What I am asking is, What are we going to do about that? Do we want to establish a policy in the Congress that at the same session the same moment that the Congress enacts legislation that helps one segment of this economy of this population, it is going to see that those who are adversely affected thereby are going to be adequately compensated for that additional burden? Is that the policy? If it is, I want to help you write it.

The CHAIRMAN. What is your suggestion?

Mr. PACE. Let me get a little further along.

Now, in connection with wages, I must mention steel. The steel workers are one group that doesn't have to go to Congress. They can, at the call of their leader, walk out. They did this summer. They stayed out. They got the wage increase. The next day the steel companies increased the price of steel 5.8 percent which not only compensated them for the increase in wages, but also included substantial other items.

You heard Mr. Cox testify a few moments ago that the tractor he bought this week went up 7 percent over what he could have gotten it 2 weeks ago. Do you know why? That was the impact that had finally hit down on the farm of the 5.8 percent increase in the price of steel.

Now that brings up a very interesting question. Is the Congress going to protect those who must buy those commodities, the people on the farm, or is the answer-and I think if we don't get it in Washington maybe we will get it across the farms-or is the answer going to be that the farmers of this Nation are going to organize where they, too, are going to have a voice in what they get for their commodity Must that be the answer?

Now on the same question about wanting to know what you are going to do, Mr. Chairman, does the Senate Committee on Agriculture and the Congress believe in parity prices? Does it understand and believe that a parity price is a fair price both to the consumer and to the producer? If it is, I can rewrite that legislation. But somebody before we can differ about this, that, and the other about cotton, corn, wheat, rice, tobacco, and peanuts or other commodities-to write the program somebody, other than a political promise, we have had those, has got to know what can be expected of the Congress of the United States.

Mr. Chairman, there are two problems that you spoke of last evening in your short talk to the distinguished guests at the dinner, and that have been mentioned here today. I should like to discuss those.

First, I observed the Chair and members of the committee, rightfully so, are disturbed about the surpluses. Well, maybe I am different in some way but you know, Mr. Chairman, in a way they could prove to be the greatest blessing that ever happened to the American people. What are we going to strike at, Mr. Chairman? Have you had an opportunity to sit and meditate on what the situation would be if there were scarcities instead of surpluses? I want to give an example which happened in peanuts last year and was testified to a few moments ago.

We have a terrific drought in the Southeast and Southwest. There was a shortage in peanuts. They made the allocation, the acreage

was made than sufficient to produce the quantity needed and a surplus. We had a shortage in peanuts. Mr. Chairman, the price of shelled peanuts went up from 18 to 27 cents a pound.

Now you will observe that that is exactly 50-percent increase, and, Mr. Chairman, if you and I ever attempt to try to cut the pattern of allocated acreage in this Nation to the point where it is exactly going to meet demand, you and I would be playing with dynamite. Every allotment has to be cushioned under normal yields, every allocation the Secretary of Agriculture makes with normal yields will produce a surplus, every single one of them. Of course, they are enormous surpluses now due to the fact that our yields are so far in excess of normal. Now, Mr. Chairman, I would hesitate to talk and discuss seriously with the distinguished Senator from Kansas on disposing of the wheat surplus. I had the privilege at times in my life to be guided on wheat by the advice and counsel of the distinguished former chairman of the House Committee on Agriculture, Clifford Hope. Cliff was my guide and I followed his advice. But there are about a billion bushels-is that right?

The CHAIRMAN. 1,030 million bushels.

Mr. PACE. Too much wheat. You can't dispose of that wheat in a day. The testimony is you have got 14 million bale carryover of cotton on the 1st of next August. You can't dispose of that in a day.

I tell you what I recommend to you, Mr. Chairman. Let us take cotton for an example. I will have to get the Senator to adapt it to wheat. Of the 14 million bales the normal carryover under normal supply in round figures is 4 million bales. The present authority of the Secretary of Agriculture on the set-aside is a maximum of 4 million bales. I understand now the set-aside is about 2.3 million to 2.7 million. Mr. BROOKS. Three less what we have taken out of 480.

Mr. PACE. I would recommend to the committee, and I am talking about trying to rehabilitate the situation we are now in, the farm people of this Nation, I would, for support-price purposes, reduce the normal holdings of cotton to a normal supply which is domestic consumption plus exports plus 30 percent for purposes of carryover. That would take care of 4 million bales of that 14 million. I would increase the set-aside and make it mandatory from a discretionary 4 million to 5 million bales of cotton. I would not only set that aside, but I would agree with the last gentleman on this stand that the Congress should then enact legislation making that a permanent set-aside to be unlocked only upon declaration of war by the Congress.

