, it has been due to a whole series of

factors, most important of which, I think, has been the demand for

labor in the cities, high wages offered, mechanization of agriculture,

the increased efficiency of our farmers. Those have been the major

factors.

Mr. WHITrEN. I can't agree with you fully. I don't mean to say

that some of those things don't enter into it. I realize that you place

great emphasis on economic units. Well, the farmer is an economic

unit. When you cut the price of a farmer's bale of cotton by $9 last

year and $6 this year, and when you cut his cotton acreage 35 percent,

you have made a lot of economic units uneconomic by action of the

Department of Agriculture.

PRICE SUPPORTS DO NOT AFFECT THE WORLD MARKET

Mr. BENSON. Of course, had we continued the high rigid support

program, which would tend to dry up markets both at home and

abroad 

Mr. WHrrTEN. I want to take issue with you right there. Why

would it dry them up abroad?

Mr. BENSON. Because our cotton was not priced competitively 

Mr. WHITTEN. All right. You set the price in world trade.

Mr. BENSON. And at home.

Mr. WHIrrEN. I would like to ask you to answer my question. You

said that the high support level dried up our markets abroad. You

just agreed that you had authority to sell abroad competitively, regardless of support level. Y ou agree to that, don't you?

Mr. BENSON. Yes, I think the authority is in the CCC Charter.

Mr. WHITTEN. Whatever the support level was, you had the authority to sell competitively. If foreign markets were being dried up, it

was your own refusal to offer competitively. Would you not agree

that, whatever your reasons for not doing it might be, that was the

cause?

Mr. BENSON. As a matter of fact, Mr. Chairman, I come back again

to the point I made earlier, that I am sure it was not the intent of Congress that the CCC be the sole marketing agency in this country. We

do not want Government monopoly in the handling of--

Mr. WHITIEN. Why treat cotton differently from the other 19 commodities you were already selling competitively prior to 1956.

Mr. BENSON. I do not know that we are treating it differently. We

started on some earlier than others.

Mr. WHITTEN. You just heard your own folks say that on January

1, 1956 you were offering and had been for some time all 19 commodities except cotton.

Mr. BENSON. Certainly there was no disposition on the part of any

of us to discriminate against any commodity. Of course, cotton is a

world commodity. It is a very sensitive commodity, in some areas.

You have the question of our relations with other countries to consider,

which you don't have to the same degree in many of the other commodities which we sold.

Mr. WHITTEN. You mean that cotton, with the biggest reduction of

any of them and the only commodity taking 2 straight years' reduction,

is the only commodity that these international commitments and assurances and all that kind of thing tie into?
9

Mr. BENSON. It is not the only one, Mr. Chairman. It is one of the

very important ones.

Mr. WRITTEN. Mr. Secretary, I feel so strongly about this, I hope

you will accept my apologies in advance for seeming to be very much

wrought up about it. But I would appreciate your .answering my

questions and I will give you any time you wish to qualify,.modify or

expand on your answers. But, may I again repeat the question: When

you said that high support levels would in any way affect foreign

sales, you were mistaken, unless you yourself withheld that commodity

from foreign markets, because there was no limit on your ability to

offer it in world trade competitively. Isn't that right?

MT. BENSON. High supports?

Mr. WHITrEN. You are not answering.

Mr. BENSON. Yes, I will answer it. High supports, Mr. Chairman,

would have the effect of pricing our cotton above world markets and to

that extent would tend to dry up world markets, which has happened.

Mr. WMTTEN. I can't let that answer stand because it is a flat contradiction of the truth.

Mr. BENSON. Let me finish my answer. We could, however, under

the charter of CCC, as I understand it, have stepped in as a government, and taken the commodity in and sold out at a much lower figure

on a competitive basis.

Mr. WHITrEN. As authorized by the law?

Mr. BENSON. Yes, it was authorized by law.

Mr. WRITTEN. As you are now doing it?

Mr. BENSON. As we are now doing it.

Mr. WRITTEN. So, the support level would not have a thing in the

world to do with your ability to offer these commodities competitively

in world trade under any circumstances?

Mr. BENSON. It would unless we disregarded entirely the relationship of price supports to the whole operation and unless we eliminated

from our thinking- the possibility that the Government would become

the only market for cotton and take over the whole operation. This

would tend to dry up our own private marketing machinery which

I think is not good for agriculture.

Mr. WRITTEN. I think these 55,000 farm families were put out

because you were giving attention to middlemen as against the farmer.

Mr. BENSON. There again, Mr. Chairman, we don't agree. I think

that was not the major factor at all. The major factors are the ones

I have mentioned.

FARMERS' COST

Mr. WRITTEN. Now, I think you will agree that farmers' income

is price times volume less cost. What has happened to farm costs

during the 4 years that you have been in office, Mr. Secretary?

Mr. BENSON. Well, farm costs have remained high, in many cases

have risen substantially.

Mr. WRITTEN. Farm income is down 20 percent or more, and costs

are staying stable at the best and actually climbing a little bit. If

you want to help the farmer's income, you have to do it one of two

ways, don't you? Pricewise or volumewise. Price or volume is all

that is left, since cost is constant or rising.

Mr. BENSON. I don't say there isn't anything we can do on the cost

side; as you know, we are putting a lot of emphasis, in our research
10

program, on reducing costs, making our farmers even more efficient.

I think that some of these wage settlements have had an adverse effect

on agriculture. I have spoken out, I presume at some risk, on that

issue also.

Mr. WHITTEN. Well, you asked industry and labor unions to hold

themselves in check, to help the situation. Then you do more damage

to farm incomes by reducing price supports, than perhaps they are

doing with their constant increases.

You have had a 62-percent increase in research. I know there have

been some findings, but I would like for you to agree if it is true,

that notwithstanding 62-percent increase in funds in your own Department for research, in spite of all the benefits that you thought

would come from that, costs have still gone up during your tenure,

haven't they?

Mr. BENSON. I think they have gone up, but that is not evidence that

research is ineffective.

Mr. WHIrrEN. I am not arguing that.

Mr. BENSON. Research is never dramatic. It is always slow but it

is effective over the long pull. I think most of the progress we have

made in agriculture in the last 50 years has been due to research and

education which has resulted in reduced costs, more efficiency on the

part of our farmers. Then I think the freedom that the farmers have

had to operate has been another important factor.

Mr. WHITTEN. Now we get back to what I wanted to develop. If

costs, notwithstanding all your efforts, have gone up and farm income

is down 20 percent, and you want to help that farm income, you have

got to increase the number of units he has to sell, or you have got to

increase the price that he sells it for, haven't you? That is your only

way in the world to increase his net income, isn't it?

EFFECT OF REFUSAL TO SELL IN WORLD MARKET ON FARM INCOME

Mr. BENSON. Of course one of the big factors that depresses farm

income has been this overhanging supply of surpluses as you know.

We do want to increase acreage and I think we are moving in the direction where we can give increased acreage. I would like to see that.

Mr. WHITTEN. Let us get to the other factors and see about that.

You say that the drop in farm income is all due to this big supply

overhanging his markets. Why was it in 1953 you would not sell these

commodities in world trade competitively so as to get them off his

neck? Why was it in 1954 you would not offer these commodities in

world trade competitively? Why was it in 1955 that you finally got

around to offering many of them, but you still would not sell cotton?

Now, you are very proud, and the President is proud, and I am proud

of you for being proud of what you did sell in 1956. But if you had

not stuck to your policy of holding these commodities—and many

folks thought you held them so you could get your way about lowering

prices 

Mr. BENSON. That is not true, of course.

Mr. WHITTEN. I say, many folks thought that. If you had not stuck

to your determination, from your friends' standpoint, and your stubbornness, as your critics would view it, how much of that would have

helped farm income if you had been following the policy of selling

competitively in 1953, 1954, 1955, that you did follow in 1956?
11

Mr. BENSON. I presume no one knows, Mr. Chairman, but there are

other .things we had to do. We had to get broad authority for the

movement of these surpluses, in addition to pricing some of them competitively on world markets.

Mr. WHITTEN. I cannot agree with you there. When the charter

gives you unlimited authority to sell through normal channels for

dollars without restrictions, I do not see where you would have to have

any additional authority.

Mr. BENSON. We wanted a program that would not keep the Government permanently in business handling farm commodities.

Mr. WHITTEN. You were willing to let farm income drop 20 per

; you were willing for 55,000 farm families to be forced off farms

in the South alone, just to have the kind of a program you wanted.

Mr. BENSON. That was not the cause; that was not the cause.

Mr. WHITTEN. What is the cause?

Mr. BENSON. We were trying to get a well-balanced program and

have been moving, I think, in that direction.

Mr. WHITTEN. Let me return to this: You will agree, won't you,

that if you want to help farm income, you have got to increase the

units to sell, or the price per unit?

Mr. BENSON. Or reduce his costs.

Mr. WHITI'EN. We have seen costs going up in spite of all your research. So if his costs are stable, the farmer will be lucky, won't he?

FARMERS FACE RISING COST

Mr. BENSON. As a matter of fact, Mr. Chairman, I think, that most

of the decline in farm income has been due to rising costs. I think the

records will show that. About four-fifths of it.

Mr. WHITTEN. You say it has been rising; the costs.

As amateur economists, we travel with fear and trepidation when

we talk to you experts in the field. But farm income has been price

times volume less cost—always. And the Secretary sap that the drop

in farm income, that this reauction you have given him in price, and

this 35 percent cut you have given him in acreage, which cut his volume, have not caused the drop in farm income. He says it is the

increase in cost. Doctor, you do not believe that yourself, do you?

Mr. PAARLBERG. I would like to explain it this way, Mr. Chairman—

Mr. WHrrrEN. You do not believe that yourself.

Mr. PAARLBERG. Since 1947, if you want to consider that the beginning point, it was the high point in farm income, since that time volume of farm production has gone up sharply.

Mr. WHITTEN. Per acre.

Mr. PAARLBERG. Gross volume, total agricultural volume, has gone

up sharply. The prices received have gone down. When you multiply

the larger volume times the somewhat lower price, the gross income of

agriculture is not much changed since 1947. Since 1947 the costs of

farm production have increased markedly, a consequence largely of

increased quantities of purchased items, and some increase in per unit

costs. So that of these three elements you suggest, the bigresponsibility for the farmer's reduced net income attaches to his rising production costs.

96-161 0 -73 - pt. 9 -6
12

Mr. WHirrEN. Of course that increase clearly shows your reduction

in price supports did not cut production. Now, let me give you the

other factor. You are figuring the farmers that are left on the farm,

and you are not including the 55,000 who were put off cotton farms

in 1955, according to your own survey.

Mr. PAARLBERG. If you wanted to figure this on a per capita basis,

Mr. Chairman—

Mr. WIITTIEN. Per farmer or per capita?

Mr. PAARLBERG. Per fanner.

Mr. WHrrrEN. If you include the farmer who has been squeezed

off, it would make your picture somewhat different would it not?

Mr. PAARLBERG. It would indicate a greater increase in production

on a per farm basis than has been the case on an aggregate basis.

Mr. WHITTEN. Could we have in the record at this point the production of cotton for the years 1947 down to date?

Mr. PAARLBERG. We can supply that.

(The information requested is as follows:)

Production of cotton, United States

Year: Thousand bales

1947 11,860

1948 14,877

1949 16,128

1950 10,014

1951 15,149

1952 15,139

1953 16,465

1954 13,696

1955 14,721

1956 13,303

ACREAGE CONTROL HAS NOT REDUCED PRODUCTION

Mr. WHITTEN. One of the arguments, Mr. Secretary, that you made

about reducing price supports was that it would decrease production.

Dr. Paarlberg makes you out as being mistaken about that. Now

please explain wherein the error was. Dr. Paarlberg says we have

had an increasing production under your theory.

Mr. BENSON. That is right, as we cut back the acreage allotments

on our farmers, they have tended to intensify their operations on the

remaining acres. You know what has happened to the yield per acre

in the case of cotton. In 1950 it was 269 pounds; in 1956 it was 408

pounds. In other words, acreage control is not effective in reducing

total overall production.

Mr. WHITTEN. Mr. Secretary, that is a very good statement. I

would give you credit for originality if I had not made that same

.statement to you in 1952, 1953, 1954 and 1955. On each occasion I

pointed out to you that every time you reduce the farmer's price per

bale of cotton he will try to make up the difference by having more

bales.

Mr. BENSON. When you cut acreage he intensifies his operations

on the remaining acres.

Mr. WHYYTEN. Your records prove that it is true. The other statement that you have made was that this would increase consumption.

When you reduced the selling price by the farmer—and you reduced

him $9 a bale last year, that is about $100 million in farm income to
13

the cotton farmer, as I recall—your argument was that that would

increase consumption. Was that not one of your arguments for it?

Mr. BENSON. I think consumption is related to price, Mr. Chairman.

Mr. WHITIEN. When you announced this recent reduction

Mr. BENSON. As a matter of fact, the cotton industry, like any other

industry, must be competitive, pricewise, and qualitywise, and I think

promotionwise. I think those are three important factors. Now, if

you are going to do that all by government, that is one thing; or if

you are going to gradually get in a position where that industry will

compete freely in the world, that is something else.

Mr. WHITTEN. Well, the law gives the right to compete freely in

the world, if they can get the approval of the Secretary of Agriculture.

I thought we had agreed earlier that you just could not get agreement—I realize you had problems at the White House and at other

levels.

Mr. BENSON. It is a question of whether you are going to have a,

Government operation as a long-time proposition. If the Government is going to be in the cotton business eternally, that is the way

out. But I do not believe that that is the course that we need to follow

or should follow. I think the Government is in too darn much

business now in competition with its own taxpaying citizens.

Mr. WHITrEN. I agree with you that you feel that way. And if

you had it within your power to reduce wages, if you had it within

your power to control bargaining contracts of labor unions, if you had

it in your power to prevent United States Steel from raising its prices

which reflect in raising everything else, if you had it within your

power to prevent these 14 freight-rate increases since 1946, if all of

that was in your power so you could treat all these segments like you

did agriculture, we might not be so well off but we would be in a

common pot. Butainfortunately, we are saddled wit_h_y_olLr views in _

agriculture aneffiFslThtlisTo norhave thpse views controlling

their interegigTthat is Me irage.cliof this situation.

11•;B:Irt .- -T-Chairman I am not asking for any more power.

Mr. WHITTEN. Well, I doubt whether any of these groups you

talk about, as much as they might like you personally, would invite

you to take over in these other fields.

Mr. BENSON. It would not do them any good if they did.

Mr. WHITTEN. My attention has been called to the fact that the

Secretary of Labor was just in and asked for increases for labor,

which is a little different viewpoint.

Mr. BENSON. He has asked that the minimum wage be extended

to additional people. I am not opposed to high wages, to good

wages. When those wage increases go beyond increased productivity,

in the case of labor, then I think it is something that agriculture needs

to take note of.

Mr. WHITTEN. I am not finding too much fault with your growling

about these other segments of the population. I do a little of it myself. But you are in shape to make it come about in agriculture, while

you can just criticize and talk about the others. But you are making

your views stick where the farmer is concerned. That is what makes

this wide disparity come about.

Now, let us put in the record since 1946 the consumption of cotton

to see whether reduced price results in increased consumption.

I think Mr. Wells could answer that. Is he here today?
14

Mr. BENSON. I think not. Mr. Beach is here. He can respond to

that.

REDUCED SUPPORT LEVEL CORRELATED TO RETAIL PRICES

Mr. WHITTEN. You cut the farmer's price • you cut the support level

of cotton last year by $9 a bale. That cost the cotton farmer a tremendous amount of income at a time when he dropped down to a very

low point. Where did the $9 go Mr. Secretary? We went into it

with Mr. Wells, and we cannot find where it showed up in any reduction in retail sales price of cotton products. So I am just wondering

who got it.

Mr. BENSON. Mr. Chairman, I think it is obvious that the reduction

in cotton greatly increased our exports.

Mr. WHITTEN. Wait a minute, Mr. Secretary. We just covered

that point. Whatever the price-support level, the Secretary of Agriculture had authority to sell competitively in world trade. If price

supports had been 5 percent of world price, he had a right to sell

competitively; and, if it had been 40 percent of parity, he had the

authority. So the price-support level has nothing in the world to

do with the authority to sell competitively in world trade. Let us

get that final.

Mr. BENSON. It has nothing to do with it if you want the Government to become the sole handler of cotton. It is just that simple.

Mr. WHITTEN. You are using that authority?

Mr. BENSON. I am using it, yes; temporarily.

Mr. WHITTEN. Temporarily? Do I understand you are going to

stop it?

Mr. BENSON. I Am anxious to get our agriculture in balance. I am

perfectly willing to use emergency measures—the soil bank is an

emergency measure; 480 is an emergency measure; this sale that we

are making now in great volume, and I think successfully, and which

you have been urging, is an emergency measure.

NEED FOR MOVEMENT OF AMERICAN PRODUCTION IN WORLD TRADE ON A

COMPETITIVE BASIS

Mr. WitrrrEN. You do not mean that we should not require the

Secretary of Agriculture to consistently, in the years to come, keep

American production moving in world trade on a competitive basis?

You believe that is unsound?

Mr. BENSON. I want American production to continue to move in

world trade. I do. I certainly do not suppose anyone ever put more

emphasis on marketing than we have done.

Mr. WHrrrEN. Competitively?

Mr. BENSON. It will have to be competitively.

Mr. WRITTEN. I take it from your statement that you mean, though,

that, when this temporary situation is over, the American farmer

ought to take a low enough price to compete with the 50-cents-a-day

labor in Mexico and all these other countries that grow cotton. Is

that your position?

Mr. BENSON. I think an efficient farmer could do that.

Mr. WHITTEN. You believe that he should do that?

Mr. BENSON. I am not saying what he should do; but I am saying

that we want to get our program in operation so that we can compete

without the Government taking over the commodity and being the
15

marketer. If we are not going to do that, then probably we ought

to set up a system and be open and aboveboard with it and say we

are going to pay one price on the domestic market and we are going

to have another price for the part that moves in world trade.

Mr. WHITTEN. Is that not what the law says under the charter of.

the Commodity Credit Corporation? It provides for support levels.

It provides for sales on a domestic market at investment plus reasonable carrying charges, usually figured at 105.

That same law, which has been the law from the day you took over,

also provides for selling that commodity in world trade at a competitive level so we can retain our fair share of world trade and keep our

farmers in business. That has been the law from the day you came in.

So it is in the law and it has been open and aboveboard. We just

could not get you to use that part of it which called for competitive

sales abroad.

But let me point out what you just said, Mr. Secretary. You said

that your sales policy as of now is a temporary measure, and that

you wanted to let the price go down in the United States to the point

that we would compete with foreign markets without any differential.

Mr. BENSON. No.

Mr. WiirrrEN. Is that the reason you cut it to 77 percent ?

Mr. BENSON. That is not the reason.

Mr. WHITTEN. What is your purpose, then?

Mr. BENSON. Our purpose is to try and get a support level that will

permit more of this commodity to move in the trade and eventually

wet some increased acreage; we want to get a greater volume moving,

and we want to get more of that volume moving in private trade

rather than through Government hands.

Mr. WHITTEN. Your records show your price reduction did not

increase domestic consumption and you had the right to sell at reduced prices in world trade anyway. Now, when you support this

cotton, you sell it to the private trade on a competitive basis and it is

handled by the private trade.

Mr. BENSON. But it is handled by the Government, comes into

Government hands; the Government sells it.

Mr. WHirrEiv. If you ever have any price-support programs under present law, it is going to come into Government hands and out

of the Government's hands. If you are opposed to having it done

that way, you are opposed to any price supports; are you not?

SOYBEANS

Mr. BENSON. No, I am not, Mr. Chairman; I think that is not

a fair assumption at all. In the first place, let me take the example

of soybeans, a newer crop, a crop that started in without any market.

They have consistently asked that their support level be at a point that

would permit them to expand their markets, which they have done

at home and abroad. As a result, their commodity has moved into

consumption; their market has greatly increased; they have gone from

1 million bushels up to over 400 million bushels; and they have met

the competition at home and abroad.
16

COTTONSEED

Mr. WIIrrrEN. I would like to go into that a little further. I have

read your speeches on it, and like many things, that is just chapter I.

A person also has to read chapter II. The two commodities are competitive all across the bo4,-d. The meal is competitive; the byproducts

are competitive; their oils are competitive: soybean and cottonseed.

And because you handled cottonseed in such a way as to give the break

to soybeans, the picture is just as you described it. But you should

discuss the two commodities together and that is the only way you can

give a fair picture.

Mr. BENSON. That is what we tried to do.

Mr. WHITTEN. Your speeches on soybean, those that I have read,

and I get all your speeches and I read them 

Mr. BENSON. I am complimented that you read them, Mr. Chairman.

Mr. WHITTEN. I certainly do, Mr. Secretary.

Mr. BENSON. I have tried to make a fair analysis. I would be

glad to have Dr. Paarlberg comment on that point. He has studied

the marketing of those two commodities.

Mr. PAARLBERG. One of the important factors about cottonseed is

that its production is linked, of course, to the production of cotton.

It does not respond independently to price because it is a small share

of the total returns from the cotton crop. So that it reflects the experience of the control program on cotton. You have that. difficulty

in comparing cottonseed and soybeans.

Mr. WHirrEN. When you cut any competitor 35 percent in acreage, it naturally leaves a void there which is very helpful to the soybean. So that is quite a factor in your fine experience with soybeans.

Mr. PAARLBERG. This is true but soybeans have expanded far beyond whatever market came to them as a windfall as a consequence of

the cotton program.

COTTONSEED AND SOYBEAN SHOULD BE CONSIDERED TOGETHER

Mr. WHITTEN. Haven't there been years in which you made a differentiation between the support levels of the soybeans and cottonseed,

so there was a sufficiently wide differential to where the soybeans

moved into the regular market and you ended up holding the other

supplies in your hands? That is the key to this thing.

MT. PAARLBERG. This has not been true the past 3 years.

Mr. WHirrEN. There was a period in which that differential was

sufficient to make one move into the hands of the Government, and you

would not sell it competitively, while the other took up the slack.

Mr. PAARLBERG. This has been rectified in recent years.

Mr. BENSON. Mr. McLain can comment on the relative support

levels.

Mr. WHTITEN. I think at the moment you are perhaps curing it, but

I am bringing out the history of this matter.

Mr. McLAIN. There is no problem at the present time on this score

at all, Congressman.

a
17

PRESIDENT'S VETO MESSAGE

Mr. WHITTEN. We have gone pretty far afield so I want to get

back to my original question. Your order reduced price support for

cotton last year, when the President raised the price for everything

else in sight, I cannot help but repeat again that cotton was the last

one considered.

Mr. BENSON. The President did not do that.

Mr. WHITTEN. In his veto message he called on you to fix a high

level price support on these commodities.

Mr. BENSON. The feed grains were raised by act of Congress. That

was in the legislation.

'Mr. WHITTEN. I believe they did, but for the other basic commodities he called on you to raise them in his veto message. I have

complimented him for being a good politician. In the first part of

his veto message he condemned high level supports. He said that

it was just ruining this country and the press eulogized and praised

him. In the second half of his message he fixed high price levels,

and the papers praised him all over again. We admire that adroitness down in my section. But notwithstanding that, he reduced price

supports on cotton $9 a bale.

Again I ask the question, can you show me any reduction in the

retail price of cotton products? We have been unable to find it.

Mr. Wells has been unable to show it. Now, if you reduced the price

to the cotton farmer by one hundred or more million dollars, and if

the consumer paid the same price, you gave that money to somebody

between the farmer and the consumer. Now who?

Mr. BENSON. Dr. Butz, will you comment on that?

Mr. BUTZ. I think you have raised 2 or 3 questions here, Mr. Chairman. In the first place, the price-support level on cotton was reduced

by some $9 a bale, as you point out. It is difficult to trace where that

$9 went. I think for the record we ought to make clear that a year

ago this reduction had the support of substantial groups, including

the National Cotton Council, for example, and some of the Southern

State farm bureaus for the simple reason 

Mr. WurrrEN. - I think I should speak up and agree that that is

right. I would not want to show that you folks were the only ones

that were wrong in this thing. They were, too.

LOSS OF COTTON DOMESTIC MARKET TO SYNTHETIC FIBERS

Mr. BuTz. I think there was logic back of it in the interest of the

cotton producer himself, because he had been losing his domestic

market to synthetic fibers. It was hoped that if there were a modest

adjustment made in the price-support level, we would stop this rapid

shift to synthetic fibers and hasten the day when we could increase the

acreage allotment for our cotton producers.

That also ties in, I should think, with the export problem. You

very properly pointed out that the Secretary has authority under the

charter of the CCC to sell cotton at whatever price he desires to meet

the world competitive price. In the last year, as you know, we have

been selling cotton abroad at a subsidy of something like 8 cents a

pound. A partial consequence of that has been very heavy competition by foreign mills against our domestic mills. As you know, we
18

have had to enter into a voluntary agreement with the Japanese to,

restrict their shipments of cotton textile products to this country.

WORLD PRICE TO DOMESTIC MILLS FOR EXPORT

Mr. WHirrEN. In that connection, I have recommended and have

urged on the Department and others, that we provide for sale to the

domestic mills of an amount of cotton at world competitive levels

equivalent to their foreign exports. It is my understanding that in

this way the allowance of stocks to a large degree would meet that

same need.

Mr. BUTZ. I think it has so far as the exports of our domestic mills

are concerned. But much of their problem during the last year came

from increased imports from foreign mills that acquired their raw

cotton at a price substantially below that which, under the law, our

domestic mills could acquire cotton for domestic sales.

From the standpoint of the good of the cotton farmer in the South, 

we have been quite concerned in the Department of Agriculture about

this because Japan, for example, constitutes a very important sales

outlet for our raw cotton. And we have been quite fearful of retaliatory actions in Japan where this voluntary limitation was not appreciated—they have their domestic political problems, too. We have

been quite fearful that retaliatory measures might result in diminution of our export outlet for cotton in Japan as well as in other important textile manufacuring countries. Therefore, I think it important to point out that even though the Secretary has the authority

to sell cotton at whatever price he desires, if, through our action, we•

drive the world price of cotton unduly below our domestic price, we

increase competitive advantage that foreign mills have over our own

mills.

Mr. WHITITN. That would not be true if you would just provide

that the domestic mills could buy an amount of cotton at world price

equivalent to exports. I would point out that the President has authority now to limit imports.

Mr. Thyrz. The principal outlet for domestic mills is the domestic

market.

Mr. Willi-1'EN. You are trying to make your argument on the basis

that we give an unfair position to foreign competitors. If your prime

problem is the competition of foreign mills, I am right to recommend

the foreign exports of our mills be on world-pricpd cotton.

Mr. Bun. It is broader than that, Mr. Chairman. You are quiite

right in your point that we could give the domestic mills the same

competitive advantage in the export market and we are doing that—

as a matter of fact, we subsidize the cotton content of cotton fabrics

for export in the same equivalent amount as we subsidize raw cotton

for export. Therefore, the domestic mills, insofar as we are able to

get an equitable subsidy arrangement, have the same advantage in

the export market as do the sellers of raw cotton in this country.

Mr. WHITTEN. We have ruled out that one. -Let us move on to thern

next one.

Mr. Bun. The real problem, however, comes in the competitive

advantage that you give the foreign mills in our own market.

Mr. WHIrrEN. Let us carry that a little further. Section 22 gives.

the President of the United States authority to fix quotas of imports
19

and levy taxes up to 50 percent of the total value, if that imported

commodity endangers any price-support program. So you have ample

authority to protect what you are talking about.

VOLUNTARY AGREEMENTS SUBSTITUTED FOR ACTION UNDER SECTION 22

Mr. Bum. You are quite right. But what we have been doing in

the past year is, in the absence of instituting section 22 action by the

Tariff Commission route, we have negotiated a voluntary agreement

with the Japanese under which they will limit their exports of certain

cotton goods to this country, notably velveteens and ginghams and

.certain manufactured items like sheets and pillowcases and blouses.

We have entered into this voluntary limitation agreement with the

Japanese. But now what we fear is that if we push that too far, or

if, through compulsory section 22 limitation, we restrict their access to

this market, they will turn elsewhere for their purchase of raw cotton

and they have in recent years been our No. 1 market for cotton exports.

That is a market we in _Agriculture want to protect if we can.

Mr. WHITTEN. I realize you have a number of problems. I have

personally never argued against your meeting those problems and

seeing them and dealing with them. I might differ with your final

conclusion. But don't tell me that you haven't got the authority.

Mr. Bun. Nobody is telling you we do not have the authority.

What we are arguing is that if we exercise the authority to the fullest

extent the Secretary has it, that we may impair our ability to export

raw cotton.

Mr. WHITTEN% What the Secretary always talks about is, if you

'broke world markets, what the effect would be. If you recall, I have

been always quite willing to see us regain our normal share of markets—referring to the time when we had some 6 or 7 million bales

moving. I think we should. But when we are getting no more than

has been our normal share, certainly nobody can rightly question our

. actions.

PRICE SUPPORT REDUCTION NOT REFLECTED AT RETAIL LEVEL

To offset the arguments that you folks were advancing, we made

a survey to show that every other country in the world, friendly

country or otherwise, was moving what it did not need by some means'

or other into world trade to make it competitive. So if we follow a

course of making the commodities competitive, that is no more nor

less than every other nation in the world is doing.

But I want to get back to my original question: If you cut the

•cotton farmer $9 a bale and reduced his already depressed income

that much further, and if it did not show up at the retail level, who

(rot it?

Mr. Buzz. That is difficult to answer. I do not have the answer.

Mr. WHITTEN. We have Mr. Wells and he is getting many millions

of dollars a year for such research. We want that answer from the

Department.

Mr. BUTZ. He can get it; and he is instituting an investigation of

this. But it involves a breaking down of the margins in the whole

cotton industry, as you understand.

Mr. WiurrEN. Now, if that reduction to the farmer does not show

up in reduction of price to the consumer, you have not helped the
20

consumer any. All these folks buy cotton or rayon to sell to the consumer; the consumer is the final yardstick. If the consumers are having to pay the same price for the cotton, and if there is no change at

the retail level, how can you argue that it affects to any substantial

extent the ability of the cotton farmer to compete with Dupont?

Mr. BuTz. Mr. Chairman, I do not have the figures at hand, but

I am informed that there has been some change in relative costs of

cotton and synthetic products in the wholesale markets.

One of our primary objectives is to recapture the domestic market

for cotton fabric, or at least to stop the rapid shift that has been

taking place to synthetics. I am informed that the rate of change has

slowed down in the past year,. if indeed it has not reversed. I do not

have the figures here. That is one of our primary objectives within

the domestic market.

Mr. WHFITEN. Dr. Butz, you are an expert in the field of economics—

Mr. Burz. Thank you, sir, for the compliment.

Mr. WHITIEN. I mean that. But I do think that applied economics

is another matter. Is it your view that the American cotton farmer

who has to apply the economics could produce at any price which

would have any substantial effect on Dupont and all these big people

who are in the synthetic field? Don't you think the farmer would

go broke and be out in the road long betore he could reduce his price

to the point where it would have any sizable effect on Dupont's operations? I use Dupont because he is probably the biggest in the field.

Mr. BuTz. Mr. Chairman, what you say might possibly come true

no more rapidly if we continue to reduce his price than if we insist

on maintaining the price where it was and the domestic market continued to deteriorate and we squeezed him back on production allotments he would go broke faster than ever.

ACREAGE RESERVE FRIGHTENS WORLD TRADE

Mr. WIIII I EN. Mr. Secretary, pursuing another thing, I hope you

will have occasion to read our report on our visit with the trades people in Europe, last summer. Everywhere we went, there was a disturbance—and not because you were selling competitively. They were

disturbed because, with your views, and with the soil bank, it appeared

that in future years we would not be the producers of cotton and

other agricultural commodities to the point of being a consistent

supplier to those countries. That was the main worry that they had.

And if they read your testimony here, they are going to be scared

to death that the United States will not produce and offer competitively

in world markets to the point that they can count on it. It is very,

very disturbing to me to have you say that competitively sales in world

trade—and you have got to sell competitively if you want to sell—is

a temporary program. It scares me to death, Mr. Secretary. I would

like to insert that portion of our report in the record at this point:

(The report is as follows :)

PART IV—MEETINGS IN WESTERN EUROPE

This portion of the trip, which included visits to Amsterdam, Hamburg,

Geneva, and Barcelona, was a followup on the trip made 2 years ago relative to

sales of United States commodities in world trade at competitive prices. In each
4)1

of these cities, discussions were held with groups of business people and importers concerning the effect of recent decisions of the United States to enter

world markets at competitive prices, and the possibility of increasing European

markets for United States agricultural commodities In the future.

It is our feeling that these meetings were Successful and productive. The

opinions obtained and information gathered fully support the position taken by

this committee during the past several years in insisting that the United States

offer its agricultural commodities in world trade channels on a competitive basis.

They also indicate that future actions to dispose of United States surpluses in an

orderly manner and efforts to recapture our normal share of world markets will

have general acceptance throughout Europe.

• AMSTERDAM MEETING

In Amsterdam, we met with 2 groups of Dutch businessmen, 1 group consisting

of the keymen in the cotton industry, and the other group consisting of important dealers in fats and oils. The representatives of the cotton industry were:

Mr. W. Kats, secretwry of the Federation of Societies on Cotton, Rayon, and

Linen Industry; Dr. W. T. Kroese, director of the N. V. Ten Cate & Co.; Mr.

H. C. Roramelaar, director of the Bureau of the Netherlands Society of cotton

Spinners; Prof. Dr. J. Wisselink, director of the Economic Institute for the Textile Industry; and Mr. A. J. Blijdenstein, president of the Association of Cotton

Spinners.

The group representing the fats-and-oils industry included: Mr. G. J. van

Waveren, director, Van Waveren's Koninklijke Graanhandel N. V.; Mr. J. E.

Th. M. Randag, director, Unilever Grondstoffen Mij. ; Mr. S. Hoek, secretary, Oil

Crushers Society; Mr. M. Wijler, director, N. V. Granaria ; and Mr. J. Verhage,

director, International Controle Mij. Messrs. Robert H. Reed and John I. Kross,

United States agricultural attaches to the Netherlands and Belgium, were also

present.

HAMBURG INTERVIEWS

Our schedule at Hamburg included interviews with German officials representing organizations which import large quantities of United States agricultural

commodities. Interviews were held with the following persons: Mr. Mueller,

Swift & Co. (meat and livestock) ; Mr. Hoekfelt, Bunge G. M. B. H. (oilseeds) ;

Mr. Alfred Toepfer (grains) ; Mr. Karl-Heinz Lange, member of board, and Dr.

D. J. Schottelius, executive director, Bremen Cotton Exchange; Mr. Drechsel,

F. H. Schaefer & Co. (cotton importers) ; and Mr. Schlenker, Reemtsma Tobacco

Co. Messrs Schwartz and Rehling, assistant United States agricultural attaches

at Bonn and Mrs. M. W. Thoreson and Mr. M. A. Falzone of the Hamburg and

Bremen consulates accompanied the group.

These interviews were followed by a luncheon meeting with many of these same

individuals. The guest list also included Regierungsdirektor Jess, member of

German Senate; Mr. A. Muenchmeyer, president of Hamburg Chamber of Commerce; and officials of the United States consulate at Hamburg.

MEETINGS IN GENEVA AND BARCELONA

In Barcelona we met with various officials of the Spanish cotton industry at

a luncheon meeting which included the following guests: Senor Pedro Marques,

agent for Sternberg Martin.Co., and director, National Cotton Center (which

purchases all cotton imported by Spain) ; Senor Luis Jover, agent for Volkart

Bros.; Senor Juan Masso and Ramon Perez-Cabrero, agents for Anderson

Clayton & Co. • and Senors Manuel Bertrand Mata, Manuel Ortinez Murt, and

Julio Munoz itamoneda, leading spinners and weavers. Also in attendance

were Mr. Max H. Klein, president, American Chamber of Commerce; Senor

Manuel Caragol, secretary, American Chamber of Commerce; Mr. Arthur O'Neil,

Lykes Lines Inc.; Mr. James Clark, AMerican Export Lines; Mr. John Burgess,

agricultural attache, Madrid; and Messrs. Milton K. Wells and Charles K.

Ludewig, Barcelona consulate.

At Geneva, we met with two representatives of the cotton-importing interests

of Belgium. Since our itinerary did not include Brussels, these men made the

trip to Geneva to exchange viewpoints on sales of United States cotton in world

markets on a competitive basis.
22

LOSS OF UNITED STATES MARKETS IN EUROPE

We found a general concern among these people about the loss of United

States markets in Europe since World War II. The men from Belgium pointed

out that American exports of cotton to their country have decreased from 60

percent of total imports before the war to 3 percent at the present time. Others

pointed out a similar situation in most countries of Europe. We found that

United States products are preferred at comparable or slightly higher prices

because of better quality and more dependable deliveries, but that in recent

years, United States prices have been held too high to compete in world markets despite the natural preference for United States products.

According to our information, the loss of United States markets in Europe

is due to: (1) Refusal by the United States until recently to sell competitively:

(2) The improved transportation and communications with all parts of the world

since the last war, making trade with the Near East, Africa, and South America

easier; and (3) the increased quantity and improved quality of products from

-other countries.

NEED FOR UNITED STATES TO REENTER WORLD MARKETS

In all cases, the business representatives contacted were realistic and practical and very adept at presenting their own points of view. At the same time,

we found them fully aware of the United States problems and pleased with

United States efforts to get back into world trade on a competitive basis. It

was generally agreed that world trade will never return to normal as long as

large amounts of United States surpluses are hanging over the market. It was

pointed out that the general practice in recent years has been to buy in small

amounts and to keep consumer inventories at a minimum. This has had the

undesirable effect of putting importers and fabricators on a hand-to-mouth basis

of operation. Normal long-range purchasing practices have been virtually discontinued.

During these meetings, it was found that foreign traders in cotton are most

anxious that the United States give the world assurances that it will continue

to produce and offer in world markets not less than 5 to 5/12million bales annually. They want to know that the United States will be a firm source of supply.

At present, they are afraid this country is cutting acreage back so far it won't

have the cotton to sell. They are especially fearful that the new soil-bank plan

will lead to further cuts in United States acreage. If our Government will

recognize this, it will mean additional cotton acreage for United States farmers.

This is highly essential to United States farmers and to the world cotton trade

as well.

We were told that the world has a real interest in American production for

export because American varieties are much more consistent and the world

is glad to deal with American exporters and American people. They know

the average American export firm is solvent, that if commitments are made

delivery will be made. On the other hand, all world traders are skeptical of

having to import supplies from other sections, because those engaged in export

trade from other countries are not always solvent and dependable, and the

•quality of the product may vary greatly.

Should announce annual export quotas

It was also found that trade groups feel that the United States should accept

the best competitive bids at whatever price received. They feel that the Secretary of Agriculture should announce at the beginning of each year the approximat quantity of each commodity which the United States plans to offer during

the year for export at competitive prices. They pointed out that the two factors which every dealer must know are quantity available and potential demand.

In recent years, the quantity element has been very uncertain in all world

markets because of United States policies. They feel that annual announcements

•of United States exports would provide considerable stability to world markets.

They also feel that such plan would result in higher returns to the United States

for commodities sold than would efforts to control prices directly.

It is our belief that the Department of Agriculture should announce that it intends to produce and offer in world markets on a competitive basis from 5

to 51/2 or 6 million bales of cotton annually. Under this plan, purchasers would

regulate the price through the amount of their bids and the United States

would avoid much international criticism. This action might also result in
23

higher returns for United States cotton. We are of the opinion, further, that

this same approach should be considered with regard to other farm commodities.

TRADE WITH RUSSIA AND SATELLITES

Another policy question which was raised during these meetings was the matter of sales of United States agricultural commodities to Russia and the satellite countries. On this point, there was unanimous agreement among all the

individuals contacted that the present United States restrictions on trade with

Iron Curtain countries are unrealistic. It was pointed out that many of our

western allies are trading with those countries and are picking up sales which

the United States refuses to make.

All of these people complained about the requirement that they must certify

that United States commodities which they purchase will not be resold to Iron

Curtain countries. In their opinion, this restriction serves no useful purpose

and creates artificial conditions in world markets. They claimed that such

a restriction places them at a distinct disadvantage in handling United States

commodities, particularly where other western countries sell such products to

Russia and the satellites.

As a result of these meetings, and based on discussions in Russia and the

satellite countries, it is apparent that our failure to sell farm commodities

behind the Iron Curtain is open to serious question. Our refusal to offer cotton

in that area on a competitive basis has caused Russia to increase payments to

collective farms producing cotton by about 45 percent. This has enabled Russia to become more self-sufficient and less dependent on the American cotton

farmer. Our refusal to sell cotton on competitive basis enabled Egypt to get

a much higher price from Russia for Egyptian cotton, and thereby much more

war material than would have been possible otherwise. Our refusal to sell corn

to Russia, and at the same time to sell 5,000 tons of hybrid seed so that Russia can become more self-sufficient in corn, appears very shortsighted. While it

may be sound for the whole group of western allies to refuse to do business

with the Soviet bloc, it doesn't make sense for the United States to follow a different course from our allies in this regard.

. UNITED STATES POLICY ON TOBACCO

Information gathered at these meetings also raises a serious question about

the present United States policy of offering tobacco in world trade channels

at 90 percent of parity levels. It indicates that tobacco may be going down the

same road as cotton. While immediate effects may not be noticeable in the near

future, this policy will eventually place the United States tobacco grower in the

same disadvantageous position as the American cotton farmer.

Over any length of time, the United States cannot sell tobacco in world trade

at above competitive levels. Increased production in other countries plus protection of a United States "price umbrella" will eventually allow our foreign

competitors to take over world tobacco markets. The tobacco representative in

Hamburg stated that very little United States tobacco is being purchased in

Germany this year because of price differentials.

Mr. BENSON. We are going to be in there selling and the American

farmer is going to be in there competing. I think we are going to,

hold the markets that we have regained since 1951-52 and I hope expand them still further.

EFFECT OF SOIL BANK -UPON PRODUCTION

Mr. WHITTEN. Now, you endorsed the soil bank, Mr. Secretary as

a means of reducing production. how much reduction are you going

to have from the soil bank in your judgment with regard to all these

commodities?

Mr. BENSON. I have it in my statement here.

Mr. WHITTEN. We would like to have that table put in the record

at this point.

(The information referred to is as follows:)

Although the progress toward the goals is not uniform we are hopeful from

present indications that wheat and cotton producers will put enough land into

the acreage reserve so that participation will be within the range of our goals.

In that event we anticipate a reduction under what would otherwise be expected
24

of from 175 million to 200 million bushels of wheat and from 2.25 to 2.5 million

bales of cotton.

The probable final signup for rice, tobacco, and corn is uncertain at this time.

Farmers in most high yielding heavy producing corn areas have been slow to put

their corn acreage into the reserve under the present allotment program.

The closing date for signing cotton and tobacco acreage reserve agreements

Is March 1. For spring wheat, corn, and rice the date is March 8. Because of

the heavy workload, the signup deadline for the conservation reserve contracts

to become effective in 1957 was extended from March 15 to April 15.

Our latest reports show that 17,424 conservation reserve contracts have been

signed, to be effective beginning in 1956. These contracts cover 1,596,454 acres.

Contracts to become effective in 1957 numbered 14,400 and include 1,242,823

acres. The signup is just well under way, and the current figure is not indicative

of the final total.

Thus far farmers in the Southwestern and Southeastern States have shown the

greatest interest in the conservation reserve.

Mr. WHITTEN. I would like to have the information in the record

with regard to reduced price supports for corn, barley, cottonseed,

flaxseed, oats, rye, sorghum, soybeans, butterfat, milk. Also I wish

to have in the record figures showing the production and domestic

consumption in those fields since 1952.

(The information is as follows:)

Reductions in Federal price supports

Change from 1952 through 1956

1952 1957 Reduction

Production Domestic consumption

Perceni

Cotton $0.32 $0.28 12 -1.8 million bales -461.0 thousand bales. Corn 1.66 1.36 20 +159.0 million bushels +178.0 million bushels. Barley 1.26 94 26 +144.3 million bushels +83.8 million bushels. Cottonseed__ 69.03 46.00 33 -695 thousand tons -751.0 thousand tons. Flaxseed_ __ _ 3.90 2.92 25 +18.5 million bushels +4.8 million bushels. Oats .81 60 25 -64.7 million bushels -39.1 million bushels.

Rye 1.47 1. 15 21 +5.5 million bushels_ +4.0 million bushels. Sorghum_ 2.46 1.83 26 +114.4 million bushels _ +37.1 million bushels. Soybeans_ _ _ _ 2.65 2.09 21 +158.6 million bushels +95.7 million bushels. Butterfat__ __ . 716 . 586 18 +137.0 million pounds +120.0 million pounds. Milk 3.98 3.2.5 18 +10,627.0 million pounds__ _ _ +9,986.0 million pounds.

NOTE.-During this period, Farm Price Index went down from 288 to 236, a decrease of 22 percent. This is about the average of the percentage reductions for the various commodities set forth above.

•
25

Crop production and support levels

CORN

Production Support

levels

Percent of

parity

1952 1 3, 292,000,000 2$1.60 90

1953 13 210,000,000 2150 90

1984 '3

'

058,000,000 2 1. 62 90

1955 '3230,000,000 2 1. 58 87

1956 1 3, 451,000,000 3 1.50 84

1 Billions of bushels.

2 per bushel.

'WHEAT

1952 

1953 

1 1,

1 1,

306,

173,

000,

000,

000

000

2$2.20

2 2.21

90

91

1954 2984,000,000 2 2. 24 90

1955 3 935,000,000 2 2.08 82. 1.

1956 3 997,000,000 2 2.00 82. (

COTTON LINT

1952. 4 15, 139,000 5 $0.3091 90

1953 4 16,465, 000 5 .3080 90

1954 4 13, 696, 000 5.3158 90

1955 4 14, 721,000 5. 3170 90

1956 4 13, 303, 000 5. 2934 82. 5

3 Millions of bushels.

Bales.

5 Per pound.

TOBACCO

1952 Z 256, 000,000 $0. 495 91

1953 a Z 059, 000, 000 5. 466 91

1954 Z 243, 000, 000 2. 464 91

1955 2, 193, 000, 000 5. 462 91

1956 2, 145, 000, 000 5. 481 90

PEANUTS

1952 1, 356, 000, 000 $0. 120 90

1953 1, 574, 000, 000 3.119 90

1954 1, 008, 000, 000 5. 122 90

1955 6 157(1, 000, 000 5. 122 90

1956 1, 566, 000, 000 .114 86

Billions of pounds.

Mr. WHirrEN. Now, the third argument that the Secretary offered

in support of his flexible supports was competition in world markets.

The Secretary and everybody here agrees that he already had authority to sell competitively in world markets. So it leaves the chief argument for reduction in price supports increased consumptioh. And I

want figures as to what the consumption has been since 1946, and what

the production is with regard to these other commodities.

Mr. PAARLBERG. Would you like reference also to the fact that these

are crops on which acreage has increased as a conrquence of the

diverted acres problem?

Mr. WHITTEN. I believe it would be well to put that in there, because

it supports my contention that as you reduce the farmer's price he

tries to make it up by increased volume. Therefore as you reduced his

price, he has tried to make it up by having more to sell. It has been
26

my argument from the first. It is completely opposite to the Secretary's views.

PRICE SUPPORT AND FARM INCOME

Mr. BENSON. Mr. Chairman, I think the attempt to associate the

20-percent reduction in farm income with 23-percent reduction in price

supports does not hold very well when you consider that only about

25 percent of farm income is from the supported income. You recognize that.

Mr. WHITTEN. That is true, Mr. Secretary. But I would go a little

further. If you let the price on basic commodities go down to where

they quit that and go into these other commodities, you would find it

would have a sizable effect. That is one of the things that you have

been preaching that I differed with. I think that the fellow who

produces agricultural commodities that are nonbasic has a very deep,

interest in the support levels for basic commodities. In my country,

if you will not let us grow cotton we will grow cattle. If in these other

sections you have not got a sound program for wheat, they will get

in the market for something else. I have not believed in a closed

shop, but I can clearly see, if you have a labor union which is fixing

the prices that it does have an umbrella effect over those nonunion

members who work in the same field. So I think you are completely

unsound when you say that those who do not produce basic commodities do not have a real interest in the income of those engaged in producing basic commodities. It has an umbrella effect.

Mr. BENSON. I have never said that they do not have an interest,

Mr. Chairman. I pointed out that some would attempt to solve the whole problem by continuing high rigid supports on the basics. In

some States, less than 1 percent of the income is from the basics.

Mr. WHITTEN. I would say that, because of the basics, those in the other fields have probably a better situation than they would have had if you had not had some stabilizing price support on your basic commodities.

Mr. BENSON: That is subject to debate, of course. In the case of

corn, we are .simply spreading the commercial corn area; we added 54 new counties last year. Some of them are in the Southern States,

as you know.

PRODUCTION NCYJC SUBSTANTIALLY REDUCED BY PRICE REDUCTIONS AND

ACREAGE CONTROLS

Mr. WHITTEN. Now, we turn to the point that Dr. Paarlberg made, which is that many of these commodities are in the nonacreage control

category. That clearly shows that in the basic commodities, if you had not had acreage control, you would have had a great increase with your reduced price, would you not?

Mr. PAARLI3ERG. Would you repeat the question? I am sorry. Mr. WHITTEL I said, your experience in these noncontrolled com- modities, where you do not control the acreage or the production, is that production has expanded. In the basic commodities, where you have reduced price supports, in the absence of acreage controls, you would have had an even greater increase in production; would you not?

Mr. PAARLBERG. I think not, Mr. Chairman. I think the reason that
•

27

oats and barley and sorghum grains increased in acreage was not due

to lowering of price supports. It was due to the fact that the farmers

had acres available for these crops. They had reduced their wheat

and their cotton. They simply put these diverted acres into these

crops. Mr. Chairman, if we believe that 

Mr. WHITTEN. May I interrupt you?

Mr. PAARLBERG. Yes; I want to get to the basic premise of your

question.

Mr. WI:1=EN. Answer my question and we will go from there. My

question was that in the basic commodities, with reduced prices, in

the absence of acreage controls you would have had a tremendously

increased production in basic commodities.

Mr. PAARLBERG. My answer would be, "No," Mr. Chairman, a frank

no.

Mr. WHITTEN. The cotton farmer in the South would not have had

a tremendously larger growth of cotton if you had not had acreage

control?

Mr. PAARLBERG. No. That is not your question.

Mr. WHITTEN. I know that section. If you are as uninformed

about the rest of the country as you are about the cotton farmer, when

you tell me that if you had not had acreage controls you would not

have had an increased production, you do not know what you are

talking about.

Mr. PAARLBERG. I did not say that. That was not my understanding of the question.

Mr. WurrrEN. May I repeat the question? With this reduced price

support for cotton, if you had not had acreage controls, you would have

had a tremendously greater increase in production; would you not?

Mr. PAARLBERG. I think, Mr. Chairman, that at the present level of

lowered price supports for cotton you still have an inducement price—

had you no controls, your production would indeed have been greater

than with controls. That is the answer to your question, as I understand it.

Mr. WHrrrEN. Production would have increased greatly as the

farmer tried to make up in bales what he lost in price.

Mr. PAARLBERG. Your acres would be greater than they now are

with controls.

Mr. BENSON. But the overall production was his point, Mr. Chairman. If overall production would not be reduced by that action, total

agricultural production 

Mr. WHirrEN. You just passed the problem on to someone else.

The farm income would have been greatly down, then.

Mr. PAARLBERG. It depends on whether you are thinking about the

immediate year or whether you are thinking about building markets

over a period.

Mr. WHITTEN. Dr. Paarlberg, we can argue about our economic

views. Suffice it to say that we have been following yours and the

Secretary's views for 4 long years and farm income is down 20 percent

and everything else is up about 50 percent. The proof of the cake is

in the eating, whether you agree with my views or I agree with your

views. We have all these farmers forced off the farms in the South.

We had your Farmers' Home Administration up here a few days ago.

They were talking about economic units and had lost track of the fact

that they are supposed to help the farmer that has no other place to

96-161 0 - 73 - pt.9 - 7
28

turn. We have had your views, and the facts you cannot contest. It

ought to be some evidence that there might be something wrong about

your views when we look and see farm income down about 20 percent

or more, when you have reduced price supports about 20 percent or

more on most of the commodities. Any layman would figure that

there might be some connection between the two. But you do not

seem to see any tie at all.

Mr. PAARLBERG. He might go back to the period from whence this

decline began and he might discover that the majority of the decline

began before the program of flexible supports was inaugurated.

HISTORY OF FARM INCOME

Mr. WHITTEN. I have a table here in which, to try to be fair about

it, I have included the year 1946. That was after World War II and

prior to Korea when the demand started up again. At that time, cash

receipts of farmers was $28.4 million. In 1952, cash receipts was

$32.5 billion, up 31 percent. By 1956, cash receipts had gone down

30 percent. But production expense had gone up 56 percent since

1946. Net farm income had gone down from $15 billion in 1946 to

$11.8 billion in 1956, which would be a drop of almost 30 percent if

you figure it in terms of a 1946 dollar.

Now, farm income per farm shows that today the farmer is getting

less than half the income of other folks in our economy. It shows

that the return of the farmer is *own from 82.8 cents to 70 cents an

hour, while income in all other fields has gone up tremendously and

average much more than twice that of the farmer.

At the same time, while we have been arguing about reducing the

price the farmer gets for his commodities, the consumers get more

loaves of bread and other 'foods for his work hour than ever before.

