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seven important groups of farm products monthly since January 1937.

It is well known that there have been tremendous fluctuations both in production and disappearance in certain grain crops and of cotton during this period. These are by far the most so-called surplus or export crops.

The matter of outstanding significance here is that those of us who represent stockmen and farmers make clear to your committee and the country at large:

That true parity price remains a goal.

That this goal cannot be measured from the depth of price levels reached in August 1939.

Price movements in general during the last few years have not been an indication of inflation.

While price parity is a goal, it should be constantly emphasized that it is not the only goal. Income parity is a more complete guide if only a satisfactory method of measuring this goal could be devised. On account of fluctuations in price due to variations in supply, demand, and other factors it would be highly improper at this time to set an absolute ceiling at price parity or 100. It is to be remembered that the pending measure is not a price-fixing bill. The Government is not prepared to guarantee parity. In fact, farmers and stockmen are becoming more and more concerned by the policy of the Government, which seems to be in the making, to not guarantee but to support prices that would only represent about 85 percent of parity as now determined. At most, the suggestion in the pending legislation is the establishment of a ceiling.

Provision should be made, therefore, permitting a fluctuation above and below parity of substantial margins. Indeed, since Federal legislation providing the commodity loan guarantees farmers only 85 percent of so-called parity, it would be wise public policy to permit ceiling prices to advance considerably above parity, thus permitting a fluctuation ranging from 85 percent of parity to a substantial margin above 100.

Students of price-parity formulas, including base periods, have at no time been satisfied with the present base period prescribed by law or the formulas now in use. Having cooperated closely with representatives of farm and other groups in developing a new conception of parity, we believe we have reached substantial agreement on certain fundamental points with reference to the present method of computing parity.

A summation of our views on this question might be expressed about as follows:

The present method of computing parity is wholly inadequate because:

Since present parity is based upon purchasing power of farm products 30 years ago without considering subsequent changes in the national standard of living, it tends to hold the farmers' relative income to the past.

The present mehod of computing parity does not include any factors reflecting increases or decreases in the wages or incomes of the nonfarm population, which comprise the domestic market for our farm products.

No consideration is given to the changes that have occurred in the competitive relationships among the different farm products since the base period 30 years ago. This omission simply freezes the price relationships existing among the different farm products in the base period.

No consideration is given to farm wage rates as a farm cost factor; and

No attempt is made to measure parity income as well as parity price.

The present concept and philosophy of parity should be completely revised rather than attempting to rectify its basic faults with patchwork methods on an individual commodity basis.

Before referring more specifically to certain features of the pending legislation before your committee, it seems important to mention that a study of farm and nonfarm income shows conclusively that the farmers of this country have not received their just portion of prevailing price changes and of the national income for more than two decades. As a result of this situation, many thousands of farmers and stockmen have lost their farms and holdings and have been forced to a gradually lowered standard of living. It is generally con ceded that this situation presents a grave threat to the continuation of the American way of life for it is known that when farmers have a subtsandard of living because of a lack of adequate income, they can hardly have the same enthusiasm for our democratic way of life as those who receive a larger and a fairer share of the good things which our country affords.

Our industrial structure has been permitted to grow to much greater heights under the encouragement of Government support than our agricultural foundation at the present time is able to sustain. The time has arrived, in fact has long since passed, for an earnest effort for sufficient governmental support, legislative rather than financial alone, to be given as would strengthen the foundation of American agriculture.

The protective tariff, the Social Security Act, the Guffey Coal Act, the Railroad Retirement Act, the authority in our regulation commercials to establish the rates that may be charged consumers for the many services rendered and performed by public utilities, the wages-and-hours law-all of these and many more which could be cited are examples of governmental interference with price administration, as they were once known, and in the distribution of the products of labor and industry.

The farmers of America, being the largest single consuming class in the Nation, thus are compelled by law and regulation to pay higher and higher prices for the things which they need and will buy, while at the same time they remain about the only large group of producers of raw materials and wealth in our Nation who have no control over the prices which they are to receive for the commodities and products which they supply.

It is this state of affairs which has induced farm leaders to oppose certain features of the price-control bill as it maintains the inequalities existing between agriculture and all other groups.

It seems important therefore, in order to throw some light on this situation, to consider the farm income in relation to national income for the past quarter of a century, and with your permission I should like to insert a table for this purpose, showing the national income of the United States from 1909 to 1941, as given on page 650 of the 1941 agricultural appropriation hearing of the United States Department of Agriculture. (These figures on farm income have been slightly revised by the Department recently.)

It is significant to note that farm income, beginning with 1909, represented 16.4 percent of the national income. Farm income, as a percentage of the total national income, remained on about this level until 1919. To reveal the serious disparity between the farm and nonfarm income the following tables, giving the annual and average farm income for three 5-year periods (1915-19, 1925-29, and 1935-39), together with the average daily farm income for the same periods, are shown:

(The tables referred to and submitted by the witness are here printed in full as follows:)

[merged small][merged small][graphic][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][subsumed][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small]

57, 590

52, 770

4,820

8.4

1939 1

68, 934

63, 821

5, 113

7.4

8.1

6.9

1936

67,009

61, 599

5, 410

1940 2

72, 595

67, 611

4,984

1 Revision of preliminary estimate given in table on p. 650 of 1941 agricultural appropriation hearings. 2 Preliminary.

Source: Bureau of Agricultural Economics.

