GENERAL FARM PROGRAM 367 



prices received l\v farmers, tlie new or '•moclernizecl" parity is a different baby, 

 somewhat undersized, but fast stepping. 



The old parity as of last June 1."j. for instance, was arrived at by (first step) 

 taking the average price received by farmers for wheat August 1W9 to July 

 1914. of .$0,884. (Second step) You multiplied this by the figure 2.51. This was 

 the BAE index of prices paid, interest, and taxes, as of June 1~>. 1948, the 1910-14 

 index number iiaving been KMi. or normal. (Third step) Multiplying $0,884 by 

 2.j1 gave us >>'2.'22. which was June l."i. 194S, wheat parity. 



If you had been figuring new parity last June, this is how you would have 

 gone about it. 



PTrst step) You would have started with the figure of .'^1.22. which was the 

 average price for wheat realized by farmers from January 1938 to December 

 1947. New parity uses the last 10-year period averages. 



Then you (second step) w<mld luwe hunted up the index of prices received 

 by farmers for some l."i5 farm conunodities, ranging from apples to grai>es for 

 wine and raisins, during tlie same period January 1938 througli December 1947. 

 The index iigiu'e is 1<!S, or (58 points above the old 19(»;^^14 figure of 100. 



Now (follow this closely if you can), as your third step you would have divided 

 168, the index of all commodities, into the average price for wheat for the 10 

 years, or .$1.22, and you get an adjusted base price for wheat under modernized 

 parity of 72.6 cents per bushel. 



Then (fourth step), you multiply the adjusted base price of 72.6 cents by 251, 

 which was the .June 1~> index of prices paid liy farmers. That series of computa- 

 tions gave us the new, modernized wheat parity price of $1.82. 



l"ou can see tliat it costs money to learn to dance the four-step. 



That third step was especially costly. Instead of nudtiplying $1.22 by 2r»l 

 and getting .$3.()o as the new wheat pai-ity. you wind up with $1.82. It is truly 

 a four-step magic dame of index numhers that will make the wheat farmer turn 

 and twist — not with joy — but to make ends meet. 



Why do you figure new parity differently than old parity? The new gimmick 

 in this four stepper is adjusting the base price of a commodity by the index of 

 prices received for all commodities. The theoi\v of that is that the relationship 

 between various commodities has changed in the past 30 years. Wheat has been 

 lower in the past 10 years relative to other farm prices than it was in 1909 to 

 1914. The efticieucies that wheat farmers have gained in production and through 

 cooperative marketing, relative to other commodities, are to be recaptured by this 

 device. 



The parity prices for all grains are dropped by the new parity formula, while the 

 parities for livestock products move up a little. 



As of June l."> last, parity for corn would have dropped from $1.61 to $1.42; 

 oats from $1 to $0.82 ; barley from $1.."i.t to $1.21. Hogs would have sone up from 

 $18.20 to $18.70; beef cattle up from $13.(50 to $16.30; lambs up from $14.80 to 

 $17.80 ; wool up from 4-5 to 52 cents a pound ; chickens up from .$0,286 to $0,304 a 

 pound, and so forth. 



Because the reduction in parity for a number of commodities, especially wheat, 

 promised to be very painful, another new gimmick was introduced. 



This gimmick wears percentages for earrings, instead of index numbers. But 

 for the wheat farmer, she's another four stepper, and she costs money. 



This gimmick is called 'transitionar' parity. It means that .supiwrt prices 

 shall not drop fi-om the old to the new parity basis at a rate faster than 5 ijercent 

 per year. With an 18 percent drop due in the case of wheat, this means that 

 the adjustment from old to new parity will be made gradually over a 4-year iieriod. 



It is reasoned that it will be less painful for 18 inches to be removed from 

 the tail by chopping off a piece at a time. 



I have not had time to see just what Confucius has to say on this subject, but 

 I have a good notion what John X. Doe will say when lie linds that it's his tail 

 that is involved. 



He may ask, for instance, when does the axing take place in the case of steel 

 prices, tractor co.sts, gasoline prices, and many others which mean much to him 

 but which have mystified him because they are always going up and never, or 

 hardly ever, downward. I say "hardly ever,"' because, if John X. Doe has a 

 grandfather who lived to a ripe, old age, he may have heard some significant 

 drops outside of the limited adjustments in the worst depression years. 



So this is how Doe gets at his wheat price, assuming that again he has to take 

 recourse in a loan or purchase agreement around harvesttime in the year 1950, 

 as is more than likely. 



One of three things will happen : 



