548 GENERAL FARM PROGRAM 



United States would yield foreign producers 172 million free of any 

 additional costs compared with our net gain of only 90 million. 



In other words, with a 20 percent cut and no increase abroad our 

 farmers would get from control measures only slightly over a dollar 

 for each $2 of net benefit to foreign producers. Similarly with a cut 

 of 50 percent in cotton acres our benefit would be $1 for each $3 re- 

 ceived by foreign cotton producers. Due to the small proportion of 

 the world wheat production which we were producing in 1933, the 

 net benefit is an astounding differential — $1 of benefit to our farmers 

 to each $4 we benefit foreign producers. 



Actually, however, if our reductions have any influence on world 

 cotton and wheat prices this stimulates increased production abroad. 

 This is exactly what occurred as can be clearly shown by cotton. From 

 1932 to 1935 for 3 years of rigid control we reduced our total pro- 

 duction so that our supplies were 31 percent less in 1936 than in 1932 ; 

 the rest of the cotton world increased their production enough to in- 

 crease their supplies to 47 percent above their 1932 supplies. Total 

 world production of cotton averaged the 4 years before control 25.4 

 million bales the first 2 years of control, 24.6; and the next 4 years 

 excluding 1937 when no controls w^ere on, 27.9. Where was the reduc- 

 tion in world supplies that we were striving so to obtain ? Foreign in- 

 creases in production had more than offset our reduction. 



Cam anyone seriously contend that in view of these figures, in a 

 world product such as cotton, that our control had increased the world 

 price and consequently the price our constant export surplus must 

 bring? The only possible way we could be sure control would raise 

 our basic price would be to reduce until we were safely and perma- 

 nently off the world cotton market. This in brief, is the trap that 

 cotton control leads irresistibly to. In other words we doubt that con- 

 trol raised our export prices a bit. 



If it did not raise export prices it could not have raised domestic 

 prices. We had to raise them, as we did, by other means. If we must 

 resort to other means to support our domestic prices of cotton, why 

 not do so by a practical two-price system and not lose our place on 

 the world market as we did by control ? This is the program of the 

 Grange for cotton. 



As an alternative to control as a price-supporting adjunct, we sug- 

 gest a two-price certificate system which has been described in detail 

 in the appendix of this statement. Either this two-price plan could 

 be used to support prices or a more complicated two-price system em- 

 bodying the draw-back principle of the old McNary-Haugen plan or 

 the more simple plan of an export debenture. The Grange many years 

 ago strongly supported the export debenture plan. The last two plans 

 we are sure are familiar to all members of the committee and we will 

 not take the time of the committee to explain in detail the certificate 

 plan which will be submitted for the record. 

 (The plan referred to is as follows :) 



Suggested Parity Certificate Two-Price Plan of Price Support for Farm 



Commodities 



(By J. T. Sanders, legislative counsel, the National Grange, April 29, 1949) 



[The views expressed herein are the author's and do not necessarily represent the official 

 expression of the National Grange] 



Under the parity certificate plan farmers are to sell all their crops on a free 

 market at market prices and are to be paid in addition in the form of a parity 