I believe I will put this table in the record at this point. I would

be glad to have any comment that you might wish to make on that, Mr.

Secretary.

Mr. BENSON. Mr. Chairman, we have here the official figures from

the Department showing prices received by farmers from 1946 on,

the parity index, farm output, and net income of farm operators. I

think that ought to be made a part of the record, too.

(The tables and data referred to are as follows:)

A. The situation on the farm,

1. FARM INCOME DOWN

[In billions]

Cash receipts Production expenses Net income

Amount Percent Amount Percent Amount Percent

1946 

1952 

1956 

$24.8 

32.5

30.0

+31

+21

$14.3 

22.5

22. 1

+57

+56

$15.0 

14.3

1 11. 8

—4.7

—21.3

1 only $10.4 billion based on 1947-49 dollars.
29

2. FARM INCOME PER FARM DOWN

Produc- Invest- Percent Number of

Gross tion

expense

Net ment return farms

1946 $4,947 $2,416 $2,531 $14,223 198 5, 927, 000

1952 6,853 4, 193 2,660 22, 836 133 5, 360, 000

1956 6,934 4, 519 1 2,415 26,327 107 4, 900, 000

3. RETURN PER HOUR TO FARMER DOWN

1946 $08 28

1952 .825

1956 .70

Manufacturing $1.98 Telephone $1.86

Coal mining 2.79 Wholesale trade 2.01

Construction 2.79 Retail trade 1. 57

Railroads 2.11 Laundries 1. 05

1 Only $2,117 based on 1947-49 dollars.

B. Conditions in other segments of the economy

1. CONSUMER INCOMES UP

Total personal income Per person

Amount Percent Amount Percent

Billion

1946 $178. 0 $1, 294 

1952 271.8 +53 1,833 +42

1956 306. 0 +70 2,010 +55

2. WHAT 1 HOUR OF FACTORY LABOR WILL BUY INCREASING

1939 1956

Increase

Amount Percent

Bread (loaves) 8.0 11.0 3.0 37

Steak (pounds) 1.8 2.2 . 4 22

Milk (pints) 10. 4 16. 4 6. 0 58

Butter (pounds) 1.9 2. 7 . 8 42

Bacon (pounds) 2.0 3. 5 1. 5 75

Eggs (dozen) 2.0 3.3 1.3 65

Oranges (dozen) 2.2 3.4 1.2 55

3. PERCENTAGE OF CONSUMER INCOME SPENT FOR FOOD DOWN

Food Housing Transportation

1946 35.6 9.3 8.2

1952 34.4 11.7 10.6

1956 32. 1 12.0 12. 7
•

30

C. Causes of farm problem

1. FARM PRICES DOWN (1910-14=100)

Prices received Prices paid Parity ratio

Amount Percent Amount Percent Amount Percent

1946 236 208 113 

1952 288 +22 287 107 

1956 236 286 +38 83 —26.5

2. FARMERS' SHARE OF FOOD DOLLAR DOWN

Percent

1945 53

1952 47

1956 40

Freight rates up 83.7 percent (14 increases since 1946); wages in marketing firms up 60 percent; other expenses

up 50 percent or more.

3. INVESTMENT PER FARM UP

1946 $14, 223

1952 22,836

1956 26,327

4. FARM DEBT UP Billion

1946 $8.4

1952 14.8

1956 18
Year

1939 

1946 

1947 

1948 

1949 

1950 

1951

1952. _ 

1953

1954 

1955_ . 

1956

1955: 4th quarter_

1956:

1st quarter. 

2d quarter 

3d qnartcr

4th quarter 

Selected data relating to agriculture, United States, 1939 and 1946-56

Prices

received

b y

farmers

Prices

paid

or

parity

index

Parity

ratio

(percent)

Farm output

Food consumption per

capita

A gricul.

tura,. exports

Cash i•:-

eoipts from

farm markctings i

Production expenses 1

Net income of farm

operators 2

Total

farm

debt

excludlug

CCC,

Dec.

31

ValtL, of

productive farm

assets,

Dec 31 3 Total

Livestock

and

products

Crops Realized 1

Total, ineluding

chanoe in

net inventorios 1

Index numbers Index numbers (1947-19=196) Millions of dollars Billions of dollars

(1910-14=100)

95 123 77 80 85 82 94 $655 $7, 872 $6, 162 $4, 394 $4, 489 $9. 6 $39. 8

236 208 113 98 101 98 104 3,173 24,770 14,324 15,000 14,923 8.4 84.3

276 240 115 95 100 93 102 3, 957 29,664 16,831 17, 191 15, 458 9. 2 93. 6

287 260 110 104 97 106 99 3.472 30, 253 18,643 15,943 17, 695 10.2 99. 1

250 251 100 101 103 101 99 3,578 27,864 17, 909 13,673 12,866 10.8 97. 3

258 256 101 100 106 97 100 2,873 28, 405 19,248 12,857 13, 716 12.3 113.3

302 282 107 103 111 99 98 4.040 32,909 22, 258 14, 802 16, 111 13.9 126.5

288 287 100 107 112 103 100 3,431 32, 538 22, 476 14,250 15, 120 14.8 122.4

258 279 92 108 114 103 102 2,847 31. 169 21,2411 13,88) 13.263 14.7 117.9

249 281 89 108 117 101 101 3, 054 29, 714 21, 442 12,1(21 12,487 15. 5 121.6

236 281 84 113 121 10(1 103 3,197 29,204 21,599 11,341) 11.660 16.9 524.9

236 286 83 114 123 106 104 4, 159 29, 999 22, 143 11,816 11, 586 18.0 4 129.0

225 279 81 896 28, 900 21,300 15,200 11,4041 

227 281 81 831 29.700 21,7(10 11600 11,500 

241 285 85 1,026 30.000 22,200 11,600 11.300 

239 287 83 979 30,100 22,200 11,900 11600 

235 289 82 

,

30, 300 22, 100 12, 400 12, 100 

Source: Compiled from Agricultural Marketing Service and Agricultural Research

Service data.

I Quarterly data are seasonally adjusted annual rates.

2 Note this is net income of farm operators from farming. Net income to all persons

on farms, including hired farm labor, from both farm and nonfarm sources, is a different

series, estimated at $7,689 million for 1939 and $19,784 million for 1956.

3 Includes farm real estate (less value of dwelling), crops held for feed, livestock

machinery, and equipment (less 60 percent of the value of automobiles), and demand

deposits used for production. The estimated value of total farm assets as of Dec. 31,

1956, is $176 billion, as compared with $53.8 billion on Dec. 31, 1939.

Estimated.

CAD
32

Mr. BENSON. When we start talking about decline in farm income,

we need to go back, of course, to when that started. The major part

of it took place before this administration ever came into office, as

you know. A very large proportion of it took place under rigid

supports. There are all sorts of predictions made that when we

went to the flexibles that farm income was going to drop drastically.

There has been 2 years since 1947 when farm income has shown

some rise. One was 1951 at the peak of the Korean war. The other

was last year. The increase was modest but it was an improvement.

So I do not think you can relate all this to price supports as such

or to Government policy as such.

There has been very serious decline in farm prices. We all regret

it. But you cannot, I think, point that it is due to this policy or that

policy. There have been many factors in the situation. Exports

were declining very rapidly when we came into office. Surpluses

were piling up. This transition from war to peace is a difficult transition: we all recognize that.

INVESTMENT OF CCC IN COMMODUILS

Mr. WHITI'EN. Now, I want to show in the record the supply of

CCC commodities that the Government had on hand when you came

in and since that time. I want to show the supply on hand January

1, 1953, 1954, 1955, 1956, and 1957.

Then I want to show by respective years how much of these commodities you offered in world trade competitively, and what year,

and how much of them were sold during those respective years.

(The information is as follows:)

CCC investment in price support commodities, Jan. 1, 1953-57

Year: Million s

1953 $2,452

1954 5,665

1955 7,171

1956 , 8,666

1957 8,211

Commodities offered for export sale on a competitive-bid basis during calendar

year 1953

Commodity

Offered Sold

Quantity

Estimated

cost,

largest

offer

Percent

largest

offer to

inventory

Quantity Estimated

cost

Estimated

proceeds

Pea beans pounds_ _ 58, 045, 700 $4, 875, 838 41 58,045, 700 $4, 875,838 $1,528,329 Austrian winter peas _do 40, 335, 700 2, 218,464 25 

Honey do 98, 185 10,398 2 98,185 10,398 9,098

Total 7, 104, 700 4,886, 236 1, 537, 427

NOTE.—Wheat is sold for export under the International Wheat Agreement and outside the agreement

at less than domestic prices but is excluded from this statement since none was sold for export on a competitive-bid basis.
Commodities offered for export sale on a competitive-bid basis during calendar year 1954

Commodity

Offered Sold

Quantity

Estimated

cost, largest

offer

Percent

largest

offer to

inventory

Quantity Estimated

cost

Estimated

proceeds

Peanuts pounds 62,068,000 1 $7, 479,000 100 137, 040,000 $20, 414,000 $9, 002,923

Butter do 375, 000, 000 2 252, 300,000 1 95 30 30 3 0

Whey do Indefinite 2 1, 530, 000 100 14, 862, 300 1,151, 800 371, 558

Cottonseed oil, crude do Ranged from 20,000,000 pounds down to amounts available 2 2, 530, 000 100 114, 680,970 15. 378, 000 12, 664,745

Cottonseed oil, refined do Ranged from 920,000,000 pounds down to amounts available 2_ _ 167, 716, 000 100 254, 446,000 47, 632,000 27, 934, 000 Flaxseed bushels Indefinite 2 16, 829, 000 100 9, 091, 449 38,093. 171 21, 685,693

Linseed oil pounds Ranged from 108,600,000 pounds down to amounts available 1 31, 678. 620 55 70, 900,000 19, 852, 000 6, 144, 650

Oats bushels Indefinite 2 22, 666, 000 100 3, 585, 000 3,943, 500 2, 497, 550

Rye do do.2 1 4, 709, 000 100 2, 125, 000 3,293, 750 2,574, 188

Sorghums, grain do do.2 1 27, 806, 000 100 3, 028, 571 4, 986, 240 4, 485, 920

Baby lima beans pounds do.2 1 2, 500 100 36, 900 2,500 1,281

Pea beans do do.2 1 49,800 100 560,000 49,800 37, 800

Red kidney beans do 5,843,100 575, 500 81 5,843, 100 575, 500 378, 539

Large lima beans do Ranged from 1,550,000 pounds up to 18,104,900 pounds, the

latter amount being balance in inventory.

2, 241, 387 100 19,654, 900 2, 429, 500 523, 288

Hairy vetch seed do 10,289,000 1, 131, 800 33 0 0 0

Common vetch seed do Indefinite 2 1,071, 500 100 14, 460, 000 1,071, 500 491,052

Barley bushels Range from 2,200,000 bushels to 1,500,000 bushels 1 3,058, 000 15 4, 292, 620 6, 310, 151 4, 120, 915

Total 543, 374, 107 165, 183, 412 92, 914, 102

'Highest value during period of offering.

2 Offer intended to include entire inventory available.

3 All bids originally received were rejected. A later bid for the purchase of grade A butter at 41 cents per pound was accepted. Subsequently, offer was made to sell at not

less than 41 cents per pound for grade A and not less than 39 cents for grade B butter.

On the basis of these prices CC C sold 1,414,351 pounds of butter at estimated cost of

$948,000 for $557,662.

NOTE.-Above does not include 300 million pounds of linseed oil valued at $57,600,000

from Defense Production Act stocks which was offered for export sale in May 1954 and

which has been sold. Wheat is sold for export under the International Wheat Agreement

and outside the agreement at less than domestic prices but is excluded from this statement since none was sold for export on a competitive-bid basis.

C.4

CAD
Commodities offered for export sale on a competitive bid basis during calendar year 1955

Commodity

Offered Sold

Quantity

Estimated.

cost, largest

offer

Percent

largest

offer to

inventory

Quantity Estimated

cost

Estimated

proceeds

Butter pounds_ _ 6, 500,000-10, 000, 000 $6, 460,000 4 10, 000, 000 $6, 204,024 $3, 615,971

Cheese do 15, 000,000 5, 970, 000 5 2, 199,369 869,210 492,053

Nonfat dry milk solids do 4, 000, 000-10, 000, 000 1, 680, 000 45 10, 698,333 1, 818, 833 944, 501

Dry whey do_ 12, 000, 000-51, 271, 377 2, 752, 000 100 51, 271,377 3,014,065 552, 702

Dry whey products do 1,054, 100 65,354 100 1,054, 100 65,354 10, 541

Condensed whey do 862,000- 4, 023, 411 160,936 100 4, 023, 411 160,936 25,292

1A, ool do 6, 225, 000 4, 127, 362 4 (1) ()I (I)

Cotton linters bales (2) 69,896,829 100 ()I ()I ()I

Cottonseed oil:

Crude pounds_ _ 300, 000-15, 025, 887 2, 133, 675 100 50, 834, 800 7, 066, 812 5,833, 787

Refined do 22, 400, 000-49, 616, 000 8, 593, 570 19 232, 290,600 39, 762, 190 30,336, 162

Linseei oil do_ 360,000-22, 400,000 3, 875, 200 70 114, 511,332 18, 825, 525 12, 158,091

Olive oil 55-gallon drums_ _ 4, 621- 6,642 931, 540 100 (I) ()1 (I)

Tung oil pounds__ 4590, 000- 3, 000, 000 762, 000 9 (1) (9 (1)

Peanuts do (3) (3) ()3

Corn bushels__ 360,000- 2, 000, 000 3, 359, 000 .03 5, 097, 637 8, 546, 675 7, 194,360

Rice (broken) hundredweight_ _ (3) 1, 451, 469 100 700,860 2, 532, 029 1, 553, 550

Wheat (light test weight and soft red) bushels 4_ _ 725,000- 3, 000, 000 7, 795, 000 . 03 10,693, 174 27, 957, 602 13, 013, 929

Barley do_ 300,000- 3,250, 000 4, 173, 000 7 67, 928, 885 92, 143,965 62,950, 723

Beans, dry, edible.

Great Northern_ hundredweight (2) 371, 735 100 15. 500 371, 735 295, 750

Pinto do 100, 000- 500.000 3, 695, 000 10 131,300 1, 037, 606 832.220

Pink do (7) 2,200, 420 100 • 60, 665 512, 023 269,338

Small red do (3) 2, 475, 000 100 306, 422 2, 520, 919 2, 120, 744

Baby lima do (7) 1, 370;901 100 213, 616 1,358, 450 671, 615

l'ottonseed meal pounds_ _ (2) 1. 25S, 706 100 204, 400, 973 6, 029, 829 5, 062, 511

Flaxseed bushels_ 173, 000- 1, 000, 000 1, 645, 000 10 1,507, 972 5 546,252 5.069, 551

;orghurns, grain do. 140, 000- 4, 190, 000 11, 564, 410 11 37, 415, 181 106, 667,0:19 40,064, 600

Dats _do 500,000- ,2, 500, 000 2, 277, 500 7 17, 890, 961 16, 428, 636 9, 742, 781

Rye do_ 68,000- 200,000 1, 571, 000 12 5, 480, 854 8, 8:49, 191 4, 444, 22d

CAD
4

Seeds:

White cover crop: Hairy vetch pounds_ _ 1, 230, 000- 2, 200, 000 341,188 770, 000 119,658 66, 374

Hay and pasture:

Grimm alfalfa . pounds. (2) 8, 325 100 19, 892 8, 325 2, 009

Northern alfalfa do_ 3, 726, 946 1,369. 653 78 3,991, 970 1,470, 976 411, 391 Buffalo alfalfa do 3 1,222, 829 511, 754 54 2, 210, 935 925, 277 270, 840

Fescue doW. 887, 954- 3, 629. 077 458, 439 14 

Ladak alfalfa do (2) 99, 752 100 257,757 99, 752 44, 808

Birdsfoot trefoil .do 3, 950 3, 555 5 

Soybeans bushels._ 3, 000. 000 8, 439, 000 44 4,491,116 12; 641, 948 10, 450, 855

Total 373, 544, 536 219,441,279

I Available either for export or domestic sale. Presumably export sales would be

negligible and CCC records would not reflect whether any was actually exported.

2 Indefinite; offers intended to include entire inventory available.

3 Offered in monthly sales list but no inventories became available.

Offerings were for light-test weight and soft red wheat only. Other wheat was sold

for export under the International Wheat Agreement and outside the agreement at less

than domestic prices but not on a competitive-bid basis.

5 Amounts available to 1,222,829 pounds.

Amounts available to 3 million bushels.

CAD

C..rx
36

Mr. BENSON. And production.

Mr. WHITTEN. And the production.

In that presentation, I think we will see that holding these commodities off world trade, where you had the authority to sell them

competitively, quite definitely was a major factor in depressing farm

prices at home. As I say, it really ruined farm income, Mr. Secretary.

I do not care if the National Cotton Council or the National Churches

of the District of Columbia recommended it to you, we in the Cotton

South, in your tenure, have had a 35-percent reduction in cotton

acreage.

Then, contrary to nearly every other commodity in the "United

States, we had a $9 reduction per bale of cotton last year, and you

gave us another $6 reduction this year.

Taking into account the $9 a bale that you took away last year, the

$6 which you took this year, and the 35 percent acreage reduction, if

you had left it alone, and had sold this cotton in world trade, the

southern cotton farmer would have been in good shape today.

Now, not only do I want to make that point, but I want to show in

the record a statement of the losses of the CCC for the 20 years before

you took over and a comparison with the losses in the 4 years that

INCREASE IN BORROWING AUTHORITY OF CCC

I would like for the record to show, also, the increased borrowing

authority of the CCC since we have been following your policies as

against the total borrowing authority prior to your tenure.

(The information is as follows:)

Commodity Credit Corporation net loss on price-support operations

[In millions]

1933 through 1952 $1,070. 0

1953 through 1956 2, 720.9

Borrowing authority

January 1953 $6, 750. 0

January 1957 14, 500.0

Mr. Secretary, I just differ all across the board with your farm

views. There is nothing personal about this.

Mr. BENSON. I understand. May I ask that my statement be inserted in the record at this point because those several points you have

raised are covered here.

Mr. WHITTEN. Your statement covers answers to questions I had

not asked and therefore I prefer to continue my questions. Your general statement will follow my questions and your oral answers.

NEW LEGISLATION

Mr. BENSON. There is one point we sometimes forget. During the

time we have been in office, the large portion of our operations has

been under the old laws; you know that. The new legislation—I think

that none of its became effective until the 1955 crops; and then it

became operative gradually on some of it.

Mr. WHrrTEN. You are saying, are you that the Republican Congress in the first 2 years of your tenure was rather slow to give you

the laws you wanted?
37

Mr. BENSON. There were laws on the books and they were committed to by both parties. And we operated under those laws.

Mr. WHITrEN. The Republican Congress in the first 2 years was

rather slow to buy your views?

Mr. BENSON. I think they did quite well. They gave us the

broadest authority we have ever had for disposal of surpluses, and

the 480 program.

Mr. WHITFEN. I thought that, with reference to the disposal of

surplus stocks you already had unlimited authority to sell them in

normal trade channels for dollars. Instead of using that, and you

would not use it, Congress came along and let you give it away for

foreign currencies. That was most unsound, the most unsound thing

I ever heard of. Here is a Department that won't sell for dollars

with unlimited authority, but Congress gave it authority to give

commodities away for foreign currency.

Mr. BENSON. We want to do both; we are doing both.

PUBLIC LAW 480

Mr. WHITTEN. I have a report here from Mr. Garnett from the

Foreign Agricultural Service. He discussed at great length Public

Law 480, the giveaway program, and finally got down to a statement

about sales made competitively. I told him that, if I were attached

to his staff and got a report like that from my boss in Washington,

I would think that he still wanted me to give preference to this

giveaway.

Mr. BENSON. 63 percent of the commodities we have moved has been

for dollars.

Mr. WHITTEN. I am proud of that.

I don't believe that you give me much credit, but then I live in a

practical world and I wouldn't expect you to.

Mr. BENSON. You can have all the credit you want. I do not care

who gets the credit as long as we get the job done.

Mr. WHITTEN. I hope you are wrong about the temporary statement.

I think it will have a serious effect.

Mr. BENSON. We are not going to lose the markets that we have

regained.

Mr. WHITTEN. I am glad to hear you say that.

Mr. BENSON. We are going to fight for them and expand them

further if we can.

DOMESTIC CONSUMPTION OF COTTON ESTIMATED SAME UNDER REDUCED PRICE

Mr. WHIII.EN. Now, let's get to cotton and see how you figured this

formula for this year's reductions in price supports. What figure did

you use as to expected domestic consumption?

Mr. BENSON. That is all in the statement at page 10.

Mr. WHITTEN. Could you read it at this point ?

Mr. BENSON. Yes, I could. For domestic consumption estimated,

8,850,000 bales.

Mr. WHITTEN. What was the consumption this year, Mr. Secretary?

Mr. BENSON. The consumption, domestic use?

Mr. WHITTEN. For 1956.

Mr. BENSON. It was the same.
38

Mr. WHITTEN. This reduction, then, of $9 a bale last year, $6 a bale

this year, according to your own estimate, has not increased consumption, then, has it, as you said it would?

Mr. BENSON. Not according to the estimate.

EXPORT OF COTTON

Mr. WHITTEN. Not according to the figures you used to fix the cotton

farmers' price-support level and their acreage. What is the figure you

use on expected exports?

Mr. BENSON. Exports, 4,500,000.

Mr. WHITTEN. You sold 7 million bales this year competitively.

Mr. BENSON. Six and a half.

Mr. WHITTEN. So now you are cutting that by 2 million bales.

Isn't that making it a little hard on the cotton farmer? Is it because

you do not know how temporary the sales program will be?

ESTIMATED COTTON EXPORT

Mr. BENSON. No; I think this is very realistic, Mr. Chairman.

They are estimates of course, and I know you understand that. And

if it is shown later that those estimates were out of line, of course we

reappraise the situation.

Mr. WHITTEN. You know, I hate for the farmer to have to rely on

your estimates, Mr. Secretary.

Mr. BENSON. That is in the law; we have to make them.

Mr. WHITrEN. I know, but I am speaking of you as an individual.

I am sorry they have to count on your estimates.

Mr. BENSON. I am sure they will be done as honestly and as objectively as we can do them.

Mr. WIIIITEN. I just want to show you why I say that. In 1955, you

told the committee that you were going to offer this 1 million bales of

cotton competitively in world trade and you hoped to sell them in 6

months. You sold them in 2 months. You hoped to sell 3 to 4 million

bales, and you sold 61/2.

Now, your estimating was so far off in 1955 and 1956, as against

what you actually did, that I just hate to buy your estimate for 1957

if you are going to follow the law and sell competitively.

Mr. BENSON. Mr. Chairman, this estimate was prepared by our own

technicians who have been doing this estimating for years in the Department. It is not something that the Secretary has pulled out of

thin air.

Mr. WHITTEN. But they are familiar with your general policy,

which is to cut price supports every chance you have.

Mr. BENSON. They are also familiar with my policy which is to

move as much cotton as we can.

Of course, we had a situation last year, Mr. Chairman, which I

think we all recognize, that the pipelines were partially empty in many

countries of the world. There was a backlog of orders and we cannot

expect that situation to prevail to the same extent this year. We know

that inventory stocks in countries outside the United States dropped

about 2 million bales between August 1, 1955, and August 1, 1956.
4

39

Mr. WHITTEN. I could follow you a whole lot better if you had not

written some estimates in 1955 and 1956 in which you said we would

be lucky to sell 1 million bales in 6 months.

Mr. BENSON. There were people who felt we would not be able to

sell any appreciable amount of cotton; they thought we would simply

replace what would be sold for dollars through the private trade and

you know what a struggle it was to get authority to sell a million

bales. I felt we could sell it. I didn't know how soon we could sell

a million bales, but I felt we ought to go and fight for the market and

sell all we could.

Mr. WH=EN. I want the record to show that I didn't give you

any corner on being wrong. I think you had several Senators and

the cotton counsel with you on those estimates.

Mr. BENSON. A lot of them are with us, too, in trying to get cotton

price supports on a flexible basis. That is so that we can do a better

job.

Mr. WHITTEN. Yes, sir, and those folks, all of them, are dominated

by the middleman. You cannot show me a farm group that backs

your policies in the least on this, can you?

Mr. BENSON. I think SO.

Mr. WHTrrEN. I will be glad to have it.

Mr. BENSON. I will be glad to provide it for you.

FARM GROUPS

Mr. WHITTEN. When you get into an organization that writes insurance like the Farm Bureau or the National Cotton Council, most

of which is anything but cotton farmers, of course you can find it,

but I said you won't find a farm group that is a producer group, without these diverse groups in it, that agrees with you.

Mr. BENSON. You wouldn't say that one of our great general farm

organizations does not represent farmers.

Mr. Wim-rEN. I said that the leaders are dominated by those that

are interested in other things. I said you won't find strictly a producer

group that subscribes to your views, that I know of.

, Mr. BENSON. These general farm organizations are strictly producer groups.

Mr. WHITTEN. I belong to the Farm Bureau and I am a lawyer

and a Congressman. I know doctors and many others who are not

farmers who are in it, because you have to join it to get the insurance.

Mr. BENSON. You probably have a farm, too.

Mr. WHITTEN. Well, it so happened that when I joined I didn't.

I do happen to have a little farm now. Incidentally, I rented it out

because, while I have 300 acres of fine farmland, I cannot support

aynthing on it because you haven't given me a 35-percent reduction in

cotton acreage. I do not have any financial interest in it. It will

come to me some day. I have to help look out after renting it, though

I don't own it. I don't want it reflected that I have a personal interest

in it, other than representing this area.

Mr. BENSON. I am sure you would agree that the few doctors or

lawyers who have memberships are not the ones who set the policy.

Mr. WHITTEN. If you are talking about the national level of the

Farm Bureau, I would agree with you. I do not believe even lawyers
40

and doctors would fix some of their national policy. If they came

from farm areas, I don't honestly believe they could do that.

Mr. BENSON. I have a very high regard for the farm organizations.

I think their membership is essentially farmers and their policies are

set by farmers.

Mr. WHIrrEN. I have the highest regard for their leaders as people.

Like you, I differ with their views in many ways. I am proud that

I have done that, because when I started off differing with them, they

opposed competitive sales. And now they are proud of a part in it.

They differed on a whole lot of things, and I am sure they have come

around to my yiews to a large extent.

So I have no apologies for differing with them, just as I have none

for differing with you. In your 4 years, you have come around about

60 percent to the views that some of us have kept trying to stress with

you Mr. Secretary.

Mr. BENSON. I think that is somewhat of an exaggeration, Mr.

Chairman.

Mr. WHITTEN. If you want the record to show that you differ with

me 90 percent, I am glad for you to have that privilege.

Mr. BENSON. No, we are only doing what I am sure you are trying to

do; we are trying to do the things that are best for the American

farmer. We can differ, of course. We have differed. I assume we

will in the future.

ESTIMATED EFFECT OF PRICE SUPPORT AND THE SOIL BANK ON PRODUCTION

Mr. WHii ihN. Now, in fixing price supports and acreage allotments

for this year, what allowance did you make for reductions that you will

get through this soil bank?

Mr. BENSON. Our 

estimate, 

of course we do not know definitely, was

that there would be about 4 million acres which would go into the

acreage reserve part of the soil bank and so far as we have gone, that

appears likely now.

Mr. WRITTEN. You are talking about acres. How much reduction

in production do you estimate?

Mr. BENSON. That would have to be related to yield. If acres of

average productivity come into the program, the figure would be about

400 pounds per acre. I have not figured it out, but it would be about

4 million acres times the assumed yield—isn't that the way we arrived

at it?

Mr. MCLAIN. Yes.

Mr. WiarrEisT. If you had a given allowance for that much production or acres cut out, wouldn't you have ended up with an increase in

cotton acreage for this year? If you had not estimated at the lowest

possible level, and if you had not put at a minimum the expetced exports, and if you had taken credit for the 4 million acres that you say

the soil bank will take out, the acreage might have been higher. Don't

you think you had better go down to the Department and give us about

a 10-percent increase in cotton acreage?

Mr. BENSON. There is no minimum. We do not set anything at the

minimum. There is no minimum on domestic consumption; no minimum on exports. We make an objective appraisal.

Mr. WHITTEN. In 1956, domestic consumption was 8,850,000 bales.

Mr. BENSON. That's right.
4

41

COTTON CONSUMPTION IN ).957

Mr. WHITrEN. You reduced the price $9 a bale to the farmer on

the theory that it would help increase domestic consumption. In

1957 you estimate that it won't improve the consumption one bale. I

say that is an absolute minimum.

111r. BENSON. We did not, Mr. Chairman, set this with the idea, or

we were not motivated by the thought that we were going to get the

greater consumption because price support had been lowered. We

simply looked at the picture and estimated it as best we could in view

of all the facts, what the domestic consumption would likely be.

Mr. WHITTEN. Dr. Butz, who is in your Department, said a while

ago that the chief argument for reducing price supports to the farmer

was this situation between cotton and synthetics. Presumably the only

reason you wanted to change the position would be so that cotton would

regain some of the markets that synthetics now have.

Mr. BENSON. Let me answer that by reading a paragraph from my

statement:

Our estimates for the 1957 crop are the best we can make at this time. But

it is extremely difficult to make these estimates with accuracy. For example,

for the 1955 crop we underestimated production by 4,695,000 bales. This is

largely because we calculated yields in the manner prescribed by law for the

purpose of determining acreage allotments. We overestimated exports by

2,292,000 bales. Both these errors of estimation had the same directional effect

on the level of price support, to boost it.

Mr. WHITTEN. You overestimated for this year; is that it?

Mr. BENSON. This is for 1955.

The supply percentage we announced, 92, resulted in a support level of 90

percent of parity. Had we been able to estimate with complete accuracy, the

supply percentage would have been 152, so great as to indicate a minimum

support level not at the top but at the bottom of the flexible scale, 75 percent of

parity.

Now, in 1956 we did better, but only because of compensating errors. We underestimated production by 3,183,000 bales, which tended to boost the level of

price support from where it would have been if our estimate had been correct.

We underestimated exports by 2,300,000 bales, which had the effect of reducing supports below where they otherwise would have been. Our first

supply estimate, made in April, indicated a level of support at 75 percent of

parity. This was revised in August to 78. Had we been perfect in our estimates the indicated level would have been 80.

And so it should be clear from what has been said that estimates

made in advance of planting cannot be made with accuracy. The

experience has been such as to suggept a reexamination of the whole

formula approach to establishing support levels.

What I am saying, Mr. Chairman, is that we do the best job in a

preliminary way that we can. Then, before the beginning of the

new marketing year we appraise the situation, we review it carefully.

If there is justification for raising it, we do so. We cannot lower

it, however, after we have once announced it, regardless of what the

facts may,be later on.

So, it is only the part of wisdom that we be a bit conservative when

we make our first announcement of the support level.
42'

• SOIL BANK

Mr. WHITTEN. Now we will go into another thing, Mr. Secretary,

and that is this soil bank.

I personally believe the soil-bank acreage reserve program is headed

in the wrong direction. It pays farmers not to farm. If continued

it will have a bad effect on the business of every town and village in

the country.

If continued for years we could lose all our foreign markets.

I fully believe that the same money expended in price supports,

with all commodities surplus to domestic markets moving in world

trade at competitive prices, as you have always had authority to do,

and may I say as at the moment you are doing, would result in much

more return to American farmers, would protect our towns and villages and yes our cities. And may I say the cost to the Government

would be much less.

We expect to recess this committee until along in April so that

we can consider the report of our committee investigation of the soil

bank.

I recently had occasion to meet a big farmer down in a county

that adjoins mine. This man says he is going to rent 150 acres of land

to the soil bank. He is going to take the money and put it in irrigation machinery and buy more fertilizer and grow more cotton on the

land left. Unless the farmers keep up their production we are not

going to have any foreign markets. We are going to dry up the

domestic market. I think the soil bank, and I am saying it from

my heart, as it is now administered, is the worst thing that ever happened to the American farmer. ,

When you start giving the farmer dollars for nothing, he cannot

ever live it down.

For 12 years, here in Congress, every time we took a soil conservation program to the floor, we met a determined opposition that the

ACP was giving the farmer something for nothing. We just saved

it by the skin of our teeth each year. The Farm Bureau was after it.

Every other farm organization was after your regular conservation

program. Now it shows that you have given the American farmer

$1,250,000,000 out of the Federal Treasury.

We will have the benefit of our investigators' work who are in the

field trying to get the real facts, and we will hear as much of the story •

of the soil bank as we can. I dare say that members of this committee may differ among ourselves as to the soil bank, but we did feel

that we should have as much information as we could obtain for us

to consider this matter.

Mr. BENSON. You will have our complete cooperation in that, Mr.

Chairman; I hope you will find that our people in the field will give

you wholehearted cooperation. If they do not, I hope you will let

us know.

PUBLIC LAND BUYING FOR SOIL BANK

Mr. WHITTEN. Thank you. According to reports up to this time

there are things which should be pointed out to you. The first is that

in many sections of the United States, people who live in towns and

others, nonfarmers, are going out and buying land and then renting

it to you under the soil bank and paying for it with Federal money.
43

We have had that. I have had people in my office citing instance

after instance.

The other thing that has been reported to me today is that you have

no control over what land the farmer may put in the soil bank. Therefore, he is putting in his thinnest, sorriest land. He takes the money

and buys irrigation equipment, buys fertilizer, and increases his production on the remaining land. There could not be a greater disservice to the American farmer, in my judgment, because it weakens

the farmers' standing with the whole Congress and with the country.

If you will recall last year, Mr. Secretary, this subcommittee recommended and the Appropriations Committee approved funds through

the regular conservation laws that are already on the statute books,

where we would have gotten something for this money. I think the

records will show that the losses of CCC have greatly increased in

the past few years. The cost of the farm program when you add

to it the soil bank will show that your administration is spending more

money out of the Treasury helping the farmer, while all the time the

farmer's income goes down, than was ever spent by your predecessors.

That is one thing I think the record should show and the facts speak

for themselves.

I realize that it was your statement that this original announcement

about the Department was by a Mr. Davis brought in here from the

Cleveland Plain Dealer, who opposed all farm programs as part of

the policies of his paper. The first statement that came out of your

office, written by him without your knowledge, I think is the way it

has been explained, and I accept that, was that you had inherited the

most overgrown bureaucracy in Government. Now the record shows

that where there were 2 Assistant Secretaries, you have 6 or 8.

Mr. BENSON. No; not 6 or 8.

Mr. WHITTEN. In your immediate office, high level jobs. It shows

in this budget there are 16,252 more employees requested under your

policy than you had when you came in.

Mr. BENSON. I would like to have Mr. McLain comment on these

specific cases you mentioned in connection with the soil bank.

May I say that we went to the soil bank as one additional tool to

try and help and get our agriculture in balance. Imbalance had been

caused at least in a measure by unwise Government policy, and because

of the emergency situation we felt justified in resorting to emergency.

measures. We felt that because the Government was partly responsible for inducing a great increase in production, that the Government

also had an obligation in helping to get things in adjustment for a

peacetime economy.

So we look upon the soil bank as an emergency tool, the same as

we look upon Public Law 480. We are trying now to liquidate a

part of the accumulation of a good many years.

REGULATIONS ON ACREAGE RESERVE

Mr. WHITTEN. What regulations do you have to see that the fanner

who gets the money for certain acreage does not increase his production

on the remaining acreage? What regulations do you have to see that

he takes out the average acres rather than the thinnest acres? Whit

regulations do you have to prevent a man from buying land and paying

96-161 0 -73 - pt. 9 -8
44

for it with a Federal Treasury check, so that at the end of 10 years

it will not cost him a dime.

Mr. BENSON. The program is voluntary. We insisted that it be

voluntary. We set up safeguards in the administration of it. I

believe the program is being administered fairly and honestly. I

would like to have Mr. McLain comment on it.

Mr. WHMEN. Fairly and honestly is not what I am talking about.

I am trying to find out what regulations you have to see that it

results in a reduction in production.

Mr. McLAIN. First, let me answer the one question specifically as

to what land is being taken out. Obviously you, knowing agriculture

as you do, Wr. Whitten, know that a farmer entering into these agreements is not going to take his prize land. We recognize that. He is probably going to take his poor land and, frankly, I think there is nothing wrong with that if he is paid on the basis of what he takes

out. These tracts of land are being looked at by the committees that establish the rates for payment.

It is just not all taken at the same rate, you understand.

Mr. WHrrrEN. Mr. McLain, I am not trying to say that there is anything illegal. I am just saying that, if your purpose was to reduce

production, when you failed to give some attention to renting the

average acres on his farm, you passed up a chance to reduce production.

Mr. McLAiisr. If we pay him on the basis of acres he does give, I

think it does the same thing; don't you?

Mr. Wurrrmsr. But you are going to figure on that farm's average

production per acre.

Mr. McLATN. No no. If the particular tract is not average, then

his rate is less than 

No,

average.

Mr. WHirrEN. We will be glad to have your regulations in connection with any of this.

Mr. MCLAIN. Just one comment on the other statement that you

made here, that this farmer ought to be deprived of using these dollars

to irrigate.

Mr. WHrrrEN. I asked you if your purpose is to reduce production.

I asked you what you did to keep the farmer from putting the rows

closer together, increasing fertilizer input, and the use of irrigation

machinery and things of that sort.

Mr. McLAIN. There is nothing in these basic laws that prevents a

farmer—even the marketing quota laws on cotton—from doing the

very best job he can on his remaining acres. Many people have

suggested that we have a quantity control, a poundage or bushel

control. Congress has never seen fit to pass that type of legislation.

I think it is something that ought to be looked at.

Several of us in the Department happened to think that it might

have some merit.

Mr. WurrrEN. I am not trying to advocate that. I frankly think

that acreage controls will never work. I frankly think that we ought

to have a domestic allotment program. I think we ought to support

a farmers' share of the domestic market with regard to basic commodities and let him get the world market on the balance.

But I do think that, pending any such law as that, we should use

the existing law which provides supports on the domestic market

here, and on world trade at the competitive level to retain to the
45

farmer his share of world markets and retain to the farmer the right

to farm.

As I have said so many times, any farm program ought to start off

with letting the farmer farm and work from that.

But pending the law being changed, as I think it ought to be, the

thing to do is to use the existing law. I am not recommending this

with regard to soil bank. I am pointing out that unless you, by regulations, control these things we are talking about you will pay out

the billion and a quarter of a million dollars and still get no substantial

reduction in production.

Mr. McLAIN. We understand that. We are trying to set the regulations, Mr. Whitten, so that we do get maximum reduction. But you

know we have 

Mr. WHITTEN. Let me carry this a step further. I am glad you

cannot cut production that way because, if you could, we would lose

our world markets.

Mr. McLAIN. Not as long as we have the supply that we currently

have.

Mr. WHITTEN. Not next year, but if you continue to follow the

policy you have, you will have us producing for the domestic market

only.

Mr. McLAIN. The Secretary has consistently said that the soil bank

is not a permanent thing.

Mr. WI:11'17EN. You scared me to death when you said that selling

these commodities in world trade competitively is a temporary thing.

I hope they do not die together.

Mr. BENSON. We are going to continue to have our markets abroad.

I am sure of that.

May I refer back to this matter you mentioned about the increase

in personnel in Agriculture.

Mr. WHirrEN. Yes, sir.

PERSONNEL INCREASE

Mr. BENSON. I think the inference was left that that has been because of the extravagance or poor management, but I think you know

where that increase in personnel is. Part of it is the result of passage

of legislation by the Congress, legislation which we supported.

Didn't Mr. Roberts put a table in the record when he was here showing that? If he didn't, I would like to put one in indicating where

that increase has been.

Mr. WHITTEN. I think you are entitled to it.

With regard to many of these programs, this committee has supported them. But it knocks into a cocked hat this original statement

that it came out of the office.
46

(The material referred to is as follows:)

Summary analysis showing by programs increases in average annual employment

fiscal year 1957 over fiscal year 1952

Brucellosis eradication +2, 408

Watershed program +1,589

Soil bank +2, 265

Price support activities—increased volume +2, 505

Strengthened research program in crops, livestock, utilization, marketing, and forestry +2, 106

Forest access roads and timber sales +2, 303

SCS technical assistance to ACP ' +1,325 Agricultural attaches and market development +349

Disease and pest control (including Mediterranean fly eradication) +344

All other (net) +1, 064

+16,258

I Made possible an increase in timber sales receipts of $53,000,000.

2Increase results in part from substitution of SCS technicians who are Federal employees for employees of ASC county committees.

It is also significant that approximately 1,900 of the 16,258 man-years results

from expanded inspection and other services which are paid for through trust

funds or reimbursements from producers, processors, timber purchasers, and

other cooperators.

Mr. BENSON. You have already indicated, yourself, that I had nothing to do with that. I didn't know about it. That ground has been

plowed about 4 or 5 or 6 times in the past years.

Mr. WHrrrEisr. I just wanted to point out that these new policies

you follow do not result in need for less personnel. I think that we

are entitled to have that in the record.

Mr. BENSON. In the long run production will be in balance. The

emergency programs should not become permanent programs and we

do not expect them to become permanent, the soil bank and others.

Mr. WRITTEN. Mr. Secretary, I think you are on my side on this:

You paid farmers last fall under the law where you knew they were

not going to produce a thing in the world, where the wheat didn't

come up, and where there was no chance in the world to produce.

Mr. BENSON. There were emergency features in the law last year.

We carried out the law.

Mr. WHrrrEN. I agree with you.

Mr. BENSON. As a matter of fact, we opposed the passage of the

legislation applicable to the 1956 crop when it became so late that it

was evident that most of the crops were all in the ground 

Mr. WHIWEN. I think you are entitled to say that.

Mr. BENSON. We are on record to that effect.

LEGISLATION NOW BEFORE CONGRESS •

Mr. WHITTEN. I think you are entitled to that view. I agree with

that view. I just want to show you where this kind of thing leads.

Today we have pending in the Senate—it passed the House—a bill

where you pay rent to ranchers not to graze cattle on land that has

no grass on it.

Mr. BENSON. We are opposed to it.

Mr. WRITTEN. The Department opposed that. Now you have a bill pending in the House and Senate which would pay farmers out in this timber country to not graze their cattle on Government land.

Mr. BENSON. We have opposed that, also.
47

Mr. WHITTEN. I just got a call from the Senate wanting the House

to go along to buy cotton seed cakes to send out to disaster areas.

Mr. BENSON. We are opposed to that.

Mr. WHITTEN. I know your position is sound. But I am saying

that in these emergency programs we are building tip more and more

the things that will break all farm programs. This is sincere on my

part.

Mr. BENSON. I recognize the threat. I recognize the danger. That

is why I have been emphasizing that these programs must be looked

upon as temporary measures.

Now, the conservation part of the soil bank will be of longer duration, but the acreage reserve part and the Public Law 480 program,

I think, must be looked upon as emergency measures.

Mr. WHrrrEN. I do, too, and I hope you will put them behind the

competitive sales program.

The answer never was to get rid of surpluses. The answer is to get

your market back. It is a lot more important how you get rid of your

surpluses, than whether you get rid of them. If you burned your surpluses up tomorrow, the relief would be temporary. You have to keep

the farmer farming and to do that you have to keep your production

on the counter, offered for sale in world trade competitively. Just

getting rid of those commodities under 480 or by throwing them in

the ocean doesn't reach the cause. May I repeat it again, and it comes

from the heart, the cause for our problem, by far the greater cause,

is that for years we held the United States farmers' production of

world markets because we would not offer that production competitively.

WORLD MARKET

Mr. BENSON. Mr. Chairman, I am sure that you and I are in agreement that there is no substitute for markets and there never will be.

We have got to put our emphasis there. I am pleased, as you are,

•that our exports of today are the highest in history, and I am hopeful

that many of these markets that we have regained, new ones that we

have acquired, can be kept even after some of these emergency measures

expire.

POLICY REVIEW

Mr. WH=EN. I want to ask you to go back and review your own

arguments that reducing price to the farmer $9 a bale would increase

domestic consumption. If you believe your own arguments, you will

increase your estimate of domestic consumption for the current year.

I want you to believe your own argument on the $6 per bale reduction.

I don't believe this argument, but they are yours. I want you to

go back and review the fact that you sold 61/2 million bales when you

thought you could sell a million, about 6 times more than you

anticipated.

Mr. BENSON. We expect to review all of those.

Mr. WHITTEN. I want you to review the 70-percent support price,

and when you analyze your price reduction for various commodities

and match it against farm income which has gone down in direct

proportion to your reduction in price supports—I hope you will increase the supports. As I have stated, it is your order which put
48

these 55,000 farm families out in the road. I have stressed cotton, but I would like to ask it with regard to each of these commodities.

Mr. BENSON. I would like to see the acreage increased. May I

mention once more that a great majority of this price decline occurred before we adjusted price supports at all. The record shows that.

Mr. WHITTEN. I am in public office, myself; and my people would have little patience with my saying that it occurred before I went into office. It is my recollection that when you were running in 1952, and when you first appeared before us in 1953, that you were going

to correct all these conditions.

Mr. BENSON. Mr. Chairman, I didn't run in 1952.

Mr. WHITI:EN. When your party was running; I will put it that

way.

Mr. BENSON. Of course, our aim has been to do that which is best

for agriculture, and we have had bipartisan help in the study which

led to the recommendations we made to the Congress. A good many of the recommendations that we brought up here were recommendations of the bipartisan commission as you know. That was after a

very careful study made up of 9 Democrats and 9 Republicans.

FARM POSITION

Mr. WHITTEN. May I say 

again, 

Mr. Secretary, at the conclusion

of my part of this program, that I appreciate your appearance here.

I know you are vitally interested in the subject, as we are. I have differed with you for the 4 years that you have been here on your policies, by and large. I do believe that 4 years has tended to sub- stantiate my part of this argument.

I think that those places where you have come around to the com- mittee's views, including my own, have worked out very well. I there- fore thought it well to put in the record the places where I think your

own experiences have clearly shown that you were wrong in your prior views.

That does not prevent you from continuing them. But this situation is deadly serious. It is high time that we who are interested in agri- culture, work out a domestic allotment plan or some other plan that will let our farmers farm.

You and Mr. Morse tell us that, the answer to the small farmers is to get a job somewhere else. If you came up with a bankers' program and told them to get out of banking, and if you came up with a labor

program in which the answer was for labor to go to the farm, they would laugh you out of the country. But you have been advocating that type of thing for the farmer.

Mr. BENSON. We have never advocated that any farmer leave his farm. We think that decision should be made by the farmer. Our

economy should be kept fluid enough so that people are free to move in or out, whether it be agriculture or banking or anything else. The rural development program, is simply a program to aid the farmer in making the adjustment that is in his own best interest. That is all it is. He makes the decision as he must always do in my judgment. Mr. WHITTEN. When you cut cotton acreage 35 percent in 3 years, and would not sell it abroad but could have sold it, and when you cut that farmer's price $9 a bale last year and $6 a bale this year, and
AP'

49

your own statement shows that under 1 order in 1955 you put 55,000

cotton farmers out of homes in the South, you have not recommended

that they get off the farms, you have made them get off the farm.

Mr. BENSON. The acreage allotments we have announced are based

on laws passed by the Congress. There are many factors, as I have

explained many times, that have contributed to any shift out of agriculture. It has been going on for more than 50 years.

Mr.'WHii-rEN. It has, and your policies have greatly aggravated it.

I spent hours trying to show you the problem in my section of the country. You know that we have sharecroppers and renters and you

know, as the acres on that farm are cut down, the tenants must leave.

I did everything I could think of to get you to make the survey in 1955,

but you had your Extension Service make it. I put it in the record

earlier and it will show. Your own survey from your own Extension

Service, showed that 55,000 farm families in the cotton-growing South

were left without homes.

Now, that is in addition to the things that might come about due to

economic pressures.

Mr. BENSON. It has been going on for a good many years, as you

know, Mr. Chairman.

Mr. Wiirrrmsr. But you can speed it up, or you can give us time to

adjust to it. You can speed it up by reducing price to the point that,

with these constantly increasing costs, it aggravates the situation.

PROGRAM OBJECTIVES

Mr. BENSON. Certainly, Mr. Chairman, the Government price-fixing

route, with a program to cut further and further back on our acreages,

is not the answer. We are all trying to find the answer, and also we

have provided a program aimed at meeting the needs of the low-income

farmer.

I think it is a constructive program, and I believe it is going to pay

real dividends. It is not dramatic, but it is taking hold, and the

reaction we are getting is very favorable. It is already accomplishing

a great deal.

Mr. WurrrEN. I say it is nice, and it may add a little bit to homelife.

But there again, it is just like Public Law 480 and these funny ways

of getting rid of agricultural commodities.

Mr. BENSON. I do not consider them funny.

Mr. WHITTEN. All the time you were overlooking the normal way

which is to offer our commodities for sale through normal channels, for

dollars, which has worked so well the last year.

In the rural farm program, which was brought about because of

no income you are going all around the house and overlooking the

way to help low income—and that is to raise it. If you want to have

something better than low income, you must provide for a little

higher income, and that is the point. You are giving them a county

agent, and an assistant agent, and a whole lot of information. You

send them a lot of pamphlets and a lot of research.

THE ANSWER TO LOW FARM INCOME IS MORE INCOME

But what the trouble to start with? Low income. There we are

doing the same thing we did in the other business. If you want

to help them, help the income. That is where the problem is.
50

Mr. MORSE. Mr. Chairman, as far as I know, there is very complete agreement that price supports will meet the problem of the over 1 mil- lion farm families with incomes of less than $1,000 per year. Most of what they produce, in many instances is consumed at home. Second, there is a very large number of these farms that are not producing any price-supported commodities.

Mr. WnrrrEN. That is where you picked the dairy farmer off. He is getting high-level price supports, but you changed him over from a

general sort of farm program, on the ground that he wasn't a basic commodity producer. And milk production has increased. But get- ting back to the problem you mentioned, every farmer has an interest in the price-support program for basics because, if it were not for that, his situation would go down still further.

Mr. MORSE. Mr. Chairman, I spoke in Oklahoma last fall and had brought together the statistics on 20 northeast counties of that State. If I remember the statistics correctly, the average cultivated acres in those 20 counties per farm was eight and a ha!f acres. You know the level of productivity for that area. Farmers are producing feed for milk cows, and eggs and chickens on that eight and a half acres and little if any cotton; they are not growing tobacco. They are growing very little wheat on their eight and a half acres. You just cannot get at the problem of such farm families through price sup- ports.

I hope we will have the opportunity to discuss the rural-development

program. I know it has already been coming up in connection with your hearings. We would like very much to have the opportunity to get into it as fully as you like. It is going to make it possible for most of the farm people to continue to live on their small farms and have adequate incomes when located within driving distance of Tulsa, for instance, where there are job opportunities. The people are con- tinuing to live on farms and supplement the incomes from their small acreage with other income. That is a major objective of the ruraldevelopment program and it is considered sound.

I have expressed the idea this way. A lot of people go to the city and prosper, and what do they often do They go out in the country and get a place to live. They like to live in rural areas. That is where the low-income farm people live now. Why don't we give them an opportunity to continue to live there and make the best use of their land, their -agricultural opportunities, and in addition develop sup- plemental sources of income where-they need such?

Mr. WHITTEN. Thank you, Mr. Morse.
51 .

Mr. Secretary, may I say that I appreciate your courtesy and your

kindness in coming up here tociay. As you know, I feel very deeply

about these things and I have been utterly sincere. I have always

given you credit for the same thing, as you know.

We will recess until 2 o'clock at which time the other members of the

committee will interrogate you.

Mr. BENSON. I assume you want me in it.

Mr. WHITTEN. Yes, sir; we won't put the show on the road without

tilt., star, Mr. Secretary.

Mr. BENSON. I don't know how much of a star I am, but I will be

back at 2 o'clock.

(Committee recess.)

Mr. WHITTEN. Mr. Secretary, I would like to make the illustration

that in my section of the country, and I am sure in many other sections

of the country, a small farm of some 12 acres of cotton in the last 4

years has had that 12 acres cut down to something like 7 acres by

action of the Government.

Then, the price on the cotton from the remaining 7 acres has been

cut $9 per bale last year, and $6 per bale this year. That situation

has largely caused the so-called rural-development program, but such

programs are no substitute for farm income.

FARM INCOME, COTTON-EXPORT PROGRAM, AND PRICE-SUPPORT LEVELS

Reduced Price supports have not increased consumption, decreased production, nor been reflected in lower prices to the consumer.

Such reductions have helped reduce farm income.

