-2- 

 ^^ There were several possible reasons for the declines in prices, 



but the immediate factor that touched off the landslide appeaired to be 

 President Roosevelt *s executive order authorizing several government 

 agencies, including the Army, Navy, and Department of Agriculture, to 

 import war materials free of duty. Inasmuch as almost any farm product 

 can be considered a war material, this meant that if the agencies used 

 their power, corn could be imported free of the 25-cent tariff duty, 

 wheat free of the ^2-cent tariff duty, etc. Although we are operating 

 under a system whereby Canada has been given quotas in connection with 

 wheat exports to the United States, our own very heavy production and 

 carryover of wheat added to the weaimess caused by this new order. The 

 executive order was based upon legislation passed during the first World 

 War. 



Crovernment officials have indicated that the order v/as in- 

 tended to provide for the importation of such strategic and scarce raw 

 materials as metals needed in the armament program v/hich were being 

 imported anyv/ay. I'lr. Jesse Jones, head of the Reconstruction Finance 

 Corporation, pointed out that in connection with the imports of duty- 

 free wool, the price of domestic wool i^ould not be affected. The domes- 

 tic price has been at the ceiling level. Presumably there is no inten- 

 tion of importing wheat duty— free when we already have a very burdenr- 

 some surplus in this country. Of course, the bargaining power of the 

 administration is strengthened in its efforts to get Congress to per- 

 mit government sales of corn and v/heat at less than parity. 



Price declines such as we experienced this week and two weeks 

 ago naturally raise the question in the minds of farmers as to whether 

 a further substantial decline in prices of farm products is forecast by 

 recent market action. We can safely say that if there is a further 



substantial decline in the price of farm products, it would have to be 

 the result of arbitrary pressure on prices by government agencies. 



