4. The establishment of a soil-bank plan as an additional measure of limiting production. In most of the agricultural areas of the United States it is impossible to create substantially new acreage. The fertility of our soil is an important national asset that should not be wasted when its production is not presently needed.

5. That the Congress recommend that the President call a conference of food producers, processors, manufacturers, and distributors to seek means for enabling the farmer to receive a larger portion of the amount the American consumer pays for food.

6. The establishment of a Government research laboratory to find new and improved uses for farm products in industry with the objective that greater quantities and increased numbers of products of the farm can be utilized as raw materials of industrial production.

7. The promulgation of a plan to advertise farm products to promote their increased consumption such as has been utilized in the citrus-fruit industry and would be financed by producers' contributions on a percentage of sales basis. Modern mass production in industry has been made possible through extensive promotional advertising. It is time we adopted those methods to increase consumption of farm products.

8. Take out of production land owned by the Government both for the growing of grains and for grazing purposes.

S. 2852 is designed to accomplish points 1 and 2 of my program. Other points in this program are either included in other bills now pending before your committee, can be accomplished without new legislation, or merely require increased appropriations.

Throughout this session of Congress, I shall continue to press for all eight points in my program, either by amendments to pending bills, or where necessary, by introducing new bills.

The farm problem is without a doubt the most serious domestic problem facing this Government today. It is the one black spot in our otherwise prosperous economy. We cannot, and I know this Congress will not, leave the farmer so far behind in the enjoyment of our current high level of prosperity.

There are many proposals, most of them meritorious, designed to bring future farm production within the limits of anticipated consumption. I will support vigorously adequate and feasible proposals to accomplish that result. But that is only half of the job. We must first distribute the existing farm surplus that hangs over the farm market as a deadweight depressing farm prices. This is vital to any restoration of farm prices to normal levels.

Now I would like to discuss in some detail the provisions of S. 2852. Section 1 of the bill provides that the act may be known as the International Food Community Board Act of 1956.

Section 2 makes clear that the purpose of the bill is to accomplish the distribution of surplus agricultural commodities, in an orderly manner, to needy peoples at home and in friendly nations abroad. This is to be done to relieve the agricultural economy of the United States of the harmful effect of these unwelcome surpluses that hang over the markets, and at the same time to provide food and clothing for underprivileged people.

To administer this program, there would be established by section 3 of the bill the International Food Community Board. Its members, including a chairman and a vice chairman, would be appointed by the President from among the heads of departments in the executive branch of the Government.

This committee might consider it desirable to provide that 2 or even 3 members of this Board be selected from outside the Government-men who could give this program their full time. I would think, however, that the Board should certainly include the Secretary of Agriculture, and either the Secretary of State or the Director of the International Cooperation Administration, or both of them. Their departments are best equipped to help achieve the objectives of the program, and the Board would have to work closely with their agencies. Section 3 also provides that to the extent possible this Board is to function through existing agencies and with existing employees of the Federal Government. The primary purpose of these provisions is to avoid a substantial cost to the Government of administering the program. I would hope that this program could be administered with a minimum of administrative expense, and I feel certain this can be done with the full use of existing agencies.

The International Cooperation Administration, for example, now has agents throughout the world who should be well equipped to advise the Board on what plans in their respective areas could best achieve the purposes of this program.

And we would want to coordinate this program in with their foreign-aid programs. Similarly, the Secretary of Agriculture has administrative people located in almost every part of the United States whose advice and help should be used. I would not object to amending the bill to provide for some outside members of the Board. Perhaps the Chairman should be one who can give the program his full time, but I would in any event like to see the maximum utilization of existing Government agencies in the accomplishment of the program.

Section 4 provides for the creation of State or regional liaison committees to assist the Board in the disposal of these surplus commodities within the United States. I would expect these committees to assume the major responsibility for making known to charitable organizations within their respective areas, including orphanages, old peoples' homes, sanitariums, and the like, the availability of the program. These committees would also help the Board to find and to process suitable applicants for surplus commodities. The committees could serve at home in much the same manner that I would expect the Foreign Service and the International Cooperation Administration to serve the Board abroad.

Section 5 specifies the duties of the Board in disposing of these excess agricultural surpluses. It provides that the President should estimate the quantities of existing surplus commodities necessary to provide an adequate national reserve for emergency purposes; and that he should also estimate the quantities of these surplus commodities that can be sold or otherwise disposed of under existing programs. The President is given the right to revise the estimates from time to time and his revisions would result in corresponding revisions in the program. Only the excess surpluses over and above those estimates would be included in this program.

The Board is urged to distribute the remaining surplus commodities within a 3-year period. But the Board is required to dispose of those commodities in a manner "which will not materially displace, disrupt, or interrupt existing commercial markets." We do not propose that the Board give these surplus commodities to any recipient who is now purchasing similar commodities or who is financially able to do so.

If there were a surplus of shoes, it would do no good to give me a pair. For I already have a pair of shoes and when they wear out I will be able to buy a new pair. But if we can give a pair to a little girl without shoes, or whose shoes are worn out, and whose father cannot buy her a new pair, we have done a good thing without disrupting the market for new shoes. This bill will not permit the surpluses to be given to anyone who would otherwise have purchased similar goods.

