From 1919 to November 1941 retail food prices as a whole decreased 27 percent, yet the composite wage rates of urban people has increased 53 percent. Actually, in November 1941 the food purchasing power of all nonfarm people in terms of their total earnings was 22 percent more than since the war started in September 1939. Since September 1939 the average per capita income of all nonfarm people increased 26 percent, yet food as an item in the cost of living only increased 14 percent.

(NOTE.-Basic data from the Bureau of Labor Statistics and the U. S. Department of Agriculture.)

Mr. HOLMAN. Now, gentlemen, I have had distributed around the table copies of a proposed amendment to the price-ceiling bill which is designed, first, to establish a new conception of parity prices as a movable ceiling for agricultural products. This new conception is based upon the increased purchasing power and the advanced condition of the city people as compared with agricultural people. The old conception of parity as used by the Department of Agriculture freezes farmers' living standards to the past and we think is entirely inadequate to the present times and the present need.

Briefly, we have used the Agriculture Department's present parity index, which includes both the elements of cost of production and of household purchases by the farmer; but instead of giving it a weight of 100, we have given it a weight of 70, and then we have added, as a part of the index, the rates of wages of city workers, giving it a weight of 30.

We have modernized this formula through the last 10 years so as to bring farm prices themselves within fair relationship to each other, which they do not have under the operations of the Department's parity formula. The methods of arriving at the formula which I propose I would like to file with the committee as a part of the record.

(Statement of methods of arriving at formula, referred to and submitted by the witness, will be found at the conclusion of his statement as table 6.)

Mr. HOLMAN. It is proposed in this amendment that having computed the theoretical prices as of January 1, 1941, we then abolish the past, stop talking about 1909 to 1914 and the depression period, and begin with January 1941, using the declared prices as the base for emergency parity; these prices to be found by Congress are listed in (a) of the new section (3) as we propose it and are also listed in Table I.

You will find on examination of those rates that approximately 98 percent of all agricultural products are covered in them, and by com

paring one with the other, while there are some inequalities, you will find a remarkable adjustment of equality among farm prices, because even farmers are purchasers from each other. For example, it brings about an almost true 11.3 corn-hog ratio.

This bill also provides that the Secretary shall monthly determine what these emergency parity prices are and shall publish them. These prices will rise and fall with the emergency parity index. It further provides that only in the case of a justifiable emergency-and you note that this amendment retains the power where it ought to be, in the hands of the Secretary of Agriculture-shall the Secretary establish a ceiling price. He must hold a public hearing, commodity by commodity, and find that the emergency warrants it, to set a ceiling price; in each case the ceiling will still be movable, but will travel along with the change of the index, which of course is farm purchasing power modified by the ever-increasing rates of wages in the cities. Ceilings shall not be below the emergency parity price, but no payments to support the ceiling are required.

The bill also has the proper protective clause in it, beginning with section 4, to protect the operation of the Agricultural Adjustment Act. If the ceiling should be fixed on the consumer's price, the ceiling on the price should not be less than that which is necessary to maintain the emergency parity ceiling for the producer.

Senator BUTLER. Mr. Holman, there was a thought brought out by Senator Barkley a moment ago with reference to the plan that was suggested by the previous witness, and Senator Barkley wanted to know if it took into consideration existing agencies that are now available for labor. Is it your idea to continue the existing agencies in control of agriculture in that function?

Mr. HOLMAN. Certainly, Senator. For the last 7 years the Department of Agriculture has been operating the Agricultural Marketing Agreement Act with respect not only to milk but a number of other commodities, under which, after due hearing, prices have been fixed; but those have been minimum prices and not maximum prices. They have operated in effect as maximum prices, but they are adjusted from time to time to meet the actual needs of the community.

Senator BUTLER. Do the tables that you are submitting for the record indicate what increase, if any, there will be by the plan you have suggested?

