GENERAL FARM PROGRAM 1109 



In discussing the matter of prices, the term parity has been used. 

 Parity is in reahty the average cost of production phis the average 

 profit for all business. A study of our economy will reveal that the 

 comparison of prices the farmer pays as compared to the price he 

 receives is a very accurate equation. For each 10 percent of parity 

 we have at stake 10 percent of gross farm income, 10 percent of 

 national income, 10 percent of retail sales, 10 percent of total wages 

 and salaries, 10 percent of employment and 10 percent consumption 

 of goods. 



If we permit our farm prices to average only 90 percent, then we 

 must be content to have only 90 percent for the other segments that 

 I have mentioned. I would like to illustrate that in this way. In the 

 10-year period 1930-39, using 1929 as 100, farm prices were 82 percent 

 of parity. Employment averaged 81 percent of parity. 



Last year the Senate passed what was known as the Aiken bill, which 

 provides for a sliding-down scale of 60 to 90 percent of parity. In 

 testifying before the Senate Committee on Agriculture, I told them 

 that if the bill ever became law it would legislate the country into a 

 depression. Wliy did I make that statement? The Raw Materials 

 National Council has been impartial and we think in terms of facts 

 only. 



Here are the facts. The record of the Biu'eau of Agricultural 

 Economics as published in their pamphlet The Agricultural Situation, 

 reveals that using the current method of calculating parity, the 

 farmers in the 5-year period 1930-34 averaged 66 percent of parity 

 or 6 percent more than the floor price under the Aiken bill. Wliat 

 was the result at that time? We had about one-third of our labor 

 unemployed and we were suffering a loss of about $45,000,000,000 a 

 year in national income. 



Then we started in with farm legislation, WPA, and so forth. 

 But, we were afraid to provide legislation to give the farmer parity. 

 In the 5 years, 1935-39 the farmer received 84 percent of parity as an 

 average. In 1939 we were still running a national deficit of over 

 $3,000,000,000 and still had 8,000,000 unemployed. In other words, 

 with 16 percent beloAV parity for agriculture, approximately 16 percent 

 of our 1939 labor force was unemployed. With this definite ratio of 

 farm prices and income to employment and other factors, the Aiken 

 bill if it is permitted to operate will force a deprecssion. I know that 

 was not the intent, but two times two makes four and arithmetic pays 

 little attention to theory or legislation. 



Why 60 percent of parity? Wliy did we have the Aiken bill with 

 its 60 percent price floor? AVliy have we failed to solve the farm 

 problem after 20 years of legislation? Printarily because society 

 doesn't like to pay its board bill. 



All of last year everyone was discussing the high cost of living and 

 many of our eftorts, especially over in the Agricultural Department, 

 were directed toward reducing farm prices. As a result we have lost 

 a potential of over $30,000,000,000 of national income since Septem- 

 ber last year. The interesting thing about it all is that the American 

 public didn't have an increase, in their real cost of living, in 1947-48. 

 They merely had an increase in the price level which in turn increased 

 the income of the Nation in proportion. 



