1138 GENERAL FARM PROGRAM 



If you let the price of wool get within 5 cents of the price of that 

 cotton, are you not going to actually depress the market price of the 

 cotton to such an extent that the Government will be buying a whole 

 lot more cotton? 



Secretary Brannan. My own impression is that you would not 

 for this reason: First of all, the world market fixes the price of wool. 

 We are only supporting the domestic production of wool, which is a 

 small part of our national consumption. The price of wool is made 

 by the world market plus the tariff or import duties. Therefore, 

 what happens in the support price , relationship to the amount of 

 domestic wool produced, in my opinion, would have a very small 

 impact upon the price of cotton. 



Mr. PoAGE. But, Mr. Brannan, the price of that domestic wool is 

 going to drop under this program; is it not? The price at which the 

 spinner can buy is going to drop down to the price at which he can 

 buy Australian wool or South African wool or Argentine wool. You are 

 going to let the price of domestic wool, as I understand it, drop in the 

 market place to the point where somebody buys it. If the spinner is 

 going to buy it, we will assume he will buy it at 32 cents. He is not 

 going to pay 35 cents for it. The producer, I understand, is going to 

 get 49 cents because you are going to pay him the difference. I am 

 not bothered about that producer at the moment. 



I say at the moment, because I am bothered about him in the long 

 run. The spinner will not buy domestic wool until it gets as cheap 

 as any competitive wool that he can buy. Then he will buy it. So 

 the price of all wool, both domestic and foreign, is the thing that will 

 be competitive with cotton. You are not going to simply let this 

 244,000,000 pounds of American wool drop to 32 cents. All wool is 

 going to be on the American market at 32 cents. When it is that 

 close to cotton, I would much rather have a suit of clothes made out 

 of wool than one made out of cotton and if the cost were only a few 

 dollars more than a cotton suit, I would probably buy it. 



But, if, the cotton suit is selling today for half or a third what the 

 wool suit is selling for, I will buy a cotton suit. Is it not going to 

 affect the price of cotton when it gets that close to the cotton-support 

 price? 



Secretary Brannan. Mr. Poage, let me point out two things. 



First of all, the effect of the present operation is to feed the American 

 supply of wool into the market at almost the competitive prices. We 

 cannot force any manufacturer to take wool from us at the support 

 level. We have to sell it in competition with the world supply and the 

 world supply coming into this market plus tariff" and so forth. 



My first pomt is that no matter what you do about the domestic 

 supply, you are not actually changing the situation very materially. 



Mr. Poage. Of course, I know it may not drop to 32 cents. I am 

 just asking what will happen when it does. 



Secretary Brannan. The second point I would like to make is 

 that, of course, the quality of the various fibers is one of the main 

 and controlling factors. If the domestic wool moves into the American 

 market and is more attractive to the weavers in this country and else- 

 where, they arc going to buy it anyhow. 



The third point I would like to make is that the relative cost of the 

 suit that you are wearing in relationship to the price of the raw 

 material is very small. I think one of you people said the last time 