On the other hand, there are many charitable organizations whose limited budgets do not permit them to purchase all of their actual requirements of commodities in our surplus stocks. In such cases, the bill requires the Board, or the distribution organization, to obtain a written obligation requiring such institutions to continue to purchase these commodities at the levels of their current budgets and distribution to them. Our surpluses would be only above and after their current levels of purchases.

The bill provides-and I think this is an important provision-that to the maximum extent possible, the distribution of these surpluses should be through nonprofit organizations. I would hope that many public-spirited citizens could be interested in helping to achieve this distribution through nonprofit organizations.

We all know of the splendid work CARE has done in distributing packaged foods to needy peoples. I am hopeful that similar bulk distribution could be achieved under this program through similar nonprofit organizations. I have in mind that such nonprofit organizations would collect through public subscription their costs of administering the program.

I believe that in many foreign countries nonprofit organizations can function more quickly, more directly, and more effectively in the distribution of food and clothing to needy people than could ever be achieved through local governments. I would therefore hope that we could avoid any distribution through local governments and utilize primarily nonprofit organizations of charitableminded or public-spirited people.

The bill further directs the Board promptly to store in foreign countries the commodities ultimately to be distributed abroad. I have in mind that it will take some months to set up a suitable organization to process and arrange for the ultimate distribution of these commodities. But to the extent that the Board determines that stated quantities of these commodities are ultimately to be 64440-56-pt. 8 -7

distributed abroad those commodities should now be exported from the United States so that they do not continue to depress domestic farm markets. Storage costs will probably be no greater abroad, but more important, we must immediately remove these excess surpluses from over the head of the domestic market. The bill further provides, however, that commodities thus stored abroad should continue to be under the exclusive jurisdiction of the United States until they are allocated for actual distribution to consumers; but they may not be returned to the United States except in an emergency.

Section 6 of the bill directs the Commodity Credit Corporation to deliver to the Board such surplus commodities as are to be distributed under the program without reimbursement. This, of course, means the surplus over and above what the President estimates as is necessary reserve for emergency purposes or can be sold under existing programs.

This provision presents a bookkeeping problem to the Government or which arguments can be made on both sides, but which I hope will not affect the achievement of the program. The bill might very well provide for full reimbursement to CCC for these commodities, but this would require large appropriations by the Congress to the Board. On the other hand, if these transfers are without reimbursement they will result in a bookkeeping deficit to CCC.

I would hope that the American people would never charge that bookkeeping deficit-and it is only a bookkeeping deficit-against the cost of the farm-support program. For in large part, this is an economic program the consequences of which extend far beyond the farm economy. But in any event, this is a mere intragovernmental bookkeeping problem that should be resolved in the most expeditious manner.

The provisions of section 7 relate to agreements by the Board with distributing organizations. The bill contemplates that the actual distribution of these surpluses to needy peoples will be undertaken largely by nonprofit private organizations. We must have in mind that wheat must be milled into flour before it can be used by the needy. Cotton must be woven into cloth and made into sheets and towels before it can be used in underprivileged hospitals around the world. Most of these agricultural surplus commodities must be processed before their ultimate distribution.

I feel that most, if not all, processing, as well as the actual distribution of the commodities, should be done by private nonprofit organizations. I would also hope that the costs of the necessary processing and distribution could largely be defrayed by public subscription, at home and abroad, to these private organizations.

The bill would authorize the Board to permit these private organizations to contract with processors to process these commodities in exchange for the byproducts; with the limitation that the fair value of the byproducts cannot exceed the reasonable value of the processing. We would hope also that shipping companies might donate the use of otherwise unused cargo space to transport some of these commodities abroad. We must also contemplate that some needy recipients such as hospitals and other institutions-could pay a modest charge for goods that they would be unable to buy at the full normal price. The bill, therefore, provides that these nonprofit organizations can charge an amount for the goods distributed by them under this program not in excess of their actual costs for the commodity, its processing and its transportation, but not including administrative overhead. I feel that these organizations should defray their own administrative expenses from their own funds.

The bill also gives the Board authority to sell these commodities whenever it can do so consistent with the objectives of the program. And the Board is not required to get the fair value of the commodity. Frankly, I doubt that there will be many occasions when the Board will be able to sell surplus commodities available to it having in mind that it is to receive only the surpluses not otherwise capable of being disposed of through existing programs. The bill would also authorize the Board, in exceptional cases, to defray the cost of processing and the cost of transportation. Funds for this purpose must, of course, be appropriated, except that any income received for the sale of commodities could be utilized to defray those obligations.

There is also provision in the bill permitting the Board to barter surplus commodities for raw materials needed for our national stockpile or for goods and services for Armed Forces personnel. And the Board might sell commodities for foreign currencies which it would then discount with the Export-Import Bank of Washington. The bank might then use those foreign funds for its general lending purposes.

