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the suggestion made here is to give credit to those who can't obtain it locally. Do you find anything harmful in that?

Mr. RUTLEDGE. They were not farmers.

Mr. Cooley. May I interrupt? The laws provide that they must be farmers. You reflected on the Farmers Home Administration. I would place the record of that agency against the record of any other agency of any Government anywhere. It has been a phenomenal record. They have made homeowners out of thousands and tens of thousands of men who are now prosperous on the farm. As far as the small farmer is concerned, Farmers Home Administration now has authority to make loans to increase the size of the farm so as to make him self-sustaining. If you have any evidence that the Farmers Home Administration has not been operating successfully I think both committees would like to have it.

Mr. RUTLEDGE. It may be changed now. I am off the board now and not in close touch with it. It may be a different situation.

The CHAIRMAN. Proceed with your statement. Mr. RUTLEDGE. Sending salesmen abroad to sell our commodities, wheat, corn, etc. No salesman can go out and sell any product at all if there is a like product just as good being sold at a price under his. That is impossible. You can't do that. If you stayed back to these 90 percent support prices and tried to cut production down by limiting acres of allotment and then those acres are going to be diverted to something else, they may not hurt me or hurt you but they are going to hurt somebody and you are going to have dissatisfaction with them right down the line.

The CHAIRMAN. That is one of the problems we have to wrestle with and we realize it. I do.

Mr. RUTLEDGE. That is where the soil bank comes in.

The CHAIRMAN. Yes. Have you any suggestions to make to us as to whether or not farmers who are asked to set aside let's


percent of their acreage should be compensated by the Government for that?

Mr. RUTLEDGE. If we are still in the squeeze like we are now with the high cost of production and low percentage of the market.

The CHAIRMAN. That is what brings it about. We wouldn't need that except for the conditions in which we find ourselves.

Mr. RUTLEDGE. Might come a war that would change overnight.

The CHAIRMAN. Have you any suggestion as to how that could be handled? You have been a farmer 53 years, you said.

The CHAIRMAN. You have had a lot of experience.

Mr. RUTLEDGE. I think it is foolish to farm land, plow, harrow and so forth, with high priced machinery and labor and fertilize and tear it up and let it erode away, harvest it and put it in the ware houses and some will rot and some will stay there and keep on building more warehouses to take it up. In that program whatever percentage would be it would be a limitation to any one farmer. That has been the worst thing in this 90 percent business.

The CHAIRMAN. You mean make it so that the smaller farmer would get a larger amount per acre?

Mr. RUTLEDGE. Absolutely.
The CHAIRMAN. Now what should be your justification ?
Mr. RUTLEDGE. Not more but get his proportion.

The CHAIRMAN. What should be the yardstick that you would suggest so as to arrive at a fair return to be paid to the farmer for keeping, let's say, 10 percent of his acres out of cultivation !

Mr. RUTLEDGE. If a small farmer had 10 acres in wheat and he could have sold that wheat on the open market say 10 acres was 300 bushels of wheat, he could have sold it on the open market in my state this year for about $1.80 right at the farm. He put it in storage and got about $2.10 to $2.15 according to the grade, and garlic and so forth. There are so many dollars between that support and what he got, that would constitute, if they took that support away, what he would have taken away. If the supports were taken off and more wheat grown he would have to scale it down according to the price and what 90 percent of parity would have been for that wheat.

The CHAIRMAN. You would pay him that to keep it out of production?

Mr. RUTLEDGE. Yes. And put that in some soil improving crop and keep it mowed down and ready to go back if an emergency came along.

The CHAIRMAN. Am I to understand that if on these diverted acres—you mentioned ten acres being diverted.

Mr. RUTLEDGE. Just a figure.

The CHAIRMAN. Would you pay to the farmer the net profit or the net income he would have made off those 10 acres to keep them out of production

Mr. RUTLEDGE. No, if he took out 10 acres and that was taken out of some crop he would have grown that he could have gotten so much for that crop and didn't get it after the cost of production was taken off, pay him that.

The CHAIRMAN. In other words, the net income. That is what I asked.


The CHAIRMAN. We understand each other. That is a suggestion that has been made. Some suggested that but it is my hope that by getting suggestions from enough people we will be able to resolve the problem.