Now, I have certain tables and information on farm income by

States, the cotton-export program for 1957-1958, and price-support

levels for various commodities which come from the Department's

statistics. I would like to include that information in the record at

this point. May I say the points I have made here today with reference to cotton price supports apply generally to other commodities.
52

(The information referred to follows:)

Farm marketings: Cash receipts from major commodities and commodity groups, ,

United States, 1949-56

[In millions]

Commodity or group 1949 1950 1951 1952 1953 1954 1955 1956 1

Livestock and products_ __ _ _ $15, 404 $16,045 $19,670 $18,281 $17,134 $16,271 $15,837 $16,207

Meat animals. 8,324 9,248 11,365 10, 109 8, 793 8, 868 8, 171 8,245

Cattle and calves__ __ 4,848 5,678 7,001 6,206 4,878 5,088 5, 167 5,258

Hogs 3, 125 3, 184 3, 902 3,512 3, 598 3, 455 2,688 2, 667

Sheep and lambs_ _ 352 386 462 391 317 325 316 319

Dairy products 3,748 3,719 4,250 4,567 4,366 4, 114 4,213 4,491

Poultry and eggs 3, 110 2,814 3,668 3,331 3,702 3,013 3, 186 3,220

Eggs 1,857 1,564 2,093 1,801 2,073 1,627 1,746 1,771

Farm chickens 497 411 472 362 450 253 229 205

Broilers 442 530 703 756 786 747 834 849

Turkeys 263 261 341 352 336 331 325 345

Miscellaneous 222 264 387 274 273 276 267 251

Wool 100 129 231 123 129 129 101 94

Crops 12, 460 12, 

-

360- 13,239 14, 257 14,035 13,443 13,427 13,792

Food grains 

_

2, 259 1, 940

=

1, 992 2, 534 2,423 2, 312 1, 955 2,027

Wheat 2,061 1,737 1,769 2, 220 2, 164 2,031 1,687 1,742

Rice 178 183 198 290 243 261 246 268

Field crops 2, 172 2, 104 1,992 2, 123 2,205 2.323 2,333 2, 272

Corn 1,405 1, 194 1,051 1, 192 1,423 1,334 1, 30 7 1,387

Other feed grains__ 487 626 602 538 478 682 683 557

Cotton 2,636 2,434 2. 852 2, 978 3, 178 2,703 2, 562 2,476

Lint 2, 387 2, 144 2,484 2, 584 2,868 2, 391 2, 319 2, 216

Seed 249 290 368 394 310 312 243 260

843

-

Oil-bearing crops 934 983 1,080 958 912 1, 136 1,236

Soybeans 492 596 701 811 655 686 819 939

Peanuts 197 203 166 145 182 115 183 170

Flaxseed 149 130 111 115 112 107 133 123

Tobacco 903 1,061 1, 191 1,090 1,094 1, 161 1,225 1, 151

Vegetables 1,664 1, 501 1,801 2,098 1, 748 1,624 1, 761 1,963

Truck crops, fresh_ 821 788 931 1,039 944 896 971 994

Truck crops (processing) 210 207 310 274 277 242 252 315

Potatoes 445 348 386 596 327 297 353 484

Fruit and tree nuts 1,013 1,209 1,209 1, 138 1,240 1,272 1,287 1,437

Citrus fruit 276 351 316 267 348 338 351 423

Oranges 187 245 231 189 250 254 267 325

Deciduous fruit 737 858 893 871 892 934 936 1,014

Apples 201 201 207 246 270 276 238 248

Grapes 93 173 138 125 123 130 130 139

Peaches 85 90 116 114 112 116 108 131

Total cash receipts

from marketings 27, 864 28, 405 32,909 32, 538 31, 169 29,714 29,264 29,999

Government payments 186 283 285 275 213 257 229 554

Grand total 28,050 28,688 33,194 32,813 31,382 29,971 29,493 30,553

'Preliminary.
53

Realized net farm income, by States, 1949-56

[In millions]

State and region 1949 1950 1951 1952 1953 1954 1955 1956 1

Maine $71.8 $64.3 $70. 0 $95. 7 $56.8 $29.4 $62.9 $82.2

New Hampshire 18.4 16.7 21.6 19.8 23.7 18.9 20.3 18.0

Vermont 31.2 30.8 32. 7 33.3 30. 6 28. 5 31. 6 30. 5

Massachusetts 64.9 59.3 75. 5 58.7 64.8 41.4 41. 1 40.6

Rhode Island 9.3 8.3 10.5 11.3 11.0 8. 1 7.3 7.8

Connecticut 58.2 49.8 63.4 61.1 66.4 54.2 57.1 45.5

New York 317.9 279.0 325.4 370.6 316. 1 266.3 266. 6 280. 7

New Jersey 99.7 94.8 130.5 111.4 122. 5 82.2 75.7 93.7

Pennsylvania 300.4 238.5 299.1 287. 7 271.5 213.5 220.2 219.2

North Atlantic region_ 971.8 841.6 1, 028. 7 1,049. 7 963.3 742.3 782.9 818.2

Ohio 464.0 390. 2 494. 8 483.4 468. 1 429. 7 396. 1 415. 5

Indiana 473. 7 422.9 515. 5 468. 6 498.8 417. 7 367. 1 383.9

Illinois 743.9 671.3 779.7 803.0 804. 2 658.6 514.8 703.0

Michigan 311.4 282.0 346.7 332.6 322. 1 280.0 246.5 274. 5

Wisconsin 433.9 424. 1 588.5 539.4 484.3 409.8 387.0 426.5

East north central

region 2, 427. 0 2, 190. 5 2,685. 1 2, 627. 0 2,577. 5 2, 196.0 1, 911. 5 2, 203.4

Minnesota 559.5 512.7 544.3 533.8 568. 1 489.6 491.8 519.5

Iowa 956.0 898.3 924. 1 817.8 1, 092. 9 872.0 801.6 805.7

Missouri 519.9 487.7 598.0 481.0 491.4 437.7 369.0 419.6

North Dakota 240.8 203.9 222.5 217.7 155.9 136 6 171.3 191.5

South Dakota 271.4 203.3 240.9 206.2 100.2 224.8 199. 1 155.2

Nebraska 433.0 374.8 437. 2 411.0 494.4 347.1 379.2 347.2

Kansas 447. 2 420. 1 410.9 498.9 387. 2 347.2 280.6

-

218.0

West north central

region 3,427. 7 3, 100.9 3, 377. 9 3, 156.4 3, 380. 0 2,855. 6 2, 662. 4 2, 656.8

Delaware 30. 2 25.4 28. 1 25. 1 24.9 21. 2 19. 1 26. 6

Maryland 82.5 70.0 80.8 80.6 68.8 70.0 56. 1 64.9

Virginia 239. 2 249. 1 295.5 275. 1 232.5 212.5 193.6 216.6

West Virginia 87.2 80.7 96.9 91.7 79. 5 71.0 64. 1 64.3

North Carolina 508.8 571. 5 671.3 169.9 572.8 579.2 572.0 570.9

South Carolina 178.7 171.9 266.6 216.3 217.9 146.8 176.0 157.4

Georgia 265.7 315. 2 365.9 345.3 345. 2 254.0 306.8 281.6

Florida 217.4 260.4 233.9 219.4 267. 5 244.4 286.3 340. 3

South Atlantic region 1,609. 8 1,744. 2 2, 039. 0 1,873. 2 1,829. 3 1, 599. 2 1,673. 6 1, 722. 7

Kentucky 371.9 321.7 406.3 358.4 341, 1 339.7 302.1 312.5

Tenne.ssee 306. 6 293. 7 352.4 347. 6 306. 8 290. 0 239. 9 277. 1

Alabama 263. 7 249. 3 300. 7 285.3 259. 5 213. 8 262. 0 235. 2

Mississippi 355.6 318.2 342. 1 309.4 411.7 277.3 312.7 314.0

Arkansas 350. 5 302. 1 319. 2 327.7 299. 1 302. 5 255. 2 324. 8

Louisiana 232.4 199.9 239.8 261.2 226.7 206.4 185. 2 192.2

Oklahoma 311. 8 238.9 255.8 301. 9 222.9 194. 2 137. 7 161.0

Texas 1, 035. 4 1, 058. 4 1, 031. 6 948.1 759. 2 777.7 678.4 596.6

South central region_ 3, 227. 8 2,982. 2 3, 247.9 3, 139. 6 2, 826. 9 2,601. 7 2,373. 2 2, 413. 3

Montana 182.8 162.9 203.5 185.4 166.2 181.8 163. 1 151.7

Idaho 132. 1 112.3 148.2 154.6 125.9 110.8 99.3 107.5

Wyoming 46. 7 45. 2 78. 5 57.0 44.3 45.3 26. 4 34. 1

Colorado 192. 5 164.8 160. 6 192.3 166.8 122. 5 79.8 82. 7

New Mexico 95.8 91.3 99.8 77.9 72. 1 67.9 33. 6 48. 4

Arizona 101.0 122.5 145. 5 181.3 212.3 154. 1 121.4 118.9

Utah 58.7 57.9 78.9 66.9 58.2 5.4.3 50. 1 48.5

Nevada 20.9 20.5 31. 5 26.3 14.5 13.5 11.8 9.7

Mountain region 837.6 777.5 946.4 941.7 860.3 750.2 585.5 601.4

Washington 220.8 229. 2 277. 7 257.3 260. 5 246. 4 208.6 195.8

Oregon 163.3 165.4 182.8 168.2 158.7 141.3 149.6 157.7

California 797.6 825.9 1,016. 5 1, 032. 9 1,024. 1 • 889. 5 992. 1 1,066. 5

Pacific region 1, 171. 7 1, 220. 5 1, 477. 0 1, 458. 4 1, 443. 3 1, 277. 2 1, 350. 3 1, 420. 0

United States 13,673 12,857 14,802 14,256 13,580 12,021 11,340 11,836

1 Preliminary.

NOTE.-Details may not add to totals, because of rounding.
54

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 19,1957.

USDA ANNOUNCES COTTON AND COTTON PRODUCTS EXPORT PROGRAMS

FOR 1957-58 SEASON

A cotton-export program for Commodity Credit Corporation stocks of upland

cotton to be shipped after August 15, 1957, was announced today by the United

States Department of Agriculture. Under this program, sales will be made

periodically on a competitive bid basis as under the current export program

(Announcements CN-EX-2 and NO-C-8).

The Department also announced today that the cotton products export program will be continued through the 1957-58 marketing year.

While cotton cannot be exported under the 1957-58 program until after August

15, 1957, the program is being announced at this time so that the domestic

cotton industry, as well as foreign users of cotton, will know the Department's

export sales policy and can begin to make sales and purchases for the new year.

In general, the program will be substantially the same as the current program

which permits the cotton to be delivered against all sales, including Public Law

480, barter, and credit sales, and allows substitution of an equal quantity of cotton

for that purchase from CCC. The program will contain performance guaranty

and price adjustment provisions essentially the same as under the current program. The purchaser will be required to make shipment of the cotton (1)

within 9 months after delivery of the cotton or the warehouse receipts to the

purchaser, or (2) by July 31, 1958, whichever is earlier. The current program

provides for export within 12 months or by August 15, 1957, whichever is earlier.

Export requirements and conditions will be contained in an announcement

(identified as Announcement ON-EX--4) to be issued soon by the Cotton Division,

Commodity Stabilization Service. Terms and conditions of sales will be contained in Announcement No. NO-C-9 to be released by the New Orleans CSS

commodity office which will also make sales under the program. The current

cotton products program (Announcement CN-EX-3) will be amended in the near

future in order to extend the program through the next season.

As under the current program, sales under the cotton export program for

the 1957-58 marketing year will be made in an orderly manner so as to avoid

disrupting world market prices and impairing the traditional competitive position of friendly countries.

Cotton will continue to be available for sale under the current program for

shipment through August 15, 1957.

UNITED STATES DEPARTMENT OF AGRICULTURE COMMODITY STABILIZATION SERVICE

FEBRUARY 19, 1957.

ANNOUNCEMENT CN-EX-4

COTTON EXPORT PROGRAM

(1957-58 marketing year)

I. General

Commodity Credit Corporation (hereinafter referred to as "CCC") will make

available for sale upland cotton from its inventories acquired in price-support

operations for export pursuant to the terms and conditions of this announcement. Sales will be made on a competitive bid basis through the CSS commodity office, Wirth Building, 120 Marais Street, New Orleans 16, La. (hereinafter

referred to as the "New Orleans office"). The New Orleans office will issue a

sales announcement (indentified as Announcement No. NO-C-9) which, together

with this announcement, will contain the terms and conditions under which the

cotton will be sold and exported. A catalog showing stocks of cotton available

for sale .will be issued and distributed by the New Orleans office, and may be

obtained for a nominal fee from that office. Information pertaining to the operation of the program may be obtained from the New Orleans office.

Warehouse receipts will not be available to purchasers, and cotton cannot be

exported under the program, prior to August 16, 1957.
55

II. Export conditions

A. Exportation of cotton.—All cotton sold hereunder is sold upon the condition

that the purchaser exports or causes to be exported to a destination, other than

Alaska, Hawaii, or Puerto Rico, outside the continental United States either the

identical bales of cotton purchased from CCC or in substitution therefor an

equal quantity of cotton (the cotton exported or caused to be exported by the

purchaser is hereinafter referred to as "the cotton"). It is the policy of CCC

not to sell cotton for export to countries or areas for which a general or

specific export license will not be issued by the Bureau of Foreign Commerce.

Accordingly, in purchasing cotton for export under this announcement, the

purchaser makes the warranty contained in subsection E below.

While the purchaser may arrange to have some other person or firm export

the cotton, the responsibility for such exportation cannot be transferred. CCC

will hold the purchaser solely responsible for its export. Satisfactory evidence

of exportation of the cotton must be submitted by the purchaser. If the purchaser

causes the cotton to be exported by some other person or firm, the purchaser

must have sold the cotton to or through such person or firm so that the cotton

would be exported.

B. Exportation of substitute cotton.-1. If other than the identical bales of

cotton purchased from CCC are exported in fulfillment of the export requirements of this announcement, the unpatched gross weight of the cotton exported

(including any identical bales in the shipment) must equal the gross weight of

the cotton purchased from CCC, and the cotton exported must be of grades

within the universal standards for American upland cotton, must have a staple

length of thirteen-sixteenths inch or longer, and must have been produced in the

continental United States. Cotton exported in substitution must not be reginned,

loose, or pickery cotton or any other such irregular cotton.

2. Cotton shipped as offset cotton in connection with Proclamation 2544 of

the President of the United States will not fulfill the export requirements of

this announcement.

C. Time for export—The cotton must be exported after August 15, 1957, and

not later than (1) 9 months after the date the warehouse receipts covering the

cotton purchased from CCC are made available to the purchaser or the cotton

is delivered by CCC to the purchaser, or (2) July 31, 1958, whichever is earlier.

Cotton exported in substitution for cotton purchased from CCC hereunder must

be exported after the date of purchase of such cotton from CCC.

D. Satisfactory evidence of exportation.—Evidence of exportation of the

cotton to be satisfactory hereunder must meet the following requirements:

1. Separate documents must be submitted for each export shipment, and all

documents covering any one such shipment must be submitted at the same time.

Each document must identify, by the CCC sales number, the sale against which

the export is being made. If the export sale is financed under Public Law 480,

the purchase authorization number must also be shown on the documents evidencing exportation.

Where exportation or transshipment has been made to one or more of the

countries or areas described in subsection E below under license issued by the

United States Department of Commerce, Bureau of Foreign Commerce, evidence

of exportation shall identify, in addition to the name and address of the consignee, the license issued by that Bureau. In the case of an exportation or

transshipment to Hong Kong not requiring a specific license, the document evidencing exportation shall contain a statement by the purchaser that a specific

license was not required.

2. If the cotton is exported to Canada or Mexico, the purchaser shall furnish

a copy of the railroad bill of lading under which the cotton is shipped and an

authenticated landing certificate issued by an official of the government of the

country to which the cotton is exported, showing the number of bales, marks,

the place and date of entry, and gross landed weight of the cotton, and the

name and address of both the person who exported the cotton from the United

States and the person to whom it is shipped.

3. If the cotton is exported to any country other than Canada or Mexico, the

purchaser shall furnish a nonnegotiable copy of either an on-board ocean bill of

lading or a port or custody bill of lading with on-board endorsement. The bill

of lading must show the number of bales, marks, and gross weight of the cotton,

the date and place of loading, the name of the vessel, the destination of the

cotton, and the name and address of both the person who exported the cotton

and the person to whom it is shipped.
56

4. The purchaser shall furnish a copy of a tag list showing the warehouse receipt numbers under which the cotton is exported and containing a certification that the cotton was produced in the continental United States, is of grades within the universal standards for American upland cotton, is of staple lengths of thirteen-sixteenths of an inch or longer, and is not reginned, loose or pickery cotton or any other such irregular cotton. Such tag list shall so indicate if only identical bales purchased from CCC are shown thereon. Such tag list shall be

sworn to by the purchaser as true and correct.

5. If other than identical bales of cotton purchased from CCC are included in a shipment, the purchaser shall furnish an affidavit reflecting, in relation to each ocean bill of lading, the actual gross weight of the cotton shipped, exclusive of any franchised weight and exclusive of patches. The affidavit covering the last shipment against any sale must also state that the total unpatched gross weight of the cotton exported is equal to the gross weight of the cotton pur- chased from CCC under such sale.

6. If the purchaser causes exportation of the cotton to be made by some other

person or firm, there shall be furnished a certification by the purchaser that his sale of the cotton to or through such other person or firm caused the export to be made, and a certification, on or attached to the bill of lading evidencing

export, by the person or firm making the export shipment that such sale of the cotton by such purchaser caused the export to be made. The exporter named in the bill of lading under which the cotton is exported must warrant that the purchaser is the proper person who may utilize proof of exportation of the cotton under this announcement.

7. The documents specified above must be filed with the New Orleans office not later than 30 days after the date of the landing certificate, on-board bill of lading, or on-board endorsement of port or custody bill of lading. An extension

of time for submission of such documents may be granted by the director of the New Orleans office if he determines that the purchaser has been or will be delayed in submitting such documents by a cause which the director of the New Orleans office determines to be beyond the control of the purchaser. Failure of the purchaser to furnish such satisfactory evidence of exportation within 30 days after the final date for exportation, determined in accordance with subsection C above, shall constitute prima fade evidence of failure to export.

8. The purchaser shall also furnish promptly any additional evidence of exportation which may be requested by the director of the New Orleans office.

9. If the cotton is loaded on board a vessel for shipment to a destination,

other than Alaska, Hawaii, or Puerto Rico, outside the continental United States and is destroyed or damaged while on board such vessel, and the cotton

or salvage therefrom does not reenter the United States, for the purposes of fulfilling the export requirements of this announcement, the cotton shall be regarded as having been exported.

E. Warranty.—In submitting a bid, the purchaser represents and warrants that the cotton exported pursuant to this announcement will not be exported by anyone or transshipped by the purchaser or caused to be transshipped by the purchaser:

1. To any country or area listed in subgroup A of group R of the Compre- hensive Export Schedule issued by the Bureau of Foreign Commerce, United

States Department of Commerce, unless a license for such exportation or trans- shipment thereto has been obtained from such Bureau;

2. To Macao unless specific license for such exportation or transshipment thereto has been obtained from the Bureau of Foreign Commerce, United States Department of Commerce; or

3. To Hong Kong if a specific license for such exportation or transshipment is required by regulations of the United States Department of Commerce under the Export Control Act of 1949, unless such specific license for such exportation

or transshipment thereto has been obtained from the Bureau of Foreign Commerce, United States Department of Commerce.'

portation 

Information to purchaser: The Department of Commerce regulations prohibit expursuant 

or reexportation by anyone. including a foreign exporter, of the cotton exported to the terms of this announcement, to Soviet bloc countries and other prohibited

exporters" 

areas except 

which 

under license. The attention of the purchaser is invited to the "Notice to accompanies this announcement.
57

III. Performance guaranty

As a guaranty of performance, the purchaser shall furnish, prior to delivery

of cotton by CCC, a cash deposit, performance bond, or letter of credit, acceptable to CCC. Such deposit, bond, or letter of credit shall be in an amount at

least equivalent to $30 for each bale of cotton delivered by CCC for which, at

•any one time, satisfactory evidence of exportation has not been submitted.

Failure of the purchaser to furnish the acceptable performance guaranty as

provided above by the time CCC is in position to invoice the cotton shall entitle

CCC to add accrued carrying charges, as determined by CCC, to the invoice

price of the cotton purchased; and in the event the purchaser is consistently

delinquent in submission of performance guaranty, as determined by CCC, CCC

shall be entitled to require the purchaser to furnish acceptable guaranty prior

to acceptance of bids or at CCC's election to cancel the sale of such cotton. In

the event of cancellation of sales, CCC will incur costs in removing and returning

cotton to the catalog, and the purchaser shall pay to CCC as liquidated damages

and not as a penalty the sum of $1 per bale.

IV. Price adjustment

CCC sells cotton for unrestricted use at not less than the statutory minimum

sales price for sales for unrestricted use (105 percent of the current support

price for such cotton plus reasonable carrying charges) or the domestic market

price, whichever is the higher. Sales of cotton by CCC for export are not subject

to the statutory price restriction. Sales of cotton under this program may be

made at reduced prices and are made upon the condition that the purchaser

exports or causes to be exported in conformity with the requirements of this

announcement either the identical bales purchased or in substitution therefor

an equal quantity of cotton. If (1) any cotton sold hereunder, or in substitution

therefore an equal number of pounds (unpatched gross weight) of cotton is not

exported in conformity with the requirements of this announcement, or (2)

exportation is made and (a) any of the cotton is exported by anyone or transshipped or caused to be transshipped by the purchaser, to any Soviet bloc

destination or Communist-controlled area in the Far East unless a Department

of Commerce license for such shipment or transshipment has been obtained, or

to Macao, without specific Department of Commerce license, or to Hong Kong

if such license is required and is not obtained, or (b) any of the cotton so exported

is reentered into the continental United States or Alaska, Hawaii, or Pureto

Rico (unless such cotton reenters pursuant to Proclamation 2544 of the President

of the United States), whether or not such reentry is caused by the purchaser,

the sales price of the quantity of cotton which is not so exported, which is exported

or transshipped in contravention of (2) ( a ) of this section, or which is reentered

(or if such cotton was exported in substitution, the cotton for which such cotton

was substituted) shall be adjusted upward by the amount that such sales price

is exceeded by the higher of CCC's highest statutory minimum sales price for

unrestricted use, as determined by CCC, or the highest domestic market price, as

determined by CCC, for such cotton between the date of sale and the final date

for exportation hereunder ( where the purchaser fails to export in accordance

herewith or exports or transships in contravention of (2) ( a) of this section)

or the date of reentry of such cotton ( where the cotton is reentered). The total

amount of any such upward adjustment of the sales price shall be paid by the

purchaser to CCC promptly- upon demand. Upon payment of such amount, the

cotton shall be available to the purchaser for unrestricted use.

V. Records and reports

The purchaser shall make available to CCC, from time to time, upon CCC's

request, such information and reports and such of the purchaser's and such of

his affiliates' and subsidiaries' books, records, and accounts, and other documents and papers, as CCC may deem pertinent to any transaction hereunder.

Specific reporting requirements subsequently prescribed shall be subject to

approval of the Bureau of the Budget pursuant to the Federal Reports Act of 1942.

F. MARION RHODES,

Director, Cotton Division,

Commodity Stabilization Service.

Approved:

WALTER W. SIKES,

Acting Vice President,

Commodity Credit Corporation.
58

NOTICE TO EXPORTERS

The Department of Commerce, Bureau of Foreign Commerce (BFC), pursuant

to regulations under the Export Control Act of 1949, prohibits the exportation

or reexportation by anyone of any commodities to Macao, Hong Kong, the Soviet

Bloc, or Communist-controlled areas of the Far East including Communist China, North Korea and Communist-controlled areas of Vietnam and Laos, except under license issued by the United States Department of Commerce, Bureau of Foreign

Commerce. Those regulations further require that persons exporting, in the form acquired or in a processed form, under general license to friendly countries,

commodities which are obtained directly or indirectly from the Commodity Credit Corporation (CCC) or commodities which are in substitution for commodities so obtained from CCC or commodities which are subsidized for export by CCC either through cash payment or payments in kind filed with the collector of

customs (in addition to any copies required for other purposes) one copy of the shipper's export declaration for forwarding to BFC and send to BFC, Washington 25, D. C., one copy of the on-board ocean bill of lading (for exportations

by rail, one copy of the railroad bill of lading), for each shipment, regardless

of value, involving sales of cotton textiles, other than cotton waste, of $10,000

or more and involving sales of all other commodities, including cotton waste,

of $100,000 or more: Provided, that copies of the shipper's export declaration and

the bill of lading for BFC are not required to be submitted covering any shipments to group 0 countries of cotton textiles other than cotton waste.

In the case of commodities purchased from CCC, or commodities being exported as "substitute" for such commodities, the $100,000 figure applies to the

sales contract between the CCC and the United States purchaser. For commodities being exported under CCC export subsidy programs, the $10,000 figure

for cotton textiles (other than cotton waste) and the $100,000 figure for all other

commodities (including cotton waste) apply to the sales contract between the

United States seller and the foreign purchaser. Each of the documents for BFC

must bear the notation "P0-2610" in the upper right-hand corner. The bill of

lading for BFC must also bear the number of the corresponding shipper's export

declaration and the CCC identification number (CCC sales contract number or

COO subsidy registration number).

For all exportations of commodities covered by the program announcement,

instrument or document which this notice accompanies, the following statement

is required to be placed on all copies of the shipper's export declaration, all

copies of the bill of lading and all copies of the commercial invoice to the foreign

purchaser:

"United States law prohibits disposition of these commodities to the Soviet

bloc, Communist China, North Korea, Communist-controlled areas of Vietnam

and Laos, Macao, or Hong Kong, except as authorized by the United States."

The United States Commerce Department export control regulations also require that exporters, in or in connection with their contracts with foreign

purchasers, where the contract involves $10,000 or more and exportation is to

be made to a group R country, obtain from the foreign purchaser a written

acknowledgment of his understanding of (1) United States Commerce Department prohibitions (Comprehensive Export Schedule, secs. 371.4 and 371.8) against

sale or resale for reexport of said commodities, or any part thereof, without

express Commerce Department authorization, to Macao, Hong Kong, the Soviet

bloc, a Communist-controlled area in the Far East including Communist China,

North Korea and Communist-controlled areas of Vietnam and Laos, and (2) the

sanction of denial of future United States export privileges that may be imposed

against any foreign purchaser for violation of the Commerce Department regulations. Exporters who have a continuing and regular relationship with a

foreign purchaser may obtain a blanket acknowledgment from such purchaser

covering all transactions involving surplus agricultural commodities and manufactures thereof purchased from CCC or subsidized for export by that agency.

Where commodities are to be exported by a party other than the original purchaser of the commodities from the CCC the original purchaser should inform

the exporter in writing of the requirement for (1) obtaining the signed acknowledgment from the foreign purchaser, and (2) for submitting the additional

copy of the shipper's export declaration and the bill of lading.
•

•

59

UNITED STATES DEPARTMENT OF AGRICULTURE,

COMMODITY STABILIZATION SERVICE,

New Orleans 16, La., February 20, 1957.

Subject: Announcements NO-C-8 and CN-EX-2--1956-57 Cotton export program.

Announcements NO-C-9 and CN-EX-4--1957-58 Cotton export program.

To All Catalog Holders and Other Interested Parties:

GENTLEMEN: We forward herewith Announcements NO-C-9 and CN-EX-4

dated February 19, 1957, which contain the terms and conditions under which

cotton will be sold and exported under the cotton export program for the 1957-58

marketing year.

You will observe from the announcements that the first opening of offers under

the 1957-58 cotton export program will be held Tuesday, March 19, 1957, at 3: 45

p. m., central standard time. Prior to the said opening date of March 19, 1957,

there is a scheduled opening under our current announcement NO-C-8 on Tuesday, March 5, 1957. Since, however, Tuesday, March 5, 1957, is observed in

New Orleans as a local holiday because of Mardi Gras, and local conditions preclude our conducting business on that day, instead of opening offers under announcement NO-C-8 on March 5, 1957, we shall pursuant to announcement

NO-C-8, open offers on the following business day, that is, Wednesday, March 6,

1957, at 3: 45 p. m., central standard time.

A partial catalog of the 1955 cotton will be available for the opening on Tuesday, March 19, 1957.

We direct your particular attention to the offer form attached to announcement NO-C-9. Since we shall open offers March 19, 1957, and thereafter on

every other Tuesday under both announcements NO-C-8 and NO-C-9, it is

imperative in submitting your offers that you specify under which program

you are submitting an offer. If our offer form is used, the caption and terms

thereof are clear, and should you submit bids by telegram you must be certain to

specify the program under which the offer is made. Commodity Credit Corporation will not permit transfer of sales from one program to another.

We have revised and are enclosing specimen offer form for use under announcements NO-C-8 and CN-EX-2 which clearly specifies that offers submitted

thereon are under the said announcements for the 1956-57 cotton export program. Any offers received which do not specifically state the program under

which they are made will not be considered. We shall furnish you prior to the

opening of March 19, 1957, supply of the two offer forms.

Very truly yours,

F. P. BIGGS,

Director, CSS Commodity Office.

OFFER FORM—ANNOUNCEMENTS NO-C-8 AND CN-EX-2 1956-57 COTTON EXPORT

PROGRAM •

[CCC will not permit transfer of sales from one program to the other]

Mail address of firm 

Date 

Mr. F. P. BIGGS,

Director, CSS Commodity Office,

Commodity Credit Corporation, New Orleans, La.

GENTLEMEN: Pursuant to the terms of your announcement No. NO-C-8, dated April 17, 1956, and announcement CN-EX-2, and any amendments thereto, we submit our offer to purchase from Commodity Credit Corporation 

bales of upland cotton at the price (s) specified below:

Grade and staple

code

Growth (1

or 9)

State code

(growth 9

only)

Warehouse

number

Warehouse

location Bales

Bid price

(cents per

pound)

96-161 0 - 73 - pt. 9 - 9
60

We agree to submit promptly final settlement statement with certified reweight

sheets and classification certificates, if applicable, and outbound bills of lading,

or ocean bills of lading, as the case may be, in accordance with the provisions

of your announcements.

Draw through 

(Bank)

(Address)

(Offeror)

By 

Title 

UNITED STATES DEPARTMENT OF AGRICULTURE,

COMMODITY STABILIZATION SERVICE,

New Orleans, La., February 19, 1957.

ANNOUNCEMENT NUMBER NO-G-9

SALE OF UPLAND COTTON

(Cotton export program 1957-58 marketing year)

To all Catalog Holders and Other Interested Parties:

GENTLEMEN: Commodity Credit Corporation (hereinafter referred to as

"CCC") has issued Announcement CN-EX-4 announcing a Cotton Export Program under which it will make available for sale, for export after August 15,

1957, upland cotton acquired in price support operations and listed in the catalog.

The CSS Commodity Office, New Orleans, Louisiana, announces that it will consider for CCC offers to purchase cotton for export under Announcement CNEX-4. Cotton available for sale is listed in the catalog. This announcement

and Announcement CN-EX-4 contain the terms and conditions under which the

cotton will be sold and exported under the Cotton Export Program.

Sales of cotton hereunder cannot be transferred to the 1956-57 cotton export

program (CN-EX-2 and No-C-8), or vice versa.

1. Offers will be opened Tuesday, March 19, 1957, at 3 : 45 p. m., Central Standard Time. The next opening will be on Tuesday, April 2, 1957, at 3 : 45 p. m.,

Central Standard Time, and thereafter offers will be opened every other week on

Tuesday at 3: 45 p. m., Central Standard Time. If Tuesday is a holiday, offers

will be opened on the following business day. Offers received after 3:45 p. m.,

Central Standard Time, on a particular opening day will not be considered. Offers

ineligible for consideration because of late receipt may be resubmitted for the

next opening. All offers by letter must be submitted directly by the offeror or

a full-time employee of the offeror to the undersigned on forms identical to the

specimen form attached hereto. Offers must be signed by an employee of the

offeror who has contractual authority. All telegraphic offers filed direct by the

offeror or a full-time employee of the offeror and containing all essential information will receive equal consideration with signed offers; however, it is required

that a confirmation of such telegraphic offer signed by an employee of the offeror,

who has contractual authority, be submitted promptly. Either a properly completed prescribed offer form marked "Confirmation of Telegraphic Offer" or a

confirmation copy of the offer telegram signed by an employee of the offeror,

who has contractual authority, will be accepted as confirmation. Offers other

than telegraphic offers should be submitted in plain sealed envelopes addressed

to the undersigned and marked "Offer under Announcement Number NO-C-9,

To be opened 3 : 45 p. m., Central Standard Time 

(date on which offers to be opened)." This envelope should be enclosed in a

regular envelope reflecting the return address of the offeror.

2. All offers must show in the space provided therefor a firm offer in cents

per pound for the cotton, in the warehouse or compress where located. No

charge for compression will be added to our invoice. Basis offers will not be

considered. Alternate offers will not be considered. Offers which contain a

• time limit for acceptance will not be considered.

3. Separate offers must be submitted on cotton described in the catalog as

growth 1 and growth 9. The offeror must insert the growth number in the

space provided on the offer form in listing the cotton on which offer is submitted.

Offers will be considered and successful offerors notified by wire as soon as

possible after opening of offers. We reserve the right to accept offers either

in whole or in part. We also reserve the right to reject any and all offers in

4
61

their entirety. All offers of a purchaser submitted for a particular opening on

growth 1 cotton will be consolidated and any acceptance in whole or in part

will be made under 1 sale; similarly, all offers of a purchaser submitted for

a particular opening on growth 9 cotton will be consolidated and any acceptance

in whole or in part will be made under 1 sale.

4. (a) The cotton will be invoiced on receipt weights and on the basis of the

classification of the cotton as listed in the catalog. If the cotton is covered

with cotton bagging, the cotton will be invoiced at seven (7) pounds more than

the receipt weight. If the cotton is covered with bagging material used under

the Experimental Bale Cover Program sponsored by the National Cotton Council,

the cotton will be invoiced at receipt weight plus the number of pounds shown by

the Program bale tag to be necessary to "adjust to normal gross weight" under

the Experimental Bale Cover Program. Delivery and payment shall be made

by sight draft with invoice and warehouse receipts attached unless (1) the sale

is a credit sale to be applied against a Credit Sales Agreement entered into

pursuant to Announcement No. GSM-1; or (2) cotton is being delivered under

a barter contract entered into by CCC. Financial arrangements and delivery

• of warehouse receipts on credit sales will be in accordance with the Credit Sales

Agreement entered into pursuant to Announcement No. GSM-1. Delivery under

a barter contract will be in accordance with the terms of such contract. On

offers accepted after August 15, 1957, drafts will be drawn as soon as possible

after acceptance. On offers accepted prior to August 16, 1957, drafts will not

be drawn prior to August 16, 1957, except as follows:

(1) If the purchaser enters into an agreement with CCC and a bank acceptable to CCC under which the bank will receive, handle, and control warehouse

receipts in such a manner as to preclude movement of cotton into domestic

consumption or export prior to August 16, 1957, the draft will be drawn immediately, and the purchaser may have the cotton sampled, processed for shipment, moved from one warehouse to another, and otherwise handle the cotton

except for delivery into domestic or export channels prior to August 16, 1957.

(2) If the purchaser desires to obtain samples from cotton purchased from

CCC on offers accepted by CCC prior to August 16, 1957, but does not desire to

move the cotton from the warehouse in which stored, upon request and identification of the lots from which the samples are desired by the purchaser and establishment of a letter of credit in form and by a commercial bank acceptable to

CCC in an amount at least equal to the invoice value of the cotton against which

CCC may draw, CCC will deliver to the bank in which the letter of credit is

established warehouse receipts and invoice covering the cotton attached to a

draft payable by the bank on August 16, 1957. Upon receipt of such letter of

credit, a tag list covering the lots from which the purchaser desires samples will

be forwarded to the purchaser. Warehousemen will be furnished instructions

that, upon presentation of such tag list by the purchaser, they may sample and

otherwise process the cotton for shipment (but not ship prior to August 16,

1957) as directed by the purchaser.

In the event there is undue delay by the warehouseman in furnishing samples

of cotton or in shipping cotton when ordered or in the event the warehouseman

makes excessive charges for handling and delivering the cotton, upon written

request by the purchaser supported by evidence satisfactory to CCC with respect

to such unnecessary delays or excessive charges, CCC will amend the terms of

sale from an "in store" deliyery to delivery f. o. b. cars or trucks at the bid

price plus the additional cost to CCC, as determined by CCC, occasioned by the

change in terms of sale. In the event the terms are amended, the amended terms

shall apply to all sales to the purchaser under this program in such warehouse

after the change is authorized until the conditions responsible for the change

in the terms of sale have been corrected by the warehouseman. Payment for

the cotton shall be made in accordance with instructions from CCC.

(b) Final settlement shall be effected on all cotton included in a sale and

shall be based on (1) reweight,s of the cotton at the warehouse where the cotton

is stored at time of sale, with adjustment for other than jute or sugar bagging,

as provided in 4 (a) above, regardless of whether a gain or loss is shown, and (2)

the classification of the cotton as shown in the catalog unless the offeror has all

of the cotton in a sale or, if he so elects, all of the cotton of one growth of any

one grade and staple in one sale in a particular warehouse reclassed by a Board

of Cotton Examiners of the United States Department of Agriculture, in which

case final settlement shall be based on the reclassification of such cotton. All

expenses incident to reweighing and reclassification shall be for the account of

the purchaser.
62

(c) The purchaser shall furnish within ninety (90) days after the date warehouse receipts covering cotton purchased are made available to the purchaser

upon payment of sight draft drawn by CCC, unless such time is extended in

writing by the undersigned, a final settlement statement in prescribed form,

together with claim on Form CSS-21 for amount due the purchaser or remittance

payable to CCC. The final settlement statement shall be supported :

(1) Original and one copy of certified reweight sheet, signed by the superintendent or manager of the compress or warehouse storing the cotton at time of

sale, reflecting the gross reweight of each bale of cotton on a particular sale.

All cotton in a warehouse sold as one grade and staple must be on a separate

reweight sheet from other grades and staples. The following certificate executed

by the superintendent or manager of the compress or warehouse must appear on

each reweight sheet:

"This cotton was not resampled or reconditioned before reweighing."

(2) If final settlement is to be based on reclassification of the cotton, Form A

Classification Memorandum, Form CN-378, Record Sheet, or such other classification documents, as may be acceptable to CCC, of the Board of Cotton Examiners of the United States Department of Agriculture serving the territory in

which the cotton is stored which reflect the classification under the same tag

numbers as sold by CCC. Separate classification documents shall be furnished

for and identified to each tag list under each sale and if there is more than one

grade on a tag list a separate classification sheet must be furnished for each

grade. Review classification will be accepted only if (1) such review covers all

of the cotton of one growth of any one grade and staple in one sale in a particular warehouse which was reclassed, and (2) the request for the review is

received by the appropriate Board of Cotton Examiners within 10 calendar days

from the date shown on the classification form covering the reclassification.

(d) If the purchaser has the cotton reclassed, representative samples from

each bale of the cotton must have been drawn from each side of the bale and

forwarded in accordance with instructions from the undersigned directly to the

Board of Cotton Examiners by the warehouse in which the cotton was stored as

of the date of sale, except that upon approval in writing by the undersigned the

samples may be drawn by any mutually agreeable warehouseman, and the Board

classing the samples must note on the Classification Memorandum that samples

were received direct from warehouse.

(e) In computing the final settlement on bales based on reclassification of the

cotton, the sales price for grades and staples reflected on the reclassification

sheets which differ from the grades and staples reflected on the invoices will

be adjusted on the basis of the average of the quoted average premiums and

discounts of the fourteen (14) designated spot markets, except that adjustments

(1) for 1%6" staple length shall be based on the average difference between

7A" ; and 1 46" in those markets which quote both staples, (2) for staple lengths

from 1%2" through 114" shall be based on the average difference between 1/126"

and the applicable staple length in the Memphis and Greenwood spot markets,

and (3) for staple lengths longer than 114" shall be based on the value determined by CCC. Adjustments for those staple lengths not quoted in each of the

fourteen markets will be made to the fourteen markets. Premiums and discounts

for the last ten market days preceding the week in which the buyer's offer was

opened will be used in making adjustments. Splits in the white grades will be

adjusted by one-half the quoted difference betwgen the designated and next

higher grade, and the light spots and light grays will be adjusted by one-half

the quoted difference between the designated spotted or the gray grade and

the corresponding white grade.

(f) In the event any of the cotton upon reclassification is classed as "below

grade," such bales may be rejected by the purchaser and CCC will accept drafts

with warehouse receipts attached for such bales drawn in an amount equal to

the amount of the invoice for such bales.

5. CCC will deliver warehouse receipts which may be either insured receipts

or uninsured receipts. The warehouse receipts contain the obligation of the

warehouseman to deliver the bales of cotton represented thereby in good condition. CCC will not recognize any liability to the purchaser for loss due to

damage. Therefore, the purchaser must look to the warehouseman for any loss

due to damage. No warranty is made as to condition, growth, or area of

production.

6. Storage charges will be paid by CCC through date of transfer of the

receipts.

"st

9
63

7. The buyer agrees to route cotton purchased in accordance with routing

instructions to be furnished by CCC with invoice and in such manner as to

protect CCC freight bills and not just outbound over the road named. Any

routing which does not protect CCC freight bills must be approved by CCC. The

buyer also agrees to furnish to CCC within sixty (60) days after date of bill of

lading, two copies, properly endorsed, of outbound bills of lading with related

tag lists of all such cotton. Such outbound bills of lading are to be endorsed

as follows:

"This is to certify that we have purchased from Commodity Credit Corporation bales of cotton representative of this bill of lading. Freight bills

were not transferred; therefore, transit privileges are waived by us to Commodity Credit Corporation.

Signed

Date /If

If cotton purchased under this Announcement is delivered to steamers or to

consuming establishments in the city where it is stored at the time of purchase,

the purchaser agrees to furnish CCC ocean bills of lading or mill receipts, as

the case may be, together with tag lists of the cotton within sixty (60) days after

date of ocean bill of lading or date of mill receipt.

If railroad bills of lading, ocean bills of lading, or mill receipts, as specified

above, are not delivered to CCC within sixty (60) days after date of bill of lading

or date of mill receipt, or, in the event the cotton is not shipped within eight

(8) months, the buyer shall honor 3-day sight draft for freight bills held by the

CCC covering the bales of such cotton which were shipped by rail to the warehouse issuing the warehouse receipts at their refund value based on shipment

to Group B except on cotton stored at Group B points on which price paid for

expense bills will be agreed to by CCC and purchaser.

8. No Member of or Delegate to the Congress of the United States, or Resident

Commissioner, shall be admitted to any share or part of any contract resulting

from offers submitted hereunder or to any benefit that may arise therefrom, but

this provision shall not be ocnstrued to extend to such a contract if made with a

corporation for its general benefit.

9. The buyer warrants that he has not employed any person to solicit or

secure a contract hereunder upon any agreement for a commission, percentage,

brokerage, or contingent fee, and that no such consideration or payment has been

or will be made. Breach of this waranty shall give CCC the right to annul such

contract or, in its discretion, add to the contract price for the cotton the amount

of such commission, percentage, brokerage, or contingent fee. This warranty

shall not apply to commissions payable by the buyer upon contracts secured or

made through bona fide established commercial or selling agencies maintained

by the buyer for the purpose of securing business.

10. By submitting an offer, the offeror warrants that he has not employed or

utilized any person, firm, or organization which (1) furnished any information

or service which might tend to prevent, limit, or restrict competitive bidding on

cotton hereunder or (2) furnished any assistance to the offeror in the calculation

of prices if such person, firm, or organization has assisted or is assisting other

persons submitting offers hereunder in the calculation of prices.

11. CCC reserves the right to refuse to consider an offer if CCC does not have

adequate information of financial responsibility of offeror to meet contract obligations of the type contemplated in the applicable announcement. If a prospective offeror is in doubt as to Whether CCC is acquainted with his financial responsibility, he should either submit a financial statement to agency prior to making

an offer, or should communicate with the office named in the announcement to

determine whether such a statement is desired in his case. When satisfactory

financial responsibility has not been established, CCC also reserves the right to

consider an offer only upon submission by offeror of an acceptable surety bond

guaranteeing performance of any contract resulting from such offer whether or

not the announcement requires such bond.

12. In submitting an offer under this announcement, the offeror represents and

warrants that he is regularly engaged in the business of buying or selling commodities and for this purpose maintains a business office in the United States,

its Territories, or possessions including Puerto Rico and therein has a person,

principal, or resident agent, upon whom service of judicial process may be had.

CCC reserves the right to determine the eligibility of any offeror.
64

The catalog covering cotton sold under this announcement will, of course, be

revised as necessary and revisions to the catalog will be issued as promptly as

possible.

Interested buyers desiring information as to stock remaining available in the

catalog may telephone this Office (Express 2411, extension 783). This service

will not be available, however, to brokers or others who charge a fee to purchasers

for catalog information.

Very truly yours,

F. P. BIGGS,

Director, CSS Commodity Office.

OFFER FORM—ANNOUNCEMENT NO-C-9 AND CN-EX-4, 1957-58 COTTON-EXPORT

PROGRAM

(CCC will not permit transfer of sales from one program to the other)

Mail address of firm 

Data 

MT. F. P. BIGGS,

Director, CSS Commodity Office,

Commodity Credit Corporation,

New Orleans, La.

GENTEMEN : Pursuant to the terms and conditions of your Announcement

Number NO-C-9 dated February 19, 1957, and Announcement CN-EX-4, and

any amendments thereto, we submit our offer to purchase from Commodity Credit

Corporation bales of Upland cotton at the price ( s) specified below:

Grade and staple

aide

Growth (1

or 9)

State code

(growth 9

only)

Warehouse

No.

Warehouse

location Bales

Bid price

(cents per

pound)

• 

We agree to submit promptly final settlement statement with certified reweight

sheets and classification ceritficates, if applicable, and outbound bills of lading,

or ocean bills of lading, as the case may be, in accordance with the provisions of

your Announcements.

Draw through • 

(Bank)

(Address)

(Offeror)

By • 

Title 

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 9, 1957.

1957 CROP OATS, BARLEY, RYE, AND GRAIN SORGHUM SUPPORT RATES ANNOUNCED

The U. S. Department of Agriculture announced today that price supports for

1957-crop oats, barley, rye, and grain sorghums will be at levels reflecting 70

percent of the parity price as of January 15, 1957. These 1957 supports are a

lower percent of parity than for 1956 crops of these four grains.

The national average dollars and cents supports for 1957 are:

Oats 60 cents per bushel for Grade No. 3.

Barley 94 cents per bushel for Grade No. 2 or better (except mixed barley).

Rye $1.15 per bushel for Grade No. 2 or better, or

No. 3 on test weight only.

Grain Sorghums $1.83 per hundredweight for Grade No. 2 or better

(except mixed grain sorghums).
65

Changes in the 1957 program from 1956 program provisions include broadening eligibility requirements for oats and restrictions on price support for any of

these grains produced in violation of restrictive leases on Federally owned lands.

For the first time, the 1957 detailed program provisions for oats will provide

appropriate premiums and discounts from Grade No. 3 to reflect differences in

quality. The 1957 program also provides that garlicky oats will be eligible for

price support.

Other eligibility requirements and operating provisions are substantially the

same as for 1956 crops. Support will be carried out through Commodity Credit

Corporation by means of farm and warehouse-stored loans and purchase agreements. These will be available through county Agricultural Stabilization and

Conservation offices from harvest time through January 31, 1958. Oats, barley,

and rye loans will mature on April 30, 1958, and grain sorghum loans on March

31, 1958. Earli r maturity dates may be set for some States because of local

storage conditions or early harvests.

Any of these grains produced in violation of leases restricting production of

surplus crops on federally owned lands will not be eligible for price support

in 1957.

Minimum eligibility requirements for obtaining price support on these four

grains follow:

Oats _ Grade No. 3 or better, or Grade No. 3 garlicky or better,

Barley Grade No. 4 or better, or Grade No. 4 garlicky or better.

Grain Sorghums Grade No. 4 or better, Grade No. 4 smutty or better, or

Grade No. 4 discolored or better, and containing not

more than 13 percent moisture.

Rye_ Grade No. 2 or better, or Grade No. 3 because of test

weight only, and containing not more than 1 percent

ergot.

The national average support rates announced today compare with support

prices for 1956 crops of 65 cents per bushel for oats, $1.02 per bushel for barley,

$1.27 per bushel for rye, and $1.97 per hundredweight for grain sorghums. These

support prices were at 76 percent of parity as required by provisions of the

Agricultural Act of 1956.

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 9, 1957.

USDA ANNOUNCES ACTION ON PRICE SUPPORT FOR 1957-CROP OILSEEDS

The United States Department of Agriculture today announced the following

actions on price support for 1957-crop oilseeds:

(1) Soybeans will be supported at a national average price of $2.09 per bushel,

which is 70 percent of the January 15, 1957, parity price of $2.98 per bushel.

(2) Flaxseed will be supported at a national average price of $2.92 per bushel,

which is 65 percent of the January 15, 1957, parity price of $4.50 per bushel.

• (3) Cottonseed will be supported on a basis to reflect approximately 65 percent

of the January 15, 1957, parity price of $71 per ton average quality seed. Loans

on farm-stored cottonseed will be available at an average of $46 per ton basis

grade (100). Purchase prices to producers will be at an average of $42 per ton

basis grade (100), with appropriate differentials for purchases from ginners to

reflect normal handling costs.

On the 1956 crops, support for soybeans was at a national average price of

$2.15 per bushel, which was 75 percent of the January 15, 1956, parity price;

supriort for flaxseed was at a price of $3.09 per bushel, 70 percent of the January

15, 1956, parity price; and support for cottonseed at a loan rate of $48 per ton,

or at a purchase price of $44 per ton basis grade (100). These supports for

cottonseed reflected about 70 percent of the January 15, 1956, parity price of

$69.40 per ton average quality seed.

Soybeans

Price support on 1957-crop soybeans will be carried out as in the past through

farm- and warehouse-stored loans and through purchase agreements. Loan

and purchase agreements will be available from harvest time through January 31, 1958. Maturity date for loans will be May 31, 1958.
66

Soybeans to be eligible for price support under the 1957 operation must be produced in 1957. Soybeans must grade No. 4 or better and contain not more than 14 percent moisture to be eligible for support. County support rates for soybeans- with premiums and discounts by classes and for differences in quality will be made available later.

Flaxseed

As in previous years, support for 1957-crop flaxseed will be carried out in most

areas through farm- and warehouse-stored loans and through purchase agree- ments. In designated Texas counties where flaxseed is storable for a relatively short period, direct purchases may be the support method. Loan and purchase agreements will be available from time of harvest through October 31, 1957, in Arizona and California, and January 31, 1958, in all other States. Direct purchases, if needed, will be made through July 31, 1957, in Texas counties.

Loans will mature on January 31, 1958, in Arizona and California and on March 31, 1958, in all other.States.

Flaxseed to be eligible for support under the 1957 operation must be produced in 1957. Flaxseed must be grade No. 2 or better. Terminal and county support

rates will be made available later.

Any flaxseed produced in violation of leases restricting production of surplus

crops on federally owned land will not be eligible for price support in 1957.

Cottonseed

There are no major differences in program operations this year as compared

with those for 1956 production. CCC will confine the program to loans to producers on farm-stored cottonseed, at an average of $46 per ton basis grade (100),

and to purchases of cottonseed from producers and participating gins. Purchases from producers will be at an average of $42 per ton basis grade (100)

and from participating ginners at $46 per ton basis grade (100).

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 9, 1957.

PRICE SUPPORT LEVEL FOR 1957-CROP UPLAND COTTON ANNOUNCED

Price support for 1957-crop upland cotton at a minimum level of 28.15 cents

per pound, gross weight, basis Middling 7/8-inch at average location, was announced today by the U. S. Department of Agriculture.

This level of support reflects 77 percent of the current parity price of 36.56

cents per pound for upland cotton. In the event that the minimum level of

support required by law on the basis of the supply percentage as of the beginning

of the next marketing year (August 1, 1957) and the applicable parity price

is higher than the support level announced today, the level of support will be increased accordingly. (Under provisions of law, if producers have not disapproved marketing quotas the minimum level of support for upland cotton varies

with the available supply of cotton as of the beginning of the marketing year

and the applicable parity price. In a referendum on December 11, 1956, cotton

producers approved marketing quotas for the 1957 crop of upland cotton by a

92.4 percent favorable vote.) The support level on Middling 7/8-inch 1956-crop

upland eotton is 29.34 cents per pound, reflecting 821/2 percent of the parity price

as of August 1, 1956.

With marketing quotas in effect, a producer to be eligible for price support

on his 1957-crop upland cotton must comply with the farm acreage allotment for upland cotton established for his farm.

Any cotton produced in violation of leases restricting production of surplus

crops on Federally owned land will not be eligible for price support in 1957. Appropriate differentials will establish the difference between the level of support for Middling 7/8-inch and all other qualities of the 1957-crop upland cotton. The Schedule of Premiums and Discounts containing these differentials will be published later, when other detailed provisions of the program are an- nounced.

The level of support for the 1957 crop of extra long staple cotton also will be announced later.
67

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, JtaV 2, 1956.

SECRETAR.Y BENSON ANNOUNCES $2 PRICE SUPPORT FOR 1957-CROP WHEAT

Secretary of Agriculture Ezra Taft Benson today announced that the national

average wheat price support for 1957 production if quotas are approved in the

July 20 referendum, will be $2 per bushel.

If quotas are not approved, the available support level under legislative provisions will be at 50 percent of parity, or about $1.21 cents a bushel on the basis

of current parity estimates.

These national average support levels will be available in commercial wheat

states for those who comply with their individual farm acreage allotments. Support rates in the 12 noncommercial wheat states, where there are no allotments,

are set by law at levels representing 75 percent of the rates for commercial areas.

National average wheat price support rates for 1956 production, .as announced

by the Department on April 23, are at $2 per bushel—the same level which is

being continued for 1957.

Under the formula of the controlling legislation, and on the basis of the

Department's supply estimates, the indicated minimum national average wheat

price support for 1957 would be at 77 percent of parity. On the basis of the

June 15 parity estimate of $2.42 per bushel. the support level would be about

$1.86 a bushel. However. the Secretary is continuing the support for 1957 at

$2 per bushel under his discretionary authority.

