GENERAL FARM PROGRAM 1137 



Secretary Brannan. I think it would. 



Mr. Pace. And you do not know how that balances off by a re- 

 duction of 20 percent or whether it would be 15 or 25 percent? 



Secretary Brannan. No, it would not be a stable figure, you see. 

 The 20 percent was selected arbitrarily and without reference to the 

 world price. It may be that at some time the world price would 

 exactly coincide, but as a matter of fact I think the tremendous 

 British stocks is one of the principal factors in the world price anyway. 



Air. PoAGE. You are figuring that the present average price of 

 wool is around 50 cents for the purpose of your calculations, are you 

 not? 



Secretary Brannan. No, we were taking the support level for that. 



Air. PoAGE. The present support level is only 42 cents plus. 



Secretary Brannan. No, my calculations are 49.8 cents. 



Mr. PoAGE. That is what you propose to support it at? 



Secretary Brannan. Yes. In other words, I am taking the high 

 figure everywhere it shows up. 



Mr. PoAGE. But the present support level is only 42 something, 

 is it not? 



Secretary Brannan. No, it is 40.5. 



Mr. PoAGE. And your proposal was to support it at approximately 

 49 cents. For the purposes of illustration, you propose to take a 

 20 percent drop from that 49 cents. That would bring you down be- 

 low 40 cents a pound, or just below the present support level. A.s long 

 as it does not drop below the present support level it has not cost any- 

 thing under the present program. Any cost under a new program 

 would be just that much more than the present program until you 

 reached the point of the present program. 



Now, suppose the price of wool were to drop even more, and we 

 anticipate that it might else the present program would not mean 

 anything. Yet it obviously does mean a good deal. You are pa3nng 

 out a good deal of money under the present program. Suppose the 

 price of wool dropped down to where wool did not bring more than 

 30 or 32 cents in the market. You would then pay the difference 

 between 32 cents and the 49 cents, which would be 17 cents you would 

 be paying to the producers. The producers of wool would be taken 

 care of all right. I can see how the producer would come out all right. 

 He would get just as much money as he would if he sold it at 49 

 cents. But what effect would a situation of that kind have on cotton 

 prices? 



Secretary Brannan. I think th« answer to that is anybody's 

 guess. My own feeling is that the relationship between cotton and 

 wool is not such a close and sympathetic relation that as one goes 

 down the other goes down accordingly. However, I suppose there 

 is some sympathetic relationship between all fibers. 



Mr. PoAGE. I think it is perfectly clear that a drop of just 2 or 3 

 cents or maybe even 5 cents in the price of wool when it is up sub- 

 stantially above the price of cotton would not materially affect the 

 cotton prices. But when wool prices closely approach the support 

 price of cotton, which today is 27/2 cents I fear we will feel the eft'ect. 

 If you let the market price of wool get down to within 5 cents of the 

 price of cotton the Government will have to support that cotton at 

 27 cents under the present program. It might cost the Government 

 considerable in the extra payments we would have to make on cotton. 