Mr. RUTLEDGE. I have a limited amount of wheat acreage on my farm, I got it in something that I use on the place, alfalfa, one hundred-some acres of alfalfa, a small amount of corn and barley but alfalfa is our main crop, keeps erosion down and feeds cattle. You said about getting these farmers that are partly in industry, getting back on the farm. If the farm will make them a living they will be glad to come. They are doing that because they are forced to.

The CHAIRMAN. I understand. With your suggestions you said you had a plan to offer. Will you let us have it now, please?

Mr. RUTLEDGE. I have been a Democrat all my life and for generations back. Secretary Benson is a Republican and that doesn't make any difference. If he is appointed by the President to do a job, I think he is an honest man, I think he is going to try to do a job, but for this United States with the four corners of it wanting something different he has a heck of a job.

The CHAIRMAN. It is a big problem.

Mr. RUTLEDGE. This flexible support price on dairy products, vou said there was a tremendous increase in dairy products, but you didn't

go on to say what the balance was between what was in the storage today and what it was a year ago.

The CHAIRMAN. You give it to us. I didn't try to hide anything.

Mr. RUTLEDGE. I haven't given it to you. As well as I can understand it is about 1 percent.

The CHAIRMAN. Of course one of the reasons for that is that they have dumped it and fed it to hogs. That is what the administration did with it. And the total chargeoff on dairy alone up to now is in excess of $700 million. That is why you got less, you know; it is because they sold it.

Mr. RUTLEDGE. Out of the total of all supported things we got 6 percent.

The CHAIRMAN. Of what?
Mr. RUTLEDGE. Of wheat, corn, cotton, and anything else you can


The CHAIRMAN. Six percent of what, losses?
Mr. RUTLEDGE. No, 6 percent of what was paid out in parity.
The CHAIRMAN. I don't know what you are talking about now.

Mr. RUTLEDGE. A friend of mine was in New Zealand. He arrived there at 2 o'clock in the morning, was met by newspapermen and farm people and before he could sit down they said, “What are you going to do about your 90 percent of parity?"

He said, “Why do you ask?”

“That is vital to us. Before you put that on we didn't have much market but since you put that on we have doubled our production and we have a market and have to haul it a lot farther than you have.”

What we get for our milk products would be enough because it is in line with what we got 10 years ago, but just take, for instance, a tractor that I bought 10 years ago for $1,160. The same machine today is over $3,000. My county and State taxes are over 100 percent higher. My labor is over 100 percent higher. There is the squeeze. We are getting about 15 percent more than we were 10 years ago and everything is one, two, and three hundred percent higher.

The CHAIRMAN. All of us know that. Have you got a key to the solution of this problem? That is what we are waiting for.

Mr. RUTLEDGE. The dairy industry is spending a lot of money in advertising and we are moving. The Government is helping by putting this milk in the schools. I don't know all the problems.

The CHAIRMAN. Do you live in a milkshed where you sell your milk? Mr. RUTLEDGE. Baltimore.

The CHAIRMAN. The dairy farmers I presume in that area are doing pretty well. You are protected.

Mr. RUTLEDGE. They are doing better than probably some parts of the country.

The CHAIRMAN. I know that because I have just returned from Wisconsin and Minnesota.

Mr. RUTLEDGE. The machinery and fertilizer dealers are complaining. They have to borrow money from the banks to get their people paid off. It is a pretty tight squeeze.

The CHAIRMAN. Have you anything else to add ?
Mr. RUTLEDGE. I believe that is all.

The CHAIRMAN. Ladies and gentlemen, the committee will meet this afternoon in the Highway Building at 1:15.

(Whereupon, at 12 o'clock noon, the committee was recessed, to reconvene at 1:15 p. m. the same day.)


The CHAIRMAN. Come to order, please.
Mr. Lanier, give your full name, please, and your occupation.


TOBACCO EXPORTERS ASSOCIATION, GREENVILLE, N. C. Mr. LANIER. I am J. Con Lanier from Pitt County, N. C. I am employed as executive secretary of the leaf tobacco dealers, the tobacco merchants, people who sell the tobacco that we farmers grow in all parts of the world. I also am engaged rather extensively in farming in Pitt County.

Mr. Chairman, I have no written text.