Mr. HOLMAN. Yes, Senator. As soon as I have gone through about one more minute on the bill, I will come to that.

Senator BUTLER. Very well.

Mr. HOLMAN. The bill further provides for the conversion of parity prices into grade and regional marketing classifications.

Senator BROWN. Do you have any limitation other than parity price?

Mr. HOLMAN. That is the only limitation on the ceiling. Senator BROWN. What is it? One hundred or 110? Mr. HOLMAN. It is a new parity formula, Senator. Senator BROWN. And your limitation would be 100 percent of parity?

Mr. HOLMAN. Yes, of the proposed emergency parity, except that the amendment provides that the Secretary may, after due hearing and consideration, fix a ceiling at above the price. For example, cottonseed is not taken care of very well under this formula, although it is taken care of better than under any other formula that has been submitted.

Senator Brown. How does your parity compare with the 1909-14 parity that has been adopted?

Mr. HOLMAN. If the Senator will look at this chart which is entitled "Relative Price Levels," you will see on the left hand the actual price levels of all agricultural products in October. That comes to 139. The second column shows the Department's full parity.

The third column shows the commodities, 110 percent of parity in the House bill. The fourth column is also in the House bill, the actual prices from 1919 to 1929; and the last column is the proposed wage-parity formula. Those range 139, 138, 152, 155, and 182.

As a matter of calculation the formula we are proposing is 18 percent above the 110 percent of parity, as I recall.

Senator BROWN. You call your fourth column "Actual Prices 1919 to 1929." Is that the Paul Brown amendment?

Mr. HOLMAN. That is simply the average of farm prices as we calculated it in our own office.

Senator BROWN. His amendment provides the average price for such commodity during the period July 1, 1919, to June 30, 1929. That, you will remember, was adopted by the House.

Mr. HOLMAN. I do not recall that that was Mr. Brown's amendment, but it is in the House bill as it stands.

Senator BROWN. The fourth column does not represent the Brown amendment?

Mr. HOLMAN. It represents what is in the House bill as it passed. Senator BROWN. I see. I just wondered why you said actual prices instead of average prices. You mean average prices, do you?

Mr. HOLMAN. It should have been average prices of agricultural products.

Senator BROWN. I think I have that. The three House limitations are the three central columns in your chart, and your recommendation is the fifth?

Mr. HOLMAN. No, the first, third, and fourth columns are in the House bill; our proposal is the fifth. We believe that is not by any means abnormal or unnecessarily high prices for agricultural products.

Senator BANKHEAD. You referred to taking care of cottonseed. It is a fact, is it not, that since the old parity many changes have been made, including byproducts of cottonseed?

Mr. HOLMAN. Yes, sir.

Senator BANKHEAD. Which table refers to cottonseed?

Mr. HOLMAN. Table No. 1, Senator.

Senator BANKHEAD. It shows $38.18 per ton?

Mr. HOLMAN. Yes, sir; in January. It goes up to $41.81 in No

vember. I do not think that is quite enough.

Senator BANKHEAD. I understand that; you have said so fairly. As

to soy beans it shows $51.67. Mr. HOLMAN. Yes, sir.

Senator BANKHEAD. Those two things are pretty much the same; they are comparable in their uses, values, and prices?

Mr. HOLMAN. That is correct.

Senator BANKHEAD. And they move right along close together in their market prices?

Mr. HOLMAN. That is correct.

Senator BANKHEAD. And they ought to be under a formula of this sort. I suggest some section that authorizes taking into consideration changes in the use or processing of commodities since 1913.

Mr. HOLMAN. And the varying costs of production, too?

Senator BANKHEAD. Yes; and to make it comparable with competitive articles.

Mr. HOLMAN. We believe that in our proposed amendment we have adequately given the Secretary of Agriculture power to make such adjustments as are necessary.