Commenting on today's announcement, Secretary Benson said, "I am glad that

the factors affecting the wheat situation make it possible to hold price supports

at higher levels than the minimum indicated by the legislative provisions.

"It has been possible to increase wheat exports, through aggressive use of the

special authorizations Congress made available. The Soil Bank, through both its

Acreage Reserve and Conservation Reserve programs opens the way for very

substantial production adjustments in the years immediately ahead. We have

turned the corner and expect to start making steady reductions in the huge wheat

surplus."

Background Information.—The determination that minimum wheat support

levels for 1957 production would be at 77 percent of parity under the legislative

formula is based on an estimated "normal supply" of 1 billion 140 million bushels

for the 1957-58 marketing year which begins July 1, 1957. This normal supply

estimate includes estimated 1956-57 domestic utilization of 650 million bushels;

estimated 1957-58 exports of 300 million bushels; and a 20-percent allowance

for carryover reserves of 190 million bushels.

The actual total supply estimated to be available for the 1957-58 year is

1 billion 668 million bushels, including an estimated carryover of 995 million

bushels on July 1, 1957; 1957 production of 668 million bushels (reflecting fully

effective Soil Bank operations for that year) ; and imports of 5 million•bushe1s.

It is estimated that 225 million bushels of wheat will still be in the wheat setaside. Set-aside wheat is not counted in calculating price support levels. Deducting the 225 million bushels from the 1 billion 668 million bushels in the actual

supply estimate leaves 1 billion 443 million bushels as the supply level for determining price supports. This total is 126 percent of the determined "normal

supply" level, and under the legislative formula would call for minimum supports

for 1957 wheat at 77 percent of parity. Under the controlling legislation, price

supports for wheat are to be established within a range of 75 and 90 percent of

parity.

The national average price support of $2 per bushel for 1956-crop wheat

represents approximately 82% percent of current parity.

UNITKD STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, December 18, 1956.

1957 FLUE-CURED TOBACCO SUPPORT RATES ADJUSTED TO CURRENT MARKET

DEMANDS

Major changes in the 1957 flue-cured tobacco price-support program—changes

which are expected to discourage production of varieties viewed as undesirable

under present demand conditions and to encourage an increase in the proportion
68

of the crop having characteristics currently in demand—were announced today

by the United States Department of Agriculture.

Today's changes, which are in accord with recommendations of grower organizations and industry leaders in the flue-cured tobacco area, are as follows:

(1) 1957-crop flue-cured tobacco of varieties "139," "140," and "244" irrespective of grade, will be supported at one-half the support rates for comparable

grades of other varieties.

(2) Price-support rates for individual grades of all flue-cured varieties will

be adjusted to reflect current demand patterns. This action will support a program• to encourage growers to follow cultural practices that will increase the

proportion of the crop which has desirable flavor and aroma characteristics.

The three varieties viewed as currently undesirable have been classified

by Federal and State scientists of the flue-cured tobacco area as "low to lacking

in flavor and aroma, generally of light body, and/or currently with poor acceptance in the trade."

These varieties, particularly "139," represented a substantial proportion of

the 1956 flue-cured tobacco crop. The increased production came just at a time

when cigarette consumption was shifting from nonfiltered to filtered cigarettes.

Since these varieties tend to produce a large proportion of tobaccos that currently have an estimated market value of only about one-half that of varieties

high in flavor and aroma, their rate of price support is being reduced accordingly.

Another important consideration relates to exports. Normally about onethird of our flue-cured tobacco is exported, and this market historically has

been based on the superior aroma and flavor of United States production. The

three varieties designated for the one-half support rates are lacking in the flavor

and aroma required by practically all foreign buyers of our tobacco.

While the Department views a reduction in price-support rates for these three

varieties as necessary in the present situation, it recognizes that increased production of these varieties is only one of the causes of the recent increase in the

volume of production of less desirable flue-cured tobacco. In the past few years

the trend toward higher yields, brought about by heavier fertilization and the

setting out of an increased number of plants per acre, has resulted in increased

production of less desirable tobacco of many varieties. Flue-cured tobacco

growers are urged, therefore, to take whatever further steps are needed to produce only the types of tobacco desired by domestic and export users. These steps

include changes in production practices such as wider spacing, lower topping, and

removal of suckers.

Each grower of flue-cured tobacco to be eligible for price support on his crop

will be required to establish prior to harvesting whether he has produced any

tobacco of varieties "139," "140," or "244." Any false representation will be

subject to penalty as fraud. If he has produced tobacco of any of these varieties

the marketing card issued for his farm will identify the tobacco as eligible only

for the one-half support rate. For example, if the support rate for a comparable

grade of tobacco of other varieties is $55 per hundred pounds, the support rate

for tobacco of the same grade of any of these three varieties would be $27.50 per

hundred pounds.

Department officials emphasized that price-support rates for individual grades

of flue-cured tobacco, without regard to variety, will be adjusted to reflect

current demand. This will mean increases in the price-support rates for the

heavier bodied orange and red grades, offset by reductions in the L grade support

rates and by substantial reductions in the LL and KL grade rates.

Department officials also commented today on a possible development related

to production history, if changes were made in production control features of

the tobacco program. There has been general discussion of the possibility of

adding poundage control to the acreage limitations under the present program.

If tobacco growers and their representatives decide to seek such program modification, the Department would suggest to Congress that the necessary legislation

also make provision to exclude 1956 and 1957 yields per acre in establishing the

poundage allotments for individual farms.

This suggestion for excluding 1956 and 1957 yields would be made to avoid

rewarding, on a permanent basis, growers who have utilized seed varieties and

cultural practices to obtain the high yields per acre which have contributed so

materially to present surpluses—and to disproportionate volumes of tobaccos for

which the demand has dropped sharply.
It)

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 9, 1957.

USDA CONTINUES CURRENT DAIRY SUPPORT PRICES FOR ANOTHER YEAR

The United States Department of Agriculture today announced that current

dollars-and-cents support prices for manufacturing milk will be continued at the

present $3.25 per hundredweight for manufacturing milk (3.95 butterfat test)

and 58.6 cents per pound for butterfat through the 1957-58 dairy marketing year

which begins on April 1.

These support prices are an estimated 83 percent of the parity equivalent

• price for manufacturing milk and 80 percent of the parity price for butterfat as

of early 1957. Because of increases in the parity prices since a year ago, the

same dollars and cents represent slightly lower percentages of parity for the

1957-58 marketing year than the current 84 and 81 percent levels.

The buying prices for butter, which are set to reflect the support price for

• butterfat, will be slightly higher per pound after March 31. This change is

needed to assure an average price to producers for butterfat fully equal to the

support price during the coming heavy-producing summer months. Revisions

have also been made in the area buying prices of butter to bring them more

nearly in line with the market price structure. Specific area buying prices will

be in effect for the deficit butter-producing areas of the Northeast, South, Southwest, and California. .Specific prices will continue to apply to metropolitan New

York, Seattle, and San Francisco as designated markets. To eliminate minor

inconsistencies in present butter-buying prices at midwestern points, Chicago

will be discontinued as a designated market. Buying prices at points other than

those for which specific prices are announced will continue to be the price at the

designated market (New York, Seattle, or San Francisco) named by the seller,

less 80 percent of the lowest published domestic carload rail freight rates in

effect on February 1, 1957, from the point to the designated market.

The 1957-58.buying price for Cheddar cheese is the same as for the current

program.

The buying price for spray nonfat dry milk also is unchanged. The buying

price for roller nonfat dry milk will be lowered one-fourth cent per pound because of the downward trend in production and use of this product.

Dairy product purchase prices, set to reflect the national average support prices

for manufacturing milk and butterfat, will be as follows. effective April 1:

[Cents per pound]

1956-57

buying price

1957-58

buying price

Butter:

United States grade A or higher:

New York, N. Y., and Jersey City, and Newark, N. J 

Seattle, Wash., and San Francisco, Calif 

California 

• Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, Maine 

Arizona, New Mexico, Texas, Louisiana 

Mississippi, Alabama, Georgia, Florida, South Carolina 

United States grade B: 2 cents per pound less than the United States

grade A price.

60. 25

59. 5

(I)

60. 5

59. 75

59. 75

60.5

59.25

59.5

Cheddar cheese: United States grade A or higher, standaroil moisture basis_ _ 35 35

Nonfat dry milk:

Spray process:

Barrels and drums 16 16

Bags 15. 15 15. 15

Roller process:

Barrels and drums 14.25 14

Bags 13. 4 13. 15

1 Designated market price less freight factor.

In addition to meeting the standards for U. S. Extra Grade, nonfat dry

milk purchased must contain not more than 3.5 percent moisture, and have a direct

microscopic clump bacteria count of not more than 300 million per gram as deter-

• mined by USDA laboratory test.

Grade B butter and roller nonfat dry milk will continue to be purchased

during the 1957-58 marketing year. Consideration will be given to discontinuing

purchases of these products after March 1958.
70

The 1957-58 support price of $3.25 per hundredweight is for manufacturing

milk of a test equal to the national and yearly average butterfat test, which in

recent years has approximated 3.95 percent. A corresponding price for manufacturing milk of 3.5 percent butterfat test (computed in direct ratio to butterfat

content) would be $2.88 per hundredweight. Many plants pay on the basis of

3.5 butterfat test for milk.

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, February 18, 1957.

NATIONAL AVERAGE SUPPORT FOR 1957-CROP DRY EDIBLE BEANS To BE $6.31 PER

100 LBS.

The United States Department of Agriculture announced today that the national average support price for 1957-crop dry edible beans will be $6.31 per

hundred pounds. This is 68 percent of the January 15 parity price of $9.29

per hundred pounds.

Price support for 1956-crop dry edible beans also was at a national average

price of $6.31 per hundred pounds, which was 70 percent of the February 15, 1956,

parity price for beans.

The support price for the 1957 crop is at a level intended to encourage movement of bean stocks into domestic and export channels and at the same time

discourage overplanting of the 1957 crop. Both 1955 and 1956 crops produced

larger quantities of dry edible beans than commercial domestic and export

outlets could absorb. Approximately 11 percent of the 1955 production was

taken over by the Commodity Credit Corporation under price support. This

was down from the 17-percent takeover from 1954 production, but the total of

3,040,186 hundredweight of 1956-crop dry edible beans put under price support

through January 15, 1957, is up from the 2,757,134 hundredweight from the

1955-crop put under support through the same date a year ago.

The supported classes of dry beans produced in 1957 will be the same as

those under the 1956 program and will include pea and medium white, great

northern, small white, flat small white, pink, small red, pinto, red kidney, large

Jima, and baby lima beans. Support rates by classes and by areas where necessary will be announced later.

Beans will be supported through loans and purchase agreements, which will be

available from harvesttime through i January 31, 1958. The maturity 'date for

loans and agreements will be April 30, 1958, except that an earlier maturity

date may be established for particular States.

As a result of heavy movement of dry edible beans out of the CCC inventory

in recent months, the uncommitted stocks in CCC hands now are at zero. On January 1, 1956, CCC had approximately 1.1 million hundredweight of beans on

band. This quantity, acquired from previous crop years, plus 1.85 million hundredweight of 1955-crop dry edible beans taken over under price support, has

been disposed of.

UNITED STATES DEPARTMENT OF AGRICULTURE •

WASHINGTON, February 18, 1957.

PRICE SUPPORT FOR HONEY To BE AT 9.7 CENTS A POUND FOR 1957 SEASON

The United States Department of Agriculture announced today that honey

will be supported during the 1957 marketing season, which starts April 1, at a

national average price of 9.7 cents a pound. This is 70 percent of the current

parity price adjusted to the 60-pound container level. For the 1956 crop of honey

the national average support level also was 9.7 cents per pound, equal to 70 percent of parity.

Price support for honey within a range of 60 to 90 percent of parity is mandatory under the Agricultural Act of 1949, as amended.

The program for 1957-crop honey is substantially the same as the one in effect

last year. It provides for farm-storage loans and purchase agreements on

U. S. Grade C or better extracted honey which is stored in 60-pound or larger containers in approved storage and is not objectionable in flavor. Beekeepers or

cooperative associations of beekeepers can apply for loans or purchase agree-
71

ments directly to the Agricultural Stabilization and Conservation (ASC) county

offices.

In announcing the honey price-support program, the Department again urges

beekeepers to increase their efforts toward utilizing bees in pollination of important pasture, seed, vegetable, and fruit crops on a remunerative basis. The

honey price-support program authorized in the Agricultural Act of 1949 is intended to extend interim financial assistance to beekeepers, thus providing them

an opportunity to market their production of honey in an orderly manner. The

Department also emphasizes the importance of continued and intensified activity

in improving the marketing and distribution of honey by all elements in the

industry.

Detailed information regarding the program, including support prices by

classes of honey and areas of production, will be available at ASC county offices

in the near future.

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON, November 20, 1956.

SECRETARY BENSON ANNOUNCES 1957-CROP RICE ACREAGE, QUOTA, AND PRICESUPPORT PROGRAMS

Secretary of Agriculture Ezra Taft Benson today announced the following

actions on 1957-crop rice:

1. Proclaimed a national acreage allotment of 1,652,596 acres, the minimum

permitted by law.

2. Proclaimed marketing quotas for the 1957 crop of rice.

3. Determined the "certificate" or "two-price" marketing program authorized

by the Agricultural Act of 1956 will not be in effect for the 1957 crop.

4. Set the minimum national average support price at $4.43 per hundredweight,

which is 80 percent of current parity.

5. Set December 11, 1956, as the date for a referendum to determine producer

approval or disapproval of quotas.

Commenting on these actions, Secretary Benson said, "Title V of the Agricultural Act of 1956 authorizes a nonmandatory two-price program if the Secretary

of Agriculture determines that such a program is 'administratively feasible and

in the best interest of rice producers and the United States.' On the basis of a

Department study I have not been able to make such a determination. For this

reason, I am continuing the present type of price-support operation for next

year's rice crop.

"While supplies of rice have been materially reduced through aggressive foreign marketing under various programs of the United States Department of

Agriculture during the last several months, the supplies are still in excess of anticipated use and require establishing an acreage allotment at the minimum and

the proclamation of marketing-quota controls for the third successive year. The

estimated supply situation, however, permits setting the support level at 80

percent of current parity."

If marketing quotas are approved in the December 11 referendum, price support will be available to eligible producers at not less than a national average

price of $4.43 per hundredweight. Individual farm marketing quotas for farms

staying under their acreage allotments will be the actual production from the

farm acreage allotment, as apportioned from State allotments which will be announced in a few days. Producers who remain within their acreage allotments

will be eligible for price support on their entire production. Growers who exceed

their farm acreage allotment will be subject to marketing quota penalties

amounting to 50 percent of parity (as of June 15, 1957) per hundredweight of

their excess production, and none of their production will be eligible for price

support.

If marketing quotas are disapproved, there will be no restrictions on rice

marketings. Acreage allotments will remain in effect as a condition of eligibility

for price support at the 50 percent-of-parity level required by law when quotas

are disapproved.

1957 acreage allotment

The 1957 national acreage allotment of 1,652,596 acres is the minimum fixed

by law and is the same as the final allotted acreage for the 1956 rice crop. If

the allotment had been determined on the basis of the law's supply formula, the
72

1957 acreage would have been reduced to 1,197,802 acres. (The 1955 allotted

acreage was 1,928,334 acres.)

The national allotment with average yields will produce a crop of about

41,325,000 hundredweight, after allowance for acreage placed in the Acrea,ve and

Conservation Reserves of the Soil Bank. This added to the estimated August

1, 1957, carryover of 17 million hundredweight would make a total supply of more

than 58 million hundredweight, which is substantially more than estimated

domestic consumption and exports during the coming 1957-58 marketing year.

The national acreage allotment will be apportioned among the 13 rice-producing States in the same proportion as they shared in the total acreage allotted

in 1956. Individual farm allotments will reflect varying plantings during the

5-year base period.

Rice marketing quotas

Under provisions of law, the Secretary of Agriculture is required to proclaim

not later than December 31, marketing quotas for rice for the coming crop (1957)

whenever the total supply for the preceding marketing year (1956-57) exceeds

the normal supply by more than 10 percent. The total supply of rice for 1957

marketing quota determination is 58.1 percent above the normal supply figure

and 43.7 percent above the marketing quota level.

(For marketing quota determination, the total supply is estimated at 81,190,000

hundredweight, consisting of a 1956 crop of 46,290,000 hundredweight, a carryover on August 1, 1956 of 34,600,000 hundredweight, and imports of 3°0,000

hundredweight. The normal supply is 51,355,000 hundredweight, based on an

estimated domestic consumption of 25,854,000 hundredweight and exports of

20,832,000 hundredweight, with a carryover allowance of 10 percent.)

Marketing quota referendum

At least two-thirds of the producers voting in the referendum December 11

must approve quotas for the 1957 crop before they can be put in effect. Eligibility to vote and locations of polling places will be made available by county

Agricultural Stabilization and Conservation offices in the 13-State area in which

rice is grown. Producers will be notified of their farm acreage allotments

before the referendum.

Rice marketing quotas were in effect for the 1955 and 1956 crops. In 1956,

producers approved rice quotas by an 84.6 percent favorable vote (9,008—yes

and 1,637—no). In 1955, the favorable vote was 90.2 percent (15,911—yes and

1,736—no).

1957 rice price support

If marketing quotas are approved by producers, price support will be available

to eligible rice producers at a national average rate of not less than $4.43 per

hundredweight, which is 80 percent of the October 15, 1956, parity price of $5.54

per hundredweight. The 80-percent-of-parity support level is set in accordance

with provisions of law providing for a variable support level on the basis of the

estimated supply of rice. (This range is from 75 to 90 percent of parity.) The

supply of rice is now estimated at 121.6 percent of the normal supply for the

1957-58 marketing year. This indicates a minimum support level of 80 percent

of current parity.

(For 1957 price-support determination, the 48,059,000 hundredweight normal

supply figure for the 1957-58 marketing year is based on estimated domestic

consumption of 25,690,000 hundredweight during the 1956-57 marketing year,

estimated exports of 18,000,000 hundredweight during the 1957-58 marketing

year, plus a 10-percent carryover allowance of 4,369,000 hundredweight. The

total supply figure for price-support purposes is also for the coming marketing

year (1957-58) instead of the preceding one as used for marketing quotas. For

price support, the total supply is estimated at 58,425,000 hundredweight, the

same as the supply indicated on the basis of 1957 acreage allotment plus the

August 1, 1957 carryover. This is 121.6 percent of the normal supply figure.)

The minimum support rate of $4.43 per hundredweight for 1957-crop rice

as announced today will not be reduced but will be increased if a combination of

the rice parity price as of August 1, 1957 (the beginning of the marketing year)

and the supply percentage as of that date requires a higher level of support.

The price-support program for the 1957 crop will be carried out through loans

and purchase agreements as under past programs. Loans and purchase agreements will be available through January 31, 1958. The loans mature April 30,

1958, unless an earlier date is approved by USDA.

lk
I

73

At present, USDA has committed all CCC stocks of rice against either actual

sales or export programs primarily under Public Law 480, title I, for future

delivery. A year ago, CCC had approximately 13,000,000 hundredweight of rice

in its inventory.

The support rate for 1956-crop rice is $4.57 per hundredweight, 821/2 percent

of parity; for 1955-crop rice it was $4.66 per hundredweight, 85 percent of parity;

and for 1954-crop rice, $4.92 per hundredweight, 90 percent of parity.

1957 State acreage allotments

State rice acreage allotments for 1957 and the final allotments for 1956 are

as follows:

[Acres]

Apportion- Apportionment Total ment Total

State of 1957 allotted State of 1957 allotted

national acreage national acreage

rice

allotment

in 1956 rice

allotment

in 1956

Arizona 229 229 South Carolina 2,846 2,847

Arkansas 398,890 399,084 Tennessee 517 517

California 299,674 299,820 Texas 422,185 422,390

Florida 956 957

Illinois 20 20 Total apportioned to

Louisiana 474,863 475,094 States 1, 651, 596 1, 652, 399

Mississippi 46, 660 46, 683 Uaapportioned national reMissouri 4,578 4,580 serve 1,000 197

North Carolina._ 29 29

Oklahoma. 149 149 United States total_. _ 1,652, 596 1, 6.52, 596

UNITED STATES DEPARTMENT OF AGRICUTURE

WASHINGTON, November 14, 1956.

SECRETARY BENSON ANNOUNCES PRICE SUPPORT AND RELATED CORN PROGRAM

DETERMINATIONS

Secretary of Agriculture Ezra Taft Benson today announced price support

levels and related determinations which would apply under alternate corn

programs for 1957 production.

The U. S. Department of Agriculture announced on Friday, November 9,

that corn growers would vote in a referendum December 11 to determine

whether Soil Bank corn base acreages or corn acreage allotments would be

used in the 1957 program.

If two-thirds or more of the farmers who vote in the referendum favor base

acreages, they will be in effect next year. If more than one-third favor acreage

allotments, they will be in effect.

The Department also announced on Friday that the national corn acreage

allotment for the 894 designated commercial corn-producing counties would

be 37,288,889 acres, if allotments are used. The corn base acreage for the same

commercial counties, as set by the controlling legislation, would he 51 million

acres.

The further determinations announced today are1. If the base acreage program is approved, 51,000,000 acres, price support

will be available in the commercial counties at a national average of $1.31

per bushel.

2. If the acreage allotment program is approved, 37,288,889 acres, price support will be available in the commercial counties at a national average of

$1.36 per bushel. This price support level is determined by the formula of the

law which applies when acreage allotments for corn are in effect.

3. There are no plans to offer price support for 1957 corn production which

is not in compliance with acreage allotment or Soil Bank provisions. Such

noncompliance price supports were available in 1956 because of special conditions.

4. The unit rate for determining payments under the corn Acreage Reserve

program of the Soil Bank in 1957 will be 90 cents per bushel, the same as for

this year.

"With the determinations which have now been announced," Secretary Benson

said, "farmers will have all the essential information before voting in the Decem-
74

ber 11 referendum. This will be an important decision. It will determine the sort

of corn program which will be available in 1957 and later years.

"The corn supply available for 1956-57 has reached an all-time record level

of 4,579,000,000 bushels. A near-record 1956 crop, estimated at 3,413,000,000

bushels, was added to a record carryover of 1,166,000,000 bushels of corn produced in former years. This huge supply is directly responsible for the further

drop in the national corn acreage allotment and the `allotment' price support

levels which have been determined by the formula of the law.

"The corn programs have not worked out well in the past. Because such a

large proportion of the crop is either fed on the farm where produced or

marketed in the immediate area, the kind of marketing quotas which are used

for other basic crops have not proved feasible,for corn. Corn marketing quotas

are not authorized by present legislation.

"Even more important, corn acreage allotments have not been effective—

either as a way for individual farmers to qualify for price support, or as a

means to secure production adjustments.

"The national corn acreage allotment has dropped sharply in recent years.

There is no 'minimum' level—no floor under the corn allotment—no matter how

big the supply becomes.

"The corn allotment for commercial counties was 49.8 million acres in 1955.

With a bigger total supply of corn that year, the allotment dropped to 43.3

million acres in 1956. Next year, if allotments are in effect, the total allotment under the formula of the law can be only 37.3 million acres—and this will

have to be spread over 894 commercial counties, 54 more than in 1956.

"With the cutback in total allotments, the share for each individual farmer

has also had to be reduced—to the point where many farmers have found that

it was not practicable to comply-with them. Even in 1955, with a relatively high

total allotment, only about 51 percent of the corn produced in commercial counties was grown in compliance with allotments. Compliance would undoubtedly

have been much less this year if the lower allotment had remained in effect.

It was replaced by the 51 million base acreage provided in the Soil Bank

legislation.

"With an even smaller allotment to cover more counties in 1957, it is obvious

that most farmers would find that limiting corn production to their allotted

acres would not fit in with sound farm management. Relatively few would be

able to comply.

"When acreage allotments are operative, eligibility for price support depends

on compliance with the established farm allotments. As allotments have been

reduced, increasing numbers of farmers in commercial counties have in effect

been barred from price support.

"This is the basic situation which underlies the legislative provision which

Congress provided for a referendum this December on alternate corn programs.

Farmers have the choice of continuing the base acreage which has been in effect

this year, or going back to an acreage allotment. Under base acreages, they

will have a higher level from which to measure both price support eligibility

and Soil Bank participation.
75

"If the base acreages are in effect, the price support level will be determined

each year on the basis of the general situation—as it was this year when the

available support for 1957 production was set at an average of $1.31 per bushel.

Eligibility for price support will depend on producing within the individual farm

base acreage, and taking part in the Soil Bank to the extent required.

"If acreage allotments are in effect, the price support will be determined

each year as provided by law within a mandatory range of 75 to 90 percent of

parity. Eligibility will depend upon compliance with the farm allotment,

whether or not the farmer participates in the Soil Bank.

"There have been questions about the possibility of 'noncompliance' corn

price support again in 1957. Corn in commercial counties which was not produced in compliance with acreage allotment or Soil Bank provisions this year

was made eligible for price support at an average of $1.25 a bushel, as compared with the full support of $1.50 a bushel.

"When Soil Bank and related legislation was delayed, several steps were

taken to help strengthen and stabilize current farm income. One of these

special steps was raising the average corn price supports to $1.50 a bushel, from

the previously announced $1.40 for commercial counties. Another was the provision for price supports at lower levels for corn which was not produced under

adjustment controls.

"On the basis of presently known facts of the general situation, we have no

plans to offer such 'noncompliance' corn price supports for 1957 production.

Farmers now have the opportunity to utilize the Soil Bank and other programs

on a full-year basis.

"I hope farmers will study the alternate corn programs carefully, and then

vote on December 11 for the one they determine to be in their best interest."

Farmers will receive notice of their individual corn-base acreages and acreage

allotments for 1957 from the county Agricultural Stabilization and Conservation committees before the referendum. Other information about the referendum and the alternate programs upon which farmers will vote will also be

available from the ASC committees and county agricultural agents.

Operating details of the 1957 corn price support program, and the basis for

determinations under the controlling legislative formula, will be announced

in the near future.

96-161 0 - 73 - pt.9 - 10
Price support levels for 1957, 1956, and 1955

Commodity

A. Mandatory commodities:

1. Basic:

Wheat 

Corn in commercial area:

Compliance with acreage

limitations.

Noncompliance acreage

limitations.

Cotton:

Upland 

Extra long staple _ 

American-Egyptian.

Sealand and Sea Island.

Peanuts 

Rice 

Tobacco:

Flue-cured (11-14) 

Fire-cured (21-24) . 

Burley (31) 

Maryland (32) 

Dark air-cured (35-36) and

sun-cured (37).

Penn. seedleaf (41) 

Cigar filler and binder (42-44,

51-55).

Puerto Rican (46) 

2. Nonbasic:

Butterfat 

Milk for manufacturing 

Wool 

Mohair 

Honey. extracted 

Tungnuts 

Unit

Beginning of

marketing

season

1957 1956 1955 "

Average

support

price

Support level

Average

support

price

Support level

Average

support

price

Support Iev,el,

Percent

of parity

Based on

1st ofPercent of

parity

Based on

1st ofPercent of

parity

Based on

1st of- Percent Percent Percent

Bushel July 1 2 2.00 82.5 July 1956 1 3 2.00 82.6 July 1 2.08 82.5 July.

do October 1 2 1.36 77 Nov. 1956_ 1 3 1. 50 84 October '1. 58 87 October.

do do 4 1.25 70 do 

Pound August '.2815 77 February 2934 82.5 August . 3170 90 August. do do. 5662 75 do . 5520 76 Do.

do do 5670 (6) .5532 (a)

do do 5170 (5) . 5032 (3)

do do 114 86 August . 122 90 August. Hundredweight do 2 443 80 Nov. 1956_ 3 4. 57 82. 5 do 4. 66 86 Do.

Pound July - .489 90 July . 483 3 91 July. do October .361 (7) .346 (7)

do do .481 90 October .462 4 91 October.

do do .470 90 do (89) (89) (8 9).

do do .321 (7) .308 (7)

do do (g 9) (89) (89) (8 9) (8 9) (99)

do do .374 90 October .389 392 October.

do do .314 89 do .319 88 Do.

do April 586 80 February :. 586 81 April_ .562 76 April. Hundredweight- ----do 3.25 9083 do 3 3. 25 12 84 do 3. 15 io 80 Do.

Pound do .62 101 Oct. 1956.... . 62 106 Sept. 1955_ __ .62 106 Oct. 1954. do do .70 86 do .70 92 do_ .70 91 Do. do do .097 1970 March .099 1070 March.

Ton November 53.76 65 October 51.06 60 November.
•

B. Nonmandatory nonbasic commodities:

Barley Bushel July .94 70 February 1. 02 76 May .94 70 Dec. 1954.

Grain sorghums Hundredweight October 1.83 70 do 3 1.97 76 do 1.78 70 Do.

Oats Bushel July 60 70 do 3 65 76 do . 61 70 Do.

Rye do do 1. 15 70 do 3 1.27 76 do 1.18 70 Do.

Cottonseed Ton August 12 46.20 65 do 12 48. 60 70 February___ 12 46. 34 65 March.

Flaxseed Bushel July 2.92 65 do 3.09 70 _do 2.91 65 Do.

Soybeans do October 2.09 70 do 2. 15 75 do 2.04 70 Do.

Beans, dry edible Hundredweight September 6.31 70 March..... 6.36 70 Do.

Crude pine gum Barrel April 24. 80 90 February 24.91 90 January. (27.60) (27. 45)

1 Commercial area only; support outside commercial area is 75 percent of the rate that

would reflect the United States average level except that in 1956 it is 82.5 percent for corn.

2 Announced as minimum support price: will be increased if a combination of the parity

price and the supply percentage at the start of the marketing season requires a higher

level of support.

3 1956 support prices originally were announced as follows: Wheat, $1.81 minimum

(76 percent); corn, $1.40 minimum (81 percent); rice, $4.04 minimum (75 percent); barley.

$0.93 (70 percent); oats, $0.59 (70 percent); rye, $1.16 (70 percent); grain sorghums, $1.80

(70 percent); butterfat, $0.562 (78 percent); manufacturing milk, $3.15 (82 percent).

Support price for corn in the commercial corn area produced by a farmer who does not

comply with acreage limitations.

1 Parity not separately computed for American-Egyptian, Sealand and Sea Island

cotton.

6 Support is in excess of 90 percent of parity because parity price at start of marketing

year was lower than at time the level was announced prior to planting time.

7 Support price based upon: 75 percent of burley support price in case of fire-cured;

66” percent of burley support price in case of dark air-cured and sun-cured.

Support prohibited since marketing quotas were rejected by growers.

9 Anno inced ".0 support."

10 Percent of parity equivalent for milk used in manufacturing principal dairy products.

11 Percent of parity adjusted to 60-pound container basis.

12 Support price average grade basis. Loans and purchases made at the following levels,

basis grade (100); 1957 lo in $46, purchase $42 from producers and $46 from ginners; 1956

loan 848, purchase $44 from producers and $48 from ginners, 1955 loan $46, purchase $42.

13 Standard barrel, net basis (gross basis in parentheses).
78

STATEMENT OF THE SECRETARY

Mr. WurrrEN. Mr. Secretary, you may now insert your prepared

statement at this point.

(The statement referred to is as follows:)

STATEMENT BY SECRETARY OF AGRICULTURE EZRA TAFT BENSON

Mr. Chairman and members of the subcommittee, our agencies which have

already been before this subcommittee have reported satisfactory hearings and

have been impressed with the way in which you are proceeding. You have a

difficult task and we are anxious to be helpful.

It is my understanding that you wish me to discuss the recent price support

announcements of the Department of Agriculture and the soil bank. Inasmuch

as these two are related to one another, I presume that you wish me to discuss

the nature of that relationship.

INVESTMENTS OF THE COMMODITY CREDIT CORPORATION

First, I wish to comment briefly on the inventory position of the Commodity

Credit Corporation. The most recent date for which we have complete information, December 31, 1956, shows an investment of $8.2 billion, down $455 million

from the corresponding month a year earlier. Investments of CCC in farm

products owned and under loan are expected to total approximately $7.6 billion

on June 30, 1957. This will be a reduction of $700 million in a period of 12

months. It will be a reduction of approximately $1.3 billion since the peak holdings of February 1956.

SALES AND OTHER DISPOSAL OPERATIONS

The downward adjustment in investment is being accomplished thus far chiefly

by our sales and other disposal operations, which are on a vast scale.

disposals of all kinds, by fiscal years, are:

CCC

Million

dollars

1953 $520

1954 1,424

1955 2,115

1956 2,723

1957 (first 6 months) 2,235

1957 (estimated for full year) 3,976

Our present liquidation is unique, in sharp contrast with the liquidations that

came during World War II and during the Korean war. It comes at a time

of peace, when supplies are overabundant, not only in the United States but in

other countries.

This subcommittee, particularly its chairman, has maintained that a liquidation like the present one could be successfully accomplished. There have

been many misgivings at home and abroad, within and outside of government,

as to whether this was in fact the case. I am happy to report that these misgivings have been allayed to a considerable extent. You have already lehrned,

I am sure, that we have announced continuation during the coming marketing

year of the same type of export sales program for cotton that we have had in

operation for the present year.

We have not only sold great quantities of cotton, wheat, rice, and wool, we have

completely liquidated holdings of many other commodities:

Commodity Peak inventory

Year Present

inventory

Pounds

Cottonseed oil 877, 738 000 1955

Cottonseed meal . 1,013, 428, 000 1953

Linseed oil 528, 028, 000 1951

Flaxseed 9, 494, 000 1954

Seeds 427, 963, 000 1953

Soybeans 8, 254, 000 1956

Tung oil 34, 516,000 1955

Honey 6, 168, 000 1953
4

•

79

It is not generally realized that most of the exports of Commodity Credit

Corporation stocks are for dollars. Since July 1, 1953, 63 percent of our disposals

have been for dollars:

Percent of dispositions from price-support inventories by type of program,

July 1,1953, to Nov. 30, 1956

Sales for dollars 63

Donations 12

Barter 10

Other transfers and sec. 32 sales involving direct use of Government funds 8

Sales for foreign currencies 7

Total 100

In the first half of the fiscal year 1957, dollar sales have accounted for 66

percent of all disposals. On our sales for dollars we have realized, from July

1, 1953, through December 31, 1956, 71 cents for every dollar invested by the

Corporation.

The figure I have given you on sales for foreign currencies reflects disposition through this outlet of CM-owned stocks only. Commodities which are in

surplus, though not in Government hands, are also sold for foreign currencies.

It is true that the rate of export movement has recently been increased by a

number of events which may not be repeated and that therefore the recent

high rate of export may not continue. Among these developments are short

supplies of wheat and oil craps in Europe, the Suez crisis, and the replenishing

from United States supplies of depleted cotton stocks abroad.

This committee is concerned with our use of section 32 funds, which is a

matter related to the whole complex of surplus, soil bank, and price supports.

With respect to the current fiscal year, we carried over on July 1, 1956, $244

million of unobligated section 32 funds from the prior year and had added to

that almost $200 million of customs receipts, making a total availability of section 32 funds for fiscal year 1957 of something over $444 million. Commitments

for commodities through the first 7 months of fiscal 1957, or through January

31, 1957, ran almost $110,800,000. Making allowances for administrative expenses and further purchases, it appears that the carryover at the end of this

fiscal year would be close to $300 million depending upon developments from

now through June 30.

As an attachment to this testimony a table is shown giving section 32 expenditures, by commodities and by years, for the past 20 years. The total

column indicates that expenditures in the fiscal years 1955 and 1956 are the

heaviest that have been made under section 32 outside of the 3 years, fiscal

1940 through 1942.

SOIL BANK

Reports from State Agricultural Stabilization and Conservation offices giving

soil-bank participation as of February 15 show that farmers have placed a

total of 15,251,968 acres in the 1957 acreage reserve program. That acreage,

when compared with the total 1957 goal for the program, indicates the generally

good progress being made.

Our announced total goal for eligible crops under the acreage reserve program lies within a range of from 20.3 to 25.4 million acres. The agreements

signed by farmers through February 15 represent about 75 percent of the low

side of the goal and about 60 percent of the high side of the goal. These figures

were as of 2 weeks before the closing signup dates for cotton and tobacco, and

3 weeks before the closing dates for wheat, corn, and rice. The supply situation

for peanuts and extra long staple cotton is good enough that, with average

yields on the allotments, we do not expect difficulties with surpluses this year.

Therefore, these two commodities were not included in the 1957 acreage reserve program.
80

Acreage covered by agreements, the total acreage offered by farmers and the

goals for the eligible crops are as follows:

Crop

Acres in

reserve

Feb. 15

Additional

acreage

offered by

farmers

Feb. 15

Total offered

col. l+col. 2 Goal

'Wheat (all) 11,1110,396 396, 506 12, 006, 908 12,000, 000 -15,000, 000

Cotton 1, 798,614 1,144, 255 2, 942,869 3,500, 000- 4,500, 000

Corn 1, 707,321 . 931,233 2,638, 554 4,500,000- 5,500,000

Rice 95,135 56,809 151,944 175,000- 225,000

Tobacco 40,502 8,492 48, 994 125,000- 140,000

The additional acreage offered consists of acreage farmers wanted to put in

the program above the initial maximum farm limits, and acreage offered within

the farm maximums but which could not be accepted because the money allocated

to a county was obligated by previously accepted contracts.

Action taken during the past 2 weeks will make it possible for county ACS

committees to accept a large percentage of the acreage listed as "additional

acreage offered."

For corn, wheat, and cotton, county committees are now accepting all agreements offered up to the initial farm maximums. The initial farm maximums

are: for corn, the larger of 20 acres or 30 percent of the farm allotment; for

wheat, the larger of 50 acres or 50 percent of the farm allotment; and for cotton,

the larger of 10 acres or 30 percent of the farm allotment.

For most types of tobacco, county ASC committees in counties with total

allotments of less than 2,000 acres are accepting agreements for all the allotted

acreage a farmer wishes to place in the acreage reserve. In counties of large

production-with total allotments of more than 2,000 acres-county committees

may accept tobacco agreements up to the farm allotments, provided the county

committee and the State ASC committee have determined that putting the

additional acreage in the reserve will not adversely affect the economy of the

county.

The three States with the largest participating acreage for each crop include:

Wheat: Acres

Kansas 4,260,007

Colorado 1,311,750

Texas 1,115,460

Corn:

Nebraska 507,929

Missouri 297,371

Iowa 157,102

Cotton:

Texas 615,130

Mississippi 196,914

Alabama 173,945

Rice:

California 30,525

Arkansas 24,787

Louisiana 21,897

Tobacco:

North Carolina 19,042

Georgia 3,949

South Carolina 3,268

Fltie-cured tobacco.

Although the progress toward the goals is not uniform we are hopeful from

present indications that wheat and cotton producers will put enough land into the

acreage reserve so that participation will be within the range of our goals. In that event we anticipate a reduction under what would otherwise be expected of from 175 million to 200 million bushels of wheat and from 2.25 to 2.5 million bales of cotton.

The probable final signup for rice, tobacco, and corn is uncertain at this time.

Farmers in most high-yielding heavy-producing corn areas have been slow to put their corn acreage into the reserve under the present allotment program.

4
81

•

The closing date for signing cotton and tobacco acreage reserve agreements is

March 1. For spring wheat, corn, and rice, the date is March 8. Because of the

heavy workload, the signup deadline for the conservation reserve contracts to

become effective in 1957 was extended from March 15 to April 15.

Our latest reports show that 17,424 conservation reserve contracts have been

signed, to be effective beginning in 1956. These contracts cover 1,596,454 acres.

Contracts to become effective in 1957 numbered 14,400 and include 1,242,823

acres. The signup is just well underway, and the current figure is not indicative

of the final total.

Thus far farmers in the Southwestern and Southeastern States have shown the

greatest interest in the conservation reserve.

The acreage reserve part of the soil bank is a costly, temporary, emergency

method of reducing the stocks which have accumulated despite our efforts to control production.

From the foregoing, we can be reasonably clear as to what the acreage reserve

program is; it is equally important to remember what the program is not.

It is not a program to empty Government warehouses so they can be filled again.

It is not a method of paying farmers to make acreage reductions which are

called for under the adjustment principle.

It is not crop insurance of the kind a farmer takes out after he knows his crop

Is lost.

It is not a device by means of which the various crops or the various sections

of the country compete to get the heaviest payments from the Federal Treasury.

Proposals have been offered which would eliminate the effectiveness of the soil

bank as a means of bringing about essential reductions in our surplus stocks. A

word of warning might be offered: If this voluntary program should be so diluted

as to become ineffective, then programs are likely to be invoked which are wholly

out of keeping with the character of American agriculture as we have come to

know it.

COSTS

Disposal operations are expensive. The soil bank will be expensive. Expenditures under the agricultural budget request currently being reviewed by the

subcommittee are the largest in history, $5.3 billion, which is $2.4 billion above

expenditures during fiscal year 1954, the first full fiscal year of this administration. This is more than $1,000 for every farm in the United States. The

realized cost of programs primarily for the support of farm prices and farm

incomes in fiscal year 1956 was $1.9 billion, including $975 million of direct

CC° price-support losses. The $1.9 billion cost is equal to 16 percent of farm

operators' net income in 1956. Realized costs will probably be much increased

during 1957 as our sales and other disposal operations are stepped up and

the soil bank gets fully into operation.

These costs are high because we report realized losses when the commodities

are disposed of, not when they were acquired, and some of the commodities we

are now moving were acquired years ago. Costs are high because production

was tremendously stimulated by a prolonged period of incentive prices—incentives supplied first by the market place and then by law. They are high because

acreage controls have not reduced our overall production. They are high because

our people have been spared the wars which cut the costs of earlier liquidations.

War is a "solution" to our surplus problems which I am sure none of us wishes

to see.

The high cost of present and prospective programs makes it imperative that

these programs achieve their objectives. The acreage-reserve program must

indeed be used to reduce the production of crops in surplus. Our disposal operations must not simply liquidate Government inventories so they can be built

up again. •

PRICE SUPPORTS

. I shall next review the facts which relate to our recent announcements regarding the level of price supports for the coming year. The following summary table
82

provides an overall view of recently announced levels as well as those announced

earlier:

TABLE 1.-Announced 1957 support levels with comparisons

Commodity Unit

1957 support level

Average

price

received

by farmers

January

1957

Net re

alized

cost of

stabillzation

programs,

fiscal

1956

Percent

of parity

Dollar

level

Million Recently announced: Percent Dollars Dollars dollars Cotton, upland Pound 77 0.2815 0.3021 85.4 Butterfat do 80 . 586 . 591 264. 8

Milk for manufacturing Hundredweight 83 3.25 3.39 231.9 Oats Bushel 70 . 60 .752 15. 1

Barley do 70 .94 1.05 53. 1

Sorghum grain Hundredweight 70 1.83 2.13 65.3 Rye Bushel 70 1.15 1.22 7.6 Soybeans do 70 2.09 2.31 15. 9

Flaxseed do 65 2. 92 3.04 7. 7

Cottonseed Ton 65 46. 00 60.40 78.2 Dry edible beans Hundredweight 68 6.31 6.88 16.4 Honey Pound 70 .097 . 152 

Peanuts do 82 . 1107 .111 10. Z

Previously announced:

Wheat Bushel 83 2.00 2.09 530.1 Corn do...77 1.36 1.23 132.4 Rice Hundredweight 80 4.43 4.57 54.9 Wool Pound 101 . 62 .467 7.7 Mohair do 87 .70

1 The support level for naval stores will shortly be announced. Support levels for various types of tobacco will be announced later.

We have farm-price data on 17 of these 18 commodities as of January 1957. As

of that date, all but corn and wool were higher than the announced 1957 support

levels and all but corn, wool, peanuts, rye, and flax were higher than the 1956

support levels.

Cotton

Table 2 gives data regarding the support program for upland cotton.

TABLE 2.-The support program for upland cotton, 1954-57

Crop of

Level of support

Carry-in at

beginning of

year (thousands of bales)

Net realized

cost of stabilization programs, fiscal

year (millions

of dollars)

Percentage of

parity

Average support level for

Middling 7Ainch cotton

(cents per

pound)

1954 90 31.58 9, 550 17.5 1955 90 31.70 11,000 21.5 1956 82. 5 29.34 14,400 85.4 1957 77 28.15 1 12, 200 

1 Estimated.

The announced level of price support for the 1957 crop of upland cotton, $0.2815 per pound, is equal to 77 percent of the January 1957 parity. It was determined in accordance with the following estimates:
•

83

TABLE 3.—Calculation of supply percentage and minimum support level for 1957-

crop cotton

Thousands of

running bales

1956 carryover (Aug. 1, 1956) 1 14,000

1956 crop (December report) 13,100

1956 imports 50

1956-57 Total supply 27,150

1956-57 domestic use (estimated) 8,850

1956-57 exports (estimated) 6,500

1957 Carryover (Aug. 1, 1957) 11,800

1957 crop (estimated) 11,200

1957 imports 50

1957-58 Total supply (estimated) 23,050

Less remainder of set-aside (estimated) 800

Total supply for price support (estimated) 22,250

1957-58 domestic consumption (estimated) 8,850

1957-58 exports (estimated) 4,500

1957-58 Total disappearance 13,350

1957-58 normal supply (130 percent) 17,355

Supply percentage 128.21

Minimum level of support (percent of parity) 77

1 Excludes preseason ginnings (410,000 131/C)•

Interest has been shown in the method by which we obtained the production

estimate of 11,200,000 bales for the 1957 crop. This was arrived at by assuming

that of the 17,600,000 acres allotted, all but 4 million acres would be harvested.

Most of these 4 million acres were expected to go into the acreage reserve program of the soil bank, an event which now appears likely. The remaining 13,-

600,000 acres harvested were estimated to produce an average of 400 pounds

per acre. Yields in 1955 and 1956 were 417 and 408 pounds respectively. A

yield of 400 pounds would produce 11,333,000 500-pound bales, or about 11,200,-

000 running bales.

We are currently estimating 1956-57 domestic consumption of all cotton at

about 9 million bales. This would consist of about 8,850,000 bales of upland

cotton and about 150,000 bales of extra long staple cotton. Unless domestic consumption picks up some during the remainder of the 1956-57 marketing year

this could be on the high side inasmuch as domestic consumption in the first

-5 months, August through December 1956 fell off 172,000 bales from a year ago.

As has been our custom for years we used the same estimate for both years of

the formula.

We believe there is rather general agreement now that we will export approximately 6.5 million bales of upland cotton in the 1956-57 marketing year. In our

opinion, however, it would not be realistic to anticipate exports during the 1957-

58 marketing year equal to the exports during the current year. We know that

inventory stocks in countries outside the United States dropped about 2 million

bales between August 1, 1955 and August 1, 1956. We know, too, that a substantial part of the cotton which has been sold for export during the past year

will be used to replenish foreign stocks, probably in the neighborhood of 2 million

bales. This being the case, export of 4.5 million bales of United States cotton

in 1957-58 would make available for consumption about the same amount as will

be consumed in the 1956-57 marketing year.

Our estimates for the 1957 crop are the best we can make at this time. But

it ig extremely difficult to make these estimates with accuracy. For example,

for the 1955 crop we underestimated production by 4,695,000 bales. This is

largely because we calculated yields in the manner prescribed by law for the

purpose of determining acreage allotments. We overestimated exports by

2,292,000 bales. Both these errors of estimation had the same directional effect

on the level of price support, to boost it. The supply percentage we announced,

92, resulted in a support level of 90 percent of parity. Had we been able to
84

estimate with complete accuracy, the supply percentage would have been 152,

so great as to indicate a minimum support level not at the top but at the bottom of the flexible scale, 75 percent of parity.

In 1956 we did better, but only because of compensating errors. We under- estimated production by 3,183,000 bales, which tended to boost the level of price support from where it would have been if our estimate had been correct. We underestimated exports by 2,300,000 bales, which had the effect of reducing sup- ports below where they otherwise would have been. Our first supply estimate, made in April, indicated a level of support at 75 percent of parity. This was revised in August to 78. Had we been perfect in our estimates the indicated level would have been 80.

It should be clear from what has been said that estimates made in advance of planting cannot be made with accuracy. The experience has been such as to suggest a reexamination of the whole formula approach to establishing support levels.

Estimates of supply and the parity price for cotton must by law be reviewed prior to harvest. If revised estimates indicate that the originally announced

support level was too low, the law specifies that supports must be raised. If the original estimates turn out to yield too high a support level, supports cannot be lowered. This argues for conservatism in preplanting estimates, perhaps

greater conservatism than has been exercised in the past. In 1955, for example, if our early estimate had been more conservative, we could have adjusted supports in line with supplies. But, having made our early announcement of price

supports at a high level, we were bound to hold it.

Other arguments militate against high price supports for cotton.

Foreign textile manufacturers would press all the harder to move in on the American market.

Consumption of manmade fibers would be further stimulated.

Acreage of "wild cotton," deliberately grown in excess of allotments, woulld

Increase. Such acreage has increased appreciably in each of the last 2 years.

There would be further inducement to increase the yield per acre beyond that which, in the absence of allotments, would be an economic level.

Participation in the soil bank would diminish or the per acre inducement would

have to be increased.

Cotton has a number of special provisions which result in higher prices than

would otherwise occur. One of these "fringe benefits" is the requirement that

the appropriate level of price support be applied to h-inch Middling cotton. All

grades of 7A-inch cotton now comprises only about 5 percent of our production.

This is different from the provisions for all other basic commodities, for which

price support is related to the average of the crop. Another "fringe benefit"

is the provision for cotton and peanuts which holds the price at 90 percent

of parity whenever the supply percentage is not more than 108. For all other

commodities, this figure is 102 percent.

Dafry products

For dairy products, the price support levels during the coming marketing year

will be the same, in terms of dollars and cents, as has been the case during the

current marketing year. Supports are required by law to be at such level, not

more than 90 percent of parity nor less than 75 percent, as the Secretary determines necessary in order to assure an adequate supply.

TABLE 4.—The support program Tor butter, 1954-57

Marketing year beginning

Level of support CC() stocks

beginning of

marketing

year

Net realized

cost of stabilization programs,

fiscal year

Million dollars

Percentage of

parity

Average support level

Percent Cents per pound Million pounds

1964 75 0. 562 364. 2 94.5 1955 76 . 562 236. 6 228.0 1956 81 . 586 0 264.8

1957 80 • 586 
*

85

TABLE 5.—The support program for manufacturing milk, 1954-57

Marketing year beginning

Level of support Uncommitted CCC stocks

beginning of marketing year

Net realized

cost of

stabilization

programs,

Percent of

parity

Average support levelCheese Dry milk fiscal year

Million Million

Percent Per pound pounds pounds Million

1954 75 $3.15 483. 1 598.8 $124.9

1955 80 3.15 328.6 86. 3 199.4

1956 84 3.25 228.2 46.4 231.9

1957 83 3.25 

The outlook for dairying in 1957-58 is similar to that for 1956-57, This was

the decisive consideration in holding the supports at the same dollar level. In

terms of parity, supports are slightly reduced. This reflects chiefly the upward

movement in the index of prices paid by farmers.

Our stocks of dairy products are relatively low, the result of heavy outmovement chiefly through donation and sales below cost. This has been an

expensive operation and a cause of genuine concern. Cost of the dairy program

is high when compared with programs for other commodities. This is partly

because the bulk of our dairy surplus has been moved and the costs have been

reflected in our reports. When the stocks of wheat, cotton, and corn are likewise

moved, increased costs for these commodities will be reflected in our statements.

Feed grains

Price supports may be provided for feed grains other than corn, not in excess

of 90 percent of parity, in accordance with guidelines specified by law. The

Agricultural Act of 1956 required that prices of the 1956 crops of oats, barley,

sorghum grain, and rye be supported at 76 percent of parity. For the coming

year we have announced price supports which reflect 70 percent of the January

1957 parity, the same percentage as in 1955. The dollar and cents level of support is close to the 1955 level, being slightly higher for sorghum grain, the same

for barley, and slightly lower for oats and rye. This level seemed to us to be the

most appropriate one in view of the eight factors provided by law. These are:

1. The supply of the commodity in relation to the demand therefor;

2. The price levels at which other commodities are being supported, and in

the case of feed grains, the feed values of such grains in relation to corn;

3. The availability of funds;

4. The perishability of the commodity;

5. The importance of the commodity to agriculture and the national economy;

6. The ability to dispose of stocks acquired through a price support operation;

7. The need for offsetting temporary losses of export markets; and

8. The ability and willingness of producers to keep supplies in line with

demand.

I know that this subcommittee is concerned about our increasing supplies

of feed grains. The combined carryover of feed grains including corn at the

end of the present marketing year is expected to be an all-time record, 10

percent above last year, the record up to that time. I know you realize that large

supplies mean low prices. I know you are aware of the fact that reduced prices

of feed grains result, after a time, in reduced prices of livestock products. I

share your awareness and your concern.

The stubborn fact, however, is that feed grains are in very heavy supply.

That being the case, they cannot be priced as if they were scarce.

There are those who would apply to oats, barley, rye, and sorghum grain the

same kind of production control that has been in operation on corn. Yet during

the recent years that corn has been under acreage allotments, the carryover of this

controlled crop has grown more rapidly than the carryover of all the uncontrolled

• feed grains combined.