The CHAIRMAN. Usually those who do not have make the best witnesses.

Mr. LANIER. I do want to talk a little on this record to the members of the committee that are not here to know that maybe the tobacco program and the way we people down here think about it has not been entirely stated in the record this morning. I was interested to learn that we had both a bad tobacco program and a bad Congressman. I don't think either.

For many years we have had a tobacco program, beginning in 1933. At that time I was in Washington in the tobacco section that first originated these tobacco programs and for whatever little part I had in it and have had over a period of 25 years, I am immensely proud because I know this tobacco program we have has meant a degree of prosperity to us tobacco growers and it has resulted, Mr. Chairman, in flue-cured tobacco over a period of 15 years averaging parity price when you lump all the years together and it is the only major commodity that I know that has received parity price. At the present time we are operating under a controlled system-acreage control. We have tried poundage control and while theoretically it might work yet practically it did not work.

While I do not put myself up as an expert, it is my opinion, having studied this thing through the years, that it would be less desirable than the present program of acreage control.

In the first place, it would be practically impossible to divide tobacco poundage to the individual grower without a terrific amount of dissatisfaction. In other words, if you have 1,200 growers in one country you would have 1,199 dissatisfied ones because the other one got more opundage per acre than this one.

The CHAIRMAN. How about the administrative feature? Wouldn't that be complicated?

Mr. LANIER. It would be terrific to determine how much poundage each one shall have in relation to his neighbor. Furthermore, it would penalize the good grower if you take a level of pounds per acre. It would discourage the good grower and encourage the sloppy grower. To me that would be in the long run a terrible thing for tobacco because someday somehow the future of at least our export tobacco trade will rest upon the production per unit cost. The agricultural colleges

are trying to teach us, and they have been successful, to grow more pounds per acre and to me the fact that we have doubled the production per acre in the last 22 years is a good sign because by doing that you lower the per unit cost of a pound of tobacco and with that lower cost of production per pound we can better meet the competition that has developed throughout the world in world markets.

Mr. Chairman, one-third of all our tobacco is exported, the fluecured type. We have tremendous competition from Rhodesia, South Africa, India, Japan, Canada, and some other countries.

If we can lower the cost of production we can meet the competition and increase our markets. Therefore, I say that the fact that we are growing 2 pounds where we grew 1 before is a very healthy sign in reference to those of us who are very much interested in the production of tobacco.

The CHAIRMAN. Would you state specifically that by having it on an acre basis rather than poundage the farmer is more inclined to grow more and be a better farmer than if you permit him to plant the acres he desires and from those acres give him a poundage allotment?

Mr. LANIER. I would say the fact that it has been on an acreage basis has been responsible for the increased growing practices that have resulted in the increased pounds per acre.

The CHAIRMAN. I think that is the consensus of opinion that this committee so far obtained from him, even from those who advocate a poundage or bushel or bale basis on our basics.

Mr. LANIER. I am glad you brought that out because that is my honest, considered judgment.

Now, as to the parity, the support price. I am thoroughly convinced that a flexible parity or support price on flue-cured tobacco would mean an absolute disaster to all of us in the flue-cured area because it would result in not less tobacco if you were to cut the support price down to 75 instead of 90. It would result in a doubling of your acreage in less than 5 years because as your revenue from an acre drops you would plant another acre in order to keep your dollars up to what you had to have to make a living.

Therefore, I say that to cut the support price down to this sliding scale parity would not work in the case of tobacco. It would merely result in a terrific overproduction of tobacco in order to keep gross farm income of tobacco growers up to where he had to have the money.

Now, at the present time I think that we are very well satisfied with this program whereby we control production and we get 90 percent of parity.

Ninety percent is not a profit figure, it is a break-even figure. We are entitled to more than 90 percent and we have gotten that because we have controlled our acreage and our production. At the present time this year, Mr. Chairman, because of ideal weather growing conditions and a new variety of tobacco, we have increased the production per acre 200 pounds per acre over last year and over the best year up to this year.

If we knew that we could have the same weather next year and next year and next year, I would think that this crop should be cut far more than 12 percent.

But using the average of 3 years' production as a basic figure and if Congress will leave the law as it is, I feel that the cut that is now announced will be sufficient to cut down the stocks to some extent and

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