1108 GENERAL FARM PROGRAM 



First of all I want to point out that gross farm income is based on 

 two factors, the number of units of production and the price per unit. 



In 1947 and 1948 we produced approximately 140 percent of our 

 1929 agricultiu-al production. At the price which prevailed, this 

 resulted in a gross farm income of approximately 32.5 billion dollars 

 from the sale and use of crops on the farm. 



As a result of this production and price level, we had a national 

 income of approximately $225,000,000,000, the highest employment 

 in ratio to population that we have ever had and a balanced national 

 budget. Stated simply, our production and price level was sufficient 

 to operate oiu- economy on a sound basis. 



Olu- first need then is to keep up the unit production in order that 

 we may have the physical materials to employ labor and second, we 

 must maintain our price level to generate the income to consume and 

 distribute our products. 



A 10-percent curtailment of our current production would cause a 

 loss of 10 percent in our income and at the same time disemploy 10 

 percent of our labor. In other words, when we talk about parity of 

 income for the farmer, we must bear in mind that parity prices alone 

 are just a part of the problem. We need parity prices and at the same 

 time we must have the uliit production to employ all of our labor. 

 Ninety percent of physical production will require approximately 110 

 percent of the parity price to create parity income. 



I feel that most of our confusion in regard to the so-called farm 

 problem is due to the failure of intei'ested parties to dig deep enough 

 to get out the real facts. 



Several times in appearances before the House Committee on 

 Agriculture I have pointed out that for approximately 25 years each 

 $1 gross farm income has created $7 of national income. This has 

 been true in spite of prosperity, depression, war, reconversion, and 

 legislation. I have attached a table showing the record from 1929 

 to 1948, the past 20 years. 



This simple relationship cannot be refuted except by the use of 

 generalities based on theory rather than a thorough analysis of our 

 economy. 



With the definite laiowledge that we will lose $7 of national income 

 for each $1 that gross farm income drops, we are forced to the con- 

 clusion that we cannot afford to permit farm prices to drop below an 

 average of 100 percent parity. We hear a lot about the cost of main- 

 taining our farm price structure. That is not the question we should 

 be asking. We should be thinking of the loss we will take if we don't 

 maintain farm prices. 



For example, the drop in farm prices since last September has wiped 

 out approximately 4.5 billion dollars of potential gross farm income 

 even though we maintain the same imit production in 1949 as in 

 1947 and 1948. Through the 7 times turn of gross farm income this 

 means that we have kicked over $30,000,000,000 of potential national 

 income out of the window. 



What effect has this had? We are faced with a Federal deficit, 

 we have disemployed some of our labor, and the end is not in sight 

 unless steps are taken to keep up the farm income, the sear wheel of 

 national income. 