The fed grain program which the Department of Agriculture has advocated

is as follows:

1. To reduce the production of corn chiefly by means of the acreage reserve

program of the soil bank, operating from a base acreage that would make it

possible for a goodly number of corn farmers to participate;
86

2. To reduce the production of oats, rye, barley, and sorghum grain chiefly by

means of the conservation reserve program of the soil bank;

3. To keep our program on a voluntary basis and provide as large a measure of operating freedom to each farmer as we possibly can;

4. To provide price stability for the feed grains at levels which will be fair both

to the grain farmers who sell and to the livestockmen, dairymen, and poultry pro- ducers who buy. These must be levels which will not pile up unmanageable

stocks of feed in Government hands;

5. To obtain value received, either in terms of adjusted production or in conservation, for the dollars we put out to feed grain producers through the soil bank.

People have used these phrases in connection with pricing policy on feed grains: "high-price policy" and "low-price policy." As for a "high-price policy," it cannot be long pursued in the absence of effective production control, which, after 25 years of effort, has not yet been achieved. As for a "low-price policy,"

our present stocks of feed are so heavy that such a policy would result in a pricedepressing flood of pork, beef, poultry, and dairy products. Our objective, there- fore, is reasonable stability for feed grains in the middle range of price, coupled with responsible operation of the soil bank. We think our announced levels fit in with this objective.

July 1-

195

195

19

195

TABLE 6.—The support program for oats, 1954-57

Ci op of—

Level of support Carry-in at

beginning of

marketing

Net roan

cost of sta

cation prog

Percentage of

parity

Average level

support

year fiscal y(

Thousand Milli°

- Percent Per bushel bushels dollar. 4 85 $0.75 226641 5 70 .61 302,693 5 '76 .65 346,819 7 70 .60 2 225, 000 

red

billLIMB,

31*

10.6

19. 1

15. 1

Established by law.

2 Estimated.

TABLE 7.—The support program for barley, 1954-57

Crop of---

Level of support

Percentage of

parity

Average support level

Carryin at

beginning of

the year

Net realized

cost of stabilization programs, fiscal

year

Percent

July 1-

1954 

1955 

1956 

1957 

85

70

76

70

Per bushel

$1. 15

.94

1.02

.94

Thousand

bushels

71, 144

130, 550

117,096

2 120,000

Million

dollars

2. fl

25. 1

53.1

'Established by law.

2 Estimated.

TABLE 8.—The support program for grain sorghum, 19.54-57

Crop of—

Oct. 1-

1954 

1955 

1956 

1957 

Level of support Carry-in at

beginning of

marketing

year

Net realized

cost of stabiliza•

lion programs,

fiscal year

Afillion

dollars

Percentage of

parity

Average

support level

Percent

Per hundredweight

Thousand

busivls

85 $2.28 22,260 7.3 70 1.78 74,977 44.0

I 76 1.97 81,376 65.3 70 1.83 2 70,000 

'Established by law.

2 Estimated.
•

87

TABLE 9.—The support program for rye, 1954-57

Crop of—

Level of support Carry•in at

beginning of

marketing

Net realized

cost of stabiltia-

.tion pro•rams,

Percentage of

pprity

Average support

level

year fiscal year

Dollars per Thousand

July 1— Percent bushel bushels Million dollars

1954 85 EL 43 14,980 0. 1

1955 70 1.18 16,417 2.8

1956 '76 1. 27 16,665 7. 6

1957 70 1.15 29,000 

Established by law.

'Estimate.

Oilseeds

For oilseeds as well as for feed grains the support program is discretionary,

not to exceed 90 percent of parity. We are instructed to follow the 8 guides

mentioned above. As was the case for feed grains, we established supports at

dollar levels which in January of 1957 reflected the same percentage of parity

as prevailed in 1955. In our judgment, this level met the overall interest of our

farming people better than any other level we could name.

As has been the case for some years, we set the support for soybeans 5 percentage points of parity higher than for cottonseed and flaxseed. Experience has

shown that the oilseeds ordinarily are in a reasonably good competitive relationship with one another under such conditions.

TABLE 10.—The support program for soybeans, 1954-57

Crop of—

Level of support

Percentage of

parity

Average support level

Carry-in at

beginning of

marketing

year

1954 

1955 

1956 

1957 

Percent

80

70

75

70

Per bush,1

$2.22

2.04

2.15

2.09

Million

bushels

1.3

9.9

4.0

25.0

Net reafizr.d

cost of stabilization programs,

fiscal year

Million

dollars

0. 6

. 1

15:9

TABLE 11.—The support program for yaxseed, 1954-57

Crop of—

•

Level of support

Carry-in at

beginning of

marketing

year

Net realized

cost of stabillzation programs,

Percentage of fiscal year

parity

Average

support level

Percent Per bushel

Million

bushels

Million

dollars

1954 70 3.14 14. 2 51.3

• 1955 65 2.91 11. 2 22.8

1956 70 3.09 4.0 7.7

1957 65 2.92 10.0 
88

TABLE 12.—The support program for cottonseed, 1954-57

Crop of—

Level of support

Net realized

cost of stabilization

programs,

fiscal year

Percentage

Average support level for

basis grade

100

1954 

Percent

75

Dollars per

ton

54.00

Million

dollars

59.8

1955 65 46. 34 85. 6

1956 70 48. 60 78.2

1957 65 46. 15 

Dry edible beans

Dry edible beans are another crop for which price supports are discretionary.

In providing support, the Secretary is to be guided by the eight factors previously

mentioned.

During the last completed year of operation, the 1955 crop, CCC acquired ownership of 11 percent of the dry bean crop. Our stocks have been moving, but at

considerable loss.

When we considered all the facts, we set price supports for the 1957 crop at the

same dollar level as last year, $6.31 per hundred pounds. Due to changes in

parity, this came out at 68 percent of the January 1957 parity as compared with

70 percent the year before.

TABLE 13.—The support program, for dry edible beans, 1954-57

Crop of1954

1955 

1956 

1957 

Level of support

Percentage of

parity

Percent

80

70

70

68

Average support level per

hundredweight

Carrying at

beginning of

marketing

year

Nct reali7ed

cost, of stabilization programs,

fiscal year

$7. 24

6.36

6.31

6.31

Million

hundredweight

2.2

3.0

1.9

2. 1

Million

dollars

$8. 2

15.2

16.4

Honey

For honey, price supports are required at not less than 60 nor more than 90

percent of parity.

We announced price supports for 1957 production at $0.097 per pound, 70 percent of parity. This is the same as for 1956 production.

TABLE 14.—Support program for honey, 1954-57

Level of support

Percentage

of parity

Average support level

per pound

Net realized

cost of stabilization programs,

fiscal year

Marketing year:

1954 

1955 

1956 

1957 

70

70

70

70

$0. 102

. 099

097

.097

Million dollars

0.8

. 6
89

Peanuts

The Agricultural Act of 1949, as amended, provides that the level of support

on 1957 crop peanuts—inasmuch as producers have approved marketing quotas—

shall range between 90 and 75 percent of parity, depending upon the percentage

which the total supply is of the normal supply at the beginning of the marketing

year. Present estimates are that the total supply of peanuts will be 122.5 percent

of the estimated normal supply prescribing a support level at not less than 82

percent of parity for the 1957 crop.

TABLE 15.—The support program for peanuts, 1954-57

Peanuts, crop of—

Level of support Carry-in at

beginning of

marketing

Net realized

cost of stabilization

Percentage

of parity

Average support level

year programs,

fiscal year

Cents per Million

Percent pound pounds Million

1954 90 12. 24 417.8 $25. 1

1955 90 12.24 279.8 3. 5

1956 86 12.35 377.4 10. 5

1957 82 11.07 '420

1 Estimated; not available until Aug. 1, 1957.

This completes my statement. I wish to thank this subcommittee for listening

patiently to a rather detailed presentation. My staff and I will be happy to

answer your questions.
U. S. DEPARTMENT OF AGRICULTURE-AGRICULTURAL MARKETING SERVICE

Removal of surplus agricultural commodities (sec. 82)-Obligations by commodity groups, fiscal years 1986-56

Fiscal year Cotton Dairy Eggs and

poultry

Fruits Grain Livestock

products

Peanuts and

products

Tobacco Tree nuts Vegetables Miscellaneous Total

1936 $4, 059, 978 $198, 604 $2. 439, 281 $5, 764, 307 $306, 550 $1, 090,213 $1, 289, 188 $1, 707, 599 $40, 462 $16, 896, 182 1937 6,836 $368, 386 2, 136, 766 6, 290, 222 653,290 $107, 229 1, 720, 637 1, 544, 360 1, 365, 684 1,258, 177 15, 451, 587 1938 133, 829 5, 876, 612 1, 726, 868 17, 330,045 13, 812, 962 2, 301, 818 I, 555, 838 1, 611, 723 7, 942, 674 1, 958, 852 54,251, 221 1939 1,894, 431 38, 995, 906 570, 549 11,851, 799 18, 236. 037 400,897 1, 232, 127 5, 466, 358 1, 197, 604 79, 845, 708 1940 49, 472, 402 17, 884,220 15, 489, 520 25, 557, 097 44, 302, 278 25, 826,388 699,353 1, 408,633 3, 685, 463 883, 117 185, 208,471 1941 54, 008, 941 14, 855, 720 14, 753, 283 33, 000,818 22, 479, 059 30, 719, 343 8, 125,877 669, 197 24, 724, 596 8,996, 194 212, 333, 028 1942 12, 238,044 29, 379, 618 25,977, 967 29,967, 124 29, 155, 316 14, 221, 175 462, 200 367, 361 1, 830, 902 35, 394, 445 3, 745, 120 182, 739, 272 1943 6, 475, 499 10, 382, 973 11, 895, 850 11, 839, 079 19, 137, 498 440,000 1, 049, 970 1, 694, 000 679,881 21, 898, 063 626,453 86, 119,206 1944 1, 319, 636 3, 610, 624 5, 883, 402 1, 242. 780 1,314, 938 367, 194 2,708, 475 6, 403, 824 239, 269 23,090, 142 1945 273, 764 3, 072, 033 3, 069, 212 4, 154, 712 3, 143033 19, 796 13, 732, 600 1946 18, 586,868 3, 751, 462 7,948, 503 30, 286,835 1947 34, 458,392 10, 697, 769 34, 062 26, 516, 422 71, 706,645 1948 2, 482, 582 19, 713, 194 19, 543,631 8,546, 500 1, 133,820 21,099, 753 822, 158 73, 341. 64,3 1949 235,371 1,823, 100 13, 857, 261 10, 138, 591 4, 191,686 10, 167,023 11, 096, 628 1, 715,950 53, 225, 610 1950 20, 157 15,542, 143 13, 261, 510 27, 768, 266 2, 854. 945 4,559, 192 3, 928, 890 5, 254. 214 303, 538 73, 497, 855 1951 289 5, 107, 4.12 22,806, 134 7, 101, 747 876, 074 207,263 1, 546,874 37, 645, 813 1952 4, 174, 675 3, 697, 872 24, 125,829 12, 176, 772 3, 390, 438 10, 720 3, 564, 280 51, 149,636 1953 935, 760 21, 775,636 26, 662, 342 14, 000,846 1,382, 188 1, 038, 393 2, 675, 945 68,471, 110 1954 10, 575, 441 87, 120,934 9. 387, 879 3, 490, 415 83,822, 255 401, 741 3,015, 107 744, 914 198, 558,688 1955 13, 264, 148 423, 209 4, 603,390 380, 808 118, 467 9, 022, 818 551,486 28, 364, 326 1956 8, 261, 842 78, 478, 611 4, 337, 010 12, 465,336 101,248, 723 9, 498,400 214, 289. 922

Total 218, 704, 209 330, 692, 367 174, 702, 222 279, 333, 095 192, 865, 988 270, 692,075 28, 548,057 18, 083, 921 20, 277, 810 205,410, 627 30,895, 189 1,770, 196,560
91

Mr. WHITTEN. We will turn the witness over now to Mr. Marshall. Mr. MARSHALL. Mr. Secretary, I read with a weat deal of interest

your statement submitted to this committee, as well as a number of other statements that hal`re been made by you during this past year.

FARM PRICES

I noticed in the paper not long ago, in the last 2 weeks or so, that

a statement was attributed to you that the farm prices had leveled off. Is that your feeling, Mr. Secretary, that with regard to farm prices, * we can look forward to a leveling off of farm prices at this level? Secretary BENSON. I don't recall that I have ever made such a state- ment as to farm prices leveling off. I have pointed out that farm prices have improved somewhat this year, compared with a year ago. They have been running, as you know, recently in the neighborhood of 5 percent ahead of a year ago, and we look for some further im- provement in 1957.

Now, that doesn't suggest leveling off. I don't recall that I ever made the statement that they are leveling off. I don't believe that. There has been some improvement in the past year. We look for

some further improvement., modest improvement in 1957, and it would please me very much if that can continue beyond next year.

FARM COST

Mr. MARSHALL. Do you feel that there is going to be any lowering of the costs that the farmer must of necessity be put to in the operation of his farm?

Secretary BENSON. Well, I certainly hope so. I am not sure that I

am in a position to forecast whether there will be or not, but I would certainly hope there would be some reduction. I think many of the costs have been excessive.

Mr. MARSHALL. It is your feeling, then, that this so-called costprice squeeze thing may continue?

Secretary BENSON. I feel it has been easing, somewhat. Of course, it is always a very serious thing, this cost-price squeeze. We had it after World War I. I was farming then, and I know.

I think we made and are making the transition following World War II with less hardship and less strain and distress than at any time following a major war, but the squeeze is serious, and it is still in existence in large measure.

Mr. MARSHALL. In making any shift that you have made in lower- ing support prices, nothing was indicated in the picture of a lowering of prices that a farmer has to pay for his necessities in arriving at that conclusion, Mr. Secretary.

Secretary BENSON. I think not to any extent.

-Mr. MARSHALL. Up in our country, we are of course interested in these grain feeds, and I wish to compliment you for a statement which

came up not long ago wherein you indicated that livestock and live- stock prices would follow rather closely the grain prices that a person has to pay in order to finish up their livestock.

Secretary BENSON. Anyone who has fed livestock as I have for many

years, knows that the price of feed is a major factor. When the

96-161 0 - 73 - pt.9 - 11
92

corn-hog ratio is favorable, as you know, there is a tendency to expand

hog numbers, increase breeding and so on.

RELATIONSHIP OF LIVESTOCK AND FEED GRAIN PRICES

Mr. MARSHALL. It was an axiom of my father in bringing me up

that you can always depend on livestock prices following rather closely

the feed prices that the farmer has to pay in order to make the

adjustments.

Generally speaking over a long-time period, the grain prices pretty

well determine what the profit of what the production of livestock

products will be.

Mr. BENSON. It is the major factor in costs of producing animals,

and finishing them out.

Mr. MARSHALL. In that connection, then, if we say that that be true,

then of course a stable feed supply as indicated by the rate of price

support would have quite a direct bearing upon livestock income,

would it not?

Secretary BENSON. I think a stable supply of feed is a very desirable thing for the livestock industry.

Mr. MARSHALL. SO, when we use the term that comparatively a

small number of our producers who produce basic commodities get

a benefit from the price-support program, that might not be entirely

true insofar as livestock people are concerned because they do receive

some benefit from a stable feed supply.

Secretary BENSON. Of course, the storage and price-support program, or loan program, I think, can be a very important contributing

factor to an orderly market and stabilization of agriculture.

We have attempted to set the supports on feed grains, as you know,

at a level that would give some protection, to permit the farmer to

get the loan, to prevent dumping his product on the market at harvest

time. At the same time the supports must be at levels which will

let those commodities come into use and not pile up in Government

warehouses and then depress feed-grain prices by that very fact.

I think that the program has worked quite well in the feed grains.

As a matter of fact, I think it might be a good thing if we had a little

more discretion on some of the other commodities. I think we could

do a better job in administering the program.

RYE MARKET

Mr. MARSHALL. In our State we produce quite a variety of crops.

In the figures I have for the 1955-56 fiscal year, we imported into

this country, 3,393,000 bushels of rye. Now, since we are importing as

much rye as that, and certainly rye is something badly needed in the

Great Plains area for clover crops, might we not have raised the support price on that basis, rather than lowered it, on rye, to good advantage?

Secretary BENSON. This question of trade, imports, and exports, is

a two-way street, as you know, and if we are going to maintain our

exports we have to, by that same token, take in some imports. You

recognize that, I am sure.
93

We took the whole picture into consideration when we set the

supports. This year, we set them at the same level they were in 1955,

as I recall.

I would be glad to ask Mr. McLain to comment on the details of

that.

Mr. McLAIN. The rye market, Mr. Marshall, as you know, has been

above the loan rate. I think one of the things we are missing in this

whole discussion here is the hope that we have in the Department—

and I am sure the farmers share—that these markets could sometime

be above the loan rate. We have demonstrated with soybeans and a

good many of these other feed grains this last year that they can be

there. That is where we ought to have them.

Mr. MARSHALL. Mr. McLain, I think the import of my question

• would be that since we are in that position with rye and we are in

a cramped position with some of our other commodities, might not it

have been wise to have given a little incentive in that direction? Price

supports should effectively work toward an incentive in the direction

that we want to go.

Mr. McLAIN. Most farmers, Mr. Marshall, in my opinion, look to

the market price for their product when they determine what they are

going to do. That is what they like to look at, and that is the direction

I think we should guide these things if we can.

They want to sell. There isn't a farmer that I know of who likes

to turn his crops over to us. They like to sell it. If we could have the

supports so the market could be above—and we have had it that way

with a good many of these commodities in the last year—it is a healthy

situation.. And the fact that the support rate is only 70 percent and

the farmer can get 80, 85, or 90 percent, this is what he is really

interested in. I think sometimes some of us lose sight of that.

Mr. MARSHALL. Well, the farmer out my way is in quite a quandary

wondering just what he should plant as far as his crops are concerned,

and the matter of a price support announced as it has been this year

before planting time gives some assurance throughout the year.

Mr. McLAIN. That is right.

Mr. MARSHALL. It would indicate to me that you might have some

additional outlook for rye over and above what we might have for

some of the crops our warehouses are filled with.

Mr. McLAIN. I think that is correct, because of the cover crop nature

of rye, that is certainly right.

Mr. MARSHALL. I am wondering if, for that reason, it might not

have been a good thing to point out a little incentive in that direction,

and it would be more economical insofar as the operation among the

• creditors is concerned.

Mr. McLAIN. The policy has been pretty much with these feed

grains to keep them all pretty much together.

The Secretary's policy to not let them get below 70 percent, I think,

has demonitrated to the farmers in this country that he wants to keep

a realistic floor under the feed grain prices.

I am sure the farmers would rather have that and be able to market

the crop above that price than to have the price so high that they have

to turn the commodity over to us. I know farmers and am sure that

farmers feel that way.
94

Mr. MARSHALL. As far as the farmer is concerned before planting

time, he tries to the best of his ability to plant the crop he can have

the highest return for.

Mr. McLAIN. That is right, and he judges that from whatthe•market price has been, along with the level of price supports, of course.

SOIL BANK AND H. R. 2420

Mr. MARSHALL. We are interested, as you know, in the soil-bank

proposal. I introduced a bill, along with our good friend and colleague and member of this committee, Mr. Andersen, H. R. 2420, which

we felt would be of some value in attempting to bring our production

in line with our market.

This is a report that the Department made on the bill. It says •

that the program would be very costly. Estimate payments based

on 25 percent of the average yields assuming full participation would

be about $490 million. Administrative costs and cost-sharing conservation payments are not included in this total.

Mr. Secretary, I believe that we have something like $1,200 million

spent on this program in this year.

I will be glad to place the report in the record at this point.

(The report referred to follows:)

DEPARTMENT OF AGRICULTURE,

Washington D. C.

Hon. HAROLD D. COOLEY,

Chairman, Committee on Agriculture,

House of Representatives.

DEAR CONGRESSMAN COOLEY : This is in response to your request for the

Department's views on H. R. 2420. The Department recommends against the

enactment of this bill.

H. R. 2420 authorizes and directs the Secretary to establish policies and programs for the use of acreage diverted because of the establishment of acreage

allotments on basic commodities. The declaration is made that acreage diverted

from allotment crops increases the planting of other crops not under acreage

allotments and will tend to increase the surplus of nonbasic commodities. In

addition, the bill points out the need for increasing soil fertility.

The bill provides for voluntary arrangements with farmers concerning the

use of acreage diverted from allotment crops. It also provides for rental and

benefit payments for acreages diverted from allotment crops. To be eligible

for these payments, the acreage must be used solely for soil-building and soiland-water-conserving purposes. A further payment eligibility requirement is

that the diverted acres must be taken out of the production of any product sold

directly or indirectly in the normal channels of trade. Payments would be

limited to the acreages that are diverted from allotment crops with the modification that payments could be made for as much as 110 percent of the acreage

diverted.

The permitted soil-building and soil-and-water-conserving uses are to be determined by the Secretary, taking into consideration the practices normally

used in each farming area. In order to facilitate diversion to soil-conserving

uses the bill provides that acreage qualified under the program would also be

eligible for cost-sharing payments under the agricultural conservation program.

The rental and benefit payments are to be determined by taking not less than

25 percent of the average county yield, of the commodity subject to acreage

allotments, and multiplying by the support price of the commodity to arrive

at the per acre rental benefit payment. The bill does not provide for any

maximum payment per acre. Total payments to any operator is limited to

$2,500.

The program would be very costly. Estimated payments based on 25 percent

of average yields, assuming full participation, would be about $490 million.

(Administrative costs and cost-sharing conservation payments are not included

in this total.) Because payments made under the program must compete with
95

income derived from the prOduCtion of value crops which could be grown on

the diverted acreage it appears that in some areas payments higher than the

minimum provided in the bill would be required. Average payments per acre

for the basic crops based on 25 percent of average yields and assuming present

price-support levels is estimated at $17.90 for corn in the commercial area, $22.03

for cotton, $27.76 for rice, $140 for tobacco and $7.62 for wheat. These payments

might be attractive on the less productive farms and would further the needed

conservation on such farms. On the other hand, such payments would not be

large enough to secure participation on those farms which are more likely to

contribute to surplus supplies. We question whether Government payments

should be made at the high levels necessary to make the program effective.

An absolute prohibition on production for market either directly or indirectly

is considered to be too restrictive. It is important that the production of

diverted acreage be carefully guided in order to minimize the impact upon

producers of other crops which do not receive price support. On the other

hand, certain situations may suggest permitting the production on diverted

acres of certain crops in restricted areas. We believe that if the bill were

enacted some discretionary authority should be granted the Secretary in this

respect.

Since the bill requires that approved practices be carried out on the acreage

qualifying for payment, the job of determining the acreages, locating them,

measuring and checking practices would require a great deal of administrative

supervision and effort, resulting in difficult and expensive administration.

The Department fully recognizes the need for effective use of the acres taken

out of production of the basic crops as a result of the allotment programs and

has developed a broad program to influence the use of acres diverted from allotment crops. The objectives of this broad program are to move production

toward balance with markets; avoid the continued accumulation of excessive

supplies of commodities under price-support programs, encourage wider use

of soil-conserving practices on diverted acres; and make available to farmers

all research and marketing information which would assist them in determining

what shifts to make and how to readjust their production to achieve maximum

economy of operation.

To effectuate this program the Department has provided additional incentives

through the agricultural conservation program to encourage farmers to conserve and protect land diverted from allotment crops; instituted an extensive

educational program for the purpose of advising farmers with respect to making

the wisest possible use of diverted acres; and utilized the Department's discretionary authority in connection with price support programs to bring about a

better use of feed grains and to encourage a sound livestock industry geared to

our expanding economy.

A committee composed of representatives of the different agencies in the

Department were asked to study H. R. 2420 and report the probable effects of

the bill. A copy of this report is enclosed.

The Bureau of the Budget advises that, from the standpoint of the program

of the President, there is no objection to the submission of this report.

Sincerely yours,

TRUE D. MORSE.

Enclosure.

Secretary BENSON. Of course, as you know, we considered the

various versions of the soil bank. I came to it somewhat reluctantly

because I felt it was a costly program and I think some of the provisions in your bill were finally incorporated in the version which was

recommended to the Congress by the President.

' We studied many versions of the bill. We gave a great deal of

thought to it. We reviewed many versions, and finally made the

recommendation to .the Congress, and they passed it essentially as it

was recOmmended.•

I think there were some minor modifications. Now, it is being

tested out. We won't know, I. think, until the end of this year just

how effective it is going to be and 'whether it'juOifies the cgst.

As pointed out, it is an expensive program. look upon, it as I

indicated this morning, as an emergency program. After we have
96

had 1 full year's experience with it, I think we will be in a much

better position to appraise its value than we are now.

I have recommended against changes in the soil-bank law until we

have had 1 full year's experience.

COST OF SOIL BANK AND H. R. 2420

Mr. MARSHALL. Mr. Secretary, this committee, in addition to our

interest in the agricultural programs, has a responsibility to the taxpayers of this country. It puts us in a dual capacity.

I am wondering, since $490 million is costly, what would you say

as far as the present program is concerned of $1,200,000,000, which is

over twice as much as we anticipated when we presented this bill to

the Congress?

Secretary BENSON. I have indicated that, that it is a very expensive

operation and a very expensive program. I think the Congress recognized that when they passed it. It was passed, as you know, with very

large bipartisan support. I think it is on trial.

Mr. MARSHALL. I want to say to you, Mr. Secretary, that I appreciate your frankness in stating to this committee that you came to

this conclusion with a certain amount of reluctance. I think a man

is to be commended when he finds himself in a position of changing a

former position and it is not easy to change.

I realize this proposition, as far as your administration is concerned

had some difficulties last year because of the lateness that it came out.

Secretary BENSON. As a matter of fact, as you may recall, Mr.

Marshall, we recommended against making the soil bank applicable

to 1956 when we saw the lateness of the date and recognized that practically all the crops had already been planted.

We recognized we couldn't hope to get much reduction in production

and that the expense would be very heavy for what reduction would

be obtained, so we recommended against making it applicable to 1956.

However, the Congress saw fit to pass it otherwise. So we tried to

make it operate as best we could, even though the season was very late.

Mr. MARSHALL. You feel that 1956 would not have been a fair sample of what might be obtained from the soil-bank operation?

Secretary BENSON. I feel sure it could not be, the bill passing as late

as it did. We should have had it before planting time, so the farmer

could plan his operation, and we could have had time to explain the

program to him. That is why I say that 1957 will be the year of real

testing.

AGRICULTURAL CONSERVATION PROGRAM

Mr. MARSHALL. The chairman of this subcommittee, Mr. Whitten,

and myself attempted last year, after the bill was vetoed by the President, to obtain the consent of the Congress to use the agricultural

conservation program which was already on the books and which was

understood, for this past year's operation.

-What would have been your opinion of that, Mr. Secretary?

Secretary BENSON. The ACP program you are referring to?

Mr. MARSHALL. That is correct.

Secretary BENSON. Of course, I feel if we have a program already

on the books which will meet the needs, there is no particular purpose

of passing new legislation.
97

One of the reasons why I have opposed this so-called range-grazing

program is that we now have authority under ACP, at least to enter into a modest grazing program in those areas where there is need for it.

I believe, however, that in the case of the soil bank, it was the feeling of our legal people that there was not sufficient authority in the ACP program to accomplish what we had in mind might be accomplished under the soil bank and to enter into long-time agreements, for exam- ple, as we do under the conservation reserve part of the soil bank. Mr. MARSHALL. Mr. Secretary, I don't mean to imply that you could have entered into a long-time operation as you do on your conserva- tion reserve, but what the chairman and I were appearing before the committee in support of, was to use this program in lieu of the acreage reserve program which did not require that long-time contract. Secretary BENSON. Subsidies, do you mean, for the acreage reserve program? Do you mean to use the ACP program in lieu of the con- servation reserve plan?

Mr. MARSHALL. It at the time appeared we did not have any acre- age reserve program. That was immediately after the President had vetoed the farm bill. We attempted to have the Congress give the authority to use the ACP program—it was a matter of funds and not authority, under the program.

That would have meant that you had a program already under- stood because the agricultural conservation program was a well- founded program.

Mr. WurrrEN. Mr. Marshall, would you yield to me at that point? Mr. MARSHALL. Certainly.

Mr. WHirrEN. Don't you think it well that the record carry at this point the brief which we prepared at that time, showing what author- ity did exist under the law as it then applied? I would like to affirm the statement by Mr. Marshall, when we attempted to make that move and the Appropriations Committee supported us in it, at that time

we had no legislation, we had just lost it through Presidential veto. It was subsequent to our efforts that the new law was passed, but I think it would be well to have that in the record at this point. (The document referred to follows:)

STATEMENT OF CONGRESSMAN JAMIE L. WHITTEN, CHAIRMAN, SUBCOMMITTEE ON AGRICULTURAL APPROPRIATIONS, HOUSE OF REPRESENTATIVES

SOIL RANK AUTHORIZATION, APPROPRIATION NOT LIMITED

Under existing law the Secretary of Agriculture is authorized until January 1, 1957:

"Sec. 1, Subsection (2) : To carry out preventative measures including, but not limited to * * * methods of cultivation, the growing of vegetation and changes in the use of land :"

"Sec. 2, Subsection (b) : On any land upon obtaining proper consent or the necessary rights or interests in such land; Subsection (3), To cooperate or enter into agreements with or to furnish financial aid to * * * any person, subject to such conditions as he may deem necessary ;"

"Sec. 3: As a condition to extending of any benefits under this act * * * the Secretary of Agriculture may in so far as he may deem necessary for the purposes of this act require :"

"Subsection (2) : Agreements or covenants as to the permanent use of such lands * * *"

"Sec. 6: There are hereby authorized to be appropriated for the purposes of this act such sums as Congress may from time to time determine to be necessary."
98

.CONSERVATION PAYMENT PROGRAM—APPROPRIATION FOR ANY FISCAL YEAR

LIMITED TO $500,000,000

•

The Secretary of Agriculture, on such terms and conditions as he may require,

Is authorized to secure: "(1) preservation and improvement of soil fertility;

(2) promotion of the economic use and conservation of land; (3) diminution of

exploitation and wasteful and unscientific use of national soil resources; (4)

the protection of rivers and harbors against the results of soil erosion in aid of

maintaining the navigability of waters and water courses and in aid of flood

control; and (5) reestablishment, at as rapid a rate as the Secretary of Agriculture determines to be practicable and in the general public interest, of the ratio

between the purchasing power of the net income per person on farms and that

of the income per person not on farms that prevailed during the five-year period

August 1909—July 1914 * * * by making payments or grants of other aid to

agricultural producers, including tenants and sharecroppers, in amounts determined by the Secretary to be fair and reasonable * *

"The Secretary may make payments in advance of determination of performance, to persons who fill purchase orders covering approved conservation materials * * * ( Sec. 8, Subsection (b) )."

"Appropriations are authorized for the purchase in advance of the program

year for which the appropriation is made of seeds, fertilizers, lime, trees, or any

other farming materials or any soil terracing services, and making grants thereof

to agricultural producers to aid them in carrying out farming practices approved

by the Secretary * *

The Secretary "shall in every practical manner protect the interests of small

producers * * * ( Sec. 8, Subsection (b) )."

"( d) Any payment or grant of aid made under subsection (b) shall be conditioned upon the utilization of the land, with respect to which such payment

is made, in conformity with farming practices which the Secretary finds tend

to effectuate any one or more of the purposes specified in clause (1), (2), (3),

(4), or (5) of section 7 (a).

Any payment made under subsection (b) with respect to any farm (except for

lands which the Secretary determines should not be utilized for the harvesting of

crops but should be permanently used for grazing purposes only) shall, if the

number of cows kept on such farm, and in the county in which such farm is located,

for the production of milk or products thereof (for market), exceeds the normal

number of such cows, be further conditioned upon the utilization of the land,

with respect to which such payment is made, so that soil-building and soil-conserving crops planted or produced on an acreage equal to the land normally used

for the production of soil-depleting crops, but, as a condition of such payment, not

permitted to be so used, shall be used for the purpose of building and conserving

the fertility of the soil, or for the production of agricultural commodities to be

consumed on the farm, and not for market."

"A payment which may be made to a farmer under this section, may. be assigned, without discount, by him in writing as security for cash or advances to

finance making a crop * * * Subsection (g)"

"Sec. 12 (a) : Whenever the Secretary finds that the exercise of the powers

conferred in this section will tend to carry out the purpose specified in clause

(5) of section 7 (a), or will tend to provide for and maintain a continuous and

stable supply of agricultural commodities adequate to meet consumer demand

at prices fair to both producers and consumers, or both, he shall use such part

as he deems necessary of the sums appropriated to carry out this Act for the

expansion of domestic and foreign markets or for seeking new or additional

markets for agricultural commodities or the products thereof or for the removal

or disposition of surpluses of such commodities or the products thereof. (16

U. S. C. 590 (a).)"

"Sec. 15. To enable the Secretary of Agriculture to carry out the purposes of

sections 7 and 8 there is hereby authorized to be appropriated for any fiscal year

not exceeding $500,000,000.00."

Under such limitation this bill would provide $250,000,000 for the remainder of

this fiscal year, which together with amount authorized for the next fiscal year

would .make a total available of $750,000,000 for the remainder of this calendar

year. If funds are obligated within this year, payments could be made into

calendar year 1957. The balance of the 1.2 billion dollars would be available

for use under the unlimited authority carried in Sections 1 through 5 of the Act,

part I hereof.
99

Secretary BENSON. May I have Mr. Farrington comment on that

point? There was a legal point involved.

The brief which we submitted might also go in the record following your statement, so we would have the complete picture.

Mr. WHrrrEN. I think we should show both sides of it. I think

that is appropriate.

Mr. MARSHALL. Mr. Chairman, I am wondering if just following

this, if it might be possible, if the report was made by the Department,

that we put the report in?

Mr. WHITIEN. We would be glad to have that, also.

(The 'items referred to follow:)

APRIL 21, 1956.

To: Secretary of Agriculture.

From: General Counsel.

Subject: Adequacy of Soil Conservation and Domestic Allotment Act to carry

out the soil-bank program.

This is in response to your request for our opinion as to whether the proposed

soil-bank program embodied in the Soil Bank Act contained in H. R. 12 and, with

slight modifications, in S. 3675 could be carried out without additional legislation if H. R. 10654, providing for an additional appropriation of $1,200,000,000 to

carry out the Soil Conservation and Domestic Allotment Act, as amended, were

enacted.

For the reasons hereinafter stated, it is our opinion that the soil-bank program

could not be carried out without additional legislation.

The proposed soil-bank program consists of two parts: (1) An acreage-reserve program, and (2) a conservation-reserve program.

ACREAGE-RESERVE PROGRAM

Under the acreage-reserve program, producers would be compensated for

voluntarily reducing their 1956, 1957, 1958, and 1959 crops of wheat, cotton,

corn, peanuts, tobacco, rice, and feed grains below their farm acreage allotments

or farm base acreages, whichever are applicable. To be eligible for compensation under the acreage-reserve program, the producer would be required to reduce his acreage of the commodity below his farm acreage allotment or his farm

base acreage, whichever is applicable. He would be required to specifically

designate his reserve acreage and not to harvest any crop from nor graze the

reserve acreage except under certain circumstances. He would not be required

to carry out a conservation practice on the acreage retired from production but

could leave such land idle. State, county, and farm acreage allotments would be

protected against reduction for participating in the acreage-reserve program.

Producers would be compensated for participating in the acreage-reserve program through the isuanee of certificates redeemable by Commodity Credit Corporation in cash or in the commodity.

The purpose of the acreage-reserve program is to obtain a voluntary reduction in the production of commodities that are in surplus by compensating

farmers for their loss of production on acreage placed in the program.

CONSERVATION-RESERVE PROGRAM

Under the second part of the soil-bank program—the conservation-reserve

program—long-term contracts would be entered into with producers for a minimum period of 3 years and a maximum period of 10 years (15 years in the case

of tree cover) under which the producer would devote a designated part of his

cropland to conserving uses. The producer would agree not to harvest any crop

from the designated acreage and not to graze it for a specified period except under

certain conditions. State, county, and farm acreage allotments would be protected against reduction for participating in the conservation-reserve program.

In return for his particpation in the conservation-reserve program, the producer

would be paid a fair share of the costs of establishing the conserving use and in

addition an annual payment which would provide a fair and reasonable annual

return for the land diverted to conserving uses.
100

The objective of the conservation-reserve program is to shift acreage from

cropland to conservation uses, e. g., vegetative cover, trees, or water storage, in

order to assist in reducing surpluses and to protect the national resources.

In view of the delay in obtaining legislation authorizing the soil-bank program.

the President has requested that provision be made for making advance payments

to producers in amounts of not to exceed 50 percent of the compensation which

would become due the producer for participating in the program.

H. R. 10654 makes an additional appropriation of $1,200,000,000 to the Department of Agriculture, to remain available through December 31, 1956, "for necessary expenses to assist farmers to divert a portion of their cropland from the

production of excessive supplies of agricultural commodities, and to carry out

a program of soil, water, forest, and wildlife conservation, as authorized by the

Soil Conservation and Domestic Allotment Act, as amended. * * *" The committee report states that the appropriation is to be used by the Secretary to initiate an acreage reserve and soil conservation program and to assist in improving

farm income by the reestablishment, at as rapid a rate as the Secretary of

Agriculture determines to be practicable and in the public interest, of the ratio

between the purchasing power of the net income per person on farms and that

of the income per person not on farms that prevailed during the 5-year period

August 1909 to July 1914. The report of the minority of the committee points

out a number of reasons why the acreage reserve and conservation reserve programs could not be carried out under the Soil Conservation and Domestic Allotment Act.

The Soil Conservation and Domestic Allotment Act, as amended, embodies 2

separate programs with separate purposes and with 2 distinct sets of powers

for carrying out such programs:

Sections 1 to 6 were enacted April 27, 1935 (49 Stat. 163), and vested certain

powers in the Secretary of Agriculture with respect to the control and prevention

of soil erosion. Under sections 1 to 6, the Secretary is authorized to carry out

certain measures, and to enter into agreements, or to furnish financial or other

aid, to control and prevent soil erosion. Section 6 authorizes such sums to be

appropriated for that purpose as the Congress may from time to time determine

to be necessary.

Sections 7 to 17 were enacted February 29, 1936 (49 Stat. 1148), to replace

in part certain provisions of the Agricultural Adjustment Act (of 1933) which

were invalidated by the Supreme Court on January 6, 1936, in the case of United

States v. Butler (297 U. S. 1). Under sections 7 to 17 of the Soil Conservation

and Domestic Allotment Act, payments and grants of aid may be made to producers for (1) preservation and improvement of soil fertility; (2) promotion

of the economic use and conservation of land; (3) diminution of exploitation

and wasteful and unscientific use of national soil resources; (4) the protection

of rivers and harbors against the results of soil erosion in aid of maintaining

the navigability of water and water courses, and in aid of flood control; and

(5) reestablishment and maintenance of farmers' purchasing power. Section

15 authorizes not to exceed $500 million for any fiscal year to be appropriated

for such purposes.

(1) Activities may be undertaken pursuant to sections 1 to 6 of the act only

if they are for the purpose of control and prevention of soil erosion. Both the

language and the legislative history of the Soil Conservation and Domestic Allotment Act make it clear that the purpose of sections 1 to 6 of the act and the

authority therein granted to the Secretary of Agriculture were limited to the

control and prevention of soil erosion. In substance the Secretary's authority

to carry out programs under sections 1 to 6 is found in section 1. Section 1

describes it to be the policy of the Congress to provide for the control and

prevention of soil erosion and authorizes the Secretary "in order to effectuate

this policy" (emphasis added) to do certain things.

Section 7 (a) states that "It is hereby declared to be the policy of this act

also to secure, and the purposes of this act shall also include" certain objectives

which were not included in the policy stated in section 1. However, section 7 (a)

did not have the effect of broadening the purposes for which the powers granted

to the Secretary in section 1 may be exercised.

Among the enumerated things which the Secretary is authorized to do by section 1 "in order to effectuate this policy * * * of Congress to provide permanently for the control and prevention of soil erosion" are:
101

"(2) To carry out preventive measures, including, but not limited to, engineering operations, methods of cultivation, the growing of vegetation, and

-changes in use of land;

"(3) To cooperate or enter Into agreements with, or to furnish financial or

other aid to, any agency, governmental or otherwise, or any person, subject to

such conditions as he may deem necessary, for the purposes of this act."

In view of the use of the term "this act" in item 3 quoted above, and the use

of the same term elsewhere in sections 1 to 6, inclusive, the suggestion might be

made that the authority granted to the Secretary by those sections could be

used to accomplish not only the purposed set out in section 1, but also the additional purposes set out in section 7 (a). It is clear, however, the authority

contained in sections 1 to 6 may be used only for the purpose of the control and

prevention of soil erosion.

Sections 7 to 17 were enacted primarily to overcome the objections to the

Agricultural Adjustment Act expressed by the Supreme Court in the Butler case.

While section 7 ( a) added purposes which were not included in the original six

sections, there can be no doubt that the Congress intended that these additional

purposes would be accomplished by the exercise of the powers granted to the

Secretary in the added sections rather than by the exercise of the powers granted

by the original sections. In other words, the purposes for which the powers

granted by the original six sections could be exercised were not enlarged by

the addition of sections 7 to 17.

Throughout sections 7 to 17 there are provisions that show that the basic

purposes expressed in section 7 (a) are to be carried out only under the authority

granted in those sections.

Section 13 provided that the powers conferred by the added sections were to be exercised through the Agricultural Adjustment Administration, whereas section

5 provided that the powers conferred "by this act" were to be exercised through the Soil Conservation Service.

Moreover, if the Secretary could accomplish the purposes enumerated in section 7 (a) through the broad powers conferred in section 1, the various limi- tations and restrictions on the Secretary's power contained in sections 7 to 17 could be completely circumvented. For example, whereas section 8 (b) prohibits the Secretary from acquiring any land or right or interest therein under

that section, section 2 (b) expressly provides for the acquisition of such rights in carrying out the purposes of section 1. Likewise, the Secretary could, by conducting the agricultural conservation program under the broad powers of

section 1, nullify the provisions of section 8 (e) relating to increases in small

payments and limitations on payments; the provisions of section 8 (f) for

safeguarding the interests of tenants and sharecroppers; the provisions of section 15 relating to distribution of funds; and the provisions for utilizing

community, county, and State committees of farmers. It would seem abundantly clear, therefore, that the Congress intended that the purposes stated in section 7 (a) could be implemented only in accordance with the provisions of

sections 7 to 17.

The history of sections 7 to 17, inclusive, as added by the act of February 27,

1936, indicates that the Congress did not intend thereby to disturb the provisions

of sections 1 to 6 and that it was in reality adding authority for a separate and distinct program. This is indicated by the fact that S. 3780, as origignally introduced, not only would have broadened the purposes of the act, but also would

have amended section 1 to make it clear that the powers conferred upon the

Secretary by section 1, with the exception of the powers to enter into contracts

with farmers and to acquire lands, or rights or interests therein, were available to carry out the policy and purpose of the act rather than merely the policy

stated in section 1.

It has been the consistent administrative interpretation of the Soil Conservation and Domestic Allotment Act since its enactment that the programs formulated under sections 1 to 6 are entirely separate from those under sections

7 to 17, and this interpretition has been repeatedly recognized by the Congress

in making appropriations to carry out such separate programs.

It is, therefore, our opinion that programs under section 1 to 6 must be for

the control and prevention of soil erosion and may not be used for other purposes such as the reduction of crops in surplus supply—the objective of the

acreage reserve program.
102

(2) Section 15 of the act limits the amount which may be appropriated for

carrying out the provisions of sections 7 to 17 to $500 million for any fiscal year.

Section 16 limits to $500 million for any calendar year the amount which may

be obligated to carry out the provisions of sections 7 to 17. These two sections

read together clearly evidence an intent to limit the program carried out under

sections 7 to 17 to $500 million for the program year. Obligation of a larger

amount is clearly beyond the authority of the present act. Approximately $250

million of the $500 million limitation provided in section 16 has already been

committed for the program year 1956. It would appear, therefore, that approximately only $250 million of the amount proposed to be appropriated by H. R.

10654 could be used for the purposes of section 7 to 17. The bulk of the $1,200

million would be available therefore only for the limited purpose of preventing

and controlling erosion during the remainder of the 1956 calendar year. The

acreage reserve phase of the soil bank is a program to cut back production, not

to control erosion. Therefore, assuming no other legal limitations, not more

than about $250 million of the amount apprpriated by H. R. 10654 wuld be available for carrying out the acreage reserve program.

(3) H. R. 10654 would provide funds for a program to assist farmers to

divert a portion of their cropland from the production of excessive supplies

of agricultural commodities and for a soil, water, forest, and wildlife conservation program, as authorized by the Soil Conservation and Domestic 'Allotment Act. There is a serious question whether the Secretary could, under the

general authority contained in the Soil Conservation and Domestic Allotment

Act, undertake an acreage reserve program such as that provided for in the

proposed Soil Bank Act, which has as its purpose the reduction of acreages

below farm allotments, established pursuant to/the specific legislative provisions

of the Agricultural Adjustment Act of 1938, as amended (7 U. S. C. 1281 et seq.).

The Agricultural Adjustment Act of 1938 was passed by the Congress subsequent

to the enactment of the Soil Conservation and Domestic Allotment Act and

provides specifically for farm acreage allotments and marketing quotas to control

production and marketing. Acreage allotments and marketing quotas are

required to be set at certain levels in accordance with specified standards. Since

the enactment of the Agricultural Adjustment Act of 1938 more than 18 years

ago, conservation programs formulated under the Soil Conservation and Domestic

Allotment Act have never had as their objective the achieving of a level of

production inconsistent with that set by the farm acreage allotments established under the specific legislative provisions of the Agricultural Adjustment

Act of 1938. While commodity payments have been made under section 8 of the

Soil Conservation and Domestic Allotment Act to producers for complying with

acreage allotments (the last such program was for 1943 crops), the acreage

allotments established have been the same as those established under the Agricultural Adjustment Act of 1938. The payments in effect constituted an inducement to the farmer to comply with his acreage allotment. In view of the

fact that the Soil Conservation and Domestic Allotment Act is in the nature

of a general grant of authority consistently construed as authorizing programs

thereunder consonant with the acreage allotment and marketing quota programs

expressly provided for in the Agricultural Adjustment Act of 1938, and the

fact that the two acts should reasonably be construed as parts of an integrated

Federal farm program, it would appear that a program designed to achieve a

substantially lower level of production than that provided for by the Agricultural

Adjustment Act of 1938 should be undertaken only pursuant to express and

unequivocal legislative authority.

(4) The Secretary could not enter into the long-term contracts contemplated

under the conservation reserve program. Under such program, it is contemplated that the Secretary would enter into contracts during the 5-year period

1956-60, to be carried out during the period not later than December 31, 1969,

and that such contracts may extend for as long as 10 years (15 years in the

case of tree cover). The Soil Conservation and Domestic Allotment Act does

not contain authority for long-term contracts. Section 15 of the act provides

the usual authorization for appropriations "for any fiscal year," and section

16 limits the obligations in any calendar year to a sum not exceeding $500

million. The appropriation under H. R 10654 would remain available only until

December 31, 1956.

The Comptroller General has consistently held that under the prevailing

laws, principally Revised Statutes 3732 and Revised Statutes 3679, an annual
103

appropriation cannot be used for long-term contracts, but may be obligated

only for the needs of the year for which the appropriation was made. ( See 9

Comp. Gen. 6; 28 Comp. Gen. 553; 34 Comp. Gen. 432; Leiter v. United States,

271 U. S. 204; Goodyear Tire and Rubber Co. v. United States, 276 U. S. 287.)

Contracts which the Secretary would make under the conservation reserve

program are for more than the needs of the year for which the appropriation

would be made. Without express authority such long-term contracts would

not be authorized. No such express authority is contained in the Soil Conservation and Domestic Allotment Act. While section 3 of the act authorizes

the Secretary, as a condition to extending benefits in connection with soil erosion,

to require agreements or covenants as to the permanent use of land, this

provision would not permit the Secretary to incur a long-term obligation to

the farmer to make payments from year to year.

(5) Section 8 (e) of the act requites that payments made with respect to

any commodity be divided among the producers on the farm in the same proportion that such producers are entitled to share in the proceeds of the commodity,

and that practice payments be made to the producers in the proportion in which

they contribute to the carrying out of the practice. The formula for distributing

commodity (i. e., diversion) payments which, in our opinion, would clearly be

applicable to payments made under the acreage-reserve program and apparently

also to annual payments under the conservation-reserve program, would not be

practicable for dividing the acreage reserve payments or the annual payments

under the conservation-reserve program. As the conference report on H. H. 12

states, "The committee tried for many hours to devise a specific formula or

direction to the Secretary of Agriculture covering the landlord-tenant-sharecropper relationship which would assure by specific legal provision fair treatment of

all concerned. It realizes, however, that these relationships are so different in

various types of farming areas and in different geographic locations, and even

from one farm to the next in the same area, that it is probably impossible to write

into law a formula for equitable sharing in benefits under the Soil Bank Act

which would work fairly in all the multitude of individual relationships of this

type which exist. After the most thorough consideration, therefore, the committee of conference reached the conclusion that the safest way to guarantee fair

treatment of all participants in the soil-bank program is to put into the law

the general rules on which the division of benefits under this act is to be made,

to require that each landlord in applying for participation in the program stipulate in detail how he proposes to share the benefits with his tenants and sharecroppers, and to require the county committee * * * to approve the proposed

division of benefits * * *." The application of the formula provided in the

Soil Conseravtion and Domestic Allotment Act to the payments under the soilbank program would not assure a fair and equitable division of the payments.

(6) The Soil Conservation and Domestic Allotment Act does not contain

authority to protect the State, county, and farm acreage allotments from being

reduced as a result of participation in the soil-bank program. While the

Agricultural Adjustment Act of 1938, as amended, does contain provisions for

diversion credit in the determination of State, county, and farm acreage allotments in the case of particular commodities, these provisions are not adequate

to meet the needs of the soil-bank program. For example, under existing law

only limited credit up to 10 percent may be given for diversion in determining

State, county, and farm acreage allotments for cotton. Under the Soil Bank

Act all farmers would be fully protected.

(7) Under section 15 of the act, funds available for payments under sections 7 and 8 are required to be allocated among the commodities by giving

equal weight to (1) the average acreages planted to the various commodities

(including rotation pasture), for the 10 years 1928 to 1937, adjusted for abnormal weather and other conditions, including acreage diverted from production under the agricultural-adjustment and soil-conservation programs; (2)

the value at parity prices of the production from the allotted acreages of the

various commodities for the year with respect to which the payment is made;

(3) the average acreage planted to the various commodities during the 10 years

1928 to 1937, including the acreage diverted from production under the agricultural-adjustment and soil-conservation programs, in excess of the allotted

acreage for the year with respect to which the payment is made; and (4) the

value based on average prices for the preceding 10 years of the production of the

excess acreage determined under item (3). This formula for the allocation of

funds is not adapted to the soil-bank program.
104

The formula for distributing funds among commodities has not been used

since the 1943 agricultural conservation program, the last program for which

commodity payments were authorized. It will be noted that 3 of the 4 items

of the formula (1, 3, and 4) are based upon the acreages planted to the various

commodities during the 10 years 1928 through 1937. This 10-year period, which

ended 19 years ago, does not give any recognition to changes in the pattern

of agricultural production which have taken place since that time due to technological improvements (fertilizers, improved varieties, insect control, etc.),

changes in dietary habits, competition of synthetics, economic factors, impacts

of war, relative changes in exports, and other factors. Since this formula is outmoded, its use would not result in an equitable distribution of funds.

(8) Section 8 (10) of the act specifically prohibits the acquisition of "any

right or interest" in land. Therefore, contracts could not be entered into under

sections 7 to 17 of the act which would result in the Government acquiring any

right or interest in land.

(9) Section 8 (e) of the act limits payments for any 1 year to any 1 person

to $10,000. In the case of individuals, partnerships, and estates, the limitation

applies to the total of the payments for each State. In the case of other persons,

including corporations, the limitation applies to the total of the payments for the

entire United States. No such limitations are contained in the proposed Soil

Bank Act.

(10) The Soil Conservation and Domestic Allotment Act does not contain

authority for the use of commodities and funds of the Commodity Credit Corporation to help finance the program in the manner contemplated by the proposed

Soil Bank Act.

(11) No provision is made in the Soil Conservation and Domestic Allotment

Act for making advance payments to producers as recommended by the President.

Section 364S, Revised Statutes (31 U. S. C. 529) prohibits the advance of public

money in the absence of specific authority therefor.

(12) There would be no authority for imposing the civil penalty provided

In the Soil Bank Act for willfully grazing or harvesting any crop from the lands

taken out of production, as a protection for livestock farmers.

(13) Aside from the foregoing limitations on the Soil Conservation and

Domestic Allotment Act as a basis for carrying out the soil-bank program, it is

highly desirable that specific legislative authority be obtained before undertaking a program entailing the expenditure of such large sums of money and

involving features so novel to existing law.

R. L. FARRINGTON.

Mr. FARRINGTON. As I recall, Mr. Marshall, the program visualized

by the soil bank was much broader than would have been possible for

us to carry out under the language of the bill which you and the chairman, I suppose, prepared. Yours would have been a 1-year program

and it would have been much more limited in scope. Contracts with

definite terms were visualized in the soil bank as recommended by this

Department.

I think we have a memorandum on that. I don't have it with me.

I haven't read it for some time, but I believe we could insert in the

record the memorandum which discusses our views on the differences

between the two kinds of programs which could have been carried

out under the two proposed bills.

