GEXERAL FARM PROGRAM 443 



Mr. Pace. Without objection, that will be inserted in the record. 



Thank you very much, Mr. Kline, for your statement. 



Gentlemen, Mr. Kline is ready to submit to questions. Are there 

 any questions '. Mi-. Cooley I 



Mr. CooLEY. Mr. Kline, under the normal law of supply and demand, 

 prices of farm commodities are ordinarily related to supplies of a 

 particular connnodit3\ Is that true '. 



Mr. Kline, Yes. 



Mr. Cooley. So when you make a statement to the eflfeet that you 

 are convinced that the level of price support should be tied to farm 

 supplies and that farm prices should be used in helping to guide farm 

 production, what is the difference between the situation you have in 

 mind in that statement and the ordinary situation where the law of 

 supph' and demand operates without any artificial interference? 



Mr. Kline. If I understand your question, Chairman Cooley, it 

 might apply to a situation where a support price came into effect and 

 interfered with the normal supply and demand situation. Is that 

 what your question refers to % 



Mr. Cooley. Yes. In other words, you say here that you want to 

 tie the support price to farm supplies. That is exactly what happens 

 when no legislation is in effect and when no program for supporting 

 prices is in effect. In other woi'ds, you mean by that statement when 

 supplies go up, ])rices should go down and when supplies go down, 

 prices should go up. That is exactly what you accomplish by the 

 Aiken bill. It is the same thing that would be accomplished without 

 the Aiken bill. 



Mr. Kline. There are a number of factors which affect price, of 

 course, of which suppl}- is one. In many cases there is rising demand 

 for some conmiodity. We think that price is a perfectly legitimate 

 and, in fact, the best means of determining as between commodities 

 what the demand is for. 



Given a fixed demand, then, of course, supply becomes a more im- 

 portant factor and as supply goes up, the price would go down. The 

 whole philoso])hy of the act of 1948 is that there is a ])oint at which 

 the public and the farmers cannot afford to have the law of supply 

 and demand be fully operative because agricultural production is so 

 extraordinarily stable compared with the production in other areas of 

 the economy. 



After this point is reached our terms of exchange just are not fair. 

 So we set in a basis for determining at what point the Government, 

 representing the public, will not allow a further deterioration of farm 

 prices. That, of course, interferes with the supply and demand propo- 

 sition but it is. we think, a reasonable interference. 



]\Ir. Cooley. Does it actually interfere with it at all ? 



Mr. Kline. Yes. sir. 



Mr. Cooley. If your supplies are abundant, it is only natural to 

 suppose that your price will be affected by that abundance and the 

 price will be low. 



Mr. Kline. That is right. 



Mr. Cooley. And. of course, the reverse of that situation is true. 

 "Wliat is the difference between the program contemplated in the lan- 

 guage which I read to you from your statement and no progTam at all ? 



IVli'. Kline. The difference is that prices could not do what they 

 did after the First World War because thev would hit these floors. 



