556 GENERAL FARM PROGRAM 



To support prices on export crops by direct purchases or nonrecourse 

 loans almost invariably leads to burdensome domestic supplies of such 

 heavy export crops as cotton and wheat ; and if continued use of these 

 means of price support is granted the law should require that sales 

 at world prices must be made in such a manner and times as to prevent 

 accumulation of unjustified reserves. 



FLEXIBLE SUPPORT LEVEL 



The Grange is a firm advocate of a flexible price support for farm 

 crops when operated under a thoroughly modernized parity formula as 

 Mr. Gross has indicated in detail. 



Maladjustment between the prices of different farm products as 

 well as too low prices are both extremely vital considerations in price 

 support programs. Maladjustment as between prices has the notoriety 

 of possibly being damaging at any price-supports level used. If 

 significant variations in the level of supports as between different com- 

 modities occurs, whether the general extent of support is light or 

 heavy, serious damage to a sound balance of production as between 

 crops can occur. Production is shifted from one crop to another when 

 relative prices in one crop are more attractive than another price, 

 whether the general level of prices is high or low. 



This means that the "modernization" of any parity formula is ex- 

 tremely vital. The potato program difficulties of recent years is a 

 shining example of a parity price of a commodity in maladjustment 

 with general price support levels. 



But even a sound modernized parity price may go counter to eco- 

 nomic forces if it is based on average acres, yield and production. A 

 sound parity price based on average yields and acreage may yield for 

 from a parity income depending on whether actual acreage and yield 

 are above or below average. This is the major reason for flexible 

 support levels based on prospective supplies. 



PRODUCTION PAYMENTS AND NEEDED CONSUMPTION 



Even a casual examination of consumption figures will reveal a re- 

 markable stability of per capita food consumption from one year to 

 the next during the past three decades, with a strong steady increase 

 during practically the whole period except for the drought years of 

 the thirties. 



It is proposed by the Secretary to let farm prices go to the rock 

 bottom low level ; and thus help consumers with lower food prices and 

 increase total food consumption. In 1933 we undertook to support 

 farm prices but did not raise cost greatly to consumers. Whether we 

 did or did not, consumption of food per capita in 1933 was only 3 

 percent lower than in 1929. Consumption of meats was actually 5 

 percent higher. 



Let us see just how much rock bottom low level farm prices would 

 help the average American at a time like 1933 and just what con- 

 sumers it would help. 



One out of every five workers employed in 1929 was out of a job 

 in 1933 — including manufacturing, mining, agriculture, trade, trans- 

 portation services, finance, etc. Wages actually paid for nonagricul- 

 tural workers who were employed did not fall as fast as cost of living 