ACREAGE-RESERVE PROGRAM

Mr. MARSHALL. Mr. Farrington, the question does not come up here

particularly as comparinz the program that we wanted in the soil bank

as compared with the ACP program, but I think the comparison rightfully ought to be made between the acreage-reserve part of the soilbank program and the agricultural-conservation program.

Mr. FARRINGTON. That is right. Our brief deals with both the

acreage-reserve and the conservation-reserve program.
105

Mr. MARSHALL. I think that is the point. You did not spend any

appreciable amount of money on the conservation reserve last year,

because you didn't have your regulations out until fall. But the

acreage-reserve program, you immediately made an effort to put that

into operation.

Secretary BENSON. That is correct.

Mr. MARSHALL. I think that the comparison we were making in the

agricultural-conservation program, the chairman and I were proposing that that be done on a fiscal-year basis in order that we could get

something done with the program that we thought was creating some

dilemma in the field.

Now, I mention that because I want to go to the next step. It was

my privilege last fall to be the chairman of a subcommittee that went

out to Sioux Falls, S. Dak., and to Morris, Minn., holding a hearing and

I say advisedly to you, Mr. Secretary, that we fan into some rather

disturbing and amazing things there. I hope that your Department

does analyze the hearings that have been published as to what we

found, from the standpoint of what it may mean to further value of

the program.

Repeatedly we had farmers who came up to us, talking to us about

the acreage-reserve program and pointing out that the land that they

were taking out of production was land that wasn't going to produce

a crop anyway. They pointed out places where the drought had been

such that they were glad to have their land in and get some payment,

but from the standpoint of controlling any crop production, it didn't

appear there was any amount of control.

We have a great deal of sympathy for the people in the drought area.

However, I observed in areas where there was no drought, that pot

holes had been taken out, even to the extent where some rows were

taken out of a cornfield and put into the soil bank and determined on

that basis.

Mr. Secretary, it wouldn't appear to me that the taxpayer had been

given a great deal of protection by the administrators of the program on that sort of thing.

Secretary BENSON. That is very disturbing to me, of course. I will

ask Mr. McLain to comment on that.

Mr. McLAIN. Mr. Marshall, we deal with human beings in our

county and State committees. The farmers elect the county committees. They are not all operating this program completely according,

to regulations. I think you have served on a county and State committee as I have and would recognize that.

In the first place, remember that the Congress in the Soil Bank Act

set out special provisions for 1956 which we tried to carry out to the

letter of the law. We came up here and talked to the people in the

two agricultural committees who were responsible for writing the

legislative history as to what they meant. Mr. Morse did that and he

had some other people with him. We tried our best to carry out the

intention of Congress. I think we have done it fairly well. Now,

this meant that crops were practically all planted. Obviously the

only one who was going to be interested in this program was a farmer

who had a crop that was not going to make too much. Everybody

understood that. That was just part of the law in the way it was

written. We didn't like it a bit better than you are saying you don't
106

like it. The only value out of it as we see it in 1956 is that it did get

some assistance into those areas where they were hit by the drought

and by other conditions. I think from that standpoint the money was

not all wasted and we are frank to admit that.

When it comes to these areas of potholes and other things, of course,

our regulations don't permit that to happen. If it is a pothole that

had no yield in 1957, that will get no payment. That is the way the

regulations are written. Again, if we have evidence that this is going

on in your area or any other area, we would like to have it because we

just don't propose to carry on a program in 1957, 1958, and 1959, that

does this type of thing.

Mr. MARSHALL. Could you place in the record at this point the

regulations which you have sent out that would prohibit putting in

potholes?

Mr. McLAnsr. For 1957?

Mr. MARSHALL. Yes; we would be glad to.

(The information requested is as follows:)

485.214. DESIGNATION AND USE OF ACREAGE RESERVE. (a) The tract or tracts of

cropland constituting the acreage reserve for the commodity must be specifically

designated and identified in the agreement.

(1) The tract (s) of land constituting the acreage reserve must be land that

would be suitable for the production of a 1957 crop of the commodity, and, in the

case of an agreement for wheat on form CSS-800-1 (Soil Bank), Soil Bank

Acreage Reserve Agreement 1957 (Winter wheat), must have been planted to

wheat at least 1 year during the period 1945-56, inclusive. Land which is intended to be utilized during the calendar year 1957 for industrial development,

housing, highway construction, or other nonfarm use, shall not be eligible for

designation as acreage reserve. The county committee shall have the right to

reject the designation of tracts which are of such size, shape, or nature as to

make it impracticable to determine performance of the agreement, or which will

tend to defeat the purpose of the program.

(2) In the case of agreements filed on form CSS-800 (Soil Bank), Soil Bank

1957 Acreage Reserve Agreement (crops other than Winter wheat), for the

purpose of determining (i) suitability of the land, (ii) percent of productivity of

the farm or the tract (s) of land constituting the acreage reserve, (iii) accuracy

of the designation and identification of the acreage reserve, and (iv) whether

the acreage reserve is of such size, shape or nature as to make it impracticable

to determine performance of the agreement, or as will tend to defeat the purpose

of the program, the county committee shall, insofar as practicable, make an

inspection of the farm prior to the time that the agreement is signed by a member

of the county committee. If it is determined by the county committee that the

land designated as the acreage reserve is unsuitable for the production of the

commodity, or that the productivity of the tract (s) of land designated as the •

acreage reserve is less than that indicated by the producers on the agreement, or

is of such size, shape, or nature, as to make it impracticable to determine performance under the agreement, or as will tend to defeat the purpose of the

program, or that the designation and identification of the acreage reserve is

inaccurate, the agreement shall not be signed by a member of the county committee. In the case of such a determination, the producers may, not later than

10 days after the date of written notice of the determination of the county

committee, file a new agreement, subject to all of the provisions of these regulations applicable to agreements entered into on such form CSS-800, designating

other land as the acreage reserve.

(3) In the case of agreements filed on form CSS-800 (Soil Bank), Soil Bank

1957 Acreage Reserve Agreement (crops other than Winter wheat), if the county

committee does not make the inspection prior to the signing of the agreement by

one of its members, provided for in subparagraph (2) of this paragraph, it shall

have the right at any time after the agreement is signed by one of it,s members to

inspect the farm for the purpose of determining (1) suitability of the land, (ii)

percent of productivity of the farm or the tract(s) of land designated as the

acreage reserve, and (iii) the accuracy of the designation and identification of
107

the acreage reserve. If it is determined by the county committee that the land

designated as the acreage reserve is unsuitable for the production of the commodity, or that the productivity of the land designated as the acreage reserve is less

than that indicated by the producers on the agreement, the producers may, not

later than 10 days after date of written notice of the determination by the county'

committee, file a new agreement, subject to all of the provisions of these regulations applicable to agreements entered into on such form CSS-800 (crops other

than Winter wheat) designating other land as the acreage reserve. Such new

agreement shall supersede the original agreement when signed by a member of

the county committee. The execution of such new agreement shall not operate

to release any producer from the civil penalty for knowingly and willfully grazing

or harvesting any crop from any acreage in violation of the original agreement

prior to the execution of the new agreement. If the county committee determines

that the land is unsuitable for the production of the commodity, and the producers do not file a new agreement as specified above, the agreement shall be

deemed terminated. If the county committee determines that the productivity of

the land is less than that indicated by the producers on the agreement, and the

producers do not file a new agreement as specified above, the agreement shall

remain in full force and effect but the rate of compensation per acre shall be

determined as provided in sec. 485.217. If the county committee determines that

the designation and identification of the acreage reserve was inaccurate, the

producers may file a new agreement properly designating the land which they have

treated is the acreage reserve under the original agreement.

Secretary BENSON. May I ask if Mr. Doggett would have any further comments on that point ?

Mr. DOGGETT. I don't believe so, Mr. Secretary. As has been

pointed out, we were beyond planting time and we did everything

that we could to get a normal—a piece of ground that represented the

normal for that farm. As you know we put on a $6 minimum for

total destruction.

As Mr. McLain pointed out, in the legislative history and the language of the act we were almost bound to do that in 1956. It had

nothing to do with reduction in production.

Secretary BENSON. I would like to say, Mr. Marshall, if you do have

any cases where you feel there is a real abuse, we would be very happy

to have you call them to our attention so we can check into them. We

would like to see this program operate with a very minimum of abuse,

and we want to get the best value we can out of the taxpayers' dollar

that is being spent. As you pointed out, it is an expensive program,

and we would like to make it as effective as it is humanly possible to

make it.

Mr. MARSHALL. You can appreciate my feelings, Mr. Secretary, in

having been feeling that I have been somewhat responsible in attempting to draw up such legislation to observe the manner in which some

people have taken advantage of it. It makes me quite unhappy.

• Secretary BENSON. We share the concern, I am sure.

Mr. McLAIN. You will realize, Mr. Marshall, the House Agriculture Committee moved out with a provision at the close of the last session of Congress, which would have continued this type of thing.

ACREAGE RESERVE POLICY

Mr. MARSHALL. I think that last year and recognizing that you had

some problems in connection with it because of the shortness of the

time, I have been getting some of our county weeklies back home and

in other parts of the country and you will observe that they carry

headlines 'Come In And Sign Up For Acreage Reserve—First Come,

First Served."

96-161 0 - 73 - pt. 9 - 12
108

What is the administrative policy behind that?

Mr. McLAIN. We have, as you know, in the law itself maximums that

are set up for each basic commodity to make up the $750 million. This

means, for instance, that with corn which is grown in your area, Mr.

Marshall, that we have a maximum—the prorated share of the $750

million, a little in excess of $200 million.

Obviously we feel that every farmer in this country who grows

corn in a commercial area ought to have an opportunity to participate,

if they want to participate. Now, corn is not a very good example because currently with the law standing the way it is, we are not going

to have to worry too much about overparticipation. But with most

of the other commodities this was a real danger.

We prorated this maximum amount to the States on the basis of

the respective allotment for the State and then in turn that was prorated out to the counties. Our administrative people after very careful consideration put maximums that each individual could apply for

to start with. Then if they desired at the time they applied, they

could indicate how much more they would put in if the moiley was

available.

In some few places in the South and in the wheat areas, we found

that initially there was so much demand for this program that the

people thought there was going to be a scarcity of money. They

lined up at the county office to make sure they were not missed. The

alternative to doing it this way would have been to have reduced the

initial maximum. This would have caused a lot more work administratively. There are several ways that we could have done it, but

we just felt that we had to prorate it out to each area to start with

and then see after a little time what would happen. If it wasn't all

used in other areas, we would transfer the money. That is what we

have done in all cases now. We have told the tobacco, the cotton, the

wheat and the corn people that we are accepting applications up to

this maximum for each farm. There was a little delay to start with

because in a few areas they thought there wasn't going to be enough •

money to go around.

SETTING OF ACREAGE RATES

Mr. MARSHAL. As I understood your comments this morning in

talking with the chairman, in making the rates of payment, you set

the rate on the farm. You do not break that rate down within the

farm, itself.

Mr. McLAIN. The regulations provide that each farm shall be

visited by the county committeeman or one that they designate before

the contract becomes binding on anybody. This means then if the

county committeeman or whoever he designates goes out and finds we

have a bunch of potholes and they will not produce anything, if the

county committeeman was acting in accordance with his inistructions,

he would appraise that land at zero.

Mr. MARSHALL. When would you be inspecting the land that had

been taken out and put in the soil bank?

Mr. McLAIN. The initial inspection is supposed to be taken care of

as soon after the application as possible.

Mr. MARSHALL. How would a committee safeguard against a proposition of a 40-acre tract of land that rents for $100 cash, a 9/12-acre

corn lot put on it, with a 43-acre rental?

4
109

Mr. McLAIN. Will you ask the question again? I miss the one

point.

Mr. MARSHALL. How would a county committee or the Department

of Agriculture safeguard itself on a tract of land of 40 acres that

rents for cash rent of $100 that has a 9/12-acre corn allotment on it,

with a $43 per acre payment?

Mr. McLAiN. I would say there was something wrong with the

committee that appraised the value at $43. That would be very

simple, I would say.

Mr. MARSHALL. You say that would be very simple?

Mr. McLAIN. There is something wrong somewhere. It might not

be the committee, it might be the man renting the land for $100. It

might be a near relative, or somebody for whom he was doing a favor.

Certainly, if this was the real value of the land, something was wrong

someplace. It might not have been the committee if the rental value

wasn't proper.

RESPONSIBILITY OF COUNTY COMMIi i ES

Mr. MARSHALL. Now, that comes back to something that we had

in our hearings last year that came up and I regret to say it is still

prevalent. A number of these committees say they don't have the

responsibility of that sort of thing, that it is the office manager that is

handling that sort of thing.

Mr. McLAIN. The county committee still has this authority, Mr.

Marshall. This is in the regulations.

Mr. Dooarrr. This is the soil-bank acreage reserve agreement and

this is the language that they use:

If the productivity for the tract designated as the acreage reserve is less than

that of the average land on a farm devoted to the production of the commodity

covered by this agreement, the producers shall enter in column B above and

on the supplement to this agreement if applicable, the percentage of productivity

which represents the productivity of the tract as compared with that of the

average land on a farm, devoted to the commodity covered by this agreement. If

the productivity of the tract is determined by the county committee to be less

than that indicated, the compensation shall be adjusted accordingly.

Now, that is a part of the agreement which the producer signs and

we feel that we can't go much farther than that. We can't get into an

argument with the producer as to whether the north half of the piece

will produce 40 bushel and the south half 35. We can't put our

county committees in that kind of position. I think you will agree to

that. If the land is obviously off from the normal, then they will

make the adjustment.

LANDLORD-TENANT OBLIGATION

Mr. MARSHALL. It has been reported to me that our landlords are

putting their land in the acerage reserve end of the soil bank and

depriving tenants of the operation of their farm. In other words,

attempting to put their whole tract in. What regulation do you have

that would prevent that sort of thing?

Mr. Dociarrr. We say that is illegal, but we give the county committees almost full authority. We attempted to establish some guidelines for them in this landlord-tenant relationship. It is a very difficult thing for us from the Washington level to attempt to get into
110

the personal relationships between the landlord and his tenant. We

have told them—we have about two pages I don't think it is worth

the committee's time to read those—establishing what outlines we

could for them and we have said in general, "Do not sign contracts

with landlords when they have removed a tenant to comply with soilbank regulations."

Secretary BENSON. In other words, the county committee has the

authority and the obligation to refuse such a contract if it can be

shown that the landlord is not giving the tenant a fair break.

Mr. MARSHALL. Mr. Secretary, I am glad to hear you say that,

since it seems to be so prevalent among county committees as expressed

before this committee in the hearing last year and it has been expressed to us recently that they feel they have been deprived of that

authority. They feel that that is a matter of the office manager. They

say they do not administer the program. I am somewhat confused.

Secretary BENSON. The office manager works under the direction of

the county committee and the county committee is responsible.

If you have specific cases, Mr. Marshall, we would like to check into

them.

Mr. MARSHALL. I was under the impression that we have some specific cases mentioned in this hearing that we have. If not, I will be

glad to supply them.

Secretary BENSON. All right.

LEGAL PROTECTION FOR THE TENANT

Mr. MARSHALL. Since the law provides for protection of the tenants, what chance is there that in future years the Department of

Justice may sue landlords for the sums of the rents paid where the

tenant was forced off? Does, the tenant have any recourse?

Mr. FARRINGTON. The law requires that we provide rules and regulations for the protection of tenants, regulations which are fair to

both the landlord and the tenant. Assuming our regulations are

sound, and I believe they are, if the landlord and the tenant both

comply with regulations there would be no basis for suit.

Mr. WHITTEN. Where a landlord had a tenant living with him for

many years, and because of this program the landlord rented out a

third of his land, and as a result had to reduce the number of tenants,

which in effect put certain tenants out on the road, in view of the provisions of this law which says that this tenant shall have his share

of the soil bank, and in this instance he was not protected and moved

off, and you make payment to the landlord, contrary to the intent of

the act—notwithstanding that you didn't know it—if in subsequent

years testimony should be carried to the Department of Justice by the

tenant, what are the chances that the Government might go in and sue

the landlord for recovery of the payment that he had received, since

you had since learned that he received it by forcing the tenant oft his

place and the tenant got nothing?

Mr. FARRINGTON. If there is fraud or misrepresentation there would

probably be a basis for suit.

Mr. WHITTEN. Let us assume that you didn't know the facts. Subsequently it develops that the tenant was forced off, and you signed

the contract not knowing it, and you made the payment not knowing

it. It later came to your attention and the facts were clear that he.,
111

had been forced off. What would be the Department's recommendation to the Department of Justice about recovering that money from

the landlord?

Mr. FARRINGTON. There would be a possibility of recovery if he

were "forced off" in violation of our regulations.

Mr. WHITTEN. Are you familiar with how many suits you have sent

to the Department of Justice in years past on facts that weren't nearly

that strong?

Mr. FARRINGTON. We have quite a few cases pending with the

• Department of Justice all the time, Mr. Chairman.

Mr. WHITTEN. Here is a law that provides payment for the acreage

reserve. The man has 10 tenants. They have been with him for

years. He rents 30 percent of his land to you, and 3 out of those 10

• tenants are forced off, and you pay the landlord the full amount of

rent for that 30 percent. That tenant comes to you complaining under

the law which says that his interests shall be protected. You say you

don't think the Department would take any action through the Department of Justice or recommend a suit to recover the tenant's share?

Mr. FARRINGTON. The first question is, did he comply with our

regulations.

Mr. WHrrrEN. Your regulations are to carry out the law and thelaw sets out specific protections for tenants.

• Mr. FARRINGTON. That is right.

Mr. WHITTEN. You wouldn't say that you had written regulations

which would in effect ignore the law?

Mr. FARRINGTON. No, sir.

Mr. WHITTEN. And the law would control, as against your regulations. The law says the tenant should be protected. He wasn't protected. The landlord got all the money. The tenant is out in the

road and he comes and complains to you. What would you do?

Mr. FARRINGTON. The question of protection—in the first place, Mr.

Whitten, I think at any time there is a violation of law or at any time

the parties act unreasonably in connection with the law there is basis

for suit. You say the tenant was forced off the farm. Was he paid

anything? What kind of contract was he under? Was it a 1-year

contract?

There are a number of things to take into account. 

Mr. WHirrEN. Let's say it was on an annual contract, which is

usual in my section of the country. In other words, they rent from

year to year. Is it your idea in the Department that, though the tenant may have been there 20 years on a year-to-year basis, that the landlord, notwithstanding the intent of the law and the provisions of the

law, could fail to renew the next year's contract and thereby get the

full rent on the land?

Mr. FARRINGTON. I would doubt it, sir, under those circumstances.

Mr. WHITTEN. Aren't our landlords facing the Department of Justice in the years ahead, where they formerly had tenants but now don't

have tenants, and collect all the rent?

Mr. FARRINGTON. I would say so if they practice fraud or otherwise

violate the regulations for the protection of tenants.

I would say in the case today, with a man being forced off of the

land and the tenant not being given a lease in order that the landlord

might get the soil-bank payment, there would be a basis for suit.
112

Mr. WHITTEN. You are a reasonable man. The man had been on

the land 20 years, renting the land each year. Suddenly we pass a

soil bank and the landlord gets interested in it and rents the land and

the tenant suddenly disappears. Don't you think there might be a

little connection?

Mr. FARRINGTON. There could be, but there could be other reasons,

too.

Mr. WHirrEN. Wouldn't you feel there likely was?

Mr. FARRINGTON. Yes.

Mr. WHIrrEN. Would that be sufficient to cause the Department

of Justice to go back on the landlord for the tenant's share?

Mr. FARRINGTON. Assuming there was a violation of the regulations.

Mr. WHITTEN. You are talking about regulations. I just had you

agree that regulations are to supplement and explain the law but

never are to be used in place of the law.

Mr. FARRINGTON. That is correct.

Mr. WIIIrrEN. What is the provision of the law on that?

Mr. FARRINGTON. It says in effect that provision shall be included

in the program for the protection of the interests of the tenants.

Mr. WHITIEN. The law then is that the tenants' interests shall be

protected. The only authority they give you about regulations is

that they shall be for that purpose. But the act itself shows that

it is to protect the tenants and leaves it up to you as to how.

Mr. FARRINGTON. Let me read the first sentence of the law on this.

In the formulation and administration of programs under the title, the Secretary shall provide adequate safeguards to protect the interests of tenants and

sharecroppers, including the provision for sharing on a fair and equitable basis

and payment of compensation under this title and including such provision as

may be necessary to prevent them from being forced off the farm.

That is the first sentence of the section which deals with protection

of tenants and landlords. There is some other language there? too.

Now, certainly, Mr. Whitten, I think that a fraudulent or a willful

violation of this section and regulation, which were properly drawn,

might give a basis for suit.

Mr. WHrrrEN. That leaves it where in each instance, where the

tenant claims one thing and the landlord another, you have a lawsuit

as to which applies.

Mr. FARRINGTON. That is right.

Mr. MARSHALL. When we were discussing the matter of disposing

of commodities at competitive rates and talking about the authority

of Commodity Credit this morning, Mr. Whitten, the chairman,

pointed out I think rather definitely what the law specified.

Since this is a committee on appropriations, do you know of any instance when this committee hasn't been willing to provide the funds

necessary to dispose of commodities on the world market, at competitive prices?

Secretary BENSON. No; I can't say that I do, Mr. Marshall.

SALES AGENCY OF THE COMMODITY CREDIT CORPORATION

Mr. MARSHALL. I think it might be well to mention at this point,

too, that this committee was quite instrumental in setting up a sales

agency for the Commodity Credit Corporation that would encourage

them to move commodities.
113

Secretary BENSON. You made such a recommendation, I remember

'distinctly. The sales agency is functioning and I think doing a pretty

-good job.

LOANS TO PART-TIME FARMERS

Mr. MARSHALL. Now, when the Farmers' Home people were before us a short time ago—and I think in fairness that we should say,

Mr. Secretary, they said they were going to look into this matter of

assisting people with loans on a part-time farming basis. I regret to

say that since they were before us there have been additional instances

pointed out to me where people who were engaging in part-time enterprises have a difficulty obtaining farm operating loans. Where they

had been very successful in getting some off-the-farm employment

they were being denied loans on an operating basis, even though the

people who wished to make those loans felt that those loans were such

as to provide a reasonable amount of security since the wages they

were getting off the farm contributed very well.

This was called to our attention, since these people were unable to

get loans from Federal Housing, because they said they were rural

homes. They were people who were long-time residents of their communities and had wished and hoped that they might continue to live

in those areas.

I think in fairness to you, Mr. Secretary, that we should say that

when Mr. Hanson was before us he did say he was going to review

their instructions in that regard.

Secretary BENSON. As I recall, Mr. Marshall, we recommended that

the law broadened so we could make loans to part-time farmers, and I

think that was passed. Now, it is a matter of administering it.

Mr. MARSHALL. This seems to have been an instance where the Congress had passed a law and had provided the authority but the administrators of the program seemed to have tightened it up over and beyond what it might be.

Secretary BENSON. I know we have made a number of such loans.

If you have specific cases where you feel the credit is not being provided as authorized by law we would be glad to know of it.

Mr. MARSHALL. I brought this thing up now because in some of the

comment that was made this morning it seemed to me that your contention was comparable to what contentions were on this side of the

table in making that type of a loan. I just wanted to reiterate it and

make it clear.

Secretary BENSON. We asked for that legislation to give us broadened authority and we expect to use it and are using it.

DROUGHT FARMER

Mr. MARSHALL. I know that you had a press conference on September 6. 1956. Mr. Mahoney asked you a question concerning:

What is the picture for somebody just as you say who does not get a crap,

year after year?

And your reply was—

Well, of course, if moisture does not come and he is unable to raise a crop the

time will come when abandonment of the land will be his only choice. It is just

that simple, and he will look for opportunities elsewhere in agriculture and in
114

indUstry, look for employment elsewhere, because a man cannot continue in- definitely to operate the land and not get a crop unless he has some other source of income.

Now, Mr. Secretary, what I am concerned about is, when you say "It is just that simple," do you mean it is just that simple for him to shift around without any assistance?

Secretary BENSON. No. I mean that the answer is simple. The adjustment is very difficult. Is that a sufficient answer? I could elaborate on it because I have visited with some of those farmers and ranchers who have already left their farms and ranches, taken em- ployment in town. When the rains come they will go back to those farms and ranches. Until the rains do come there is nothing they can do out there to sustain their families.

Mr. MARSHALL. Last fall I had the privilege of going out into what I considered to be some of the best cornland in the United States

'

the land in northwestern Iowa, where I observed young families partic- ularly in a very serious position because of the drought. I think they

were being more severely hurt there than in many areas that had been

more publicized because they have had a high cost of operation, a high standard of living and a lot of other things.

Secretary BENSON. I was in that same general area through thesouthern part and the western part and visited a number of farms. They were hard hit by drought.

Mr. MARSHALL. In my estimation, even though we have had extreme drought in that area for the last 2 or 3 years it would be a real liability to the country for these young families to fzie forced off the land. Secretary BENSON. I agree with that, sir.

Mr. MARSHALL. Certainly it would be inconceivable that that land would continue to be in that kind of unproductive position.

Secretary BENSON. We are all grateful that rain has come to some of those areas that have been hit hard by drought in the last 5 or 6

years. We have pushed our drought program as you know, which provides for feed and also for emergency credit. I think it has been

very helpful.

Mr. MARSHALL. What is the Department doing to assist these folks in northwestern Iowa?

Secretary BENSON. I would have to check the particular area. I

am not sure offhand whether that has been declared a disaster area,

or not.

Mr. McLAix. A part of this right along the river was declared a

disaster area for grazing under the soil bank. Credit has been made available, Mr. Secretary, in those areas, I am sure. This happens to be my State, Mr. Marshall, and I hear about it about as quickly as anybody.

Mr. MARSHALL. I think you have always been fortunate in being next to the best State in the Union.

Mr. McLAnr. Thank you.

Secretary BENSON. He would say that he was right in it, I guess.

RELATION OF MULTIPLE-PURPOSE DAMS TO WATERSHEDS

Mr. MARSHALL. Another thing along that line that we have won- dered about since going out and getting over some of this country,.
115

the Department has been doing some excellent work I think in some

of these watershed programs in putting in some dams and so forth in

the matter of flood control. What consideration have you been giving to the reservoir end of it because supplementary irrigation is getting to be a highly important thing? Do you explore the responsibility

of a multiple-purpose dam when you put these in or do you just think

in terms of flood control?

Secretary BENSON. Mr. Peterson is not here but I feel that the whole

area of possible use is reviewed before these projects go in. This

'question of supplemental irrigation is becoming increasingly widespread, as you know. In fact it is moving clear across the country and

I don't know if there are any of our agricultural States today that are

not doing some irrigation.

Mr. MARSHALL. Would it be a fair statement to make that in connection with the watershed work that you are attempting to put in

dams from a multiple-purpose standpoint is to take care of reservoir

needs, of wildlife, of flood control and so forth.

Secretary BENSON. I have been on a number of these watershed

projects, Mr. Marshall, and I am sure some of them at least would

meet the description you give.

Mr. MARSHALL. That isn't quite exactly what I was getting at.

What I was saying is, the matter of policy of the Department is that

it is your intention that all phases be taken into consideration in buildi ng these dams, a reservoir, recreation, wildlife and flood control?

Secretary BENSON. I think the broad possible uses that might come

from these projects on the part of the public are taken into consideration in the planning of them.

Mr. MARSHALL. What would be the attitude of the Department in

the watershed project where the only value as such would be a matter

.of drainage? Does the Department favor that sort of thing in watershed programs?

Secretary BENSON. I ,am not sure I can answer that offhand, but I

assume we probably would. We would probably look with more

favor on a project that had multiple achievement as a basis for its

operation. We look at each proposed project on its merits, as you

know, and try to be sure that each project conforms with the law as

passed by the Congress. We have rather broad authority, as I recall,

-under the law.

• Mr. MARSHALL. Mr. Secretary, I spent* about 12 or 13 years of my'

life with the Department of Agriculture.

Secretary BENSON. I did not know that.

Mr. MARSHALL. I have always been proud of my association with

the Department of Agriculture.

Secretary BENSON. I have been proud of my association, also, which

extends over a good many years, with some breaks.

• Mr. MARSHALL. My father was the first agricultural county agent

hi the State of Minnesota and he was always and still is very proud

of the fact that he had something to do with the pioneering of the work.

Secretary BENSON. I wouldn't mind being in county agent work

today. I enjoyed it very much.

Mr. MARSHALL. It is certainly fine work.
116

STATEMENT BY REED BENSON

We are somewhat disturbed. We heard a report September 1—thil,

was taken from the Pantagraph of Bloomington, Ill., Saturday, September 1, 1956:

Reed Benson, eldest son of Ezra Taft Benson, Republican Secretary of Agriculture, Friday charged the Democrats in 1952 left the Department of Agriculture

riddled with Communists and a "thalebomb" of socialistic practices.

Do you concur in that statement, Mr. Secretary?

Secretary BENSON. No I do not concur and I do not believe my

son said it. As a matter of fact, I had understood that you were concerned about it and so I have asked my son purposely if the account

of his talk at Pontiac, Ill. as carried in the Bloomington newspaper,.

the Pantagraph, September 1, as you indicate is accurate. He said

that the paper reported, as you have indicated, that we charged the

Democrats in 1952, that they had left the Department of Agriculture

riddled with Communists. My son tells me that that is not true. He

tells me that be did mention that at one time the Department had

harbored such men as Lee Pressman, Alger Hiss, and others, and that

one of the first Communist cells in Government exposed was in the

Department of Agriculture, but these I presume are matters of record.

He has been doing a lot of talking over the country, before political

groups and nonpolitical groups. I have his own word that he has

never made such a statement as he is quoted as having made there.

Mr. MARSHALL. Mr. Secretary, I am very much relieved to know

that, because my observation has been that in the Department of

Agriculture we have people who have dedicated their whole life to

the service of agriculture in a professional way and in other ways.

I am always a bit disturbed when I see something come up that casts

some reflection upon the integrity of the employees of the Department

of Agriculture.

Secretary BENSON. We have been concerned about this because it is

the only time, I think, with one other exception, where we felt he had

literally been misquoted in the hundreds of talks, I guess, he has

given in the last couple of years. He was not traveling under the

sponsorship of his father or the Department of Agriculture. He was

speaking his mind, apparently, and discussing some phases of agriculture.

Mr. MARSHALL. It is certainly regrettable that such a cell did exist

in the Department of Agriculture.

Secretary BENSON. I agree.

Mr. MARSHALL. I think the record was rather clear that former

Secretary of Agriculture Wallace, a great many years ago, was instrumental in moving this cell out of the Department of Agriculture

and breaking it up. I think, too, that the record shows that some of

those employees were in the Department of Agriculture when Secretary Wallace became Secretary of Agriculture, and I am sure that it is not a matter of either the Republican Party or the Democratic

Party holding any corner on attempts to rid this Government of sub- versive influences wherever they may be.

Secretary BENSON. Certainly that is one thing we should unite on,. always.
117

Mr. WHITTEN. To further clear this up, if I may, certainly you

gave your son nothing of this nature upon which he could predicate.

any such charge?

Secretary BENSON. That is right. He had read about the Communist cell, I am sure, that existed in the Department of Agriculture,

but he is pretty discreet and he has made essentially the same talk on

agriculture in many parts of the country. This is the only case I

know of where he was misquoted.

Mr. WHrrrEN. I said a few years ago, when all this agitation was

on, that under your administration you found one Communist down

there. I made a statement, where I differed with your views on agriculture so much, that having found 1 Communist, it just showed what

damage 1 Communist could do.

SUBVERSIVES

Secretary BENSON. Of course we have engaged in no witch hunt in

the Department of Agriculture. I don't think there is any place for

it. We have tried to be alert, of course, as I think any administrator

ought to be, to make sure that the people in the Department of Agriculture are good, substantial, loyal Americans.

Mr. WurrrEN. I think the record should probably show, in view

of this being developed, that the record earlier had shown that probably 2 had been removed in the whole period and as many as 5 had

been let out for one reason or another, not to say they were subversives,

as a total. That is a. small figure from the total number of employees.

However, one is one too many. As Mr. Marshall pointed out, the

cell you mentioned apparently was inherited by Wallace. You will

recall the previous Secretary of Agriculture was a Republican, so

neither side seems to be wholly responsible.

Secretary BENSON. I remember going to the Department at one

time with heads of at least two national farm organizations—at that

time I was executive hea.d of the Co-op Council—and making representations that at least one of these men whom I have mentioned,

who was then in the Department, ought to be out. We had checked

the record officially to convince us that he had no place in the

Department.

Mr. WiirrrEN. I am pleased to know this type of statement was not

caused by anything you had told your son, and. I am also glad to find

out that it was not made by him.

Mr. NATCHER. The President, in his budget message for 1958, stated

that various agencies are being asked to review with the Congress

the interest rates charged by the Government in connection with different kinds of loans, several of which have a fixed statutory maximum

established when interest costs were much lower than today.

INTEREST RATES FOR REA

He further stated that it was desirable that there be more consistency and that more discretion be allowed in determining what

going rates should be, dependent on the period of the loans and their

condition.
118

• Further, Mr. Secretary, in the item-by-item analysis of the budget,

on page 1111 appears a statement pertaining to REA, which reads,

and I quote:

Interest rates are set by statute at 2 percent, substantially below the present

cost of long-term money to the Treasury of about 3% percent. Administrative

expenses are financed by a separate appropriation. Collections of principal and

Interest are deposited in miscellaneous receipts of the Treasury.

Mr. Secretary, I am definitely of the opinion that the sure way to

destroy REA is to increase interest rates and to make loans more

difficult to secure. REA serves every county in my district. REA,

to me, is one of the great achievements of our present-day Government.

Now, Mr. Secretary, I am just wondering if this administration is

planning to recommend an increase in the REA interest rate.

Secretary BENSON. Mr. Natcher, I can only say this, that the Department has no plans for increasing or recommending an increase

in the interest rates on REA loans.

Mr. NATCHER. At present?

Secretary BENSON. To my knowledge, we, have no studies being conducted by the Department with respect to the interest rate or any

interest rate increases.

Mr. NATCHER. There are no studies underway at the present time?

Secretary BENSON. Not to my knowledge.

Mr. NATCHER. Mr. Secretary, do you agree with me that the way

to destroy REA is to increase the interest rates and to make loans more

difficult to secure?

Secretary BENSON. I don't like to even think about destroying REA.

I think it is filling a real need, and it is doing a good job, and I think

'anything that is done ought to be done in the direction of strengthening it rather than weakening it.

Mr. NATCHER. I certainly agree with you, Mr. Secretary, and though

I speak as only one member of this committee, realizing and knowing

-the other members of this committee as I do, I can say to you that

revery member on this committee has proven by his past record that

he is a friend of the American farmer and agriculture, generally.

I sincerely hope that no money authorized or appropriated by this

subcommittee is ever used for that type of a study.

Mr. Wurri-EN. The Secretary's statement was that there .was no

_study being made, to his knowledge. I wonder if the same question

might be directed to the other people the Secretary has in attendance

here, to see if anyone knows of any study or anything of that sort.

Secretary BENSON. I would assume if there was anything, Mr. Far-

-rington would know it.

Mr. NATCHER. I have directed that question to Mr. Farrington and

also to the new Administrator.

Mr. Chairman, I certainly agree with you that if any of the Assistant Secretaries or the Under Secretary or anyone in this room knows

anything about it, he should give this committee all information

requested.

Secretary BENSON. I am sure you recognize, Mr. Natcher, that the

President is not only carrying out his obligation but no doubt his responsibilities to make some inquiries as to whether or not the various

.agencies of the Government are absorbing the cost of the money that is
119

loaned. I think it is only good business to get at least a picture of

what the situation is in all the Government agencies. Of course, the

cost of money has increased as you know, but we have not recommended

any increase in the interest rate for REA.

Mr. NATCHER. Mr. Secretary, I hope if anyone makes a demand in

the future that a study be carried out along this line, that you will be

kind enough to turn over to the President the annual report of the

REA for the year of 1956 and show him table 17, page 24, of that fine

report, showing the agency's net income from lending operations since

the inception of the program through last June 30, which is the sum

of $47,504,355. I think that is a fine record, Mr. Secretary, and that

ought to answer the President's inquiry.

Secretary BENSON. That is a good record.

TOBACCO

Mr. NATCHER. Mr. Secretary, next I want to take up with you briefly

a subject that means a great deal to my section of the United States..

I refer to tobacco. Only recently, Mr. Secretary, the three darktobacco associations which represent most of the dark-tobacco growers

have held a meeting and adopted resolutions providing for the darktobacco program, and I want to call your attention to the resolutions

adopted by these three associations. The first resolution provides that

the associations approve the soil bank as a suitable vehicle by reduction

of the surplus of dark tobacco now on hand, since acreage restrictions

were officially lifted on February 13, thereby permitting the tobacco

grower to place all or any part of his dark-tobacco acreage in the soil

hank.

Mr. Secretary, in lifting the acreage restrictions with regard to

tobacco was necessary and certainly in order.

No. 2, that dark tobacco payments for the soil bank be increased to

50 percent of parity in order to place tobacco in line with prices paid

for other commodities.

No. 3, that the time for placing dark tobacco in the soil bank be

extended to April 1, 1957, since it is considered that the present limit

of February 28 will not allow farmers sufficient time to become.

familiar with the provisions of the law and to determine what they

should do with reference to it.

No. 4, that the 10 percent acreage cut on dark-fire cured tobacco

and the 15 percent cut on air-cured tobacco be restored insofar as it

affects base acreage, and this restored acreage be put in the soil bank,

and soil-bank payments be made on same.

M. Secretary, the Burley Tobacco Association, from time to time,

within the last few weeks, have adopted resolutions pertaining to the

burley tobacco program, and I want to call your attention to some of

these resolutions.

The first resolution adopted by the Burley Tobacco Association that

has been called to my attention provides that acreage limits on tobacco

should be lifted, and this action was carried out by you on February 15.

No. 2, removal of the dollar limit per acre as far as tobacco is concerned; and

No. 3, increasing the soil bank price per pound for burley so it

would be more in line with amounts paid for other agricultural

commodities.
120

I have introduced House Joint Resolution 195, which restores the

,cut entered for dark fire-cured and dark air-cured tobacco, and also,

Mr. Secretary, the bill, H. R. 4690, which amends the Soil Bank Act

with respect to its application to producers of dark fire-cured and dark

air-cured tobacco. Under this bill, the acreage reductions would be

placed in the soil bank.

NEED TO EXPORT TOBACCO COMPETITIVELY

Mr. Secretary, according to my information, the export market, as

far as burley tobacco is concerned, is in bad shape. Burley tobacco

selling on the markets at $64 and $65 cannot compete at the present

time abroad. I am just wondering, Mr. Secretary, if you have thought

of a plan whereby additional burley tobacco might be produced under

a different price schedule just for export.

Secretary BENSON. Mr. Natcher, on the several resolutions I assume

we have copies of those also. If not, we would like very much to get

copies from you that we could consider.

Now, on this question of tobacco exports, we have, of course, as you

can well appreciate, lookell at several proposals for the possible use of

subsidies, for example, to increase tobacco exports.

Mr. WHITTEN. Could I interject there, Mr. Natcher, to point out that

tobacco remains one of the few commodities you have full authority

to offer in world trade competitively. But the Secretary is not using

that authority. And may I call your attention to the report of my

previous visit to Europe, where I pointed out that a subsidy is not required. You have the same authority there to sell competitively as

you have with regard to other commodities.

Secretary BENSON. If you sell competitively below the domestic

market, that is a form of subsidy, surely, Mr. Whitten.

COMPETIVE SALES NOT A SUBSIDY AS TO THE WORLD MARKET

Mr. WHITTEN. Well, it might not be. It might be a subsidy to the American farmer to offset the 14 freight rate increases we have had since World War II. It might be a subsidy to the American farmer

to offset the United States steel prices, the $1 minimum wage, and other costs. But it is not a subsidy for exports, because the law pro- vides for selling what we have and don't need in world trade com- petitively. The fact that you use that authority in law does not mean

you are paying any subsidy.

The subsidy is in the original price supports which, in turn, are

made necessary by these other factors which I have pointed out.

Secretary BENSON. Of course, it costs the Government considerable if you sell it at a lower price.

Mr. WHITTEN. It is not a subsidy if you sell something for what it will bring. If there is a subsidy, it is in connection with the support level and not in the sale.

Secretary BENSON. Well, the Government has to make up the dif- ference, call it what you will, between the domestic price and the export price.

Mr. WHITIEN. If you don't ever sell it, the Government has already

made it up. It doesn't enter into the sale at all. If you sell it, you

cut out storage, you regain world trade for the American tobacco
121

grower, you enable foreigners to have American tobacco. But you are

not touching the subsidy thing, top, side, nor bottom, in the sale itself.

Secretary BENSON. We are selling—

Mr. WHrrrEN. But you are reducing the Government's eventual

loss.

Secretary BENSON. Of course, that is a matter that isn't always easy

to determine. You are reducing the Government's final loss, but if

the export is made at a level lower than the domestic market, the

Government would have to take up the difference. We are doing that

in the case of cotton.

Mr. WHrrniN. Oh, no.

Secretary BENSON. Well, it is the same thing.

Mr. WHrrrEN. It isn't the same thing, and that is the point I am

making. Whatever you have invested in cotton you have invested,

period. Whatever the subsidy arrangement is, it takes effect the day

you buy the cotton. What you may do with it after that has no connection with the subsidy.

Secretary BENSON. But the loss to the Government doesn't take affect then. You may move the cotton out at the same level at which

you took it in, in which event there would be no loss. Or you may

move it out at a lower figure which we are doing now, and the Government takes a loss.

Mr. WHIrrEN. It takes the loss, but it took the loss when it bought

the cotton and didn't use it.

Secretary BENSON. That depends on what happens to the cotton.

Mr. WHirrEN. From time to time I read where somebody in the Department is thinking about going back to the old export subsidy idea,

where you paid a differential to the exporter between the world competitive price and the support price. In that case we keep the world

supply situation tight and in keeping it tight we gradually move

United States acreage overseas. That is borne out by the investigator's

report which we had made. I hate to see you get competitive sales

tangled up with the subsidy. If there be a subsidy, it is in connection

with the support level, which is made necessary by these other factors

in our Government which have built up the farmer's cost.

Secretary BENSON. I will not prolong the argument. You can look

at it either way, I think, Mr. Whitten, but certainly if you take it in at

one level and move it out at a different level there is either a gain or a

loss one way or the other.

Now we have not yet come up with a plan, nor have we had a plan

offered to us, which we felt would result in any substantial export gain,

in the case of tobacco. As you know, our American tobaccos are high-

. quality products, generally speaking, and most foreign buyers are willing to pay a premium for them. fthink we must also recognize that

tobacco is probably the most protected commodity in world agriculture

trade, also.

Many governments are in it, as you know. We understand that the

world's largest importer of tobacco—which participates, by the way,

in these preferential trading arrangements—would probably impose

countervailing duties if we were to utilize export subsidies on tobacco

so we have a serious problem in tobacco. We recognize the problem.

We are consulting from time to time with representatives of the in-
122

dustry, and if we can come up with a program that is workable and that would be helpful, of course we should like to do that. We recog- nize your concern about it, naturally.

BURLEY AND DARK TOBACCO SITUATION

Mr. NATCHER. Mr. Secretary, as you well know, there is quite a dif- ference at the present time between the burley tobacco situation and the

dark tobacco situation.

Secretary BENSON. That is right.

Mr. NATCHER. At the meeting in the Department the question was raised as to whether or not there should be an increase. Burley tobacco has reached that point.

Now, that situation doesn't exist, insofar as dark tobacco is concerned. But there are one or two things, Mr. Secretary, that I want

to point out to you with regard to dark tobacco. For instance in my

section of Kentucky, we produce dark air-cured tobacco. Between

the years 1946 and 1955, types 35 and 36 have suffered acreage reductions from 37,000 acres to 20,000 acres. The reduction has subsequently fallen from 45,600,000 pounds to 27,800,000 pounds. At the

time of our meeting down at the Department to discuss the dark

tobacco situation, it was estimated, Mr. Secretary, at that time, that

that the 1956 production for these particular types would be about

28,400,000, which is an increase of only 600,000 pounds over the 1955

crop.

Now, Mr. Secretary, as you well know during the past few years we

have suffered acreage reductions amounting to about 35 percent, as far

as dark tobacco is concerned. I am just wondering whether or not you

have a true picture of the dark tobacco situation at the present time..

I believe, Mr. Secretary, that the reports from the Tobacco Division

will show that the number of applications on file placing dark tobacco

in the soil bank exceed the money allocated for dark tobacco. That situation certainly doesn't exist as far as burley is concerned. With

12 and 13 cents per pound for fire-cured and air-cured dark tobacco,

up until the time that the order was entered lifting the acreage re- strictions completely, there was not too much incentive to place dark tobacco in the soil bank.

Now, Mr. Secretary, at the meeting in the Department of Agriculture, I made the statement that I believe the acreage reduction for dark tobacco was simply an admission that the soil bank would not work, as far as tobacco is concerned. I didn't think it was in order

at the time it was entered. The acreage reduction for dark tobacco plus the amount placed in the soil bank will mean about a 30-percent

cut for dark tobacco.

That is in addition to the 35 percent reduction over the years and, Mr. Secretary, I don't believe that the tobacco farmer can stand it.

I don't think it is in order. I say to you advisedly in introducing these two bills, I did so with the thought in mind that, if some study

was given at this time to the dark tobacco situation, possibly some relief might be given now.

I wanted to call that to your attention, Mr. Secretary.

I do think that additional study at this time, Mr. Secretary, will show that the acreage reduction for dark tobacco is going to amount to over 30 percent for 1957, and it is just too much.
•

123

FILTER-TYPE. CIGARE.LIES

Mr. Secretary, another matter I want to call to your attention pertains to our new filter-type cigarettes and the many so-called quality

changes that have taken place in the past few years. Additional research on the part of the Department of Agriculture and our landgrant colleges must now be made.

It seems to me we should now have additional research projects

underways pertaining to cultivation, handling, housing, curing, and

marketing of tobacco.

One of the great services that could be rendered to the tobacco farmer

of this country in the way of research at the present time, in my opinion, is to find out what kind of tobacco the market demands, and the

handling, cultivation, and marketing of this tobacco.

I often wonder as to whether or not, Mr. Secretary, the filter is a

device for selling inferior and normally cheaper tobaccos for larger

profits.

This opinion, by the way, is expressed by men of long experience in

tobacco.

Several months ago, Mr. Secretary, the Burley Tobacco Association

of Kentucky gave to the College of Agriculture of the University of

Kentucky, $12,000, which was set up and used to conduct an experiment to determine the content of cigarettes and the relative proportions of leaf tobacco, natural and processed in the various blends.

I have been informed that a great deal of valuable information was

developed by this project, and I hope that something along this line

may continue in the future.

It would be of great advantage and of great benefit, Mr. Secretary,

to the tobacco farmer.

Secretary BENSON. Dean Welch of your college was telling me about

these projects in the State when he was up here a few days ago, and no

doubt has discussed it with our research people. He is also serving

on this new research commission as you probably know.

I don't know but this filter, and mild versus strong types of tobacco

raises quite an issue. It would appear that the filter is being used to

filter out some of the strength from the tobacco and they increase the

strength of the tobacco so the same amount gets through as originally.

At least that is the way it appears to me. I don't use tobacco,

however.

We have had the problem of certain varieties, as you know, and we

have gone into that. Mr. McLain has been in those conferences and

may have some further comment on this,but personally, I would have

to look into it to get more familiar with it before my comment would

mean very much.

Mr. NATCHER. Mr. Secretary, you mentioned Dean Frank Welch.

We are right proud of him in Kentucky. He is an outstanding man

and has done a lot for us in agriculture.

Secretary BENSON. He has been helpful to me and to us in the

Department.

NEED OF EXPANDED TOBACCO RESEARCH

Mr. NATCIIER. A lot of good research has been carried out by the

Department of Agriculture, Mr. Secretary in the last few years concerning tobacco and the tobacco farmer, and the people in my section

96-161 0- 73 - pt. 9 - 13
124

of the United States appreciate the fine research projects that have'

been conducted in the past, and I want to call these additional matters

to your attention because they are important to us at this time.

Mr. Secretary, in my home State of Kentucky we have a number

of men who understand the need for additional tobacco research at

the present time and during the past few weeks I have contacted

these men requesting that they furnish me with recommendations concerning this matter. The following are some of the types of research

suggested that to me need strengthening and expanding in order to,

increase the efficiency of production and marketing. Although there

are important economic, marketing and agronomic aspects of such

researth, the area is predominantly agricultural engineering:

(a) Mechanization of tobacco harvesting and housing: Present

methods of harvesting and housing tobacco require large amounts of

labor. The introduction of labor-saving devices would contribute

importantly to the income and profit of the tobacco enterprise, perhaps both by reducing costs and enhancing the quality of the tobacco.

(b) Better use of labor in stripping, handling, and selling tobacco :_

The present method of selling tobacco at auction sales requires relatively large quantities of labor from the time tobacco is taken to the

stripping room until it is delivered to buyers at the auction warehouse. A study should be made to discover more effective ways of

using labor than now employed, either through simplification of operation or by new or improved mechanical devices.

(e) Light as a factor in the efficiency of marketing tobacco: It is

known that the kind of light used in sorting and handling tobacco,

has an important effect on the grading and evaluation of tobacco

as well as affecting labor utilization. Variation in light is an important reason for variation in the price of tobacco of a given grade and'

quality on auction market. Improved, standardized lighting in the

stripping shed and at auction sale would contribute importantly to.

assurance that tobacco of a given grade and quality would sell for

approximately the same price on a market. Improved lighting is also,

demonstrated as being important in reducing fatigue.

The following are some of the researches that need to be done in the•

area of chemical analysis:

(a) Accumulation of basis information about the industry: A greater effort is needed to obtain fundamental facts about the things that

are happening in the industry. First, it is very important to know

what changes are taking place in tobacco products including the

amount, kind, and quality of tobacco constituting the various products. Of equal importance is basic information on the kind and quality tobacco being produced by farmers.

(b) Accumulation of fundamental information on the biochemical

'aspects of tobacco production: In the past, major researches of the•

experiment stations and the United States Department of Agriculture

have been concerned with breeding, fertility, cultural practices, curing, insect control, and related problems. Greater emphasis now

needs to be placed on the accumulation of fundamental information

on the effects of genetic, physiological, cultural, and curing conditions

on the chemical composition of the tobacco since this is the knowledge

that will be important in the technological approach now developing

at the manufacturing industry level. The effect of chemical corn4
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position on smoking quality of tobacco is very poorly understood at

this time. Alkaloid (nicotine) content is about the only element that

all of the tobacco manufacturers now recognize as important to smoking quality. As these manufacturers obtain more and more information of the effect of chemical composition on smoking quality, it can

be expected that smoking quality will be defined more and more in

terms of chemical composition of the tobacco they buy. This means

that growers must think more and more in these terms in their efforts

to produce a leaf more useful to consumers—the tobacco companies.

(c) Marketing research needs to be expanded: It is becoming increasingly apparent that our present Federal tobacco grade standards are poorly correlated with buying policies of the industry. The

grading service has served a very useful purpose but the grade standards now need to be brought up to date and a way found to make

them more accurately reflect market quality in terms of manufacturers'

needs. Until this can be done, the difficulties now being encountered

in the flue-cured industry and those encountered in the burley industry

3 years ago will endanger the production control program. A way

needs to be found to provide a financial incentive, through realistic

quality standards, for a farmer to produce the kinds of tobacco needed

by the industry. This will undoubtedly have to be concerned in some

way with chemical analysis on the market for the reasons given above.

LEGISLATION FOR RESERVOIRS AND FLOOD CONTROL

Mr. Secretary, on January 3, I introduced in the House bills providing for a more comprehensive development and utilization of

natural water resources and plans in construction of water reservoirs—flood control reservoirs—these bills are H. R. 350 and H. R.

847.

My primary concern is the enactment of legislation providing for

low-flow legislation. The necessity of low-flow legislation is obvious because we look to the rivers more and more for services.

Our expanding population and new uses for water determine that

it is to our best interests and national security that legislation 'be.

enacted to increase low streamflows. With an adequate flow, navigation stages are more economically maintained, the recreational

values of the rivers and streams are expanded.

I know, Mr. Secretary, you are acquainted with this type of

legislation.

I say to you that it means a great deal in the Ohio River Valley,

the Green River Valley, the lower Mississippi, and all parts of my

section of the country.

I hope, if any of these bills are called to your attention, that you

will file a favorable report for these bills.

COUNTY AGENT

One further matter, Mr. Secretary, and I am through. I was glad

to hear you mention a short while back that you were a county agent

and that it was a fine assignment.

I remember last year you stated to this subcommittee that youi

served as county agent and that your salary was $1,800 a year.
126

Mr. Secretary, as a former county agent, you realize the important

position that these men occupy in their respective communities. The

county agents in this country are dedicated men and are qualified

to serve in their capacities as county agents. A college degree is required and their salaries are too low.

I understand the requirements as set forth under the Smith-Lever

Act and know full well that the Department of Agriculture is not in

a position under the present law to arbitrarily fix the amounts of

the salaries of the county agents throughout the United States.

COUNTY AGENT SALARY INCREASE

However, Mr. Secretary, I do know that you, as Secretary of Agriculture, and the members of the Department of Agriculture, are in

a position from time to time in discussing this matter with our landgrant colleges to make certain recommendations that will be of assistance in seeing that our county agent salaries are increased and

place these men in a position whereby they can live and support their

families and educate their children.