1915.

1916.

1917.

1918.

1919

Total..

Yearly average.
Daily average.

Year

Farm as

5-year period percentage

of total

$4,806, 000, 000

14.5

5,838,000,000

15.0

8,903, 000, 000 10, 501, 000, 000

18.8

19.0

11, 598, 000, 000

19.2

41, 646, 000, 000

8,325, 200,000

22, 808, 767

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Dr. SHEETS. In order to determine whether or not there is any justification for the establishment of price ceilings, price control, or price administration, the significant facts showing the relation of farm income with other groups of society over these periods of years should be taken into account.

For the 5 years, 1915-19, the average farm income was $8,325,200. In other words, each evening as the sun went down the farmers of America had added $22,808,767 of new wealth to the Nation. It is recognized that this 5-year period represented the years covered by World War I, which is very similar to the present period in many respects.

The period following the World War, which is regarded as more nearly a normal one, but a period in which agriculture lacked a great deal of being on a parity with labor and industry, was the period of 1925-29. The average yearly farm income for this period was $6,974,400,000, or the daily produced wealth of $19,135,479.

Compared to the income in recent years, prior to the beginning of the present world conflict farm income for the 5-year period 1935-39 had dropped to the low level of $5,222,800,000, or the daily creation of wealth had dropped from $22,808,767 during the 1915-19 period to $14,309,315. Certainly, Mr. Chairman, these figures answer the question, How are farmers getting along in the States?

It is significant to point out that the total farm income for the 5 years 1915-19 of $41,646,000,000, which was a difference of $15,502,000,000 more than for the 5-year period 1935-39, the income of which was $26,114,000,000.

When it is known that the Farm Credit Administration reports the total farm-mortgage debt in 1935 was $15,299,182,000, you will see that the farm income during the 5 years 1935-39 was reduced by an amount sufficient to have paid off the entire farm-mortgage debt at that time. Those who remember World War I will recall that agricultural products were considered essential defense commodities. It will be remembered by those who had any part in agricultural affairs during the latter years of that conflict that it was but a few days after President Wilson's memorable address and message to the Congress and the resultant declaration of war that the slogan adopted was "Food will win the war." Throughout the land this slogan, heralding to the world food and fiber as our first line of defense, brought a quick response from American farmers and stockmen.

It is interesting to remember that then, as well as now, a rising business, labor, and the consumer wanted a low price fixed for agricultural commodities. Today as then business and labor want increased prices for their goods and services-witness the strikes for higher wages, and fast-rising costs of things which business and industry have to selland yet the farmers who must pay these increased prices are being told that they should be satisfied with less than parity.

As we build battleships, tanks, airplanes, and all instruments of modern warfare to the extent of billions upon billions of dollars, there are but few who seem to be concerned sufficiently about the place the farmer has in this important program. To understand the difficulty of adapting agriculture to a world at war, it is necessary to realize that farming is still a business of individuals. More than 90 percent of our farm products and commodities are produced by individual farmers and their families. This is because, in our national agricultural plant, there are many thousands of independent units, each with its own management. Programs designed to increase the output of these unit farms must appeal to the many rather than the few. On the other hand, in certain nonagricultural lines of industry, decisions made by a few can and do determine production. An increase or decrease in the production of automobiles, for example, can be brought about by the decision of a few men, but a material increase in wheat, hops, milk, cotton, or corn production can be achieved only when our farmers decide upon the matter and favor cooperation to that end.

Industry can undertake to make contracts with the prospect of comparatively quick sales, carefully guarding against overproduction. Agriculture, on the other hand, must look far into the future and take a chance. First, our farmers must be convinced of the necessity and desirability of stepping up production. It should be remembered that the decision must be made by millions of individuals not by just a few leaders. Secondly, it should be remembered that farmers can do little to hurry nature or change normal production processes. Farmers require at least a year and usually longer to raise crops or hogs. With beef cattle it takes from 2 to 4 years to bring about an important increase to the market. Increasing dairy production requires almost as long.

The period of time that may elapse before the farmer can realize returns on new decisions naturally makes them cautious about changing their farm program. Individual farmers must be convinced that the need will not pass while they are working with or waiting upon the process of nature. If farmers increase their production greatly, they risk being "caught short." They risk a declining market. They risk having on their hands the necessary new implements required for growing and producing commodities. They risk undertaking a responsibility without assurance of adequate labor at a cost that can be met. All of the hazards mentioned are in addition to the chances farmers must take with the elements of nature. Unwise expansion would be a stone around the neck of agriculture. Farmers therefore are cautious. Their desire is an economic plane for agriculture comparable to that of industry. This is an unselfish desire for the eco

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