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going to come down. There are many ways of keeping the price down. They could produce more, or they could let these 8 million bales that the Government owns, out into the market. That will keep prices down. We have learned all along that we do not need price control where there is a surplus of the commodity.

Senator CLARK of Idaho. How much cotton is now in storage? Representative PATMAN. Approximately 8 million bales, to which the Government has title. If the price were raised to the floor, who would be the winner? The Government would make $13.25 on every bale. There are about 8 million bales, so that would mean $116,000,000. The farmers would have only a small part of that. The Government would be the winner if the price of cotton were raised.

Today is the first time in history that we are consuming more cotton in America than we are producing. It is the first time in history. So, since farm commodities represent surpluses and not shortages, certainly they should be protected in this bill; otherwise prices will be destroyed.

If there are any questions any of you gentlemen would like to ask me, I will be glad to try to answer them.

Senator Brown. I think I have the issue of this matter of a ceiling and a floor for agricultural prices pretty well in mind. Your position is, briefly, that you think the agricultural South is quite desirious of retaining the Brown amendment in the bill?

Representative PATMAN. Not just the agricultural South. I believe dairy products are produced in every one of the 3,000 counties in this country, with the exception, perhaps, of New York City.

Senator BROWN. We had a spokesman for them this morning.
Representative PATMAN. What are they are in favor of?
Senator BROWN. They want to go very much higher.

Representative PATMAN. Of course, they are just as much interested as the cotton farmer and the wheat farmer. Remember this, gentlemen, that if they could get 50 cents a pound for cotton, they could not make a living, because they cannot produce enough of it.

Senator CLARK of Idaho. What is your slant on labor-on including labor in the bill?

Representative PATMAN. I am opposed to it. I opposed it in the House. I went into the committee believing that wages should be included. I changed my mind during the hearings. I answered Mr. Gore on the floor of the House in opposition to including wages. Mr. Gore's amendment received only 23 Democratic votes in the House and only 2 Democratic votes in the committee; it received 3 Republican votes in the committee and forty-odd Republican votes in the House. I believe the Members thoroughly considered it.

I know that Mr. Gore is entitled to lots of credit for the fine fight he has made, his conscientiousness, and all that, but I think it would be clearly the wrong thing to do. Even the enemies of labor, if they understood it, would be opposed to putting wages in there. It would mean increasing wages several billion dollars a year. You can't have a national prevailing scale without making it the floor.

Senator CLARK of Idaho. That is the oddest thing. Only this morning we heard Mr. Brinckman, of the Grange, and other agricultural leaders, who insisted upon wages being put in if agricultural products were.

Representatve PATMAN. I am afraid some of them want to do something to labor. Even the fellows who understand it, who want to do something for labor, should not be in favor of putting it in.

I hope that the time will never come when we drive a wedge between agriculture and labor in this country. I am afraid that some of our farm leaders have become a little shortsighted in that respect. I hope that they will not further insist on doing that, because it is a harmful thing to the country. Both labor and agriculture have gained in the last few years by working together. I certainly do not like the very short-sighted policy of some of the farm leaders who insist on getting into a fight with labor. I am not going to do it myself.

Mr. Chairman, would you like to have these tables for the record? Senator BROWN. Yes; they will be included in the record.

Senator BANKHEAD. I am sorry I did not get here in time to hear your full statement. You do not have a prepared copy of it? Representative PATMAN. No, sir.

Senator BANKHEAD. Well, I will read it in the record. I am sure that you covered the ground well.

Representative PATMAN. Thank you, gentlemen.

(The tables referred to are as follows:)

Approximate farm-price equivalent of minimum ceilings for prices of selected agricultural commodities under price-control bill as of Nov. 8, 1941

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Lambs.

do

13.36

9.66

9.75

14.61

8.91

11. 12

Butterfat.

cents per pound..

63.3

48.3

36.9

11 40.4

37.0

44.0

Chickens (live).

do....

26.8

24.6

16.0

17.3

16.2

21.1

Eggs

cents per dozen.

69.6

45.8

31.8

11 41.5

31.0

33.2

Wool..

cents per pound.

55.2

35.9

36.3

27.8

36.3

34.1

1 Highest farm price for 15th of month reported by farmers to U. S. Department of Agriculture during the calendar years 1919 and 1929.

2 The bill provides that the ceiling on any agricultural commodity shall be not less than (1) 110 percent of the parity price, (2) the price on Oct. 1, 1941, or (3) the average price for the 10-year period 1919-29, whichever is highest.

3 Prices received by farmers as reported in Midmonth Local Market Price Report, U. S. Department of Agriculture, Oct. 29, 1941.

4 Based on parity for Oct. 15 as reported in Midmonth Local Market Price Report.

Average of prices received by farmers on Sept. 15 and Oct. 15 as reported in Midmonth Local Market Price Report.

Average of monthly prices received by farmers, July 1919 to June 1929. 7 Contract price for the crop of the year shown.

8 Not currently quoted.

Seasonal average.

10 Estimated.

11 Adjusted for seasonal variation, see price report.

Approximate farm-price equivalent of minimum ceilings for prices of minor agricultural commodities under the price-control bill, as of Νου. 13, 1941

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1 Highest price received by farmers in any month, where available.

2 Prices received by farmers. For a number of minor commodities monthly prices are not reported. 3 The bill provides that the ceiling on any agricultural commodity shall be not less than (1) 110 percent of the parity price (2) the price on Oct. 1, 1941, or (3) the average price for the 10-year period, 1919-29, whichever is highest.

4 Based on parity as calculated and published for most commodities. For field crops, except tobacco and livestock, the parity base period is 1909-14. For tobacco and fruits more recent base periods are used for computing parity.

