552 GENERAL FARM PROGRAM 



all but the 10 percent diverted to relief. The Government obviously vpould have 

 to pay the 90-percent-support cost out of the Treasury as all production payments 

 must be paid. 



It will be noted that there is no effort directly to control production in any of 

 these proposals. However, if a sound relativity of parity is reflected in the parity 

 prices of the different products, and since there is to all purposes no such thing 

 as general overproduction of all products, the expansion and contraction of the 

 nonsupport proportions will serve as a regulator of production as between differ- 

 ent products. 



Furthermore, in order to support at parity income rather than at a rigid parity 

 price, I would calculate parity income for a product first and divide this by the 

 prospective supply for the current year to obtain the parity price, thus reflecting 

 effects of over or under supplies and parity income in the parity price itself. 

 This would introduce the flexible support principle in the announced parity price 

 and would do aWay with necessity of support at varying percentages of parity 

 price levels in order to introduce flexibility as is done in the Aiken bill. Parity 

 could be supported at 100 percent of parity price at all times, under such a parity 

 price determination. 



ILLUSTRATION OF THE TWO CEKTIFICATES 



The illustration below indicates the use of the two types of certificates in the 

 purchase of the 10 bales of cotton previously described at a parity differential of 



5 cents per pound or $25 per bale. 



The certificate on the right is the parity supporting certificate and is issued 

 with a face value of $250 or $25 for each of the 10 bales — both the export and 

 domestic parts of the cotton sale. It is sold at face value to all successive pur- 

 chasers of the cotton. Possibly as the cotton moves in channels, this sale may 

 split or be combined with other cotton, and certificates may need to be turned 

 in and rei.ssued in proper combinations. 



The certificate on the left is the parity-payment certificate which is torn off 

 and given to the farmer. It is issued with a par value of $1.50, or $25 of parity 

 benefit for 6 of the 10 bales, i. e., the 60-percent declared domestic percentage of 

 all cotton the year. Since enough funds are on deposit from the time it is issued 

 to the buyer to redeem this parity-payment certificate, it is issued as a fully 

 negotiable instrument cashable when it is delivered to the farmer. The certifi- 

 cate would become null if not redeemed in 6 months after date of issue. This 

 would force them out of circulation for redemption and retirement. 



NEGOTIABLE CERTIFICATES, FRONT VIEW 



Serial No. 32476 $150 Serial No. 32476 $250 



United States of America United States of America 



parity payment certificate parity supporting price certificate 



For: Six bales of cotton. For: Ten bales of cotton. 



Sold bv: John Doe. Issued at: Poeville, Ga. 



Issued" at: Poeville, Ga. Date: October 10, 1949. 



Date: October 10, 1949. . This certificate is evidence that $250 



This certificate is evidence that $150 has been deposited with the Treasurer 



is on deposit with the Treasurer of the of the United States of America as a 



United States of America for full pav- parity support payment on 10 bales of 



ment to the bearer at anv time within cotton and is full authority to the 



6 months after issuance of this certificate holder to sell, transport, ship, process or 

 that it is presented to the Treasurer of otherwise handle the specified product 

 the United States of America for re- m domestic channels under the terms 

 demption. o^ ^949 .^ct of Congress dated August 1, 



" 1949. This certificate becomes null and 



(Note.— This portion of the certifi- void 12 months after issuance unless 



cate comes attached free with the other officiallv validated for a longer period, 



part of certificate and is detached and " z^^. „ ,n t^„ ^ -r, „ 



given to the farmer when the sale of the (Signed) John Roe. 



product is made.) (Authorized issuing: agent of the Govern- 



ment of the United States of America) 



