GENERAL FARM PROGRAM 621 



Mr. White. And the only way those adjustments will be made 

 through the flexible plan is by bankruptcy, by breaking a few of the 

 producers or making it unattractive to them. Is that not right? 



Mr. Davis. Xo ; I do not think so. If we also gear in with our over- 

 all object iA'e in agriculture, it would not be true. 



Mr. White. How can it affect them unless it does adversely affect 

 their income and make them reduce production? 



Mr. Davis. Of course, our biggest adjustment in agriculture has 

 come in periods of prosperity. 



Mr. White. Upward but not downward. We are talking now about 

 reducing production as a result of these price cuts by the Government. 



Mr. Davis. In fruits and vegetables or an annual crop of that type 

 I think you will have a rather fast adjustment. In wheat, I think 

 you will have some adjustment in the Midwest and the areas that can 

 produce other things. In the Plains States you will not. 



Mr. White. You wnll admit, will you not. that a stable price level 

 is the most desirable element in our national life ? 



Mr. Davis. Yes. 



Mr. White. Then why do you advocate a flexible price? 



Mr. Davis. I think you need to have a certain amount of flexibility 

 in order to bring about these long-time adjustments that are needed. 

 I would like to have as much stability as you can and still bring about 

 those adjustments. 



Mr. Pace. Will the gentleman yield there? 



Mr. White. Yes, sir. 



Mr. Pace. Mr. Davis, you evidently subscribe to the parity prin- 

 ciple ? 



Mr. Davis. Yes. 



Mr, Pace. Why would it not be much better to fix a support level at 

 85 or 90 percent? Then when you increase production of the com- 

 modities needed, you can use the incentive of increasing the support 

 price. Then yoii have done what Mr. White wants, what I want, and 

 what you want. You have stabilized it. 



Mr. Da\t:s. You mean support it above that minimum? 



Mr. Pace. In order to get increased production, not to dive a man 

 out of production by driving his price down. As was illustrated in 

 the case of flax and other commodities, you could fix a support level 

 which is fair. I maintain that parity price is a fair price to both the 

 farmer and the consumer. You should fix it at a fair level across the 

 board and then as the need for increased production of A, B, and C 

 commodities arises, you can add this incentive which you and I know 

 gets production. Increase the support up to 100 or 110 or 120 percent 

 until that production is brought up to the national need. Why is that 

 not a more stable program than the flexible supports, particularly 

 when the flexibility operates at harvest time and not at planting time ? 



]Mr. Davis. The principal problem, it seems to me, is the question of 

 cost. It is the intercommodity relationships that bring about the shifts 

 you have in those areas that can shift. The shorter the cycle of produc- 

 tion, the quickecl they will likely shift where there are other crops that 

 they can shift to. But you have a few places, and wheat is a good 

 example and perhaps to a considerable extent potatoes in Maine, where 

 there is not much to shift to. Then they do not shift. 



Mr. Pace. We heard how Minnesota shifted out of wheat. It took 

 them 40 years to do it. When you talk about shifting, who is going to 



