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2. Then a few years later the Federal government—the taxpayers, if you please started giving the railroads huge blocks of public land. This was the first incentive payment for expansion and production or service. Before this direct subsidy ended, the Federal Government had given away, to the transcontinental railroads more than 183 million acres of the taxpayers' land with a value in excess of a billion and a quarter dollars

The CHAIRMAN. That was before they struck oil?
Mr. SCARBOROUGH. Yes, sir.

3. In World War II, for example, the Reconstruction Finance Corporation paid, through direct subsidies, more than $3 billion for the processing of such commodities as meat, petroleum, zinc, lead, copper, wood pulp, and nitrate of soda, to mention only a part of the list.

4. The railroads are granted subsidy benefits of various forms, including low-interest-rate loans, special freight-rate concessions, and quick equipment-purchase tax amortizations.

5. The aluminum producers of America alone received $26 million from the RFC in direct subsides, for reimbursement of so-called excessive power costs they had paid.

6. In setting up the subsidy pattern, the Government has not neglected the ocean shipping lines. This industry for a long time has been receiving a most substantial subsidy. In fact, it receives two direct subsidies. First of all, the Government pays up to 50 percent of the cost of constructing all major merchant marine ships and, this year alone, the ship-construction subsidy will cost the American taxpayer more than $18 million. This is money the Government never hopes or expects to get back.

7. In addition to its construction subsidy the shipping industry receives an operating subsidy which is costing the Government this year slightly more than $100 million. This operating subsidy is to reimburse the shipping lines for the higher wages they pay American seamen, and at the same time keep them in a competitive position with foreign lines.

I would like to insert here, I wish it were possible for us to get a hundred percent parity and even be able to pay our employees on the farm the equivalent of what other lines of industry get.

8. The airlines also come in for a whack at the subsidy dollar. Last fiscal year they were paid at least $56 million for carrying this country's airmail. This was a liberal fee for services rendered. But, in addition, the airlines were handed $73 million, as a direct subsidy, with no strings of any kind attached, plus the benefits of free use of Government airport installations, weather service, beacon lights, and other navigation aids which annually cost the taxpayers some $75 million.

9. Then, there is the Post Office Department. For many years the annual deficit of the Department has been considered a subsidy of a sort, particularly in view of the fact that some divisions of the Department pay their own way, or even produce a profit.

10. In the fiscal year 1953, a typical year, the total postal deficit amounted to $663 million. Of this total, the largest single item$230 million-was lost in second-class mail services alone. In a sense, the second-class mail deficit represents a type of subsidy to newspapers,

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magazines, and other publications that depend upon the mail as a cheap method of distribution.

11. Then there is the rapid tax writeoff certificate subsidy that permits industry and big business to hold back from the United States Treasury billions of dollars of accrued income taxes and use this money, without payment of any interest, for a period of years. In many instances it even becomes an outright gift.

As of July 1 of this year, such tax certificates had been granted to the tune of slightly over $31 billion with an effective tax writeoff, deferred payment or gift amounting to in excess of $18 billion.

Such Government expenditures in the fiscal years 1949 through 1955, inclusive, have totaled $3,773 million for agriculture, and $5,880 million for business. The figure for agriculture covers storage costs, spoilage, nonrecoverable items because other expenditures under the agricultural program on recoverable direct subsidies made to business and industry almost 100 percent greater, however, are dead losses.

Yes, subsidies in the world in which we live today have become just about universal.

These things have been cited to show the precedent for assistance and for the purpose of two deductions. One is the lack of justification of withdrawing the 90 percent parity and jeopardizing our agriculture and national economy as though agriculture's program would bankrupt the Nation, putting out unjustifiable propaganda. The loss to agriculture and to the purchasing power of our country and could have been prevented until necessary amendments to the act could have been made to the need of the respective commodity before such drastic changes in the present program.

In the meantime, strenuous efforts toward exporting our surpluses and orderly merchandizing stocks were urgent necessities. We have no doubt lost opportunities to sell cotton as has been true in wheat to Brazil, and so forth. Only an integrated program on many levels can bring relief or an eventual solution. Industry can cut costs greatly by reducing production. Farmers cannot. Industry can save at least 45 percent of total costs by reducing production, agriculture not over 23 percent.