I would also like to file for the record table I with its explanatory data. On the first page thereof it shows the actual average prices and the parity computations of the Department compared with the parity-formula computations as proposed by us. The graph of parity indexes and wage rates shows from 1910 to November 1941 how the index of these various formulas would operate. The lowest index is that of the Department of Agriculture. The one in red is the formula that I am proposing to the committee as the price ceiling. The one above that is a different formula, but it shows where you would arrive if you weighted the urban wage rate at 50 and use only the elements of cost of production of the farm instead of the formula that we use. Privately, I rather like that one, but the farm groups that we are affiliated with have agreed to support the one which I have introduced, known as the red line on this table. I should also like to file this material.

Senator Brown. You have permission to do so.

(The data referred to and submitted by the witness will be found at the conclusion of his statement.)

Senator BUTLER. Speaking with reference to a table showing that the average industrial wage had advanced 350 percent, your chart indicates 280. Is that because you have included urban wages as well as industrial wages?

Mr. HOLMAN. Yes, sir. The table that we used is published by the Federal Reserve Bank of New York, and includes not only industrial wages, but wages of railroad workers and of white-collar workers, in all, some 20,000,000 wage earners. It is probably the widest index of wages that there is in America. It even includes school teachers, and it also includes farm wages. That is the reason we do not propose farm wages in our formula on the farm side. We have it covered in the city side. The wages of school teachers and farm workers and white-collar groups would be retarding factors, but otherwise I doubt if there would be very much difference between your figures and the ones we have arrived at.

Senator THOMAS of Idaho. I notice that your proposed parity formula would mean an increase in the farm income. How does that compare? Does that put the farm income back about where it should be in the event a ceiling were fixed?

Mr. HOLMAN. It would bring it closer to it, Senator Thomas, and it would give the farmer an improvement over what he had prior to the World War.

Senator THOMAS of Idaho. Have you taken into consideration the value of the dollar or the chance of a change in the value of the dollar?

Mr. HOLMAN. We naturally had to take that into consideration. But when you use this type of formula, where you compare the buying power that the same amount of a farm commodity would buy before the war, and then add to it the factor of wages, you have not quite, but almost, compensated for the depreciation of the dollar. The black line would compensate. I have some doubts as to whether the red line would.

Senator THOMAS of Idaho. Are you of the opinion that, assuming that a price-fixing bill or a ceiling bill of some kind will be reported out, that agriculture as a whole would probably endorse this kind of a formula?

Mr. HOLMAN. I belong to a committee which has not yet reported to Senator Thomas of Oklahoma. I am confident that of the 9 or 10 proposals we have studied this one will more nearly gain the support of all agriculture than any other one, once it is known what the formula is. We have only completed it during the past week. It already has the endorsement of the beef-cattle people, considerable groups of the hog people, of the Grange as a ceiling formula, of the United States Live Stock Association, and of the Wool Growers Association, and we expect it to be endorsed by the citrus and other important groups just as fast as the information can be gotten out to them. It was started last Saturday only. We have already explored its support and its potentialities and we know this comes nearest to being the most scientific formula and the simplest one to operate, for an emergency parity for price ceilings, particularly with the findings of fact by the Congress.

Senator BROWN. Thank you, Mr. Holman.

Senator TAFT. There is a bill, is there not, to change the basis of parity? If it is changed for price-control purposes it should be changed for every purpose, should it not?

Mr. HOLMAN. There is no bill before the Congress. There is only a committee to explore it. This price-control legislation has overtaken that purpose and put any general definition of parity into the background. Our only hope of protection is not arbitrary prices, but a movable price ceiling based upon an emergency formula and one that ties in the wages, because we do not think there is going to be any legislation that fixes wages passed by this Congress.

Senator GLASS. Why not?

Mr. HOLMAN. It was tried in the House.

Senator GLASS. They are afraid of losing votes; is that it? Mr. HOLMAN. I do not know. It was attempted in the House and it did not go through. It might come up later. It should come up if this type of legislation passes. Of course, I personally think that