Finally, Mr. Chairman, the bill provides that the act shall expire June 30, 1960. I do not propose that we hereby set up a permanent disposal board. I am most hopeful that we will adopt means of bringing future production more nearly in line with consumption so that there will be no future excess farm surpluses. This bill is designed only to distribute the existing excess surpluses.

The farm question is not a political matter, but is so vital an economic problem, to so large a segment of our economy, that it demands bipartisan consideration and bipartisan support. I urge this committee to report favorably to the Senate my bill to create an International Food Community Board.

Senator CAPEHART. I wanted to say this, many good ideas have been suggested in reducing future surplus, that is, to make certain that surpluses do not occur in the future which I am 100 percent in accord with.

In my opinion, it is the only answer to the problem. However, I have not yet, as good as I thought the President's message was and his suggestions, seen a proposal that in my personal opinion was strong enough in getting rid of existing surpluses because I do not believe you can solve this problem unless you do get rid of existing surpluses and do that quickly.

While I came up sometime ago with an 8-point farm program, I only introduced legislation together with many other Senators, many of them members of this committee-I have only introduced one piece of legislation, S. 2852, which has to do with disposing of existing surpluses. This S. 2852 is aimed at only one thing, that is, to get rid of existing surpluses.

I again want to repeat, gentlemen, that I do not care how good a program you work out in eliminating future surpluses, it is going to take a long time as we are going at the moment, to work off this existing surplus and I do not think you are going to get much increase in farm prices until you do work off the existing surplus.

The CHAIRMAN. Well, Senator Capehart, I presume that you are of the belief that no matter what program this works out with respect to price supports or any other portion of the problem, that the thing we must do in order to make any program work is to reduce the surpluses.

Senator CAPEHART. That is my opinion. I base that on my experience as a businessman over a number of years. You have to take whatever drastic actions are necessary. And I am going to try to prove in my statement, and I think I have precedent for this sort of thing in business-and I want to ask this of you, gentlemen, that if it is not the existing surpluses that are depressing farm prices, what is it? It has to be.

As you will note from my statement, in my opinion it has to be existing surpluses because we have today, as you know, the greatest prosperity in the history of this Nation. You never can get more people employed at higher wages. I mean you cannot get any finer employment at any finer, higher wages than you have at the moment. Our people have money. Business is very prosperous. The wage earners are prosperous. The manufacturers and bankers are prosperous. We have a national production of about $500 billion. We have a national income of well over $300 billion.

Under those circumstances, if farm prices are not up here with other prices, how in the world do you ever expect to get them up here? There could only be one thing that is causing them to be depressed; and that is surpluses.

And we have, as you well know, about $8 billion worth of surpluses owned or controlled by the Government. And the Government owns and controls them. They are not owned and controlled by the farmers. There is only one instrumentality that can get rid of those surpluses; that is the Government because we, the Government own and control them. We have got to get rid of them.

Senator YOUNG. Would you mind a question at this point? Does that $8 billion represent all of the holdings plus the loans that the Federal Government has?

Senator CAPEHART. The chart that I placed in the Congressional Record here a couple of weeks ago represents that. It is the total amount of the commodities that the Government owns or has control of, whether the farmers have borrowed money upon it, put them under the support price.

Senator YOUNG. In many instances where the farmer borrows money on commodities he may still redeem later.

Senator CAPEHART. That is very true.

Senator YOUNG. Your $8 billion

Senator CAPEHART. Represents that total amount.

Senator YOUNG. The Government holdings, plus loans.

Senator CAPEHART. That is right. It represents the total amount. Gentlemen, you might as well face this situation, that the farmer is a big buyer of consumer goods and a big buyer of practically everything. He is a buyer of tractors, automobiles, radios, refrigerators, deepfreezes. He is a buyer of machinery parts, implement parts, and he is going to have a tendency to pull down all businesses, in my opinion, unless he gets a larger, a bigger price for that which he sells.

You just cannot make this thing work with one segment of our industry, the farmer, getting such low prices in comparison to the socalled city fellow.

Therefore, the city man or businessman has just as much stake in this matter as does the farmer. I think he realizes that today. I do not think he did a year ago. I do not think he did 2 years ago, but I think he does today and there is not anyone that knows better than the businessman that he never can operate a successful business as long as he has a surplus.

Whether he be a retailer, a wholesaler, a manufacturer, or a processor he knows that when he has a surplus that he has to get rid of it. And he does get rid of it, because he knows it is good business to get rid of it, because a surplus is not an asset.

It is a liability. It becomes a liability because, if you have a surplus you immediately have depressed prices and you likewise are unable, if you are a manufacturer, to produce more, just like if you are a farmer and the farmers have a surplus, they are not in a position to produce more because they have plenty, just as a manufacturer, if he has a surplus of, let us say, radios, he is not going to manufacture any more because to manufacture more further aggravates his own surplus problem, further depresses his prices, and further gets him. into trouble.

Businessmen of America know that. They will be, in my opinion, in hearty accord with this Congress in trying to get rid of these surpluses in any way we can get rid of them, because, gentlemen, it is