GENERAL FARM PROGRAM 593 



It goes without saying that a stable, prosperous, and expanding agriculture is 

 essential to a sound and prosperous national economy. As a means of achieving 

 this goal, the Roosevelt farm program, with its policities to cope with the related 

 farm problems of parity prices, soil conservation, agricultural credit, tenancy, 

 and farm security, has proven successful in practice. It is, of course, not per- 

 fect, but it certainly represents a step in the right direction. The New Deal pro- 

 gram for agriculture should be broadened, strengthened, and improved. In this 

 connection, the Brannan proposals for modernized parity and for production pay- 

 ments to farmers fits into the over-all pattern of already-tested policies. 



The No. 1 problem of the farmer is fluctuations in farm income resulting from 

 the unfavorable price-cost relationship for major farm products which exists at 

 all times other than during periods of war and ]X)Stwar shortages. Farm in- 

 come folloAvs the business cycle — for example, total farm income in 1919 was at 

 $17,000,000,000, but in 1929 it was down to $11,000,000,000, and bv 1932 it had 

 fallen to $5,000,000,000. Due to the heavy demand for food during the war and 

 the first postwar years, gross farm income moved to the unprecedented high of 

 over $28,000,000,000 per year. But farm prices are the first to break in times of 

 economic recession — you will note that said prices are today some 15 percent 

 lower than they were a year ago. 



In other words, the agriculture industry is highly competitive, and farm prices 

 are sensitive to the laws of demand and supply. At the same time, farm equip- 

 ment prices are usually monopoly prices and do not follow the business cycle to 

 any extent. Thus, the farmer finds himself in times of recession squeezed be- 

 tween falling farm prices and high equipment prices and high cost of production. 

 The 30-cent corn and 40-cent wheat, the farm foreclosures and bankruptcies of 

 the Hoover period were the end products of this economic situation. 



The solution to this problem is the stabilization of farm income at a level 

 which is high enough to provide decent living standards and economic security 

 to our farm population. This goal can be achieved by (1) establishing farm 

 prices at high levels, and (2) increasing consumption of farm products and thus 

 guarantee stable markets for the farmers' products. 



I am convinced that Secretary of Agriculture Brannan's plan for stabilizing 

 farm income is a sound one, for which I express my unqualified support. There 

 can be no doubt that the so-called flexible parity formula established by the Agri- 

 cultural Price Stabilization Act of 1948 (whichreduced the parity base, and then 

 reduced the parity price on said base) must be discarded for a new and mod- 

 ernized parity formula. I am convinced that the Brannan proposal to set parity 

 at a level to give the farmer the same collective income on all products equal to 

 his buying power in the preceding 10-year period is a sound proposal, and it cer- 

 tainly has my endorsement. 



The recommendation to extend price supports to all farm products has great 

 merit, and one which has my complete approval. The present parity system has 

 proved successful in stabilizing corn, wheat, cotton, and tobacco prices, and to 

 supplement it with price supports for perishable farm products (meat, milk, 

 buttei-fat. eggs, poultry, fruit, vegetables) makes sense. Production payments 

 to farmers to make up the difference between the market price and the higher 

 subsidy-support standard will furnish food to the consumer at prices that he can 

 afford to pay, and thus encourage consumption, and at the same time guarantee a 

 minimum farm income. 



I will also mention that I approve to the proposed limitation on price supports 

 to large farms. The small family-sized farm is the backbone of the agriculture 

 industry, embracing 98 percent of all farms, and the effect of this proposal would 

 be to aid family-sized farms and halt the further growth of the large factory- 

 sized farms. 



It should be emphasized that the Brannan plan for support prices on all farm 

 products, based on a modernized parity formula, is not a cure-all ; it will not 

 provide economic security to all farmers. In my opinion, the committee should 

 supplement this plan with legislation embracing the following two proposals: 



(1) An expanded crop-insurance program to cover all major farm crops. — 

 Parity prices will guarantee the farmer a living income as long as he has good 

 crops, but it will not protect him from the loss of income resulting from drought 

 and crop failures. The only answer to this question is a broad program of 

 crop insurance. 



(2) A national food-stamp plan to place a floor under consumption. — Produc- 

 tion payments for perishable farm products will hold down prices for consumers, 

 but it must be recognized that this plan will not help millions of consumers who 



