58 GENERAL FARM PROGRAM 



me that with a higher support price outside of the commercial corn 

 area, that is an inducement to people to grow more corn in the area 

 w^here there is a higher support price. 



Certain}}* I cannot see anything in this that gives the people outside 

 a lower support price. How do you explain that? 



Secretary Brannan. You explain that by the proximity to the 

 established markets at which prices of these commodities are fixed by 

 the daily tradings. The differences by counties reflect primarily the 

 freight differentials from those j^articular areas. 



Mr. Andresen. Let us take the case of New Jersey where they 

 raise a lot of chickens. Their support price is $1.60. Do you tie 

 that in with Chicago, or does that reflect the difference in the freight 

 rate between Council Bluffs, low^a, and Newark, N. J.? 



Secretary Brannan. Kansas City or Chicago, and I say, Mr. 

 Andresen, that in so doing wc are following the established practices 

 of the trade in these kinds of commodities. We are required by the 

 statute to follow as closely as possible the established practices of the 

 trade, and this is a part of it. 



Mr. Andresen. Thc^n the farmers who raise corn in New Jersey 

 and want to get a loan on it, or in Tennessee or Kentucky or West 

 Virginia, will have an advantage over the farmer inside the commer- 

 cial corn-producing area, because they w ill probably get 25 cents or 

 30 cents a busheJ more. It has nothing to do ^ith the market in 

 Chicago. 



Secretary Brannan. I wonder if you could call on Mr. McArthur 

 to explain this. He works day in and day out with the terminal 

 market and freight difl'erentials, and so forth. I think he can do a 

 more lucid job than I. 



Mr. Andresen. The reason I bring this up is because we were 

 discussing here that the support price or the loan rate would be 

 materially lower outside the area than it was in the commercial corn 

 area. 



Secretary Brannan. It would not under the legislation which 

 prevails this year. 



Mr. Andresen. I am reading from this year's schedules. 



Mr. McArthur. Mr. Congressman, our corn loan programs have 

 been set up on more or less of a historical pattern of farm prices in 

 different areas. They are not established on a terminal-market 

 basis like we have our wheat loan prices. Historically, whether the 

 area was surplus producing or a deficit feeding area has had its effect 

 upon farm prices for corn, and the corn loan pattern has been more or 

 less determined on a historical basis. 



The loans in New Jersey and Maryland do not reflect a full freight 

 difference over Chicago or Illinois. It is related to what has been 

 historical in the way of corn prices of the different areas. 



Mr. Andresen. A farmer who raises corn in New Jersey or Ten- 

 nessee and wants to get a loan on it is not interested in Chicago prices 

 or Iowa prices. He gets the loan rate in his home area at $1.60 or 

 $1.61. If we want to get closer to home, you can take my own county 

 in Minnesota. The loan rate is $1.37. I live on the banks of the 

 Mississippi River. You can go across the river where the land is 

 equally good and they raise just as much corn, and it is $1.41. Of 