Mr. Secretary, I have in my district and in my State fine county

agents, and that situation exists throughout the United States, as you

well know.

These men are well e,ducated and well-qualified men and some of

them have children in college. The salaries of the county agents in

the State of Kentucky and in my section of the United States are below

the national average as far as salaries are concerned.

I say to you quite frankly, as I did last year, Mr. Secretary, that

every effort should be made to place these men in a position where they

can live.

I have never seen men called upon more than they are. Not only

during the day but at night.

Mr. Secretary, I hope in taking up the appropriations and the

different matters with the land-grant colleges concerning extension

work and our other programs, that you can see your way clear to call

this matter to the attention of the proper authorities in the States, and

have this done down through the Department of Agriculture. I think

it is imperative that it be done. I would appreciate it personally as

a member of this subcommittee and I know this applies to the other

Members of the House.

Secretary BENSON. I am very glad to have your views on this, Mr.

Natcher, and I am very pleased to have you make this well-merited

comment, and pay this tribute to the county agent system of our

country.

Mr. NATCHER. Thank you, Mr. Secretary.

LEGISLATION FOR COUNTY AGENTS

There are two bills that I have introduced in the House: H. R. 2002

and H. R. 2023, which seek to amend the Civil Service Retirement Act

pertaining to county agents.

Under these two bills, Mr. Secretary, I am attempting to get the

county agents placed in a position where they can claim time spent in

the vocational agriculture field on their retirement.
127

I think the bills are meritorious bills, and again, Mr. Secretary, in

calling these two bills to your attention, I hope if they are called up

for your approval or disapproval that you can see your way clear to

give a favorable report on this particular legislation.

Secretary BENSON. Thank you very much, Mr. Natcher.

Mr. NATCHER. Mr. Secretary, in going back once more to the county

agents, I think it is a fine thing to have the required number of personnel for clerical assistance with our county agents set up throughout

the United States, but I think it is more important that the county

agent receive a living wage.

Mr. Chairman, I hope you will pardon the reference again to my

district, but, Mr. Secretary, I have 15 counties and 6 of my counties

are low-income counties. They are critically low.

I say to you that the county agents are doing a wonderful job in

those counties. They are carrying the word.

STRAWBERRIES

I want to call one other thing to your attention, Mr. Secretary:

In the Department of Agriculture during the past few months, studies

have been made concerning strawberries. As a result of additional

research along this line Kentucky produced twice as many strawberries in 1956 as in 1955.

Some 20 years ago, Kentucky was one of the large strawberryproducing areas in the United States and this crop comes at a time

when our farmers need the money. I want to express for the people

in my section of the United States their thanks to you and to the

Department generally for the fine research project that was carried

out along this line. It has been of great benefit to our people.

Secretary BENSON. Thank you. I wish we all had a dish of them

right now.

FARM PROGRAM

Mr. ANDERSEN. Mr. Secretary, the chairman earlier this morning

enlarged upon the value of farm income when we look at the general

picture of agriculture. I think the chairman stated—and I agree

hilly with him in that statement—that without a fair level of farm

income, much of the balance of the farm programs is really wasted.

Farm programs make very little difference to the average farmer if

he cannot secure a decent price for what he produces and for the

work he puts in on his farm. It makes very little difference to him,

I repeat, in the final analysis when he is on the way down to going

broke, as to whether the degree of price support is 70 percent or 75

percent.

I am sure, Mr. Secretary, in my study of you during the past 4 years,

that you want to do what is the best for agriculture. You want

exactly what this subcommittee sittingacross the table from you wants,

and that is a good, prosperous agriculture. We differ in certain view- points as to the means of obtaining that prosperity in agriculture.

As I look at agriculture today and glance at this chart that the chairman was kind enough to have inserted in the record this morning,

I see that in 1946, 1952, and 1956, the average income per hour labor

for the farmers in America were respectively 82.8, .82.5, and 70 cents
128

per hour. I think that is a reflection upon the economy of our great

Nation, gentlemen.

On the other hand, when we glance at what wage earners get in

the manufacturing segment of our industry: $1.98 an hour average;

$2.79, in coal mining; $2.79, in construction • $2.11, in railroads; $1.86,

in telephone, and so forth, there is no question but what agriculture

is at the bottom of the totem pole in our economy today. At least,

I feel that.

I am disturbed when I see, Mr. Secretary, that, whereas the farmer

debt in 1946 was $8.4 billion, that rose to $14.8 billion in 1952, and $18

billion in 1956.

That would prove to me that the man who has engaged in agriculture all of his life knows that there is something wrong with the general makeup of our entire agricultural economy, that things are

perhaps worse than the public thinks they are.

When I see that in 1945 the farmer's share of the food dollar was 53

cents and it fell down to 47 cents in 1952, and then down to 40 cents

in 1956, why, there again I am concerned.

I am beginning to wonder where the end of this trend is going

to be. I repeat I know that you are doing all that you believe you

can along with your associates in the Department of Agriculture to

reverse this trend.

NEW PRICE SUPPORTS

This leads me up to my first question: If I can, Mr. Secretary, I

want to get your line of thinking when you announced the new price

supports the other day. What was the line of thinking in the Department of Agriculture that it was necessary to reduce the price supports

on corn, rye, oats, barley, and flax, which constitute the five major

commodities in my particular congressional district—I could add

soybeans to that.

What is the line of thinking in the Department relative to that, Mr.

Secretary?

Secretary BENSON. Putting it very simply, Congressman Andersen,

we have tried to take into consideration the demand and anticipated

supply situations. We have tried to give thought to the eight guidelines which the Congress has provided, which are in the law. We

tried to set those supports at levels which will permit those commodities feed grains and others, to move into consumption and be used

and not pile up in warehouses which in turn would tend to depress

farm prices and probably reduce the use of those commodities.

I discussed the foregoing in my statement. We have had some

concern with the increasing supply of feed grains as you know—

about 10 percent higher than a year ago, I think, overall. The feed

grains are in very heavy supply and we don't feel they can be priced

as if they were scarce. The carryover of corn appears to be very

substantial.

We tried to set those supports in line with what we felt were supplyand-demand conditions that would permit those commodities to move

into consumption, and our best estimates were that those should be set

at about the level of 1955.

And, generally speaking, on the feed grains particularly, I think

that is about the level at which we set them.
S

129

MARKET PRICE AS TO SUPPORT LEVEL

Mr. ANDERSEN. Thank you for your answer, Mr. Secretary.

Now, let me call to your attention the fact that it appears in each

case the 1957 support levels were set just low enough to get below the

current market price in Chicago for that particular commodity. That

is almost without exception. I quote here from the chart ahead of

me in your own statement, Mr. Secretary, as a basis for that statement.

I know that the day following your announcement that price supports would be lower, that the market in Chicago began to drop, the

feed grain level began to go down to meet or be just a trifle above the

price supports which you had announced for 1957.

I think that it is becoming a fact that you do really establish prices

in Washington, here, when you announce the price supports for commodities. You virtually establish the price on that particular commodity. I will ask the question when I come to the point. •

I want this to be a connected record. I want to give you every

opportunity to answer. I am becoming satisfied in my own mind

that what we do here in Washington and in the Department of Agriculture toward establishing prices

'

virtually puts a lid on those prices

in the terminals in the United States, and that affects practically every

commodity that we produce. And when I watched the break that

ensued following that particular announcement, I asked myself this

question: How foolish can we be here in Washington, D. C., both the

Congress and the Department of Agriculture, when here we are looking for a little prosperity in agriculture, trying to bring the prices

up to a fair level—and I don't call 70 percent of parity a fair level,

nor 75 percent—but how foolish can we be when we, by our actions

here in Washington, D. C., both in the Congress and in the Department of Agriculture, more or less tell the people in the trade: "It is

all right with us if you don't pay more than $1.15 for rye; it is all

right with us if you don't pay more than $2.92 for flaxseed, 60 cents

for oats, or 94 cents for barley.

I wonder how many in this room have tried to raise barley year in

and year out, and expect to get anywhere near a fair return if you

have to sell it for 94 cents. That, Mr. Secretary, will mean about

78 cents back in Minnesota.

Do you have any comments on my statement?

Secretary BENSON. You understand these prices we have here are

farm prices and not Chicago prices.

Mr. ANDERSEN. So, even assuming that, they are still not high

enough. I am quoting frm your parity level, here.

Secretary BENSON. The parity level is as stated. The actual prices

are farm prices as of January 1957.

Mr. ANDERSEN. You believe 70 percent is enough to place beneath

the feed grains in the final analysis?

HIGHER SUPPORT PRICES

Secretary BENSON. I would like to see the prices higher and see the

support levels higher.

Mr. ANDERSEN. May I ask you this question: Why don't you set

them higher?
130

Secretary BENSON. If we set them higher than supply-and-demand conditions warrant, it has the effect of moving these commodities into

Government warehouses, and not into consumption.

CORN SUPPORT PRICE

Mr. ANDERSEN. Let me ask you this $64,000 question. Why did you

say in the election year that corn should be worth $1.50 for com- pliance corn, and $1.25 to those of us who for some reason or other had to open up? If that is all right in the spring of an election year,

Mr. Secretary, why isn't it all right now to put that same figure on corn?

Secretary BENSON. These figures on the feed grains

Mr. ANDERSEN. Could you give me your line of reasoning for plac- ing those supports last spring on corn, sir?

Secretary BENSON. These figures on the feed grains are right in line with what we had set them at in 1955.

Mr. ANDERSEN. I am talking about the spring of 1956.

Secretary BENSON. In 1956 they were raised by act of Congress;

the feed grains were.

Mr. ANDERSEN. The President came out further, Mr. Benson, following the veto, and stated the supports that would be placed beneath the corn; did he not?

Secretary BENSON. He did on corn.

Mr. McLAIN. This is correct on corn. On feed grains, of course,

the Congress did it.

Mr. ANDERSEN. And I am referring to corn. I am asking this

question.

Secretary BENSON. And I think the corn support was set in line

with the support on the other feed grains, as I remember, and then, administratively, we provided for a lower support on noncompliance

corn.

That was done administratively, $1.25 a bushel, which we estimated

would be in line with the market, and would permit the corn to move

into consumption.

Mr. ANDERSEN. And isn't the blunt truth of the matter in relation

to placing those supports last spring that that was more or less offered

by the administration, by my administration, as a palliative, so to

speak, as a little hypodermic to the fact that he vetoed the farm bill?

Isn't that a fact that it was given out to kind of make the farmers feel

a litle bit better because he had turned down the farm bill?

Secretary BENSON. I am sure there were other reasons.

Mr. ANDERSEN. That is how I took it and I think I have what you

call a little commonsense and I am a corn farmer in my own right.

Secretary BENSON. I think, Congressmen, there was real disappointment on the part of a lot of us that the soil bank was not passed

early enough to get into real operation last year. And farmers were

in a squeeze.

Mr. ANDERSEN. Mind you, I am not saying you were responsible

for those particular supports as put on corn last spring, but the point

is, I am asking this question. If they were good then in an election

year—and a lot of my constituents asked me this question—they say,

'Carl, if your Republican administration saw fit in April 1956 to put

$1.50 nationwide average support under corn, under compliance corn,
131

and $1.25 under all the corn you can produce regardless of whether

you are in the program or not, why can't they do that this year ?"

Secretary BENSON. Well, Mr. Andersen, the supply is greater this

year than it was a year ago. The grains total, as I remember, about

10 percent higher.

Mr. ANDERSEN. YOU Must Cut how many cents a bushel off of Compliance corn in your supports, Mr. Secretary? You have announced

a cut nationwide of 14 cents a bushel; have you not. From $1.50 to

$1.36 as a figure; is that correct?

Secretary BENSON. I think that is correct.

Mr. ANDERSEN. I am speaking about national average.

Secretary BENSON. Yes.

Mr. ANDERSEN. What are you going to do with noncompliance corn

this year? I heard Mr. McLain discuss that before the Committee

on Agriculture the other day, the legislative committee, and I may

say I was really more attentive to attendance there, Mr. McLain, than

some of the committee.

Mr. McLAIN. I noticed that, and I very much appreciated it.

Mr. ANDERSEN. I wanted to see what was going on.

Mr. WHITTEN. Mr. Andersen, we use this figure of 14 cents a bushel

reduction in corn. Nobody worries about $1.50 or $1.56, but I wonder

if we should have inserted here the proper calculations to show what

reduction that will be in the corn farmer's income throughout the

country.

Mr. ANDERSEN. I will ask the Secretary to ask one of his men to

estimate what that 14-cent-per-bushel reduction means on 3,400 million bushels of corn which, in all probability, we are again going to

produce in 1957. I say "again produce," gentlemen, because I can't

see anything in the offing in this legislation reported from the Committee on Agriculture which is now before the Rules Committee to

hold out any hopes that we are going to do anything worthwhile on

the corn situation.

Secretary BENSON. First of all, Congressman Andersen, that would

not be a true picture.

First, it should be noted that the actual sales off farms where produced of a 3.4-billion-bushel crop would probably be in the neighborhood of 1 billion bushels.

There are too many assumptions which have to be made in making

an estimate of the effect of the 1957 price-support announcement.

These are:

(1) Whether or not there would be price support to noncooperators.

(2) The degree of cooperation.

(3) The free-market price.

(4) The CCC sales program.

Mr. ANDERSEN. A big bulk of it, of course, is put into livestock, but

I have never agreed with you on this point through the years. You

say that price supports mean—you have said this continually, Mr.

Secretary, and you honestly hold the opinion that price supports mean

little to the average Minnesota farmer because only 11 percent of

what he produced in the line of grain is covered. That is in terms of

basics; that the bulk of what we sell is livestock, and therefore the

Minnesota farmer shouldn't worry too much about this 14 cents a

bushel.
132

Secretary BENSON. I didn't say he shouldn't worry too much about

it, but I indicated that, relatively, only 11 percent of the farm income

in that State comes from the basic commodities.

Mr. ANDERSEN. Yes, sir.

CORN PRICE AS TO LIVESTOCK

Now, according to that same line of reasoning, we could throw corn

down eo 10 cents a bushel, and what would happen eventually to hogs,

cattle and poultry? You know that they would become worthless

through such extreme overproducing.

I claim this, that this little bit of corn or cotton, or anything else

that moves in the market, that if we protect that, we will protect

everything alined with corn, everything fed out of corn. All through

the livestock of our Nation. That is where I disagree with some of

the economists in your Department.

I have grown enough cattle and sheep and hogs to know that eventually if you have cheap feed you will have cheap livestock. One

follows on top of the other.

Secretary BENSON. And, of course, our efforts to reduce the amount

of corn have been ineffective, as you know.

Mr. ANDERSEN. Getting back to my original question, I still can't

see why you reduced the price supports on the feed grains produced

by the farmers in my area—and I refer to the surplus-producing area

of the Midwest, because I can't see where it helps the economy of our

Nation.

Mr. MORSE. Mr. Andersen, may I enter here?

Mr. ANDERSEN. Yes, sir.

Mr. MORSE. Beef is a very substantial part of our meat supply.

Mr. ANDERSEN. That is correct.

Mr. MORSE. And beef is only to a limited extent dependent on grain.

Most of the beef is made on grass, hay, silage and roughage. The

same is true of lamb and mutton and pasture is used even in good hog

production. We produce part of the pork, as you know, on pasture

and roughage.

Mr. ANDERSEN. A very small part, Mr. Morse.

Mr. MORSE. When it comes to dairy products, there is a very substantial part of dairy production from hay, pasture and roughage. Farmers can get up to 85 percent of the milk capacity of cows without grain.

I think you would want to look pretty carefully at the price support

on feed grains as being the controlling factor in prosperity in the

area of meat, milk and eggs, and the level at which these commodities

sell.

Of course, on the other side of the picture, the dairymen and poultrymen, and others, the beef cattle people and hog producers are

continually raising questions and say "Look, we do not have price

supports on our commodities, and why, therefore, should there be

strong price supports on feeds, when feeds are a cost item to us?"

Mr. ANDERSEN. Right there is where the ideology of Mr. Benson

and yourself had so imbued some of my good farmers that they really

believe that. They really believe that the price support on corn has

nothing to do with beef cattle, the feeding of beef cattle or hogs. I

think it has everything to do with the feeding of cattle.
133

Mr. MORSE. I am speaking of beef production as a whole.

Mr. ANDERSEN. Why, certainly, beef production as a whole.

Now, Mr. Benson, I remember back in 1953, the first conversation

I had with you at that table. I called to your attention a speech you

made at Denver, in which you told the beef cattle men out there

they were suffering because of high-cost feed grains. I criticized

you then, just as I am trying today, 4 years later, to show you gentlemen—and I think Mr. Benson admitted it last December, that there

is a distinct relationship between cheap feed grain and cheap livestock in the final analysis. I don't agree with you, Mr. Morse, when.

you say that these farmers who feed beef cattle and hogs are not interested in price supports. Perhaps they may not be interested,

but they don't know that when Carl Andersen and his partner, for

example, produce 9,600 bushels of corn, as we did this year, they don't

know that when we had a fairly decent price support of $1.18, it

was noncompliance corn, we sealed it for $1.18, the fact that we

could get $1.18 by sealing it, kept us from going out and buying some

lambs or some steers. We were satisfied with that. We had made a

little profit.

You reduce the price support much below that $1.18, Mr. Benson,

that you were kind enough to put there last year on noncompliance

corn—there is going to be a lot of it this year—if you take that away,

what are you going to do with the corn market?

We will produce over 10,000 bushels next year. We will be forced

to—that is, this year—because that is about the only decent crop we

can produce in southwestern Minnesota. But we are not going to

sell that corn beneath $1 a bushel to other farmers or $1.10. We

are going into the feeding business. Now, I am talking of just what

one actual farm line of thinking is. We are not going to sell that

corn on the market at $1.10 or $1 or $1.05. Don't think for a minute

we will. We will go out and do as we have in the past, sometimes

produce 400 pigs in one year, put them on the market. But then what

are we doing when we do that? When the support price for the corn

is so low, it is going to force us to get in there and produce hogs

that aren't needed. It helps us make things worse for another man

who likes to feed hogs and likes to fed cattle and likes to fed lambs.

Gentlemen, that is the basic question. That is why I question, Mr.

Benson, your good judgment, or the good judgment of those in your

Department who have urged you to do this when you lower the priee

supprts beneath feed grains any lower than they were, and I say

that in all sincerity. I think it would be much better for the farm

economy if you had announced, instead, that you were going to place

• those feed grain supports somewhat in line with what they were this

last year.

Mr. MORSE. Congressman, part of the problem that we have in corn

and feed grains is supports at too high a level. I made a talk on

competition for farmers' markets in your State on the 7th of February. When you get corn up to price support levels where it has

been, the cattle and dairy farmers tend to shift away from relying on

corn and proceed to make maximum use of pasture, hay and silage and

other feeds. The corn is cribbed up, as you know, in the Corn Belt,

and often is not sold. That has happened repeatedly. If feed costs

are out of line with the price at which the meat, milk and eggs sell,
134

they will economize in every way they can and they will shift to feeds

other than grains where possible. Farmers are not confined to any

single feed item. That is a part of our problem in connection with

markets.

Further, we have had this tremendous shift in corn production into

areas where more of the grain was formerly supplied from the Corn

Belt. The Corn Belt can grow corn to better advantage than many

other areas. Now other areas are expanding corn and feed grain

production where they would normally be using their land for pasture,

or other crops. They are moving to supply the corn which they have

been buying in larger amounts from the Corn Belt.

Mr. ANDERSON. Now, Mr. Morse, I contend, and I want to give you

and Mr. Benson and Dr. Butz all the opportunity you want to answer

these questions, and I appreciate the statement you have made.

Mr. Benson, I still can't see the philosophy of the Department of

Agriculture in deciding to announce, as they did, a lowering in the

price supports beneath feed grains. I will close that subject, unless

you have something further you want to add before we leave the

subject.

CORN SITUATION

Secretary BENSON. I would like Dr. Butz to comment on it.

Dr. Burz. I think there is a broad philosophical explanation behind

this adjustment in price supports on feed grains. Let me illustrate

in terms of your own farm situation, which you so aptly described. I

think you said you produced 9,600 bushels of corn last year which you

sealed.

Mr. ANDERSEN. I sealed for $1.18 for the noncompliance corn.

Dr. Bun. You said if it was something below $1.18 you would have

fed the corn.

Mr. ANDERSEN. I would certainly think of feeding the corn and

making arrangements to feed it; yes, sir.

Dr. BUTZ. Now I come back and ask what will be the ultimate disposition of the 9,600 bushels of corn you raised last year? It will

either be used for food purposes in America or for feed purposes in

America, or exported under some of the various export techniques

we have.

Mr. ANDERSEN. Some might go into starch or go abroad.

Dr. BUTZ. Or it could go into industrial use. It will not remain

indefinitely under Government seal.

Mr. ANDERSEN. That is right.

Dr. BUTZ. We now have something like 1,200 million bushels owned

by the Government or under loan to the Government. The management of the Commodity Credit Corporation has been quite concerned

about storage space when this fall's corn crop matures, particularly

if we have a large crop.

There is a practical limit to the amount of corn that the Government can hold. It has been estimated that this year our feed grain

production will exceed consumption by some 4 million tons. The

other day we figured out about what that would mean in increased

pork production if the entire 4 million tons were fed exclusively to

hogs. Now, I recognize that you don't feed all your feed grains to

hogs, but we have made this simple conversion. This would result

in approximately 8 to 9 pounds per person in America of live hogs.
135

If you put that on the basis of pork, this would be an increase of approximately 6 pounds of pork per person in the United States.

I recognize that includes the infants who don't consume much, as

well as the old people, but we calculate our per capita consumption

in terms of the total population. I think that if we can move in the

direction of a modest price adjustment that moves these surplus feed

grains into a utilization for which they are best adapted in this country; namely, the production of meat, milk, eggs, and so forth, it won't

take a very great increase in per capita consumption to ease this

problem we have of pricing this material into Government warehouses,

of moving toward increased production controls on our producers.

The 'philosophy back of this, and I am sure the Secretary supports

this, though he didn't touch upon it, is that we want to move in the

direction of freeing agriculture from these burdensome agricultural

marketing controls under which it now suffers.

Mr. ANDERSEN. Before you get too far away from what has been

said, let me check you up there: Do you mean to tell this committee that

it is necessary to lower the prices on what we produce in order to get

control of production? Is that the philosophy under which the

Department of Agriculture is working?

Dr. BUTZ. I beg your pardon? Do you mean in order to free production from controls?

Mr. ANDERSEN. No; in order to get control of production of that

commodity.

Dr. BUTZ. I am not sure I get your question.

Mr. ANDERSEN. Well now, you said by lowering the price supports

you could get the farmers to produce more hogs, poultry, eggs, and

so forth. I wonder if you are conveniently forgetting all the Department has had to say about overproduction being responsible already for very low prices on these livestock products? Will not your

cure be worse than the ailment?

Dr. Bun. All I know, Mr. Andersen, is for these commodities,

where we have had high mandatory price supports, we do have in

every case production controls. In corn they are not mandatory. In

the case of feed grains, where we have had our price supports at 70 or

75 percent of parity, it has not been necessary to have the production

controls.

Mr. ANDERSEN. Well now, I don't think it is necessary—I don't think

it is necessary, Mr. Secretary, to reduce the price supports. You

have made it clear that you prefer to divert corn to livestock production and yet you are not at all prepared to cope with breaks in the livestock market. Now I am coming into a subject that I want to com-

• pliment you a little bit about.

Secretary BENSON. Thank you, sir.

EGG MARKET

Mr. ANDERSEN. I want to compliment you for your prompt action on

reentering the egg market. But in relation to the egg market, I have

an instance brought to my attention the other day that a farmwife

living near Fargo, N. Dak., took eggs in, got 23 cents a dozen for top -

eggs, and the consumers in that same town pay 60 cents a dozen for

them in some cases, and I think that is outrageous.
136

Secretary BENSON. If those are the facts, I think that is outrageous.

Mr. ANDERSEN. That is an extreme case, but it is in accordance with

a letter which came to my desk just the other day. I wanted to ask

you what you thought about those particular spreads. I think you

have said you think they are outrageous

'

and I am sure you do, but

I do want to compliment you, sir, on what you say you have done

toward helping to get in there and get a little more than 24 cents a

dozen for top grade—A eggs for the farmers in western Minnesota.

Secretary BENSON. Thank you.

Mr. ANDERSEN. Mr. Secretary, I want to commend you for the position you have taken on the soil bank in recent months. First, in general, you and your staff have done an excellent job of trying to sell

the program, not only to the farmers, but to the public as a whole.

You have helped to quiet both the critics and the sceptics, and we do

appreciate that.

SOIL BANS

Furthermore, I admired your efforts last summer to keep the soil

bank from becoming a welfare, or a crop-insurance program, and I

wrote you at that time that I was upholding you in that position.

No one is more sympathetic with the plight of Midwest agriculture

and farm people than you are, or myself, but I like to protect the

integrity of our farm programs, and I thought your position on that

was very sound at the time.

Unfortunately, there are many people who would use or even abuse

the soil-bank program for every reason, but that for which it was

designed. We should keep our eye on the objective and that is to

reduce surplus production and at the same time build up our soil for

future needs. I think Mr. Marshall mentioned earlier today that he

and I were the original authors of the soil-bank legislation in the

Congress. I recall, gentlemen, a year before I ever called it to your

attention, Mr. Benson, here, in the spring of 1954, I recall how in my

talks around my district relative to that particular area, I brought out

to the farmers in my audience that what I wanted to see done was

average, good productive land taken out of production and have the

farmer paid a sufficient incentive to have that done, and I thought if

we could take 30 or 40 million acres of land out of production we

wouldn't have to argue much about the degree or level of price supports on any of our commodities.

ACREAGE RESERVE

Now, the acreage reserve is production reduction, and nothing else,

Mr. Secretary. That is what I call the acreage reserve. It is reduction of production.

Properly administered, it can no doubt help reduce our surpluses,

but it is expensive, and I hope you will do all you can to see that this

section of the program is not abused, Mr. Doggett. I am looking

right at you when I say that.

We certainly,do not want to see nonproductive or the lowest types

- of cropland going into this program. What we are after is average,

good producing land for the particular crop under the acreage-reserve

program.

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4
137

Do you feel, Mr. Secretary, that you have adequate safeguards for

that, so that the American people will get their money's worth in crop

reduction for the hundreds of millions of dollars that the Department

asks us for in this particular budget? I am referring to the acreage

reserve, here.

Secretary BENSON. No one can say with certainty. We are trying

to use every possible safeguard and to see to it that we do get reduction

for the money spent. We will know better at the end of this year.

So far, we are encouraged.

Mr. ANDERSON. I agree entirely with what you have had to say

previously, today, that the soil bank has not had an opportunity as

yet to be even tried. You must have a full year's operation.

Secretary BENSON. That is correct.

Mr. ANDERSEN. We have a better idea right today, Mr. Secretary,

of some of the problems facing us than we did at this time last spring.

Secretary BENSON. That is right.

Mr. ANDERSEN. Thank you for your answer, sir.

CONSERVATION RESERVE

Now, the conservation reserve is, to me, personally, the real soil-bank

program. That is why I was surprised to learn last year that the

Department had set a national average payment rate of only $10 an

acre for the conservation reserve. Then I was shocked to learn from

some of your officials that the Under Secretary had laid down the policy that only class 5 land, or the poorest land we have, should be considered as available for the conservation reserve; is that right, Mr.

Morse?

Mr. MoRsE. No, sir. In the first place, I don't lay down the policy

for the Department of Agriculture.

Mr. ANDERSEN. Did you advise that?

Mr. MORSE. I don't ever recall referring to class-5 land.

In working with the congressional committees, working on the soilbank legislation, I repeatedly made this statement: That in the acreage reserve, obviously, we wanted to get some of the better or at least

average land out of production to cut back on production. The committees seemed to be in agreement.

Mr. ANDERSEN. I am talking about conservation reserve, here.

Mr. MORSE. Yes. But on the conservation reserve, we repeatedly

discussed in the hearings that we expected the poorer cultivated land,

the land in crops that needed to be conserved, to go into the conservation reserve. Hillsides that are washing, land out in the Great Plains

country in drought areas that may be blowing, or subject to blowing;

so that in addition to getting a rtduction of production off of these

lands, that we would be building up the soil—conserving fertility and

building productivity for the future.

Now, then, the class of land that we would expect under that approach in Iowa or your State, for instance, to go into the conservation

reserve, would be quite a different level of productivity that we would

expect to get in some of the mountainous, hill areas, or in the highhazard areas of New Mexico and other States.

Mr. ANDERSEN. Well, Mr. Morse, the fact that there was practically

no compliance insofar as conservation reserve is concerned out in the
138

Great, Plains, shows that that was worthless in trying to get any land out of production.

Secretary BENSON. That is a national average figure. It is higher in some areas than in others, depending on the productivity of the land.

Mr. ANDERSEN. I understand. Six dollars was perhaps paid out in the New Mexican drought areas. New Mexico, by the way, utilized its full program of conservation reserve money, as you know. A lot of this land went into conservation reserve, especially in the drought

areas, and I am glad it did, because what I understand of it, Mr. Doggett, that means that land won't be farmed for the next few years.

Is that a fact?

Mr. DOGGETT. The next four.

Mr. ANDERSEN. That is fine. Even if we have to take a drought to

get it started, gentlemen, it may be money in the bank as far as con- servation is concerned, to get that land out.

Mr. MORSE. When they get rain down in the Southwest, they will

produce grain sorghums and feed grains, and if the land has been

taken out in the conservation reserve they will not.

Mr. ANDERSEN. They will not be able to put that land into any crop

for the next 4 years.

Mr. MORSE. That is right.

Mr. ANDERSEN. I look at it from this viewpoint, then, that perhaps

that money wasn't entirely wasted, and certainly we know they needed

the income down through that area, and so rthink that even in this

operation, gentlemen, why, I could get up on the floor of the House

and make a pretty good argument that that money was well spent.

But getting back to this other, Mr. Morse, if that kind of philosophy

is in the Department of Agriculture, that only the poorest, generally

speaking, of the land should go into the conservation reserve—that

is giving the farmers the opportunity only to do that, and limiting it

to a national average of only $10 an acre, I think that philosophy is

most damaging to the program and will defeat it even before it has a

chance.

Mr. MORSE. There is no limitation on the class of land and it will

depend upon family conditions and many other situations that surround individual farms.

I was interested in reading some articles that appeared in the

Farmer, in your State. There were several examples set forth there

where entire farms had been put into the soil-bank program.

In one instance, the people were old, as I recall it, and wanted to

reduce their farming operation. So, between the acreage reserve and

the conservation reserve, they were putting their entire cultivated

land into the soil bank.

There is no barrier against that. That is their decision. From

farm to farm, they make such decisions.

Mr. ANDERSEN. NOW, Mr. Secretary, what Mr. Marshall and I

originally intended years ago was that the good average cropland

would go into the conservation reserve under contract for 3 to 5 or

more years, and that the best of soil-conservation practices would be

applied to that land.

Let me illustrate: In Minnesota in the areas where we are contributing the most to surplus feed grain production—and that happens

to be my congressional district in particular—southwestern Minne-
139

sota—and the same would be true in the good corn areas of Illinois,

Iowa, Indiana, Nebraska and so forth, in normal years without a

drought, I am told that the Department is only allowing about $11 an

acre on the average for the conservation reserve.

In my district, the farmer pays as much as $3 an acre in taxes alone

on his land, and if you will check with your soil bank people you will

find, as I have stated before, virtually none of that good land going

into conservation reserve.

LOWER CLASSES OF LAND FOR CONSERVATION RESERVE

Is it the Department's line of thinking, Mr. Secretary, that you are carrying out the intent of the Congress by holding this conservation

reserve down to the drought areas and to the very lowest classes of cropland?

Secretary BENSON. Of course, one of our problems is to get wide participation, as you know. On most farms—it may not be true on

your farm, but on most farms there is some land that is rocky, or on

a sloping hill. On this land it would not take the inducement that it would for choice cropland to get farmers to put it into the conserva- tion reserve. Usually those areas are the type that need a conservation

program, as you understand.

We were limited on the amount of money we had to spend. We tried to set a national average at a level and to provide enough flexibility

so that we would get very wide participation throughout the whole country.

As I indicated before, it is somewhat experimental this year, Mr. Andersen. It is our first full year of operation. We will no doubt learn a lot of things from this first year's operation, but we expect to get most of the reduction, as you have indicated, through the acreage

reserve and most of the conservation through the conservation

reserve.

FORMULA FOR CONSERVATION RESERVE PAYMENTS

Mr. ANDERSEN. Might I ask what would be wrong with adopting a

formula relating the conservation reserve payment to the actual pro- ductive value of the land involved, much as you do for the acreage

reserve, but obviously at a lower rate—say, about one-half of what is set forth for the acreage reserve?

Whatwould be wrong with such a formula? Do you have any ideas

on that, Dr. Paarlberg ?

Dr. PAARLBERG. That has been behind our establishment of the rates. It isn't at the level you indicate, but the idea that the inducement should be related to the productivity of the area, this underlies the establishment of our rates.

Mr. ANDERSEN. In other words, you are not quite up to the point where I feel you should be on the rate, but you figure somewhat along that line?

Secretary BENSON. The principle has been followed.

Mr. MORSE. The question of rates has come up a number of times in these hearings and it keeps coming up. After we have had a year's experience to study actual results in the way people have responded to the soil bank, we will have a much better idea on the level of rates.

96-161 0- 73 - pt. 9 - 14
140

Your budgetary responsibility here, of course, as some of you have

said, put you on both sides of this question of rate. If there is sufficient response at, say, the present level of rates for conservation reserve to get the full acreage out without increasing the rate of payment, we will have more reduction and conservation than if we went

out at rates which are at a higher level than we need to offer to get

reduction. Where that level of rates is, nobody knows.

After a year's experience, I think we will know a lot more about

what payment rates are needed.

Mr. ANDERSEN. I think we have $1,254 million, to be exact, in this

budget for the 1958 fiscal year for the soil bank—$1,200 million of that

is payments to farmers for taking land out of production, in one sense

or another.

Well, now, to my way of thinking—and I reiterate that I think

the conservation reserve part of this program is the only really

worthwhile part of the program, if you look at it from the conservation viewpoint, gentlemen—it seems to me that a good administrator, such as Mr. Doggett, could take that $1,200 million on an average of $20 per acre and take 60 million acres of land out of production somewhere in the United States that otherwise would produce

an average crop of something along the line of feed grains, or something we don't need.

Now, I am trying to be realistic.

You said very well, Mr. Morse, that it is our responsibility to put

up the money. It is also our responsibility to try to see that this

money is not wasted.

You gentlemen are just as much interested in that, I am sure as

we are. You are hemmed in by laws passed by the Congress and by

this and that. We are hemmed in, too, in our line of thinking.

We sometimes feel that we go up against a stone wall. But I still

get back to the fact that that $1,200 million, gentlemen, is an awful

lot of money, and that if you would take it and go nationwide down

South or wherever you might want to go, up in Minnesota, and find

land, good, average producing cropland, on an average of $20 per acre,

that would allow you to go anywhere from $10 to $30 an acre, get

that land out of production, get it into a 3- to 5-year contract, into

some cover crop, that if we could accomplish that in 3 or 4 years' time,

I think it would be well to forget about the acreage reserve. And I

think you could save yourselves a lot of headaches in the operation

of the whole program and that the price support program itself, as I

originally visualized it 4 years ago, would become the stabilizing force

it should be.

Secretary BENSON. Why don't we see what the result is in this

year, keep in mind your suggestion, and see what we should do beginning next year?

They are pretty well into it now, and the results, so far, Mr. Andersen, have been quite encouraging.

Mr. ANDERSEN. Well, I hope so, and that is why I think that even

the chairman, in all due respect to him, even the chairman should go

a little slow in saying much derogatory to the soil bank until we have

given it an opportunity to qualify in a year's operation.

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141

COUNTY ASC COMMITTEES

Mr. Secretary? I am asking a question relative to county ASC committees, and I wish you would provide the answer, if you please, sir.

Mr. Secretary, one of the concerns of this subcommittee is the status

of the farmer-elected county committees who must administer these

tremendous farm programs. We hear many complaints that those

committees are being regimented and their authorities taken away

from them.

Last fall, we held hearings at Sioux Falls, S. Dak., and at Morris,

Minn., and many witnesses presented such complaints.

Principal among these were the charge that the committees were

being stripped of their authority over the personnel in the county

offices and the administration of the programs.

They also advised us that the State office was even dictating the

selection of office managers, and in my own State we were told that

pressure. was being applied to replace all the women office managers

with men, without regard to the experience and ability of the women

involved. They told us that documents were prepared and laid before

them for signature which should have been their responsibility to

begin with.

There are so many of these complaints, Mr. Secretary, that there

must be a basis for them.

The morale of these committees is important. Their role in the

administration of these programs is important. Their responsibilities are important both to us and to the farmers in their counties.

What steps are you planning to take to relieve this source of complaint which I personally believe is justified in most instances?

(The answer to the foregoing question follows:)

Early in this administration, it became apparent from our studies that several

changes were needed to strengthen the farmer-committee system. We were aware

of the splendid contribution agricultural stabilization and conservation committees had made in the past, and determined to make the best possible use of

their services in administering farm programs. This committee structure, composed of community and county committees elected by farmers, and the State

committees appointed by the Secretary, is responsible for the local administration of the agricultural conservation, acreage allotment and marketing quota,

price support, soil bank, and sugar programs.

The changes which we made were for the purpose of increasing efficiency, promoting economy, and attracting more competent farmers to serve in committee

positions. They were not intended nor have they in our opinion had the effect

of taking away from committees any of their important responsibilities. The

principal change made in the spring of 1953 was to make uniform the separation

of policy-making and policy-executing functions of State and county offices. The

policy-forming functions were assigned to the farmer committees. The committees now operate in much the same manner as a board of directors. They

make the policies of the office and hire office managers who are responsible to

them for carrying out the committee's decisions and for the day-to-day operations. This method of operation has enabled both the farmer committeemen

and their employees to perform the functions which each is best qualified to

undertake. A second change was to employ committeemen on a part-time and

when-actually-needed basis, rather than full time. This change not only reduced

costs, but enabled us to attract many capable and interested farmers to serve

in these positions who otherwise would have been unwilling or unable to serve

If their services were required on a full-time basis.

The county office manager method of operation was not new in most of our

county offices at the time it was prescribed for use in all counties. Rather it

was the method which had been followed prior to that time in the great majority

of the States. Observation over the years had indicated that those offices in
142

which the county committees did not work full time and which utilized the

services of a competent person in directing their day-to-day operations were the

most efficiently and effectively operated.

Since this method of operation has been made uniform throughout the country

it has generally had good acceptance and, we believe, has contributed to a higher

overall level of performance. We recognize that there has been and that there

still is in some counties in Minnesota resistance to this plan. Generally, such

resistance is coupled with a desire on the part of committeemen to perform

clerical work in the county office. There is no national policy against the employment of women as ASC county office managers. Because of the nature of

their responsibilities, however, it has been our experience that in most cases men

are better able than women to perform them in a satisfactory manner. We have

found that many women managers are quite capable of supervising operations in

the county office but have difficulty in supervising fieldwork which includes COO

bin sites and the inspection of grain in on-farm storage structures.

Each county committee has the sole responsibility for hiring its county office

manager provided he meets the minimum qualifications established for the position. Under delegations from the Secretary, minimum qualification standards

are prescribed for these Jobs by the Commodity Stabilization Service. A State

committee has neither the authority to insist upon the employment as office manager of any person not acceptable to the county committee nor the right to refuse

approval of a person selected as manager by a county committee if such person

meets the qualification standards.

H. R. 3728

Mr. ANDERSEN. Mr. Secretary, I have here some comments regarding H. R. 3728, which I have introduced and concerning which I have

testified before the Committee on Agriculture recently and I am asking you certain questions to which I wish you and your staff would

place adequate answers.

Secretary BENSON. Thank you, sir.

Mr. ANDERSEN. Mr. Secretary, farmers in the commercial corn area

are faced with an almost impossible situation unless the Congress

passes corrective legislation. I am sure you recognize this because

you have recommended some legislation. The President also took

cognizance of it in his messages to the Congress.

I have a few general questions on that subject, and then I want to

ask you a few questions about my own bill.

Apparently, there is no administration bill in the House of Representatives. But I understand that your recommendation for legislation was along the lines of the 51 million base acreage alternative

voted on in the referendum last year. Is that correct?

If what you want is legislation to give farmers what they failed to

approve by the necessary two-thirds majority in the referendum, can

you tell us why it has taken so long for you to get your recommendations before the Congress. The need for such legislation has been

known ever since the referendum results were announced, it is obvious

that you knew what the administration wanted in the way of legislation, and yet I understand that those recommendations were not disclosed to Congress until early in February. That delay concerns me

not only as a farmer but as a member of this subcommittee because,

we know how much administrative costs are increased by any substantive program changes made late in the crop season.

How do you account for so much delay?

On that subject, what would be wrong with providing corn farmers

the same type of program in 1957 as you provided them last year which

happened to be election year? The problem is certainly no' better-
9

a

143

this year than it was last year, and yet it seems that you are unwilling

to do as well for the corn farmer now as you did last year. What

are the fundamental reasons for treating the problem any differently

now?

The problem in corn that we are trying to overcome is a combination

of surpluses and low prices. The question is how to best go about overcoming that two-headed problem. Obviously, we must reduce the

surplus before we can ever accomplish the other.

The principles of the bill I have introduced will, in my judgment,

go far in accomplishing what we seek. The bill has five provisions,

and I would like your opinion of them.

(The answers to the foregoing questions follow:)

Yes, we have recommended legislation along the lines of the 51 million acre

base alternative vote in the referendum. This alternative is very similar to the

type of program which was in effect in 1956 except for the important matter of timing.

It is true that the 51 million base acreage program did little to reduce

corn surpluses in the 1956 crop season. However, this was due solely to the

fact that the 1956 program was started well after the larger part of the crop

was planted and not due to any basic defect in the program as such. In evaluating 1956 program results, we must recognize that the President and I warned

about the impracticability of securing any significant benefits from the acreage

reserve from spring planted crops. Despite this warning, the Secretary of Agriculture was required by law to start the program beginning with 1956 crops even

though the law did not become effective until the end of May 1956.

We are faced with an entirely different situation for 1957 crops, provided

speedy action is taken. If this is done, farmers will be in a position to participate.

before and not after they plant corn.

We have every reason to believe that the 1957 acreage reserve corn goal of

4.5 to 5.5 million acres will be achieved and the acreage of corn harvested in the

commercial corn area will be significantly below the 53.1 million harvested acres

in 1956 if our recommended program is adopted early.

This will mean that the Government will receive direct benefits from expenditures in the form of reduced corn production.

Mr. ANDERSEN. Mr. Chairman, may I have permission to include

in the record at this point a copy of my bill.

Mr. WHITTEN. You may.

(H. R. 3728 follows:)

(H. R. 3728, 85th Cong., 1st sess.1

A BILL To amend the acreage allotment and price support provisions for corn, and for other

purposes

Be it enacted by the Senate and House of Representatftes of the United States

of America in Congress assembled, That section 328 of the Agricultural Adjustment Act of 1938, as amended, is amended by adding to the end thereof the following: "Notwithstanding any other provision hereof, the acreage allotment for corn

for any calendar year beginning with 1957 shall not be less than fifty-one million

acres."

SEC. 2. Section 329 of the Agricultural Act of 1938, as amended, is amended to

read as follows:

"SEc. 329. The acreage allotment for corn shall be apportioned by the Secretary

among the counties in the commercial corn-producing area on the basis of the

tillable acreage in such counties. The acreage allotment to the county for corn

shall be apportioned by the Secretary, through the local committees, among the

farms within the county on the basis of the tillable acreage on such farms. Not

more than 3 per centum of the county allotment shall be apportioned to farms

on which corn has not been planted during any of the three years immediately

preceding the year for which the allotment is made."

SEC. 3. Section 101 (d) of the Agricultural Act of 1949, as amended, is amended

by adding at the end thereof the following additional paragraph:
144

• "(8) Price support made available for any crop of corn (beginning with the

1957 crop) to cooperators on any farm in the commercial corn-producing area

shall be not less than 90 per centum of the parity prices therefor on the first four

thousand bushels. This provision shall not affect the level of price support

made available to cooperators outside the commercial corn-producing area."

SEC. 4. Section 408 (b) of the Agricultural Act of 1949, as amended, is amended

by inserting after the first sentence thereof the following: "For the purpose of

price support in the commercial corn-producing area for any crop of corn for

which an acreage reserve program is in effect, a 'cooperator' shall be a producer

who (1) devotes an acreage of cropland (tilled in normal rotation), at the option

of the producer, to either the acreage reserve program for corn or the conservation reserve program equal to 20 per centum of such producer's farm allotment

for corn, and (2) does not exceed the farm acreage allotment for corn."

SEC. 5. Section 114 of the Agricultural Act of 1956 is amended by deleting the

words "under this title" and substituting therefor the words "under the acreage

reserve program".

Mr. ANDERSEN. The first provision is for a minimum Corn acreage

allotment of 51 million acres. This is identical to the same provision

in the Andresen bill. Now, as I understand it, you have proposed a

51 million acre base for 3 years which would have the same effect

during that time as the provision in my bill and the Andresen bill.

What serious objection can you possibly have to our proposal?

The next provision is for the apportionment of corn allotment on

the basis of tillable acreage instead of the present method of basing

it largely on planting history. Now, the historical method does nothing more than to perpetuate planting patterns—both the good and

the bad. It penalizes the good, rotation farmer and gives an acreage

bonus to the farmer who has mined his soil. If there is any one section of my bill which seems to have met with unanimous approval,

this is it. What is your reaction to such a change?

The third provision seeks to modify the differences most of us in

the Midwest have had with you on the question of price supports.

You have presented many arguments against 90 percent of parityprice supports, but perhaps the most effective has been the contention

that such supports help the big producers relatively much more than

the small- or average-size producers.

Now, I propose to meet that argument by a section in my bill to

the effect that 90 percent of parity supports be made available on the

first 4,000 bushels of corn per farm. That will take care of the familytype operation we all say we want to protect, and then you can have

your flexibility on the balance.

Economically, it would help the average farmer keep his head above

the economic waters. Productionwise; it would gain the compliance

with allotments we all agree we must have. Furthermore, it would

at lower cost to the Government keep an umbrella over the entire

market. You have previously recommended to the Congress some

graduated form of price supports—would not this meet with your

approval, at least in principle?

The fourth provision in my bill is to the effect that cropland equal

to 20 percent of the corn allotment must go into either the acreage

reserve or the conservation reserve. Apparently, we have no disagreement on that as I understand you have suggested a 15 percent figure

and so does the Andresen bill. I go a step further and propose a 20

percent figure as our contribution in return for the higher price. support for the family-type farmer. Would you care to comment on

that?
145

The fifth provision is one I have considered essential since the first consideration of the present soil-bank law. I have always felt that the conservation reserve feature was the really worthwhile part of the soil-bank program and that was the type of program I was after when

1 first discussed the soil-bank idea with you right here in this committee room some 4 years ago. It was what Fred Marshall and I were

after when we introduced the first soil-bank bills 4 years ago. But it

has become the lost stepchild so it seems under the program we have

today.

As you know, there is a provision in the Soil Bank Act which says

that any farmer in the commercial corn area who does not comply with

the acreage allotment or base acreage program for corn cannot put

any of his land even into the conservation reserve. That provision

accomplishes nothing other than to keep most of my farmers out of the soil bank—the cheap end of it—the conservation reserve. Don't you

agree that the Congress shouk. repeal that cross-compliance provision

as my bill proposes?

(The answers to the foregoing questions follow:)

With respect to the minimum corn acreage allotment of 51 million acres for

a 3-year period, we are generally in favor of this approach during the life of the acreage-reserve program. Therefore we do not have any serious objection

to this first provision.

With respect to the second provision it might appear at first glance that allo- cating corn acreage proportionate to the acreage of tillable land would prove to be equitable between farmers. However this is not the case. In making the allocation to the counties on this basis the allotment would greatly increase in the fringe counties of the commercial corn-producing area at the expense of the farmers in the major-producing corn area. For example, in the heart of the

corn-producing area a relatively high percentage of the cropland is now produc- ing corn, whereas in the fringe area of Kansas, Alabama, parts of Missouri, and such other areas of highly diversified farming including intensive dairy and live- stock production having a high proportion of pasture and forage crops, the per- centage of corn normally grown to the total cropland in the county is quite low. As an example in Bureau County, Ill., the total cropland is 419,000 acres. The acreage seeded to corn in 1956 was 203,800 acres with a ratio of corn to crop- land of 49 percent. In Republic County, Kans., the cropland is 314,000 acres and

acreage planted to corn is 51,500 acres with a ratio of corn to cropland of 16 percent. Under the proposed legislation the allotment for each county would be 29 percent of the cropland. Thus the allotment for Bureau County would be only 122,000 acres. This is less than 60 percent of the acreage grown in that county in 1956. On the other hand, Republic County would receive an allot- ment of 91,000 acres which is almost twice the acreage grown in 1956 and more than has ever been planted in the history of the county.

The inequity which would result to counties if the allotment were distributed

on the basis of tillable acres would be compounded on a farm basis. Some farmers normally devote most of the cropland to corn whereas others devote a

relatively small percentage to corn, depending upon the type of farming opera-

• 

tion followed. Under this bill all farms of equal size with respect to tillable acres would receive the same allotment regardless of need or desire to plant corn.

With respect to the third provision we are unalterably opposed to your pro- posal that 90 percent of parity price supports be made available on the first 4,000 bushels of corn produced per farm. A Department analysis of this reveals that approximately 90 percent of the corn produced in the commercial corn area would be eligible for the 90 percent of parity-price support if producers complied with their respective acreage limitations. It would increase costs to the Govern ment and fail to accompish even its apparent purpose.

With respect to the fourth provision we feel that requiring that 15 percent of the corn allotment be put into the soil bank is reasonable. Establishing the minimum level at 20 percent would make it more difficult for many farmers to Join in this cooperative effort.
146

With respect to the fifth provision, certainly, the objectives would not be met

If farmers were able to be paid for reducing their acreage of depleting crops on

the one hand and then offsetting such contribution by overplanting of corn on

the same farm. We strongly believe that the overall objectives of the Soil Bank

Act with respect to production adjustment and conservation of resources are

sound.

Mr. ANDERSEN. I have received a great many letters endorsing the

principles of this proposal, and I would like to include just a few of

them in the record at this point. They come from farmers, bankers,

businessmen, Farm Bureau, Farmers Union, and others.

Mr. WHITTEN. Without objection, that permission is granted.

(The documents referred to follow:)

FAIRFAX, MINN., February 15, 1957.

DEAR CONGRESSMAN: I am a farmer on a family-size farm, and I been talking

to many of the farmers in the Fairfax area, about the corn bill you introduced

in Congress.

We all admire the bill and think it's the first step in saving the family-size farm.

We would like to see speedy action on this bill, and you have our honored.

support.

Respectfully,

GLENN L. DALLMAN.

SPRINGFIELD, MINN., February 14, 1957.

Hon. H. CARL ANDERSEN,

House of Representatives,

Washington, D. C.

DEAR Sin: I am well pleased with the features of the new corn legislation that

you have introduced. It represents very well the desires of the farmers of

Redwood County.

In my work as chairman of the county ASC Committee I hear criticisms of

present farm laws and suggestions as to how they should be improved, from

a great many farmers during the year. I can assure you that there is practically unanimous approval for all the amendments to the present legislation

as introduced by you.

Farmers and businessmen alike in my area have come to the conclusion that

what we need is action, and soon, to stop the decline in farm prices. We hope

that the Congressmen from other States may see the seriousness of the situation

and give you their full support.

Thank you for your work in behalf of agriculture.

Yours sincerely,

HAROLD LARSON.

KENNETH, MINN.

H. CARL ANDERSEN,

Member of Congress.

DEAR SIR: I received your congressional report of February 12 and glad to get

It as usual. I was very much interested in the new bill which you have introduced. I believe many one-quarter-section farmers like myself would recommend this bill. One more thing, the payment per acre would have to be large

enough to induce farmers to comply. Possibly $40 per acre.

I suppose you have lots of pressure from book farmers such as county agents,

etc. They have their work and do well but at times they think they have all

the answers.

WALTER ROLES, Farmer Supporter.

FEBRUARY 11, 1957.

Hon. H. CARL ANDERSEN,

House of Representatives,

Washington, D. C.

DEAR Sin: We of the Granite Falls-Leinthrop Farm Bureau unit of Chippewa

County are not in favor of the present corn program. We need a new program

before our April 1 spring planting so we can plan our farm operation.

V
147

We read with interest your bill for a new corn program and feel you are

- making an effort in the right direction.

We do not favor rigid support as we feel it has not solved the surplus problem;

however, the compulsory soil bank may be the answer.

We appreciate our Congressmen who have concern for our farm situation.

Yours truly,

GRANITE FALLS LEINTHROP FARM BUREAU,

MAURICE GUSTAFSON, Secretary.

FARMERS & MERCHANTS STATE BANK,

Sacred Heart, Minn., February 18, 1957.

Congressman H. CARL ANDERSEN,

Washington, D. C.

HONORABLE H. CARL ANDERSEN: Received your letter of February 12 this

morning and I think you are on the right track in reference to holding down

production of corn. The bill that you and Ben Jensen, of Iowa, have before

the Legislature is the only correct solution so far and I doubt that that will

remedy the situation being the Southern States are not in the corn area and

have gone to planting corn which goes on the market. It Just means one thing,

that this is flooding the country with meats of all kinds and over production of

feeds.