If you turn back, I think it was in 1952, Mr. Brannan was Secretary then, he could have invoked marketing quotas on cotton. He didn't do so and he made the statement that I am requesting of the cottongrowers; to increase their cotton acreage because I think for defense purposes there should be a 5 million bale supply available for war purposes, and you have it. You set aside, you normally carry over his 4 million. If you set aside his 9 million you have 3 million bales of cotton left. Let us get busy disposing of the 3 million bales, but in the meantime the legislation would not let it be taken into account in determining the support level.

Then, Mr. Chairman, there is a lot of thinking going on on this. If you have done that, can't you set up some permanent programs in

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agriculture? Can't you set up a 3- or 5-year or 10-year cotton program? Maybe we can't get rid of this surplus over about a million bales every year; nobody knows until we throw this million bales on the market in January and observe the reaction. But build a program for 3 or 5 years, a cotton program that will take into account that if necessary the production will be 1 million bales less than the quota in order that that 1 million bales may go into the annual quota to be consumed domestically or in export. Then in an orderly manner you would close out these surpluses.

The CHAIRMAN. Would that have the tendency of reducing acreage? Mr. PACE. Yes, sir. But in my judgment, Mr. Chairman, if you give the cottongrowers of this Nation a 3- or 5-year definite fixed program that will take into account the final and forever elimination of this enormous surplus where they can do the other things recommended to you in research and promotion, I think they will take it and I think they will like it.

Senator SCHOEPPEL. Would you go to bales rather than acres, when these people can put new lands in better production practices, for cotton, wheat, soybeans, et cetera?

Mr. PACE. We tried bales on cotton under the old Bankhead plan. The Congress hasn't been favorable to it because it gives you some certificates in your pocket for 50 bales of cotton for you to walk up and down the road and offer them at a premium.

Senator SCHOEPPEL. What about these farmers who farm their lands better and fertilize more and do what they did in the potato business?

Mr. PACE. That takes care of itself because the national allotments is made each year on the basis of normal yields and as the yields go up it takes less acreage to produce it. It is a little slow but it takes care of itself over a period of 2 or 3 years.

Senator SCHOEPPEL. The trouble we have now is we have cut these acreages so low we are driving people out. What about that?

Mr. PACE. A lot of people sitting in this audience may not agree with me but, Senator, if I can produce as much cotton on 5 acres as I have normally produced on 10 acres, isn't that better for me? Senator SCHOEPPEL. There is no question

Mr. PACE. Has it reduced my income any? It has not because it takes lots less insecticide to fight the boll weevil on 5 acres of cotton on land than it does on 10 acres. It takes less cultivation.

I don't know, I think you do have the problem of diverted acres but. if I think a producer can produce twice as much on half as much land, I don't see how he has been so materially hurt.

Senator SCHOEPPEL. I agree with you there, but we are starting with topheavy surpluses. You were going to tell us how to eliminate the surplus. I am talking about this period of time when we are trying to reduce the surpluses that are a drug on the market. They affect prices, pile up storage charges, and I know some of them are spoilable. Mr. PACE. Yes, sir; that is the reason

Senator SCHOEPPEL. Fortunately, in cotton you have an excellent point. I wish we could store wheat for 25 years and forget it, but we

cannot.

Mr. PACE. I understand and I would not want to comment even in your presence, but I understand you have so much wheat you couldn't even give it away.

Senator SCHOEPPEL. Some nations of the world don't want us to give it away.

Mr. PACE. You certainly have that problem.

Mr. Chairman, my recommendation is you set up some permanent programs. There has been a lot said in the last 2 years about stabilizing agriculture. The farmer, no businessman could live the life the farmer lives when he doesn't know what is going to be his situation the next year.

The CHAIRMAN. The permanent program you are suggesting as I understand for cotton is that we curtail the amount that is to be produced in the future by a million bales and let that take some of the surplus off until you get it all down.

Mr. PACE. Yes, it will take time.

The CHAIRMAN. That means, as I suggested, a further decrease in the present allocation of acreage.

Mr. PACE. It would mean to the extent of 1 million bales a year.
The CHAIRMAN. Yes.

