GENERAL FARM PROGRAM 



547 



for the extended drought. Drought was the only thing that saved 

 control from obvious and miserable failure. 



Despite an unprecedented period of drought years that cut yield of 

 crops from 1931 to 1934 an average for the whole country by 25 per- 

 cent, total crop production declined only by an equal amount or the 

 same jDroportion, 25 percent, showing that control of the selected crops 

 was offset by increased production in alternative crops. The net 

 result was that we did not reduce total production. 



Among other defects of control as a means of raising the price level 

 is that control on such major export crops as cotton helps foreign pro- 

 ducers more than it helps American farmers if it raises the general 

 price level at all. This is shown by the table below, which was in- 

 cluded in testimony which I gave before the Senate Committee on 

 Agriculture in 1933 : 



Effects of reduction of p7-odiiction of tcheat and cotton in the United States on 

 the estimated net income of farmers in the United States and abroad^ 



Crop and region 



Amount gross 



value of crop 



would be 



increased 2 



Estimated in- 

 crease in cost 

 of production 

 due to reduc- 

 tion in acre- 

 age 3 



Net gain in 

 value of de- 

 creased crop 



Remarks 



Wheat with a 20-percent reduction 

 in the United States: 



(a) Foreign producers 



(b) United States producer 



Cotton with 20-percent reduction: 



(a) Foreign producers 



(b) United States producers... 



Cotton with 50-percent reduction: 



(a) Foreign producers 



(b) United States producers... 



$760, 000, 000 

 120, 000, 000 



172, 000, 000 

 ISO, 000, 000 



518, 000, 000 

 337, 000, 000 



$66, 000, 000 



90, 000, 000 



150,000,000 



$760, 000, 000 

 54, 000, 000 



172,000,000 

 90, 000, 000 



518, 000, 000 

 187, 000, 000 



The producCT of the 

 United States gets only 

 $1 to each $14 of net 

 gain for foreign com- 

 petitors. 



The producer in the 

 United States would get 

 $1 to each $2 received 

 by other producers. 



Producers in this country 

 would get $1 for each $3 

 for our competitors. 



J The calculations herein given are not considered usable except as indicative of general and not specific 

 facts. 



2 If normal price and supply of past decade prevailed. 



8 Estimated increased cost of production based on cost studies of 27 wheat farms in Garfield, Okla., and 

 67 cotton farms in Oklahoma, and is approximated at 11 cents per bushel increase for wheat, 1.5 cents per 

 pound (with 20-percent reduction) and 4 cents per pound with 50-percent reduction of cotton. 



The facts brought out in this table presented to the Senate 15 years 

 ago are pertinent in considering the advisability of use of control as 

 a price-raising device, or the use of flexible supports and with a two- 

 price system as an alternative approach. In judging the merits of 

 tliese alternatives, one should keep in mind that parity must be sup- 

 ported on a thoroughly reliable modernized price parity, and that 

 best efforts must be made to hold all farm prices in as near a full bal- 

 ance as practical by the various programs Ave are suggesting. 



Clearly to support prices of cotton by restricting our crops (if we 

 actually are effective in reducing world supplies and raising world 

 prices) will raise all cotton prices both at home and abroad. Similarly 

 wheat. In the case of cotton, as shown by the table, with 20 percent 

 reduction in the United States and no response by increases abroad, 

 we would have raised total value of cotton to our farmers by 180 

 million dollars. But it would cost them 90 million additional costs 

 to cut their output by this amount, thus leaving them only 90 million 

 net gain. A cut of 50 percent would give them a net gain of 150 

 million. 



But foreign cotton would receive the same price boost assumed due 

 to reduced world supplies; and a 20 percent cotton reduction in the 



91215 — 49— ser. r, pt. 3 13 