Yours truly,

A. G. SIEWERT, President.

'To the Honorable H. CARL ANDERSEN,

Member of Congress, Washington, D. C.:

Whereas you have realized for some time past the financial plight the agricultural area of the upper Midwest is in, and the cost-price squeeze the farmers,

.you constituents of your district, are In; and

Whereas you have given the matter of much needed higher income for farmers

through continued price supports for farm commodities your diligent study; and

Whereas you also realize that production of price-supported basic farm commodities eventually will increase, so that production controls, such as acreage

:allotments and soil bank, are needed to prevent an accumulation of so-called

surpluses; and

Whereas you have gone to the extent of introducing to the Agricultural Committee of the House of Representatives in the 85th Congress, 1st session, a

new corn bill, H. R. 3728: Therefore be it

Resolved, (a) That we, members of the Fairfax Farmers Educational, Cooperative, and Legislative Union, Local No. 635, of Fairfax, Renville County,

Minn., assembled at our regular monthly educational meeting, did by a voice

vote resolve to inform you through a resolutions committee appointed from

The floor, to commend, praise, and thank you for introducing and presenting

H. R. 3728; and

( b) That we endorse, approve, and give you our full support and encouragement to continue in the fight for such beneficial corn legislation; and

(c) That we urge you to greatly influence and exert the strongest of pressure

possible on the Agricultural Committee to present H. R. 3728 to the 85th

Congress in its present session and urge its speedy passage into law, because

time is running out and corn planting time is soon at hand; and

(d) That the Agricultural Committee be hsked to gently sidetrack or shelve

:any recommendations the Secretary of Agriculture may introduce that are a

hindrance and detrimental to tentative plans for corn legislation; and finally

( e) That we, to be more specific, emphatically resent and denounce any

Bensonizing of the farm program as a whole.

To this, we, the resolutions committee, have given our signatures.

ELVIN NESTANDE, President.

STANLEY DANIELSON, Vice President.

ADOLPH KIECKER, Secretary.

Members of the executive board of Fairfax Farmers Educational, Cooperative, and Legislative Union, Local No. 635„ having a membership of 62 members

strong.
148

Hon. H. CARL ANDP.RSEN,

Washington, D. C.

DEAR : We of the Morgan Farmers Union Local and farmers of the Morgan

community are truly grateful to you for having introduced a bill into Congress

for corn legislation which embodies most of the recommendations put forward

by farmers through the Minnesota Farmers Union. We shall be watching and

applauding your efforts in committee and in Congress.

Other Senators and Congressmen are hearing from us regarding our views, and

we urge them all to put forward their best efforts in our behalf to avoid a

disaster situation of a glut of corn and resulting lower livestock and produce

prices. We farmers indicated by our defeat of Mr. Benson's "full flexibility"

clause in the corn referendum that we do not trust ourselves to the mercy

of an unfriendly Secretary of Agriculture. We, however, do not mean to imply

that supports at 75 percent of parity adequate or that acreage of 37 million

acres is sufficient for corn. Such a proposition is economically unfeasible and

could hardly muster support enough to be of any value.

Again we wish to thank you and hope your efforts are successful.

Sincerely yours,

MORGAN, MINX., February 14, 1957.

REYNOLD JACOBSEN,

Chairman, Morgan Farmers Union.

WALNUT GROVE, MIN N., January 3/, 1957.

Hon. H. CARL ANDERSEN,

House Office Building, Washington, D. C.

DEAR MR. ANDERSEN: I know you're busy, but I want to congratulate you on

your many efforts made for farmers. Your recent bill to provide 90-percent

price supports for the first 4,000 bushels of corn produced on any farm is the

very best idea that has been advanced to help the smaller farmer and get

around the antiquated system of corn acre allotments.

As things stand, the quarter section farmer who always planted conservatively

IS penalized; the one who planted everything to corn during the base years, and

those who farm large acreages, are the ones who are benefited today.

Let me use my own quarter as an example. It is located in Murray County,

4 miles southwest from Walnut Grove. It has 145 acres of cropland and my

corn base is 33 acres. This Was brought about simply because it was planted

conservatively, then had to take a percentage cut with everyone else.

The farmers wilo planted everything to corn are the ones who produced the

so-called surplus. I hope your bill gets favorable consideration.

Yours very truly,

C. C. BAXTER.

PIONEER HI-BRED CORN CO.,

Avoca, Minn., February 19, 1957.

Congressman H. CARL ANDERSEN,

Washington, D. C.

MY DEAR CARL: I read your newsletter of February 12. I have read it carefully and find it the most sensible approach to help the much-talked-about family

farmer since the Brannan plan. You propose to support the first 4,000 bushels

of corn at 90 percent. The corn allotment based on tillable acres is the right

way. In the past, the family farmer on 80 to 160 or even 320 has not been

treated fair under the historical base, especially those who have groves, pasture, and hayland to carry livestock.

The big operators have gone all out producing corn and wheat and have been

able to seal all of their crops. There should be a limit of not over 25,000 bushels

of corn or wheat that any one operator could get Government supports on.

This would soon reduce the huge surplus. I deal with hundreds of corn producers selling seed corn and find there will be very small percentage of compliance under the present setup. A lot of our young tenant farmers are selling

out because they can't stand the price squeeze and a lot of small-business firms

are folding up. So we need some quick action by Congress on the farm program.

Sincerely,

GEORGE W. ANDERSON.
149

BUFFALO LAKE, MINN., January 26, 1957.

Hon. Congressman ANDERSEN:

I received your newsletter and read same with much interest. I am a farmer,

and have been for over 45 years. I operate a 300-acre farm, mostly corn. Last

year I raised and fed 700 hogs and 75 steers. I buy considerable amounts of

feed. I have never sealed a bushed of corn, but I would like high support price

for corn and acreage control, for I know that cheap corn means even cheaper

hogs and cattle.

More power to you, for I know that you are working for the farmer.

Yours truly,

FRED P. BOEHLKE.

STATE BANK OF CHANDLER,

Chandler, Minn., February 18, 1957.

Hon. H. CARL ANDERSEN,

House of Representatives, Washington, D. C.

DEAR MR. ANDERSEN: Just this morning I read your news release of February

12 and noted especially the corn-soil-bank legislation you proposed. Your proposal is the best we have seen and covers all the phases of a good corn program

which at this time is vitally needed in the corn areas.

We would wholeheartedly recommend your efforts to increase the conservationreserve payments and feel the national average payment of $10 per acre is not

an inducement, especially as it pertains to land such as we have in most a Minnesota, Iowa, and all of the commercial corn area.

We are encouraging the farmers to support your plan and hope that favorable

results will be reached before the planting season.

Very truly yours,

ALVIN C. PETERSON, Vice President.

THE FIRST NATIONAL BANK,

Brewster, Minn., February 19, 1957.

Hon. H. CARL ANDERSEN,

Member of Congress, Washington, D. C.

DEAR MR. ANDERSEN: Your Washington newsletter for release on February 12

was received today, and in reading it over I want to say congratulations to you

on the bill you introduced to get the corn mess on some sort of a workable basis,

and am especially pleased with items Nos. 2, 3, and 4. I have stated for many

years that the corn allotment should be on the basis of tillage acreage and not

on corn raised in the past, and to give you an honest illustration of this I want

to say that I have a brother-in-law, a dentist living in the State of Texas, that

owns 160 acres of all tillable land just north of our village. I have looked after

this for him for many years and at no time did we ever put in more than 45 acres

of corn. We have had corn, oats, beans, barley, flax, and then each year we leave

20 acres lay over into clover. In other words we have had our own soil bank for

many years, but because we never raised a great deal of corn when they come

to give the allotments, we have to suffer. Others that have been raising a hundred

acres of corn to the quarter section had twice the allotment that we had, and I

contend that if all of the farmers would have rotated as we have been doing,

we wouldn't have been into this corn muddle and wouldn't have to be allotted

so much to be given a guaranty price, and I am glad that you had the guts to

introduce such a bill.

Then again on No. 3 where you say 90 percent of parity on the first 4,000 bushels

of corn. That comes right down my alley. In that I think it's our duty to look

after the majority of the farmers—not the big boy that owns a dozen farms and

wants to disrupt everything for the farmer on the land.

Then also No. 4 I think is very fair. I certainly hope your bill gets attention

and, if anybody wants to be fair and think about the farmer that lives on this land

and makes it his livelihood, he certainly should vote for this bill.

I have contended for many, many years that when all of our farms are occupied

by the people owning them, the better off we will all be. It will make a much

more stable community and better for all concerned. In other words I might as

well state that I am not for the big investor with all the tenants on this land. This
150

same thing goes for banks. I believe they should be owned by the communities

they are located in instead of some millionaire holding company. In other words,

get back to doing business the way our forefathers did it years ago.

Very truly yours,

A. J. KANE, President.

Mr. ANDERSEN. Mr. Secretary, I appreciate you and your staff coming up here and appearing before the subcommittee. Perhaps we

appear critical, but I am sure that you will always keep in mind, all

of you gentlemen, that this to me is the lifeblood of my district and

in many cases what is done in the Congress in relation to these particular topics we are talking about will have a great impact on the

economies of our areas. Business as well as farm economies are directly involved, and in my district the level of the farm economy

determines the level of the business economy.

Thank you very much, Mr. Chairman.

SUMMER FALLOW WHEAT AS TO CONSERVATION RESERVE

Mr. HORAN. I have a lot of summer fallow wheat in my district

and I wonder what you are doing to solve the problem of trying to

fit the soil-bank idea into the summer fallow pattern, bearing in mind

that a summer fallow wheat farmer operates only half of his farm

and the other half lies fallow and he can't fit it into the conservation

reserve.

I took this up with Mr. Doggett last fall and Mr. Hamilton went

out there. It wasn't entirely successful, Howard. I am sorry you

couldn't go yourself.

Secretary BENSON. Mr. Horan, as an old wheat farmer and a dry

farmer and alternate fallow, I know what the problem is but I would

like Mr. Doggett to comment on it from the standpoint of the soil

bank.

Mr. DOGGETT. Well, Mr. Horan, the first problem we have, the Congress in passing the law said that we shall establish what we now call

a soil-bank base, or a depleting base, in the case of the acreage reserve.

In the case of the fallow man, that is his weakness. In other words,

if he has a section of land, 320 acres of it is his base.

Mr. HORAN. He is already carrying on a form of acreage reserve,

that is the funny part of it. He gets hit pretty hard and when you

have to put acreage restrictions against him, he winds up farming

about 35 percent of his total acreage.

Mr. DOGGETT. That is correct, but I think his land values are reflected. It is an economic thing. He did that long before we had any

control programs.

What I wanted to make clear was that the Congress in the law

said that we should do that.

Now, in the case of the acreage reserve it was omitted as language.

Therefore, we were very hesitant. If they had omitted it in both

the acreage and conservation reserves we would have felt that we had

some legal standing in using both—using the base in both programs.

But since they specifically mentioned it in the conservation reserve

and not in the acreage reserve, we were very reluctant to use it in the

acreage reserve.

Now, I don't know whether this is an answer to what you are thinking of. I realize that it is difficult for the fallow farmer to come
151

into the conservation reserve. He is still left with half, or with an equal amount of land in the fallow side of the picture which is not eligible, unless he puts the whole farm in, as we are now operating.

I think our program needs a new look, for sure, after we have had a

year's ex,perience. We are getting a lot of land in the fallow area.

Mr. HORAN. A summer fallow man ought to be eligible in my book

automatically because he puts half his farm in the acreage reserve as

a practice that he has been following for decades.

Secretary BENSON. I am sure the intention of the Congress was to

• get farmers to go beyond what they had been doing.

Mr. HORAN. You want a contract covering a period of years but

your summer fallow operator, is just hornswoggled right to begin

with, on that one.

3 

Mr. McLAIN. Under the acreage reserve program as now carried on,

we are being criticized that the fallow acres can be set aside as the

acreage reserve acres.

He can make reduction in wheat and then put that land in barley

or something else. We have been criticized that we are too lenient in

this part of the acreage reserve part of this thing. You understand

that, I am sure.

Mr. HORAN. Well, the soil bank isn't very popular out my way.

The summer fallow wheatgrower isn't increasing his enthusiasm for it.

Mr. McLAIN. The basic thing is that this has been a normal practice. It has paid well for the summer fallow fellow to do this. It

was his decision that he should do this.

Secretary BENSON. He has to do it.

Mr. McLAiN. He has to do it in order to stay in business.

Mr. HORAN. Well, enough of that. I am not satisfied. I would like

to see you go out there.

Mr. DOGGETT. I know what the problem is, Mr. Horan.

Mr. HORAN. Sure you do. I tried to get you out there, and instead

you sent somebody from Wisconsin out there who doesn't basically

and fully understand about summer fallow.

Secretary BENSON. You know, we met with the growers when I was

out there. This was one of the problems they presented to us. I am

sympathetic because I-know what it is, and I have farmed under those

conditions.

GRAIN STANDARDS

Mr. HORAN. I have one other thing I want to bring up. You have

been holding hearings and you are coming up with some new grain

standards. We had quite a discussion of that when we had the

Marketing Service before this subcommittee, and my discussions with

Assistant Secretary Peterson indicated to me that the trade and this

subcommittee and quite a number of people felt we ought to go slow,

at this time. I met with the wheatgrowers out there, and we had

quite a discussion of this.

They abstained from voting, you know, at the meeting at Lincoln.

The Northwest wheatgrowers, they are fearful that the acreage restrictions and other things, while changes in the wheat grading rules

might be desirable, the economy of it might hurt the wheatgrowers

right at this time.
152

Secretary BENSON. I learned when I was out there, that they did not

officially go on record. It was presented to them as I remember, and

they discussed it and then decided not to take an official position on it.

Mr. HORAN. They have opposed it actually.

Secretary BENSON. In times past.

Mr. HORAN. No • they are on record, as opposed to a change, at this

time. They so testified in the Oregon hearings.

Secretary BENSON. May I ask Dr. Butz to comment on that because

he has been attending a number of the conferences on it.

Dr. Bum. As you well know, there is mixed opinion regarding the

revision of the grain standards. We have had informal hearings at,

four or five locations around the country and a great mass of correspondence and personal communications on this. In general, some of

the farm organizations are for the proposed revisions. The Millers

National is for the proposed revision. The grain trade itself in the

main is opposed to the revision. I am informed that the National

Wheat Growers Association has come out on this officially in favor of

the revision even though as you point out, the growers from the Northwest reserve their position.

Nevertheless, this is a matter upon which there is divided opinion

among people directly concerned with the problem and we are trying

to appraise the pros and cons of this very carefully. We have met with

a group of Senators form the wheat-producing States, and this coming

Thursday, I believe, we are going to meet with a group of representatives from the wheatgrowina States to discuss this with them to get

their reaction to it, because they have gotten a great deal of correspondence on both sides of the question.

I am sure, therefore, that before the Secretary makes his recommended decision he will to the best of his ability take into consideration all these diverse points of view represented by producers and

producer elements, themselves.

Mr. VURSELL. Mr. Secretary and Mr. Chairman I will try to make

my questions as brief as possible. There are a number of problems that

have been gone into, and a number of things I am interested in, but

first I would like to say at the close of a rather long day for the committee, that being an optimist and having observed this highly efficient

administration under the direction of Secretary Benson, I am still

optimistic as to the future of agriculture.

I want to compliment you and your staff for holding to sound policies, even though times have been critical. I am confident that a great

majority of the farmers believe that your policies had to be adopted

and followed, not only to get us out of a bad economic squeeze that the

farmers have been in for a number of years, but for the long-term

future of the farmers of America and the economy of our country.

I believe today, Mr. Secretary, after 4 years of your stewardship in

this office, that you have the confidence of more people, both farmers

and businessmen and the citizens of these United States, by far, than

you had when you came here.

That ought to be some compensation for the hours and the days and

the years and the work that you and your splendid associates have put

into this laudable purpose of trying to strengthen the foundation base

of the economy of our country: agriculture.

Your overall policies I think have begun to prove the value of their

operation. As I understand it, Mr. Secretary, some of your major
3

153

policies, in order to bring relief to the farmers, are increases in exports and the use of the soil bank.

INCREASE FARM EXPORTS

They are: (1) To increase farm exports. I think you have done an

-excellent job ,alo,ng_that hue.. Of course, there has been some discussion here today about when we should have gotten into the competitive

world markets. I think we went over that once or twice before, and

found that any delay in plunging into the world market was tempered

to a considerable extent by the critical condition that we were in with

reference to our foreign policy and with reference to our domestic and

world markets, because of the cold war and because of the general

situation. That having eased, you have later gone into the export

market in a firmer way and I understand from some information I

have received since we started to increase our efforts in the export

market in June or July of 1955, that you have been doing a splendid

job. In fact our farm exports have increased to the highest level in

30 years. I think time will prove we are right, that you will not only

hold the export markets that you have been able to bring about, but

you will increase them. I am of the opinion that the tendency

throughout the world in the last 2 or 3 years for people to live better, is

here to stay, and they will need and use more American farm products.

SOIL BANK

Another of your policies that is paying off is coupled with your

increase in farm exports, of your application of the soil bank, taking

productive acres out of production. Those two, working together, will

relieve the tremendous cost to the taxpayers, and the tremendous

pressure of surplus farm products that have been piling up, depressing

the farmers' market.

I am wondering if you have any idea of how many billions of dollars

that the farmers have lost, to say nothing of the billions the taxpayers

have lost in its deterioration and the storage and in the moving and

handling of these farm products2 how much these farm surpluses have

depressed the farmers' market m billions of dollars over the past 4

years.

Secretary BENSON. As I believe I indicated this morning, some of

our economists in the Department made some calculations in which

they estimated that for the years they studied—I think they used

1955, first—that the surpluses had depressed farm income by about

20 percent, or $2 billion. That does not, of course, include storage

costs. They have been running anywhere from $1 million to $1,200,000

a day. It would be difficult, but we could 

P'

(Yet at the figure as to bow

much the losses have been in deterioration of the commodities in storage and the difference between what the commodity was taken in at

and disposed of, of those commodities that have been moved. It

would be difficult to get an overall figure. We could get a rough estimate, probably.

Certainly it has been rather substantial. But we have been moving

out commodities that have been accumulated over a period of several

years, and we must keep that in mind. It is not a cost for 1 year—
154

1 year's crop. It is an accumulation of crops over several years. We

have been moving them out rather rapidly in the last couple of years,

particularly.

SURPLUSES

Mr. ATURSELL. And you have made quite a lot of progress on reducing surpluses in many lines, I understand, that have been depressing

farm prices.

Secretary BENSON. We estimate that by June 30, 1957, there will be

a decline from the high point in our stocks of about $1.3 billion.

Mr. VURSELL. Then I believe, in considering the net income of

the farmers, we have to take into consideration that in the past number

of years, and the most of them in the past 4 years, prior to your taking

over as the Director of Agriculture, the constant rise in wages of

those making farm machinery with the collusion, I might say, of

the past administration in power. Statistics show that for 4 years,

from 1947 to 1952, wages went up something over 40 percent while

farm prices were dropping 30 percent. We have got to take into

consideration what that has done in penalizing agriculture, and to a

certain extent the consumers of America as well.

The farmer's net income started down in 1948, and each year his

costs went up as the cost of machinery he had to buy went up. It costs

the farmer $4 billion more to plant and harvest his crop in 1952 than

it did in 1948. That was just for 1 full year.

You could add to the farmer's cost $3 billion more for 1949, 1950,

and 1951 to the $4 billion for 1952 and you have some of the major

factors that put the farmer in the price squeeze that he has been in

for the last number of years. Freight rates are up 7 or 8 times for

the farmer—yes; 14 times in the past 14 years. And then we wonder

why. And we often quote that the farmer gets so little out of the

dollar. There is one bright ray of hope, and maybe there has been

some benefit with this increase in the cost of labor, because it has

increased the purchasing power and in reverting from the war years

to a sort of a peace that we have had, we have had the greatest home

market for consumption of farm products the world has ever known,

and if we hadn't had that, the farmer would have been much worse

off than he is today.

Having that, we did not rest on our laurels, but with this committee

and the Congress and your cooperation, we have increased exports to

the highest point in the history of this country.

Secretary BENSON. That is correct.

Mr. VURSELL. Mr. Chairman and Mr. Secretary, that is what I

mean by saying that I am still optimistic as to the future of farming.

Now, I would like to point out that during the past 4 or 5 years of

the prior administration farm prices dropped much more rapidly

than they did during the past 3 years of this administration. And

also we talk about keeping the farmers on the farm. That there were

more farmers that went out of the business in the past 4 years of the

last administration than have gone out of the farm business in the

first 4 years of this administration.

Secretary BENSON. That is also correct. I could provide the details

by way of answering both of those questions, if you like.

Mr. VURSELL. We would be glad to have the details.
155

( The information requested follows:)

PRicEs RECEIVED BY FARMERS

The index of prices received by farmers for all farm products in January 1948

was 310 percent of its 1910-14 average. In January 1953 the index was 267.

This is a decline of 13.9 percent. In January 1957, the index was 238. The

decline from January 1953 was 10.9 percent.

Number of farms in the United States, estimates for years 1949-561

'Year: Thousand farms Year—Continued Thousand farms

1949 5,723 1953 5,240

1950 5, 648 1954 5, 100

1951 5, 520 1955 5, 000

1952 5, 360 1956 4, 900

1 We assume that there is 1 operator for each farm.

FARM INCOME

Mr. VuRsELL. I notice that this morning we had testimony to the

effect that the farm income had been reduced by a little over $2 billion

in the last 4 years. Just for the record, what was the reduction in

the preceding period of 4 years, in farm income?

Secretary BENSON. Would you like for me to provide this? I

have it.

Mr. VURSELL. I would like for you to provide it. I have it here.

My figures indicate that from 1947 the income was $17,191 million

1952, $14,256 million, a drop of almost 3 percent.

Dr. BUTZ. That is $3 billion drop.

Secretary BENSON. I have the official figures here, if you would

like for me to put them in.

Mr. VURSELL. You may put them in the record now or later, as you

would like.

Secretary BENSON. I will do whatever the committee wants me to.

I have the details here, but I can put them in with regard to that

particular question.

Mr. WHirrEN. They may be placed in the record.

( The information requested follows:)

Realized net income of farm operators, United States, 1947-56

Tear: Millions Year: Millions

1947 $17,191 1952 $14,256

1948 15,943 1953 13,880

1949 13,673 1954 12,021

1950 12,857 1955 11,340

1951 14,802 1956 11,836

NUMBER OF FARMS

Mr. VURSELL. We are all concerned about the decrease in the number .of farms. Has this been any more rapid during the last 4 years

than it was in the previous times?

Secretary BENSON. I shall supply the answer, Mr. Vursell.

(The answer referred to follows:)

The year 1956 is the latest for which we have an estimate of the number of

farms. During the years 1953 to 1956 the number of farms decreased by 340,000,

or a little over 113,000 per year. This is less than in the pervious 4 years, 1949

to 1953, when the number of farms decreased by 483,000, or approximately

121,000 per year. In still earlier periods, going back to 1933, the decrease in

96-161 0 - 73 - pt. 9 - 15
156

number of farms proceeded at a slower pace than in the .years since 1949. The.

change in farm population as well as the change in number of farms should

perhaps be considered in answer to this question. The decrease in farm population slowed down very considerably during the period 1953 to 1956 compared

to the decrease experienced during 1949-53 and compared with the average

annual decline in the farm population over the period 1933 to 1949.

TREND OF FARM INCOME

Mr. VURSELL. We have all been concerned about the decline of the

farm income in the United States. We understand this has been going

on ever since 1937. Do you have any information that this trend has

been reversed, and if it has been reversed, did high-level price supports

for basics cause it to be reversed?

Secretary BENSON. I can provide the details but 1 can say briefly

that the decline in farm income has been underway since 1947, with

the exception of 2 years: 1951, at the peak of the Korean war, and this

past year, 1956.

We had an increase in income last year of about 5 percent over

the previous year. Farm prices have been running at a level of around

4 to 5 percent ahead of a year ago. Most of the decline came under

rigid supports and prices are higher now than when we left rigid

supports, but I will provide further details.

Mr. VURSELL. You may supplement the record if you like.

(The information referred to is as follows:)

In the fourth quarter of 1956, farmers' realized net income was running

11 percent above the fourth quarter of 1955. When net income is adjusted for

net change in farm inventories, the increase of the fourth quarter of 1956 over

the fourth quarter of 1955 was 6 percent.

Gross and net income of farm operators seasonally adjusted at annual rates,.

by quarters, 1955-56 1

[In billions]

Item

1955 1956

Year IV I ii III IV Year

Cash receipts from farm marketings $29.2 $28.9 $29. 7 . $30.0 $30. 1 $30.3 $30.0

Nonmoney income and Government payments_ 3.7 3.6 3.6 3.8 4.0 4.6 4.0

Realized gross farm income 32.9 32.5 -33. 3 33.8 34. 1 34.9 34.0

Farm production expenses 21.6 21.3 21.7 22.2 22.2 22.5 22.2

Farmers' realized net income 11.3 11.2 11.6 11.6 11.9 12.4 11.8

Net change in farm inventories . 4 .2 -. 1 -.3 -.3 -.3 -. 2

Farmers' total net income 11.7 11.4 11.5 11.3 11.6 12.1 11.6

I Quarterly estimates for 1956 are revised in 1 ne with revised annual totals as given in table 2. Quarterly

estimates for earlier years were published in FIS 159 (July 1956) and FIS 156 (December 1955).

COMMODITY SHIFT

Mr. VURSELL. It has been said that the Cotton Belt and the Wheat

Belt have at least partly shifted their adjustment problems into

the Wheat-producing Belt, notably the Corn Belt. If this is true,

do you think it accounts in part for the public support which has been

generally ordered, the high price support control prograin for those

two commodities ?
157

Now, as a matter of brevity, you maySecretary BENSON. The answer is "Yes," but I would like to give a

fuller answer.

(Further answer referred to above is as follows:)

Acres averted out of cotton and wheat have generally not remained idle.

They have gone into forage and livestock or into feed grains, including corn

itself. The former has increased competition for our traditional livestock producing areas, and the latter has in large part accounted for the unprecedented

surplus of corn now on hand. Thus while aggregate production has fallen little

if any in the Cotton and Wheat Belts, the total production of feed grains has

increased substantially and has worsened the competitive position of corn producers. Corn producers in turn were prohibited either by geography or by

regulation from going into wheat or cotton. As a consequence, they have found

it very difficult to make production adjustments in their particular commodity

which were indicated under the provisions of the price support law for basic

crops.

HOG PRICES

Mr. VURSELL. Now, I recall that 2 years ago, when hog prices were

low in Illinois, my home State, that there was considerable pressure

on you to establish a price floor under live hogs. Some of that pressure came from the Congress, itself. At that time I insisted that price

floors under live hogs would work against the interests of the hog

producers in my State. I was supported in this view by many farmers and farm leaders in my district.

Do you think that the developments of the last year and a half in

the hog market have vindicated the position I took, as others took at

that time?

Secretary BENSON. Yes, I do. The producers voluntarily have

made the adjustment. I can provide further figures for the record

if you would like me to.

Mr. VURSELL. Now, Mr. Secretary, how much have farm prices increased now since the low back a year or two ago, about?

Mr. PAAFtLBERG. About 5 percent.

GENERAL FARM SITUATION

Mr. VURSELL. Mr. Secretary, do you feel that with the application

of the soil bank, the prospect of continuing high-level exports and the

general work that is being done to remove surpluses have got us to

the point where we have come through the worst of the farm program,

or the farm squeeze, and do you feel that probably with the increase

in population annually, that we are on the threshhold, at least, of a

brighter future fol. the farmers?

Secretary BENSON. Congressman Vursell, I am pleased, as I am sure

we all are, that the corner has been turned and that prices have shown

some improvement in the past year. We still have problems and

serious problems, but if we can maintain our exports and improve

them, if we can move forward with our removal of surpluses, and if

the soil bank takes hold as we expect, I think we can expect some

further improvement.

In fact, our technicians in the Department estimate that 1957 will

show some further improvements in farm income and prices. That is

the very best estimate we can make as of today.

Mr. VURSELL. I am glad to have that answer because I have been

thinking along that line.
158

I would like to close with the observation that the farmers in Illinois,

who I realize are in a little different position from the farmers in

Minnesota because we have greater diversification of crops, have great

confidence in you and your policies, Mr. Secretary, and they showed

that confidence by voting to continue the 51 million base on corn by

52,925 farmers voting for it, to only 12,655 voting against it.

RESEARCH AND EXTENSION SERVICE

I would like to say further that while our farmers would like to be

more prosperous than they are in Illinois, that we have had abundant

crops. The application of the Research and Extension Service, so

well carried forward and increased by your administration, has given

them hope, and we don't have any very bad farm problem in Illinois.

Hogs are selling at a profit, livestock is getting along pretty well generally, including the price of cattle and beef, and if you can just do

something to get the egg market up a little and keep it up, we would

be willing to invite you out again to speak on some great farm day

that we have out there and we will have a sellout crowd.

Secretary BENSON: That is really worth the effort to go out to Illinois to get the egg market up. I always enjoy going.

Mr. ATURSELL. Thank you very much for your time.

SIIRPLITS AS TO DOMESTIC MARKET

Mr. WHITTEN. In connection with the line of questioning, I think

perhaps I should take a moment to point out two or three inaccuracies

that I believe were given in reply to questions just raised. First, a

statement was made about something like $2 billion being lost by the

American farmer by reason of these surpluses on the market. I would

like to point out that commodities are not surplus which have never

been offered in world trade on a competitive basis. They may be

surplus to the domestic market.

This figure of $2 billion is further evidence of just how the farmer

has suffered as a result of not moving his commodities in world trade

on a competitive basis during the years that they were not so offered.

FARM INCOME

Now, turning to the drop in farm income—and I realize it doesn't

solve the farm problems, to determine who is responsible. But I quote

your own figures which you just put in the record, Mr. Secretary, which

shows that in the preceding administration, in the year 1949, net farm

income was $13,673 million. In 1950 it was down to $12,857 million.

In 1951, it was $14,802 million. In 1952, it was $14,256 million.

For the previous 4 years, farm net income actually increased.

Whereas in the 4 years of your administration, farm income dropped

from $13,880 million in 1953, to $11,836 million in 1956. I quote these

figures which you yourself introduced into the record.

I realize that doesn't solve the problem.

Secretary BENSON. I was making a measuring from 1947 when the price decline started.

Mr. WHI'rrEN. And 1947 was after World War II and prior to

Korea.
159

Secretary BENSON. That is right, and there was one year of upturn

and that was 1951.

Mr. WHIrrEN. And that was in connection with the Korean outbreak, but that doesn't solve our farm problems.

Secretary BENSON. It doesn't solve the farm problem. I was just

pointing out that most of the income difficulties occurred before we

came into office and you are not going to solve it overnight.

Mr. WHIrrEN. From the high peak, but not from the norm. This

won't help to try to settle that. I hope, Mr. Secretary, in the days

and months ahead that you will feel free to counsel with members of

this subcommittee. I think all of us on this committee have a long

record of trying earnestly to help with farm problems. I think when

we do go into these things, that it is probably helpful to all of us.

Secretary BENSON. I am sure it is, Mr. Chairman.

Mr. WHITTEN. We stand at your command. Any time you would

like to confer with the members of this committee, we are ready to

do so.

I would like to review here and now some things that rest rather

seriously with me. I may be critical of all of us in the Congress, and

I am critical of the Department. With this known bad situation

for the farmer, wherever the cause may be, your Department and the

Congress are handling it on a "hit or miss," "touch it here," "give

them some money here," "relieve it there," "send some hay," or "send

some cottonseed cake or something" basis.

You are not trying to find the basic problem and trying to bring

about cures, in my judgment. I would like to point out a few things of

which I have been convinced since I have been on this committee.

PARITY FORMULA

First, the agricultural support program and the Domestic Allotment Act, if you go all the way back to the beginning, had a parity

formula which tied the farmers' supports to the cost of what he

bought. I believe in that formula. It has since been repealed, on

your recommendation.

Secretary BENSON. What do you mean, it has been repealed ?

Mr. WHITTEN. It has been modified. You substituted modern

parity for the former parity, where you tied the farmers' purchasing

power to his purchasing power of 1909 to 1914. For that you substituted the so-called modern parity where the prime factor is the average price the farmer has been receiving for the last 10 years. That

was done by the Congress on the recommendation of the Department..

Mr. PAARLBERG. It still ties back to the 1909-10 overall farm relationship.

Mr. WHITTEN. But it doesn't go up and down with what the farmer

buys.

Mr. PAARLBERG. Oh, 

yes, 

it does.

Mr. WHITTEN. Not with the same weight. I can go back and quote

you the record where we discussed this parity formula previously.

Secretary BENSON. We can have Dr. Butz speak to that.

Mr. WHITTEN. Here you have another change which would cut

prices another 2 percent.
160

Mr. BUTZ. Mr. Chairman, I think you are correct when you say

that we use the last 10 years for commodity prices. However, in the

existing law, the 1910-14 relationship holds on a cost-price relationship, and for every commodity whose parity goes down under the

modernization concept, there is another whose parity goes up. The

overall relationship still remains on a 1910-14 basis exactly as it did

before the institution of modern parity.

Mr. WHiTrEN. We can't settle that, but I am trying to get my views

over to you. I could go back and dig up prior hearings where this

has all been thrashed out. But the point is, in the original act it was

intended that the farm support level be tied to the cost of what the

farmer bought.

GENERAL FARM PROBLEM

Now, there are two or three things—apparently from reading the

law and the history of it—that were thought to be sound, but which

subsequent events, I think, have proven to be unsound. Under the basic

law it was contemplated that you would support the farmer's price in

an effort to maintain his comparative purchasing power in this base

period. It was recognized that you would sell on the domestic market,

reflecting that support price. It was understood, also, that you

couldn't sell in world trade unless you sold competitively.

Thus, the original law and the charter of the corporation provides

for sales in world trade at what the traffic will bear, comparatively.

Now, it was also thought, as the law shows, that we could regulate

world domestic production and have an influence on world prices by

cutting United States acreage.

I think subsequent events and time has proven—and this is the point

that I think is worth thinking about—time has proven that there are

two or three fallacies in that law.

One of them is that you cannot regulate United States production by

cutting acreage. Neither can you regulate world production by reducing American acreage.

And it has also been proven by administrative action that you can't

regulate world price by merely holding our commodities off the world

markets. You merely give the markets to somebody else and we pay

the storage.

I think, in trying to consider and come up with some solid answer

to our farm problem, that we have to take those factors into consideration. That is the reason that I feel we are headed in the wrong

direction with the soil bank.

We are paying farmers to cut back when we have learned by just

cutting acreage you don't necessarily cut production. Further, you

reduce the trade and activity of the railroads, of labor, of gins, and

warehouses and of everybody, if you try to cut the American production back.

As I said earlier in meeting with the trade people in foreign countries, they are really disturbed that our policies are headed in a direction wherein in future years we will not be a firm source of supply.

They also are most anxious, Mr. Secretary, for you to say publicly

that the United States is back in world markets on a competitive

basis—which is the only way you are in a market—from now on, to

the extent of our normal share of those markets.

Then, they can look to us as a source of supply.
161

EFFECT OF REDUCED PRICE SUPPORTS ON CONSUMPTION AND PRODUCTION

Mr. Secretary, the facts and figures developed in this hearing disclose that reduced price supports have neither increased consumption nor decreased production. Records of the Department, as developed by this hearing, further show that reduced prices to the

farmer have not resulted in reduced prices to the consumer; but, in

my judgment, the only real effect has been to reduce farm income.

In view of that, the committee is pleased to note that in your prepared

statement, these announced reductions in price support in cotton,

oats, barley, rye, grain sorghums, oilseeds, and several other crops will

be reviewed by the Department; and we are glad to note the Department does have authority, after review, to increase supports.

We urge you to increase such support levels, in view of the farmincome situation, and urge that you keep our committee advised as

to the results of your review.

With regard to cotton, your figures submitted to this committee

in connection with the fixing of cotton-acreage allotments for the

present calendar year show that you use the least possible figure for

domestic consumption and also used what appears to me to be a

greatly reduced figure on probable exports. I think the record will

show that little weight was given to the earlier view of the Department

as to the probable reduction through the soil bank.

In view of these facts we wish to urge you to review the acreage

allotments for cotton this year, and trust you will be able to grant

some increases to relieve hardships which exist in some areas—particularly in my district where we have many sharecroppers and tenant

farmers involved.

Mr. Secretary, we are pleased to note you say that in the years

ahead American agricultural production will be kept on the markets

of the world at competitive prices, so as to regain and retain our

foreign markets. Now that you have started such competitive sales

program, I trust that you and those who may succeed you will keep

American commodities moving in world trade, through normal channels at competitive prices, for dollars, as has always been authorized

by law. This is absolutely essential if the American farmer is to

prevent his acreage from moving overseas, and is necessary if our

farmers are to enjoy any degree of prosperity.

I would remind you that prior to your sales program on cotton,

which began January 1, 1956, our subcommittee—having tried unsuccessfully to get the Department to sell for 3 years—had made up its

mind that we would, subject to the approval of the Congress, prohibit

the use of any funds for the enforcement of acreage allotments and

marketing quotas on any commodities of which the CCC had a supply

which were not offered in world markets on a competitive basis. I

reftlize that in submitting that fact as to our plans to the Department,

we were threatening drastic action. However, we feel so strongly

about it that I can assure you that should the Government ever fail

to keep its supply, surplus to domestic markets, offered in competitive trade in foreign markets so as to regain or retain our normal

share of world markets, I would recommend to the subcommittee—

and I believe the subcommittee would again support me—a prohibition

of the use of any funds to enforce restrictions through acreage controls and marketing quotas on farmers producing commodities which
162

our Government refused to sell by failure to make the offering price

competitive as authorized by law. This statement is not intended to

constitute a threat but is to point up the very strong feelings of our

committee about the absolute necessity of regaining and retaining our

normal share of foreign markets for American farmers.

I think it very unfair to cut American farmers' production by governmental action when the Government holds its commodities on hand

and counts them to bring about such reduced acreage allotment and

marketing quotas.

Mr. Secretary, we must let our farmers farm. We must take off

acreage restrictions if we are to save our farmers, our towns, and

villages.

Mr. Secretary, I would, therefore, like for your legal department

to prepare amendments which would set up a farm program in line

with the one I mentioned, that is, a domestic allotment plan for basic

commodities.

In my judgment, such amendments should provide for a system

whereby the farmer's share of the domestic market would be determined on some historical basis, somewhat similar to that now used for

allotments based on bushels, bales, pounds, and so forth. The Government then could issue to such farmer certificates or stamps for that

quantity of the commodity which would be supported at 100 percent

of parity. Any purchaser or subsequent handler could be required to

certify to the fact that the farmer had been paid not less than 100

percent of parity.

Such legislation should require that each original purchaser of

farm commodities for domestic use would be required to keep on hand

at all times stamps or certificates equal to the supply of such commodity as the purchaser for domestic use had on hand and had moved

through his operations during the year. Rather severe civil penalties would be provided for the sale of noncertified commodities to

anyone for domestic use, and special penalties should apply to any

purchaser of the commodities not so certified for domestic use.

Exporters then could be licensed and required to make bond on any

purchase of commodities for export, and should be required to keep

records of all such purchases. Such bonds would be similar in nature

to those now used in the cotton export sales program.

The Commodity Credit Corporation should be retained and should

be authorized to make loans up to 90 percent of parity on certified

or stamped commodities produced for domestic consumption by loans

or purchases as now authorized by the charter of the Corporation.

And on noncertified commodities produced for world trade at a rate

of 90 percent of the world price as determined by the Secretary.

In my judgment, such an act should require the CCC to offer all commodities, not certified by the Secretary as essential as a security reserve, in world trade at competitive prices within a period of 12

months after title should be obtained by the Corporation.

Another bill might be prepared to do the same thing by setting up

a farm program for all basic commodities, similar to what we have

in the Sugar Act, where the taxes would have to go into the Treasury

and would then justify payment of an equivalent amount to the

farmer at the rate of 100 percent of parity for the farmer's share of

the domestic market. I believe the objections or basis for various
163

Supreme Court decisions could be met by changing the old act, which

was held unconstitutional. This latter approach I do not think as

sound as the first, since it would leave the farmer largely dependent

upon annual appropriations by the Congress.

I would like for the Solicitor's Office of the Department to begin the

preparation of bills on these two approaches for this subcommittee as

early as possible. In addition to the suggestions I make, I would welcome others from the Department. I will be glad to meet your people

on the matter of working out the language, in an effort to make it

4 thoroughly practicable and feasible.

I hope this can be completed promptly, as it is absolutely imperative,

in my judgment, for us to come up with a sound agricultural program

which reaches to the heart of the present difficulties and would correct

them. We need to introduce such bills for hearings and study.

Time has proven we cannot regulate world production by cutting

United States acreage. Nor can we regulate world prices by holding

United States commodities off world markets.

We must first let our farmers farm and start from there. The two

proposals I make, as chairman of this committee, seem to me to constitute the most practical approaches to changing the basic farm

program if we are to reach the heart of the problem.

In this connection I will insert later a brief news release on a speech

I shall make on these views to the Plains Cotton Growers Association

in Lubbock, Tex., on March 18.

The news release is as follows:

LET US CORRECT THE CAUSES OF THE FARM FROBIEM—SPEECH OF CONGRESSMAN

JAMIE L. WHITTEN

Congressman Jamie L. Whitten, Democrat of Mississippi, speaking to the

Plains Cotton Growers Association here today, called for a complete new look

at the agricultural program, including price supports. Mr. Whitten. chairman

of the Agriculutral Appropriations Committee, who was the first to insist that

the Department of Agriculture sell its surplus cotton in world markets at competitive prices, said this sales program had done lots of good and if continued

would relieve some of our problems. He insisted, however, that there were many

defects in the present law which have become apparent after years of experience.

"First," he said, "we have learned that controlling acreage will not control

United States production. We also have learned that reducing United States

production will not reduce world production. Also, the Department has shown,

through its shortsighted policy of holding United States offerings in world trade

above world prices, which it followed, up until a year ago, that while sucji

course would help hold up world prices, in the process foreign countries increased

production, got the markets, and the United States ended with surpluses on

which it paid storage and counted to reduce United States acreage, while foreign

acreage expanded.

"We have learned that Secretary Benson's theory of reducing price supports

won't work. In recent hearings before my committee it was shown that the

Secretary's action in reducing price supports on cotton $15 per bale had not

decreased production, had not increased consumption, nor had this reduction

been passed on to the consumer. All his action did," the Congressman said, "was

to lower the income of cotton farmers.

"E-isting law," the Congressman said, "invites every farmer to increase his

production per acre to the fullest extent he can. Present efforts to control

United States production by acres leads to more and more use of expensive

fertilizers, insecticides, irrigation equipment, and other expensive equipment,

adding to operating costs. As the farmer, with reduced acreage, tries to produce

more and more per acre under existing law, in effect he cuts his own acreage

for the following year. And, if continued, it would mean a gradual shrinkage of

an already too small acreage, resulting in more and more people being forced

from the farms.
164

"The present acreage reserve program, where the farmer is paid for leaving out

of production a part of his allotted cotton acreage, also heads in the wrong

direction and is based on the false premise that removing acres until present

supplies are sold will correct the farm situation.

"It is my opinion," Mr. Whitten said, "that such program is doing untold harm

to every city, town, and village in the country. I would point out another fact

which farmers should recognize. Today there are only 13 percent of the American people on farms and the other 87 percent will believe that this acreage reserve

payment is a direct gift to the farmer, whereas in fact it will be of little help to

the farmer, for the reason that the farmer must leave this acreage out of his

already limited allotment. Such payment from the Government will not substantially add to his income, but is in substitution for the income he would have

received from the acreage. Since the payment comes for not farming, it is my

opinion this will, in time, inflame the American people against farm programs

generally."

"It is my belief," he said, "that we must rewrite our farm legislation so as

to reverse the present approach, which leads to less and less farming on a

more and more expensive basis, which does not relieve the world supply and

demand situation and makes the condition with the American farmer more

and more dependent upon the 87 percent of Americans who are nonfarmers,

who in the final analysis, through their representatives in Congress, must accept any farm program in order for it to continue."

Continuing, Congressman Whitten said that we must start out with the

premise that any farm program, to be worthwhile, must let the American

farmer farm. The world needs American production; if American farmers

do not farm year in and year out we will gradually lose our markets to foreign

competition. If our farmers do not farm, all businesses which are to any degree

dependent upon farm production and activity will feel the pinch greatly as they

are beginning to do at the present time.

If we do not let our farmers farm, he said, where are the thousands and

thousands of young 4—H Club members going to find a place to use their talents

in connection with farming?

"It is my belief that the best approach to our present farm difficulties is

through a domestic allotment plan. I have been working with lawyers at the

Department of Agriculture in recent weeks, in an effort to write such a bill,

which would apply to wheat, tobacco, and rice on the same general basis as it

would for cotton. We all recognize that with a dollar an hour minimum wage,

the bargaining rights of labor unions, 14 freight-rate increases since World

War II, and all the other costs built into the American economy by various

laws, it is absolutely essential that some protection against such costs be given

to the American farmer through price supports. I am convinced, however, that

these protections should be self-financing in that the costs should be passed on

to the consumer by the sales price. All costs of minimum wages are paid by

the consumer. All the costs of freight rate increases are borne by the user.

Thus it goes. Only the farmer is left dependent upon annual appropriations

of the Congress; and yet the necessity for such financial support of the farmer

flows from these other laws which add to his costs. Therefore, I am preparing a

bill which will be introduced shortly, wherein the American cotton farmer will

be given support on his share of the domestic market, figured in terms of bales

or pounds. Such supports on the farmers share of the domestic market should

be on the basis of 100 percent of parity. Under such bill, the farmer will be

released from acreage controls and any cotton that he produces beyond his

share of domestic market would be available only for world trade and on that

share of his crop the farmer would be dependent on what the world market

would pay."

This approach, according to Mr. Whitten, would guarantee to users of

American cotton that the United States would continue as a consistent source

of supply. Under this approach we would get rid of all acreage controls and

the many troublesome features of such a control program.

"Based on my years of experience as chairman of the Agricultural Appropriations Subcommittee, where we review annually the overall farm program operations," Mr. Whitten said, "it is my belief that the mechanics of such a program would be to issue to the farmer annually certificates for his share of the

domestic market, figured in bales and pounds on somewhat the same basis as

acreage is now figured. Domestic mills then would be required to use only

certified cotton to meet their domestic market, but would be authorized to buy

at the world price a sufficient quantity of cotton for their export market."
4

165

Such an approach would prevent the outlay of millions of dollars each year by

the Government, as is now required. Instead of the American people being

taxed to support the farm program, the users would pay the cost just as now

the users pay the cost of wage contracts, freight-rate increases, and all the

rest.

Such a program will make it possible to use our exchanges, it will restore cotton movements to normal channels, and above all, it will let our farmers farm

as against present programs. It will let the farmer rotate the use of his

land, reduce his operating expenses, and will relieve the farmer from having

to vote more and more acreage restrictions on himself in order to obtain support

prices.

Such bill will require the Secretary of Agriculture to sell at competitive prices

any cotton above a security reserve which comes into the hands of the Commodity Credit Corporation, within 12 months after title is taken over by such

Corporation. Such a program would regain and retain the farmers' export

market upon which his economic well-being is dependent.

The Congressman concluded by asking that all farmers and farm organizations study such proposals for the purpose of improving on his views. "I

am sure," he said, "that such a program will not be perfect. However, I do

know such an approach will do much to correct the glaring defects in the present

law which reduces the farmers farming every year and which leaves the farmer

more and more dependent upon annual appropriations of the Congress."

Mr. WHITTEN. Mr. Secretary, may I thank you again for your

patience because we feel very strongly about this.

Before you came into office we had already gotten started on our

views about agriculture. But these things that have happened during

4 years of your views are certainly sufficient to raise some question.

Secretary BENSON. Mr. Chairman, there is certainly much of real

worth in what you have just said and I want you to know I appreciate

it very deeply. We don't claim to have all the answers. I don't think

any group of men have the answers.

We are constantly striving to improve the program for agriculture.

Last year was the first year that the program which this administration recommended went into operation and then only partially on the

soil bank. I don't think the soil bank is the final answer. We would be

very happy to sit down with you and other members of the committee,

or anyone for that matter, and discuss any possible improvements in

the present program for sales and other disposal abroad—a program

that has been developed largely in a bipartisan fashion as it should.

I am sure we would be very happy to try and make a draft of a bill

and would be glad to consult with you on it.

I would like to say at the conclusion of this very interesting day that

the reports that have been brought back by our own people in the

Department from the hearings you have conducted, here, and through

which I have kept in touch with what you have been doing here, have

been generally very satisfactory.

I want to express appreciation on behalf of my associates and myself

for the fine cooperation that has been extended by this committee. We

want to work closely with you. I am sure our objectives are the same.

Namely, we want a prosperous, expanding, and free agriculture, and

we want our farm people to move forward and enjoy a high level of

prosperity.

Again, I say it is our desire to be helpful to you in the very tough

job you have, and I know it your desire to help us.

Mr. WHITTEN. I appreciate that statement, and I want to say in

all the hearings and in our dealings here we give you the same credit

for earnestness of purpose and earnestness of desire in trying to solve
166

these problems as we claim. I do think it is time we reached over be- hind the scenes and quit trying to cure the situation by touching the thing, as both Congress and the Department has been doing.

When you and I pass on out of the picture and we look back, we will agree that, if the farm problem ever gets solved, it will not be solved by stopping the farmer from farming. And that is the route that we are headed on.

When we try to control production by acreage we greatly increase the farmer's cost, because he pours on more fertilizer and he builds his costs up.

Secretary BENSON. Controlled production is not the answer and when you and I pass out of the picture, as you say, I presume we will still have farm problems, but I do hope we will have made some

progress toward a solution in the meantime.

When we get on the other side, if you and I meet we will probably still discuss the farm problem.

Mr. WHIWEN. Mr. Secretary, where I hope to go and I trust you will go, I understand there are no problems.
INDEX

A

Acreage reduction. (See also soil bank) : Page

Formula for 6

H. R. 2420, discussion of 94

1955, effect of 4, 6

Production, lack of reduction in 12, 26

World trade, influence on 20

Benson, Reed, statement of 

Commodity Credit Corporation:

Increase in borrowing authority of 

Investments in commodities, data on 

Net loss of 

Sales agency of 

Corn:

Acreage allotment for 

Price supports, decrease in 

Cotton:

130,

116

36

32

36

112

142

142

Acreage reduction in 1955, effect of 4,6, 12

Consumption, 1957 41

Domestic consumption under reduced price supports 37, 47

Domestic mills, world price for export 18

Export program 38, 54

Price support, effect on consumption 47

Synthetic fibers, loss of domestic market to 17

World market, competitive sales in 6

County agents, salary increase for 126

County ASC Committees 141

Crop production and support levels 1952-56 25

Farm exports:

Cotton 38

Policy relating to increase in 153

Farm income and costs:

Breakdown of 28

Costs, trend of 9, 11,28, 91

Income:

Fair level of, importance of 127

History of 28

Price supports, correlation with 2, 26

Realized net income of farm operators 53, 155 158

Trend of 156

World market sales, effect of lack of 10

Refusal to sell, effect of 10

Farm income, cotton-export program, and price support levels 51

Farm marlKetings 52

Farms, number of 155

(I)
II

Page

General farm situation 157,160'

Grain standards 151

H. R. 2420, discussion of 94

H. R. 3728, discussion of 144

Livestock and feed grain prices, relationship of 92

Meetings in western Europe, report on 20 Multiple purpose dams and watersheds 114

Parity formula 159

Part-time farmers, loans to 113

Personnel increases by programs 46

Price supports:

Farm income, relation to 

Levels, 1955-57 

2,26

76

Reductions 2, 14, 19, 24, 26, 37, 40, 47,64, 128,161

Consumption, effect on 37,47,161

Corn 130

Production, extent of effect on 26,40,161

Reason for 128

Retail prices, effect on 14,19

World market, lack of effect on 8

Production, lack of effect of price reductions and acreage control on 12,26

REA, interest rates for 

Removal of surplus agricultural commodities, 1936-56,

commodities 

Reservoirs and flood control, legislation for 

Rye market 

S

Secretary, statement of the 

Soil bank:

Acreage reserve:

obligations by

117

90

125

92

78

Landlord-tenant obligation 109

Production, effect on 23

Program and policy 104

Rates, setting of 108

Regulations on 43

Summer fallow wheat 150

Agricultural conservation program 96,104

Authorization for 97

Conservation reserve 137

Danger of abuse of 136

H. R. 2420, discussion of 94

Production, effect on 40,42

Program, direction of 42

Public land buying for 42

Value of 153

Subversives in Department of Agriculture 116

Surpluses, reduction of 154
III

T

Tobacco: Page

Burley and dark tobacco situation 122

Competitive sales on world market, need for 120

Soil bank, need for placing of acreage in 119

Research, need for expanded 123

V

Voluntary agreements, substitution for action under section 22 19

W

World markets:

Acreage deduction, effect of 20

Commodities offered for sale in 1954-55 33

Competitive sales in 3, 6, 10, 14, 33, 153

Farm income, effect of lack of sales in 10

Movement of American production in, need for 14

Price supports, lack of effect of 8

o


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