204 GENERAL FARM PROGRAM 



what should have been the cash receipts in order to provide the 

 farmer with the proper purchasing power that year. Is that right? 



Secretary Brannan. Mr. Pace, I do not want to be argumentative, 

 but my answer would be yes and no. I would like to explain it in 

 detail. 



The Chairman. You may explain it your way. 



Secretary Brannan. Yesterday I submitted a statement to you. 

 Might I ask, Mr. Chairman, if the members of the committee do 

 have this single document which we delivered to them yesterday, 

 entitled "Formula for Computation of National Farm Income Support 

 Standard and Specific Farm Commodity Price Support Standard?" 

 There are some more copies in the possession of the clerk, if you do not 

 have them. 



Mr. Pace. Mr. Secretary, you start off with the total cash receipts 

 for the year 1939. Is that correct? 



Secretary Brannan. You start off with it, because you have to 

 write some figure down first and that in chronological order would be 

 the figure you would write down first. 



Mr. Pace. Going on from there, you divided that figure by the 

 year's index of prices paid by farmers, which is 73 on that page. 



Secretary Brannan. That is right, Mr. Pace. You understand, 

 however, that you could not do that until you wrote down the income 

 figure for the next 9 years following 1939. 



Mr. Pace. You take 1 year and then multiply it by 10? 



Secretary Brannan. No; you see, in order to get that 73 you had 

 to relate the parity index to the prices of those specific commodities 

 during the years 1939 to 1948. 



Mr. Pace. In order to get the 73, which represents the year's index 

 of prices paid by farmers? 



Secretary Brannan. That is right. 



Mr. Pace. Dividing that into cash receipts for 1939, instead of it 

 being 7,800,000 you come up, in round figures, with 10,000,800,000 

 for that year? 



Secretary Brannan. As the purchasing power of value of the 

 dollars the farmer got in 1939, if those dollars had the average pur- 

 chasing power of a dollar during the years 1939 to 1948. 



Mr. Pace. And it took the difference between the 7,000,000 and 

 the 10,000,000,000 to give him that purchasing power? 



Secretary Brannan. That is right. 



Mr. Pace. Then you do it for 1939 and you do it for the next 

 9 years. 



Secretary Brannan. Yes, sir. 



Mr. Pace. Then you take the right-hand column for the 10 years, 

 the purchasing power column, and you average it. 



Secretary Brannan. That is right, sir. 



Mr. Pace. Then you come up with about 18,200,000,000, I believe. 



Secretary Brannan. Yes, sir. 



Mr. Pace. Then you multiply that by the then current price index. 



Secretary Brannan. Yes, sir. 



Mr. Pace. In order to give that average purchasing power the 

 amount necessary for it to have its present purchasing power. 



Secretary Brannan. The amount of present dollars to have the 

 comparable purchasing power they would have had during that 10- 

 year period; yes, sir. 