5 Average of September 15 and October 15 average prices received by farmers, where available. • Average of monthly prices from July 1919 to June 1929 for barley, rye, buckwheat, sweetpotatoes, peanuts, and livestock. Average of prices for the crop-marketing seasons 1919 through 1928 for hops, tobacco, and fruits, except as noted.

7 Season average price. Monthly prices not available.

8 Estimated. Not published currently.

• Fruit prices are estimated and unpublished unweighted average prices calculated in accordance with legal parity. For California oranges and walnuts they are "to grower" prices: for all others they are "on tree" prices. Prices on October 15 are not available, but current season prices are not expected to be higher than parity.

10 1926-29 average.

11 1925-29 average.

Senator Brown. The next speaker will be Dr. Charles O. Hardy.

STATEMENT OF DR. CHARLES 0. HARDY, BROOKINGS INSTITUTION, WASHINGTON, D. C.

Senator BANKHEAD (presiding). You may proceed, Dr. Hardy. Please state for the record your full name and whom you represent. Dr. HARDY. My name is Charles O. Hardy. I am connected with the Brookings Institution.

My time is limited to 15 minutes, I understand? Senator TAFT. No; I think the chairman said you might take longer if necessary.

Dr. Hardy, are you going to say anything about your own qualifications?

Dr. Hardy. I will if you like.

Senator TAFT. Will you please state your connection with the Brookings Institution?

Dr. Hardy. I have been with the Brookings Institution since 1924. I presume that the reason why I was invited to appear before this committee was that about a year and a half ago we published a book on Price Control During the World War, of which I was the author. As a result of that, I admit I know a good deal more about price control during the World War than I do about what has been taking place right here, because I have not had any share in the price-control work, and most of my time recently has been used on other things.

Is there anything further?

Senator TAFT. I think that is sufficient.

Dr. HARDY. In looking over the bill and some of the testimony, the / thing that strikes me first is the great difficulty of separating the discussion of appropriate legislation from the discussion of the policy that is going to be followed by the agency set up under the legislation. Naturally, any authority acting in this field must have a good deal of discretion, and it is very difficult to organize the thing so that Congress can prescribe in any detail the policies, either as to what prices should be controlled or what standards should be set for the prices.

The discussion, as you know better than I, has raged very largely around the issue between a general price ceiling and a selective basis of price control. I think there are really three options there, but the first choice is between a universal ceiling covering everything that has a price, with a price-control authority, and having the job of making exceptions and making adjustments, taking up the cases pretty much on a basis that permission to go through the ceiling is the exception, and the ceiling is the rule, or a selection which is to be started at least on the assumption that freedom of individuals to trade at what prices they please is the rule, and price control is the exception.

However, as I read the testimony in the House and before this committee, it seems to me the interpretation of "selective" has been broad enough so that there is not as big a difference between them as it might sound like. The whole thing goes to the basis of how you make your selection.

As I understand Mr. Henderson's testimony, he would select commodities to be controlled on the basis of price and demand itself. That is, the general object would be examined under the ceiling, depending, namely, on the general movement of prices, rather than dealing with the cases where the price movement was exceptional.

On the other hand, a selective form could be set up on the basis that the general price level, the prices of things not particularly scarce, was determined by the level of incomes to the people who are buying these things and the level of costs of the people who are producing them; and the job of the price-control authority would be to deal with the cases where supply and demand under those

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conditions breaks down, usually because there is an acute physical shortage. That is, either the Government has to take a very large proportion of the supply, so that the price of the product in a free market, for the tail competitive unit of supply, would be a ridiculous price, or else it is a case where prices are going to be difficult to improve. If you increase the income-the national income-by paying out a lot more Government money than the Government picks up in taxes, you are going to have increased demand in money terms all along the line. But that is quite different from special demand for anything greatly needed on account of the war or that becomes very scarce on account of the war.

The general position I took in the book I wrote a year and a half ago was in favor of the selective control on the latter basis; that is, selective control that dealt only with those things where the market was upset, where the supply and demand price was all out of line with the income of the community, and would not be tolerated either because the thing was a basic necessity, which everybody wanted and which we would not tolerate having a few wealthy people monopolize, or else because it was a thing the Government was buying in big quantities, and the price control imposed protected against shortages.

The selective price control that Mr. Henderson advocates, as I interpret his evidence, is really a selective price control intended to accomplish the purpose of a ceiling, but selective on the basis of where you have the most information, but the idea would be to select those things where the price would be likely to go up. Of course, it would have the advantage that you could leave out things that did not make any difference. You would not have to deal independently with problems to maintain a minimum or where the price is out of line, and I think it would be clearly, in that respect, superior to the general price ceiling. I think there is much to be said for a narrower price control law, a selective one, that would attempt to supplement the general market but would limit itself to highly abnormal cases.

Senator TAFT. What concerns me is the growth of the deficit. That is why I should favor Mr. Henderson's method over the one you suggest. Apparently, we are going to have a deficit of from fifteen to twenty billion dollars a year for some time to come. Does that have any effect?

Dr. Hardy. It certainly means that if we are going to have deficits of that size there would be, in the absence of control, a strong tendency to raise prices. It seems to me that in the price bill there is one place where the principle of control only for the prices that are out of line with the prices in general is adopted, and that is in the agriculture formula. It contrasts the purpose of keeping the price of rubber tires from going up at all with the purpose of interfering with the agricultural price only when it goes up above parity. There the parity price will go up as the general price level goes up.

You get a distinction between the two methods of approach when you recognize that if people have 50 percent more money to spend the old price does not mean what it meant before. People are able to pay a higher price if they have a great deal more money. But certain

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