550 GENERAL FARM PROGRAM 



Under the plan, the functions of buying, shipping, storing, selling, and proc- 

 essing any of the parity-benefited commodities by any middleman after the 

 product leaves the actual farmer-producer could not be legally performed unless 

 the person during the time he was handling the products was also in possession 

 of parity-supporting certificates in amounts and with face value covering the 

 entire amount of farm products in his possession. As stated previously, the 

 first buyer would have paid for these parity supporting certificates the full 

 amount of the legally determined parity payment differential on the total amount 

 purchased. (See example of this certificate below.) When the first buyer sells 

 his product to another domestic middleman, the parity-supporting certificates are 

 to be sold at full face price to the second and to all succeeding purchasers, 

 whether they be middlemen, processors, or exporters. Thus each handler is 

 compensated for his certificates in full at the time he sells and gives up pos- 

 session of the farm product and the covering certificates. 



First-stage processors of each product would hold parity-supporting certificates 

 covering all farm products which they have bought for processing and domestic 

 use. These parity certificates would be released to official inspectors who would 

 certify the manufactured product as being eligible for domestic sale, but the 

 inspectors would not pay processors anything for the certificates they had 

 released. Thus, the full price of the parity-supporting certificates wou^d remain 

 in the Treasury for all commodities processed for domestic sales, and the price 

 the processor has paid for the certificate becomes for him in actuality, a 

 processing tax. Processors would thus have to raise prices to the consumer by 

 the amount paid for parity certificates or absorb it out of their current profit 

 margins. If parity payments are required of all competing products, it is 

 believed that the cost of certificates could not be thrown back on farmers by 

 reducing basic purchasing prices to them. Especially is this true of products 

 on a world market price basis. 



Thus when the parity-supporting certificates covering domestically used prod- 

 ucts are taken up without payment to the processors, this leaves parity payments 

 in the Treasury in sufficient amounts to pay farmers their full parity differential 

 for domestic used portions of products. 



Any commodity loaded for export would be accompanied by necessary parity- 

 supporting certificates which would be surrendered to official inspectors who 

 would pay exporters the full face value of the certificates and clear the export 

 product for foreign shipment. Thus tlie export portion of commodities would 

 have moved from the original first buyers to the point of export with each 

 successive handler buying the covering parity-supporting certificates from the 

 preceding handler. These products would have moved through domestic channels 

 at world prices alongside domestic-use portions that are, in effect, being handled 

 at the higher parity-price level. All commodities are thus policed through 

 domestic markets safely, and without possibility of profitable bootleg operations, 

 by the simple expedient of requiring that each handler invest the full parity 

 payment in the product while it is in his possession. 



HOW THE F&RMEE IS PAID HIS PARITY-PAYMENT DIFFERENTIAL 



Attached to the parity-supporting certificate and coming free without extra 

 payment to the first buyer would be a parity-payment certificate with a face 

 value equal to the parity differential on the domestic portion or percentage of 

 each sale. This parity-payment certificate would be detached and given to the 

 farmer. It is redeemable at full face value since sufficient funds have been put 

 in the Treasury by the buyer of the product and are left in the Treasury at 

 processing points to cover the proportion of each sale destined for domestic use. 



ILLTISTBATION OF USE OF SYSTEM ON COTTON, WHEAT, AND MEATS 



For the piirpose of illustrating the use of these certificates we will assume 

 certificates are to be used to buy 10 bales of cotton 60 percent of which will be 

 declared for domestic use ; to buy 1,000 bushels of wheat 80 percent of which will 

 be used domestically ; and 10,000 pounds of pork, beef, or mutton on the hoof, 10 

 percent of which will be diverted into relief uses by the Government and price 

 support given on 90 percent of all meats. The transactions will be illustrated in 

 the following table assuming current market price of cotton is 20 cents, wheat 

 $2, and meat 20 cents with a parity-differential payment of 5 cents for cotton, 

 50 cents for wheat, and 5 cents for meat. ( See table below) : 