Mr. PACE. I think producers would be willing to do that, but I haven't finished. There is something you have to do as part of that picture and that is to stabilize support level at not less than 90 percent of parity.

The CHAIRMAN. How about quality?

Mr. PACE. Mr. Chairman, I am willing to go just as far as the experts say on quality. I don't think that the Commodity Credit Corporation was ever intended to set up to support the price of an unmerchantable commodity, whatever it might be. I don't think you are going to find any complaint among the farmers of this State on that. The CHAIRMAN. How about the length of staple? Now the law supports cotton on a basis of % Middling, and there is a proposal to make it 1 inch Middling. How about that?

Mr. PACE. I have no objection to that, but I seriously object if it is going to have the effect that I am told of reducing the support price of cotton by 22 cents a pound. I have no objection to making the 1 inch or 11%. But I am told when you do that that in itself reduces the support price on cotton 212 cents a pound. If you reduce it 21/2 cents a pound that way, reduce it about a cent a pound under modernized parity, and present indication here is that the support price on the 1956 crop of cotton can easily go to 75 percent of parity. I hope the Secretary certainly in his sound judgment will never let it go that low.

I agree with the witness this morning that there needs to be, Mr. Chairman, as quickly as possible, if you are not going to repeal it, that you put stops on the flexible support. My recommendation to this committee is that the flexible support be repealed as quickly as the Congress reconvenes and I will tell you why.

I believe I had the privilege of sitting in conference with the distinguished Senator from North Dakota when that legislation was up. I think it is founded on a false theory. It was founded on two false theories. One was that if you reduce the support price they would grow less of the commodity. History shows they grow more. They necessarily have to. The other was that if the price goes down they will shift to some other commodity. And I would like for somebody to tell me what a cotton or corn or peanut farmer of Georgia can shift to under existing conditions.

Somebody told me a few weeks ago, shift to tobacco. I said of all the closed corporations I know that acreage allotment on tobacco is locked up. The Senator from Kansas doesn't want us to shift to wheat.

Senator SCHOEPPEL. We would like for you not to.

Mr. PACE. Mr. Chairman, I don't know whether you know it or not, but that is what flex has done.

The CHAIRMAN. I know about it, I think.

Mr. PACE. I hope you know enough about it to hate and despise it as I do. I can't tell you but about two commodities which I know about, cotton and peanuts. Do you know what is happening in the trade today on peanuts? There is a possibility of peanuts dropping to 75 percent of parity.

Ordinarily these peanut-butter manufacturers buy a year's supply. They make it into peanut butter, ship it to warehouses across the Nation, and maintain a large supply. Do you know what they are doing? They are buying from hand to mouth.

What would you be doing if you had some 90 percent parity commodity on the market and there was a chance of you getting it at 75 within a matter of a few months?

Senator YOUNG. Is not the support price of wheat, under the present formula going to be reduced next year and the year after that and the year after that? No one is going to buy wheat unless he has to have it the next day.

Mr. PACE. Thank you, Senator. What is happening in cotton? I know about that because I have some textile friends and they will tell you straight to your face, "No; we are not stocking cotton. Why should we stock cotton when it will probably be 80 percent of parity next year?"

If you let flexible support prices stay in effect you have destroyed the market, the orderly marketing, for farm commodities. Worse than that, equally as bad at least, you have put complete and utter instability under agriculture in this Nation instead of that stability that we have heard so much about. Do I make myself clear? I hope so.

One other thing, and I am done. You talked about diverted acreage. You asked how much we should pay for diverted acreage. I want the standard on that, too. I think what I would like to know is an answer to a question: What is the most precious thing in America today? Outside of our wives and children and grandchildren? What is the most precious thing in America? It is the fertility of our soil. Without it the Nation perishes, and with it we have little concern for the future. How important is it, I want to ask, in the light of the rapidly growing population of America; in the light of the possibilities arising out of this international situation, how important is it to the defense of America that we maintain and build the fertility of our soil?

Mr. Chairman, if I may make one brief reference, there were years and years that maybe like you are today, you gentlemen are, if you will pardon the reference, down among the trees, you are listening to people, this, that, and the other, the diversity of views, diversity of organization. I was down there and I couldn't see the forest. I was down there like our distinguished chairman is now, down there fighting and I was down there fighting among the trees. But for 5 years now I have been out of the woods.