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STATEMENT OF DR. E. W. SHEETS, SECRETARY, UNITED STATES LIVE STOCK ASSOCIATION, SEWARD, NEBR.

Senator BROWN. I thought Senator Butler wanted to be here when you presented your statement.

Dr. SHEETS. I think I can handle the situation if you will give me a few minutes.

Senator TAFT. He is probably persuaded already.

Dr. SHEETS. My name is E. W. Sheets. I am secretary of the United States Live Stock Association, with headquarters at Seward, Nebr., of which Mr. D. M. Hildebrand is president. I represent also the American Pork Producers, Associated, of which F. Alvin Park, of Peoria, Ill., is president; the American Soy Bean Association, of which Mr. David G. Wing, of Mechanicsburg, Ohio, is president; American Fats and Oils Producers, including among others, cottonseed, soybeans, and livestock; the commissioners, secretaries, and directors of agriculture, through a committee of five from this organization, being represented in Washington by Commissioner H. K. Thatcher, chairman, of Arkansas.

I have a telegram from the president of the United States Live Stock Association, Mr. D. M. Hildebrand, which reads as follows [reading]:

Dr. E. W. SHEETS,

Washington, D. C.:

Secretary of Agriculture Wickard claims present war will be won by producing more food. Our farm and livestock producers are confronted with a labor shortage and higher production costs, and should be given the same protection as labor and industry, and if a ceiling on agriculture and livestock commodities is necessary same should be on a basis that is fair to those that are providing the food to carry on.

I also have a letter from Mr. David G. Wing, president of the American Soy Bean Association, reading as follows [reading] :

The American Soy Bean Association takes the stand that since we have a national emergency in fats and oils, and since our supplies are very likely to be cut off from the Philippines, and since Department of Agriculture has encouraged an increase in the production of soybeans for 1942 that price of soybeans and its two chief products-oil and soybean meal-should be set at a level high enough to be in line with industrial prices and labor. The soybean grower and farmer does not object to necessary price ceilings, but we demand treatment on a basis in keeping with accorded labor and other industries.

I also have a telegram from Mr. Alvin Park, president of the American Pork Producers, Associated, which is as follows [reading]:

Please appear before Senate Banking and Currency Committee in behalf of American Pork Producers Association protesting price ceilings on lard. We pork producers ask only equitable prices for our products equal with other groups. If we were paid union wage scale for hours put in producing pork, what would the price be? Clearly it could then never be a lease-lend item. Government cannot force proposed price ceiling and also ask us to increase production. Fork, lard, and pork products are one of our best energy-producing foods, not only for Army but also for civilian workers. Cannot understand why ceiling is placed at proposed figure. If food will help win the war, help write the peace, and be of tremendous value in post-war period, we must have more favorable consideration.

With your permission, Mr. Chairman, because of the lateness of the hour, if I may submit a brief statement for the record I will take this opportunity in a few minutes to summarize and to point out specifically the matters to which, I wish to direct your attention.

Senator BROWN. Do you want to make a brief oral statement and then submit a written statement?

Dr. SHEETS. Yes; to follow.

Senator BROWN. That is entirely satisfactory to us.

Dr. SHEETS. One of the points to which I wish to call the attention of the committee, and which I know has not escaped your attention, is the fact that for the purpose of testimony practically all witnesses have referred to August 1939, as the starting point, as if all prices during August 1939, were normal and as if farm products had attained so-called price parity, and that everything which has happened since that time should be labeled "inflation."

With much of this testimony I cannot agree. Neither with the purpose for which it was presented nor with the assumptions which have been arrived at and presented, because the measure before your committee frankly and honestly recognizes parity price as the basic measure or starting point from which inflation is to be measured.

In that connection I would like to submit the facts and figures from Government statistics to bear out that contention.

It is important to examine the price structure back for a period of at least 5 years to determine at what point or points prices received by farmers were on a par with prices paid by farmers, that is, points or dates when price parity existed.

I have here a table showing by the use of index numbers prices received by farmers for seven important groups of farm products, together with index numbers of prices received for "all farm products" and prices paid for "commodities purchased." The last column shows ratio of prices received to prices paid. The data in the table covers each month from January 1937 through September 1941.

(The table referred to and submitted by the witness is here reproduced as follows:)

65913-41-33

[August 1909-July 1914-100]

Grains

Cotton
and
cottonseed

Fruits

Truck
crops

Meat

Dairy Chickens

animals

products

and eggs

All
groups

Prices paid
for commod-
ities bought

Ratio prices received to prices paid

TABLE 17

Index numbers of prices received by farmers for products sold and prices paid for commodities purchased; also index numbers of prices received

for 2 export groups of farm products-grains and cotton-by months: January 1937 to September 1941

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Dr. SHEETS. It is well known by all who have kept in close touch with price movements that prices received by farmers had reached substantial parity levels by January 1937. Without referring at length to the factors which had helped to bring about that desirable goal, it will be sufficient merely to refer to such factors as increased purchasing power or demand during 1934, 1935, and 1936, and the substantial decline in volume of agricultural products from an index of 107 in 1931 to 92 in 1935, largely accounted for by severe drought years beginning in 1934 which principally affected grain crops and crop-curtailment programs.

The severe curtailment in production is further illustrated by the fact that the index number for production of grains declined to 61 percent over average for the year 1933, 44 percent in 1934, 71 percent in 1935, and 59 percent in 1936. In other words, during these 4 years grain production averaged less than 60 percent of normal. This reduction was largely the result of unfavorable weather conditions.

It is equally well known that large crops during 1937, 1938, and 1939 again brought tremendous supplies of farm products to the market while purchasing power or demand declined substantially. The net result of these and other factors was that by August 1939, the index number measuring prices received by farmers for all products had fallen from 131 in January 1937, to 88 in August 1939.

During the same period the index number of prices paid for commodities had declined only from an index of 130 to 119. In other words, farm returns had fallen from so-called parity, 101, slightly above parity, in January 1937 to only 74 percent of parity by August 1939.

It is believed that any fully informed public official or private citizen in the United States would not wish to bind prices received by farmers for agricultural products at or anything like 74 percent of parity, the level to which prices had fallen in 1939. It is difficult to comprehend, therefore, why any public official should refer to price recovery since August 1939 as an evidence or illustration of inflation. Purchasing power has increased substantially since August 1939. The Government has, through laws and administrative action, taken steps to bring farm prices up in the direction of parity. The table heretofore mentioned discloses the fact that by August 1941 prices received by farmers and prices paid for commodities purchased had been restored to so-called parity for the first time since January 1937. In the meantime, prices received by farmers had gone down from an index of 131 to 88 and had returned up to an index of 131. In the meantime, likewise, prices paid for commodities purchased had gone down from an index of 130 to 119 and again recovered to the level of the starting, an index number of 131. From this examination of statistical data, as shown in the table, it appears that there has been no definite inflationary movement up to August of this year insofar as prices received by farmers are concerned, but only price advancements restoring price levels and placing them into equilibrium.

In order to more completely indicate the significance of fluctuation in prices of individual commodities and groups of commodities, the table attached presents index numbers of prices received for each of

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