duty is lowered by the amount of such 

 difference. When the farai price falls 

 more than 10 per cent below parity, the 

 tariff would be increased in the same way. 

 And when the farm price no longer dif- 

 fers from parity by more than 10 per 

 cent, the normal import duty again be- 

 comes effective. 



A national base acreage will be set up 

 for each major crop. This acreage will 

 be that required under normal production 

 to produce what is needed for normal 

 domestic consumption plus exports and 

 a surplus reserve. The national base is 

 allotted by the Secretary of Agriculture 

 to states and to counties or other local 

 administrative areas on the basis of the 

 previous 10 years' history with adjust- 

 ments for abnormal weather conditions, 

 etc. These county or district allotments 

 will be equitably divided among indi- 

 vidual farms according to tillable acres, 

 type of soil, typography and production 

 facilities. County and township commit- 

 tees of farmers will make these allot- 

 ments of individual farm bases. They 

 win be published for each farm and the 

 farmer will have the right of apfjeal to 

 the Review Committee, to the federal 

 reviewing officer, and finally to the fed- 

 eral district court. 



The farm base acreage serves at all 

 times to limit the acreage that may be 

 used for producing the crop, and also as 

 a yardstick for acreage diversion when- 

 ever required. Each farm also will have 

 established a normal yield per acre with 

 the same right of appeal. The normal 

 yield per acre of any commodity on any 

 farm shall be the average yield per acre 

 for the crop thereon during the preceding 

 ten years. 



In the case of field corn, the normal 

 supply level is an average year's domestic 

 consumption plus five per cent for re- 

 serves. A normal supply of wheat is 

 an average year's domestic consumption 

 plus 20 per cent for exports and reserves. 



Whenever the total supply (carryover 

 plus estimated production) of any major 

 commodity exceeds the normal supply 

 level, the Secretary shall require contract 

 signers to cut their acreage of the com- 

 modity as is necessary to bring the sup- 

 ply in line with market demands. Co- 

 operators are also required to engage in 

 soil conservation practices as provided in 

 the adjustment contract. If any farmer 

 exceeds his base acreage of a commodity 

 or fails to reduce his acreage, he will 

 not be entitled to the commodity loan 

 or parity payment. 



Whenever the total supply of wheat 

 is more than 20 per cent above the nor- 

 mal supply level or when the supply of 

 field com is more than 10 per cent above 

 requirements, the Secretary is required 

 to hold a public hearing to ascertain the 

 facts and proclaim "a national marketing 



President Earl G. Smith 

 Before House and 

 Senate Committees 



Here Is The Philosophy On Which New Form Progrcan 



Is Based 



^*^^ HE Agricultural Adjustment Act 

 ^— ^ of 1937 is the outgrowth of 



-/ more than six months of delib- 

 eration by a Farm Conference Group of 

 widespread interest and influence repre- 

 senting the cotton, corn, wheat, tobacco, 

 and rice belts of the United States. 



At its recent conference in Washington 

 to adopt the final draft of the new bill, 

 the group chose Earl Smith, president 

 of the Illinois Agricultural Association, 

 to present the arguments for the program 



quota " which will be the basis for reduc- 

 ing acreage the following year. 



Through local committees of farmers, 

 farm marketing quotas shall be set up 

 fixing the quantity of basic crops that 

 may be sold from any farm. In such 

 an emergency, a co-ojserator is required 

 to keep under seal in his crib or bin his 

 share of the surplus until it is released. 



A marketing quota will be set up also 

 for non-co-operators and any farmer who 

 fails to withhold from market his ex- 

 cess production will be subject to a severe 

 penalty per bushel for that portion of his 

 excess disposed of. Whether co-operator 

 or non-co-operator, the excess supply will 

 be automatically released when the na- 

 tional supply is reduced to normal, or it 

 can be released when the farmer reduces 

 his acreage planted to the commodity 

 the following season in an amount equiv- 

 alent to his excess carryover. Penalties 

 only apply when farmers insist upon sell- 

 ing their excess production and thereby 

 force, through its bearish influence, re- 

 duction in the price level. 



TTie whole plan is set up to maintain 

 adequate supplies, including surpluses, 

 but intended to harness or control the 

 surpluses and keep them from breaking 

 the price levels of the commodity. 



It is estimated that the program cover- 

 ing com, wheat, cotton, tobacco and rice 

 can be administered with funds available 

 under present appropriations. With only 

 normal carryovers, it is estimated the cost 

 will approximate $287,000,000. As ex- 

 cess supplies accumulate, costs will rise 

 until such point as marketing quotas are 

 established. 



before the House and Senate Agricultural 

 Committees. 



On Monday and Tuesday, May 17-18, 

 Mr. Smith gave three and one-half hours 

 of testimony at the two hearings, in 

 which he effectively and ably outlined the 

 basic philosophy of the new agricultural 

 adjustment bill. The New York Times, 

 Washington Post, and other metropolitan 

 dailies on the eastem seaboard, as well 

 as scores of inland newspapers, carried 

 leading articles based on Mr. Smith's 

 testimony. 



Excerpts from his description of the 

 new program appearing in the press are 

 presented herewith to assist members 

 in getting a better understanding of the 

 bill. 



Mr. Smith said: 



"Today we come before you to suggest 

 a bill which we believe may well become 

 the basis for permanent treatment of the 

 farm problem. In my opinion, it is the 

 most constructive ever suggested. 



"It deals with five basic commodities. 

 It contains provisions to meet all market 

 demands, both domestic and foreign, plus 

 normal carryover, plus reserves against 

 emergencies. Control is not authorized 

 except when supplies exceed the total of 

 all these demands. In this bill, we ad- 

 dress ourselves to an economy of plenty. 

 We harness and control surplus supplies, 

 rather than try to control production. 



"This bill establishes a national base 

 for each commodity, determined by sup- 

 plies, estimated yields, and market de- 

 mands for the average of the previous 

 ten years. On the same basis, county 

 bases are awarded, and within the county 

 individual bases are established by com- 

 mittees of farmers, using tillable acreage, 

 topography, type of soil and production 

 facilities on individual farms as base- 

 determining factors. Good farming prac- 

 tice will guide the committees in deter- 

 mining local bases, for experience has 

 proved that history is not the proper ap- 

 proach. 



"Should supply from total alloted acres 

 exceed normal supply, the Secretary of 

 Agriculture has the authority to make 

 loans on corn and wheat at all times, 

 and on cotton and rice under certain con- 



lUNE. 1937 