In this pressing situation agriculture is in a squeeze, heroic action is necessary, here costs are rapidly increasing, and her income rapidly declining. The administrative portion of our Government is witnessing this with the utmost complacency. To further impress our minds with the dire seriousness of this situation and to the national welfare, let me cite statistics issued by the USDA and by the Bureau of Labor Statistics. We see from these facts what is happening to the farmers as compared with other sections of our national economy.

Taking the postwar period 1947-48 and taking farm and food prices out of this index and the increase is 19 percent. Consumers prices are up 15 percent, the things the people buy. Average hourly earnings are up 43 percent; this represents industrial wages.

The prices paid by the farmers for things they buy are up much more than 12 percent because should you eliminate the scale of prices received by the farmer from the index it would show a much higher figure and his prices are continuing a steady decline.

The CHAIRMAN. We are familiar with everything you have mentioned. I don't know of any of us who is not. Your conclusion is we should do the same for the farmer?

Mr. SCARBOROUGH. Yes, sir. I want to mention these figures.
But other costs are shooting up while farm prices go down.
Farmers now pay 72 percent more in interest on money owed on land.
Taxes on farmland are 51 percent higher today than in base period.
Farm wage rates have increased 20 percent following city wages up.
Trucks, tractors, other farm motor vehicles have jumped 25 percent.

Gasoline, oil, diesel fuel, and so forth, are 16 percent more expensive now.

Farm machinery has increased by 34 percent over the 1947-49 average.

Building and fencing materials are up by 23 percent over base period.

Farmers costs are still rising.

I have tried to show, from quoted figures, the lack of justification for any policy on the part of the administration being advocated that would bring the farmer down to the level of his present income in the midst of advancing prices to all other segments of the Nation and that would apparently indicate an attempt to destroy agriculture's present program without having anything effective to offer in lieu thereof.

I have also tried to indicate the actual seriousness from statistics of the farmer's present position in the national economy. It is our belief that the prosperity of the Nation is geared closely to the economic well-being of our farmers. These farmers constitute our tremendous market for the industrial output of our highly mechanized productive system.

When prosperity comes to the farmer it is reflected in business establishments all over the length and breadth of the land. It is apparent that we cannot treat the economic life of the farmer as an isolated factor to be viewed in and of itself. It must be considered in light of its relationship to our whole economy and that relationship is close and inseparable.

The CHAIRMAN. You are stating the problem. What we want is a solution.

Mr. SCARBOROUGH. The problem is this, immediacy and urgency.
The CHAIRMAN. And do what?
Mr. SCARBOROUGH. Do this: Give us 90 percent parity.
The CHAIRMAN. All right.

Mr. SCARBOROUGH. Then if you wish to, then have the soil bank or the acreage rental and then have it so, of course, in no instance can you partake of the advantage of the program unless you enter into and make them obligatory and make it so that the acreages that are relieved from the program cannot be put into the other programs.

The CHAIRMAN. Competing, cross compliance ?

Mr. SCARBOROUGH. Yes. Let's say this: That this program has worked and it will continue to work. Of course, I believe in fitting and tailoring certain programs to suit certain commodities. In cotton it will work, absolutely it will work. But the thing is it is impossible on a permissible act like you have to pass to get an administration that is not in sympathy and then have it properly administered.

That is the thing in a nutshell. The thing has been handled as to bring disrepute upon it. This thing has many gadgets. It is a wellrounded picture like the solution to any of the problems. You have to see the whole picture. The fact is, it had to have encouragement of

exports, orderly marketing of domestic and foreign. They have had these surpluses. They missed Brazil sales and things of that kind. Redtape. Similarly, in cotton. Likewise, it has to have a heavy amount of money expense for research, new increased uses, new markets. What I mean to imply is this: Something is needed and needed quickly. Why in the name of commonsense couldn't you have held to this program, the administration? Because under the 1948 act he was athorized to raise these things. He did it on wool, did it on sugar, could have done it under these others. Under an emergency he could have done it. My thought is that maybe you had better amend these laws and make them minimums and things in the requisite, or make them mandatory. I think, if this program can get back and we can get going, you will have time for amendments and make any change, not after the house is destroyed but while the fire is burning.

Senator JOHNSTON. Your position is that after the war in reconversion we paid billions to industry of the United States?

Mr. SCARBOROUGH. Yes.

