368 GENERAL FARM PROGRAM 



First, acreage allocations might have been ordered by the Secretary of Agri- 

 culture and marketing quotas voted by a two-thirds majority of producers in 

 the fall of 1949. In that case, if Doe cooperates in the program, as he should, he 

 will plant fewer acres and market fewer bushels in 1950, but he would get 72 

 percent of the new parity as the basis for his loan, plus due allowance for the one- 

 swipe-at-a-time transitional parity. 



Instead of 300 acres planted to wheat, he will be allotted 20 percent to 30 per- 

 cent less. If it is decided to cut the Nation's wheat acreage back from 79 or 80 

 million, in prospect in 1949, to 55 million, which many forecast will be more 

 than enough in 1950, the Nation's wheat farmers face a cut of 30 percent in acreage. 

 Domestic consumption is not increasing ; exports will drop in all likelihood. 



In this case, we will assume that in 1950 Doe cuts his acres 20 percent to 240 

 acres, harvests 15 bushels to the acre, or 3,600 bushels in all. He ofCers for sale 

 3,100 bushels (his quota). He still needs 500 bushels for seed and home use. A 

 cut from 4,000 to 3,100 in the volume for sale is substantial. 



We expect parity to decline further in 1950, from 1948 levels, because feed and 

 food will be cheaper. We can reasonably assume old parity, by that time mainly 

 an interesting historical fact, would be $2.05 and that now parity would be $1.68. 

 But transitional parity keeps the decline from being that much. It means that 

 svipport prices would be figured from a base 5 percent under old parity, or at 

 $1.94%, 



Seventy-two percent of this would be $1.40. Without an increase in rail rates 

 Doe's loan price would be $1.20, but a freight increase of 8 to 15 percent by that 

 time is almost certain, but we will leave it out of the calculation. 



Thus, with 3,100 bushels to sell, with the loan again important to John X Doe, 

 lie finds his gross income is 3,100 times $1.20, or $3,760 less loan interest and ser- 

 vice cliarges. Doe remembers 1948 with $7,200 gross against 1950 with $3,760 

 gross. I could, but I will not. quote what he says when he gets his check. But 

 at home that night, after deducting costs from his gross income and eyeing the 

 red in the net figure, he will say very little except : "There won't be much to 

 spend for Christmas this year, Mother." 



I said two other things might happen to Doe in 1950. They are worse. ' Farm- 

 ers could vote down quotas. Then the support price would drop to 50 percent 

 of new parity-transitional parity. Fifty percent of $1.94% would be $0.97i4. 

 Take oft" 20 cents for freight and handling, and Doe's local loan price would be 

 $0,771/4. If he got a loan on 4,(Xli0 bushels, Doe's gross, before CCC loan interest 

 and service charges, would be $3,084. 



Or it might be that he would get 60 percent of new parity plus transitional 

 parity, in case acreage allocations and marketing quotas were out and the price 

 rested on the support level due to a large supply in relationship to "normal" 

 supply. Then the calculation would 60 percent of $1.91%, or $1.16% less 20 cents 

 freight, or $0.91%. Before loan interest and service charges, with 4,000 bushels 

 to turn over to CCC Doe would gross $3,674. 



In short, his alternatives as gross income in 1950 would be $3,674 or $3,084 or 

 $3,760 — any of which is around 50 percent of what he grossed in 1948. 

 His prospect.5 for 1951 are roughly 5 percent worse than in 1850; for 1952, 5 

 percent worse than 1951. By 1953, they are still worse, but his tail is cut ofE 

 and transitional parity is finally buried with the last scrap of tail. 



By 1953, naturally, he is not a very friendly fellow and, what is more im- 

 portant, he has become a very poor customer for what the industry of the Nation 

 produces. And you know what it means when purchasing power dries up on 

 farms. 



I wish I could share the optimism of those who, having lost the art of using a 

 pencil, endorse the long-range price-support provisions so heartily. I have even 

 heard it called the farmer's "Magna Carta." 



They talk of shrinking — get that word "shrinking" — wheat acreage by cutting 

 the prices so the so-called marginal lands will be withdrawn from production. 



The farmer's income will do the shrinking — he isn't Sanforized. 



They say, with enthusiasm, that the act will shift wheat production effort to 

 cattle, chickens, milk, bees, fur farming, and what not. 



They say all this will help "balance" the enterprises of the farmer. Maybe it 

 will, but it will unbalance the wheat farmer's books, too. 



They say it will help arrest inflation and supply a floor under farm income, 

 establish the principle of forward pricing, all while American agriculture "ad- 

 justs" to the laws of supply and demand. 



A floor that sinks below the level of the cellar isn't weatherproof. People have 

 drowned in bathtubs on the second floor. 