Senator JohnSTON. We got in this trouble because we were preparing for war and then the Korean war. Now the farmers ought to have some help here to reconvert them and get them back on a stabilized program.

Mr. SCARPOROUGH. Yes. The national welfare demands it. The last thing is this: Inconsistencies in administration. Your Japanese importations coming in. Bringing in European raw cotton to compete with American cotton because the American manufactured items are not sold and he can't buy our stuff, practically paralyzing, throwing out 25,000 workers this fall from the textile industries and cutting down on our industry.

Vast inconsistencies. Absolute unwillingness to see moneys that are thrown away and the fallacy followed. The method indicates an attempt, almost a conspiracy to scuttle our program.

The CHAIRMAN. All right.
Mr. Chappell, please. Give us your name in full.

STATEMENT OF J. H. CHAPPELL, CHESTER, S. C.

Mr. CHAPPELL. J. H. Chappell. I would like to be
The CHAIRMAN. What is your occupation?

Mr. CHAPPELL. Cotton farmer and I farm for a living. I have 8 boys and 1 daughter. All except one is farming on the farm and in that community. I would like to be a little critical of the program from the standpoint that we have let substitutes under this program take a great deal of our cotton consumption, some in the form of pulpwood, which is agricultural, but it has impaired our lumber situation and we can't hardly buy a decent board, any of it is cut immature and in South Carolina, as I understand it, we have lost a lot of acres.

Last year we allotted, I believe, 888,000 acres of cotton in South Carolina. Now this year from some cause or another we have lost maybe some 40,000 of those acres which has gone—this is hearsay, I am no authority on it—has gone to the West. As you know, South Carolina doesn't produce an average of any 2 or 21,2 bales per acre, which ('alifornia in obtaining our lost acres, instead of cutting our bales down to our programs, quota has added a lot to it and are adding more bales, which has put us in a position to have to take more cuts.

I am not arguing from my standpoint any more than I am from the individual little farmer who has a family and you know that 3, 5, or 7 acres for 12 months annual income to support those families and keep the standard of living up and send them to school is mighty small, The CHAIRMAN. What size farm have you? Mr. CHAPPELL. I have a rather large farm. I have about 3,000

acres.

The CHAIRMAN. How many in cultivation ?

Mr. CHAPPELL. About 1,500. I have about 150 people on that farm working and to be paid. The CHAIRMAN. Are they tenants ?

Mr. CHAPPELL. Yes, sir. Not that many units but I am just talking about the population of the families on that unit. It works rather a hardship on me. I don't know what is the solution. I don't know what you all can do about it but if South Carolina is allotted 880,000 acres we should still maintain or be able to keep our 888,000 acres and not let it go from three-quarters of a bale per acre to 2 or 21/2 bales in the West.

I don't think the program will be able to ever give its full benefit under those conditions.

The CHAIRMAN. We have been working on that for quite some time. The only thing is we are short of votes, as I pointed out a while ago. Any program like that needs a majority of the Members of the House and of the Senate.

Mr. CHAPPELL. I never have gotten from the agricultural office the reason for taking acres out of South Carolina and sending them somewhere else, when they try to curtail bale production.

The CHAIRMAN. Before the war and during the war there were no marketing quotas, nor any control program and because of that everybody planted all the cotton they desired and the West of course planted quite a bit and then we went back to the historical basis and they added more acres as time went on. That is the way it happened.

Mr. CHAPPELL. Since the program last year the program was in effect and had been in effect and why would South Carolina lose those acres to the West? That is something I don't know.

The CHAIRMAN. I don't know. It may be because some of your people, as you heard here today, didn't use the acreage allotted to them. We have had 2 or 3 witnesses come here today who testified that, 1 of them in particular who said he went into peaches, he lost his acres because he did that, because he didn't plant them.

Mr. CHAPPELL. It wasn't taken out of the State. The ground was

still here.

The CHAIRMAN. To maintain your historical basis it was necessary for somebody to plant those acres and since they were not planted, they were lost. Mr. CHAPPELL. How would the West win them? The CHAIRMAN. They planted it. Mr. C'HAPPELL. They couldn't plant but their quota. The CHAIRMAN. We had no quota at that time. Mr. CHAPPELL. This is the third year we have had no quota. FROM THE FLOOR. That is caused by dropping a year and picking up

a later year.

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