elementary economics that price is based on supply and demand but not on the total demand nor the total supply.

More usually it is based on the top 5 percent of supply or demand. When supplies are only 95 percent of demand, we have a tight market with rising prices. But when supplies are 105 percent of demand, we have surpluses and a soft and declining market. It is the 5 percent at the top that regulates prices.

Nobody knows that any better than the businessman does and he is in sympathy with this problem of getting rid of the surpluses. And this S. 2852 that I introduced, together with other gentlemen, is aimed at only one point, that is to get rid of surpluses.

Senator THYE. Mr. Chairman, the Senator says the businessman knows that a surplus is impossible to deal with. The farmer likewise knows that a surplus is a detriment to him and to the market structure of the commodities he produces.

But the businessman, to a great extent, can tailor his inventories to his needs. The farmer, however, cannot control surpluses through his actions alone. That was demonstrated last year when it was shown. that it was not the pork producer in Indiana and Iowa or Illinois who brought on the glut in the pork market.

It was added to by the fringe areas, such as in the West-in the Oregon area we had information to that effect when we held hearings there as well as in the fringe areas like Missouri, for example.

But when you got the total combined you had a production of pork that absolutely ruined the pork market for everyone. The same thing is true with wheat.

The fringe areas of 10, 15 acres of wheat has absolutely overburdened the market to the extent that the wheat producer, if you permitted the market to swing to whatever the surplus weight forced it to, would be ruined.

So, therefore, we have to look at this and try to solve the surplus problem two ways: First, in our annual production, but that is going to be too slow to be of immediate relief to the producer. Therefore, one of the proposals your bill must expedite is the disposal of surpluses through all channels where the surpluses can be used.

Senator CAPEHART. What I am saying is let us get rid of the surplus, period-take whatever drastic steps are necessary.

Senator THYE. That is right.

Senator CAPEHART. Because when a businessman has a surplus he gets rid of it and tries to do so still at the existing price, if he can, but if he cannot do that he offers it at a reduced price. If he cannot sell at a reduced price he offers to sell a man 1 and give him 5, but he gets rid of it. He has to get rid of it.

Now, a retailer, of course, can quit buying and create surpluses just that quickly. He just does not buy any more. The wholesaler can do the same thing. For the manufacturer the cycle is a little longer.

The farmer cannot reduce his production, except on grains it is on a yearly basis; on hogs, it is a 9 months basis; and on cattle it is nearly a 3-year basis.

But let us keep in mind now that the Government owns and controls this surplus that is causing the trouble. It is not the farmers that own it. It is the Government that owns it and we must get rid of it ourselves because we are the Government.

Let me read some of the things that the President had to say in his message. I am on page 3. The President recognized the presence of these surpluses as the main farm problem, saying:

Of the many difficulties that aggravate the farm problem, mountainous surpluses overshadow everything else.

The President went on to say:

Farmers, the intended beneficiaries of the support program, today find themselves in ever-growing danger from the mounting accumulations. Were it not for the Government's bulging stocks, farmers would be getting far more for their products today.

My personal opinion is that if you had no surplus today, the farm prices would be up as high as all other prices. I am quoting now from the President, and I know we must all agree with the President's statement that:

The attack on the surplus must go forward in full recognition of the fact that farm products are not actually marketed when delivered to and held by the Government.

That is one of the mistakes we made in the past. It was in thinking that these farms products, when we delivered them to the Govern ment, had been absorbed into the market. They were not absorbed into the market. They simply were an accumulation of surplus.

A Government warehouse is not a market. Even the most storable commodities cannot be added forever to Government granaries, nor can they be indefinitely held. Ultimately the stockpiles must be used.

I have been quoting the President of the United States.

Now I think the President came up with some excellent ideas in his message of a way to handle this matter, as far as future accumulations of surpluses are concerned, but I do not think his suggestions were adequate in handling the existing surpluses.

I am not saying that the bill that I introduced with other gentlemen is the answer. I am not saying that you ought not to make many changes in it. I am not saying that the language is possibly as it should be.

I am simply saying, gentlemen, that you better find some way to get rid of them and get rid of them in a hurry and find some organized intelligent way to do it; otherwise, you are not going to solve the farm price situation.

I go on. President Eisenhower wants to do something to dispose of these surpluses and referred to a start being made by the Secretary of Agriculture saying:

Because the problem continues to be so serious and stubborn, Secretary of Agriculture is appointing an Agricultural Surplus Disposal Administrator who will report directly to the Secretary. The duties of the Administrator will relate to all activities of the Department associated with the utilization of Commodity Credit Corporation stocks and of our current abundant production.

I think that is good but I do not think it goes far enough. I think we, the Congress, have the responsibility. We pass the laws in the first place that were responsible for the accumulation of these surpluses. We should mandate the President of the United States and the Secretary of Agriculture to get rid of them and I honestly believe that the American people will be back of us.

That is what this bill in my opinion will do.

Now we are told, of course, as I say on the bottom of page 3 here that we cannot get rid of these surpluses.

Gentlemen, I do not believe that at all. I think that is taking a defeatist attitude. I think it is an attitude we ought not to take.

We are told that to sell these surpluses abroad at prices below existing market prices will divert trade from other countries and bring disaster to the farm economies of other friendly nations.

This, of course, we must not do. It is not necessary to do it.

We are told that to seek to dispose of additional supplies on the domestic market would further depress prices. Of course, this we will not do.

In my opinion, it is not necessary to do it.

The CHAIRMAN. As the Senator well knows, we had a special subcommittee of this committee to look into the question of disposal abroad and the committee came out with the facts, with statements made, that the Department of Agriculture was not a free agency in disposing of these products abroad.

The State Department with the backing of the President, I presume, hampered the sale of many of these products abroad because they were afraid that by selling these surpluses abroad it would tend to depress the economy of many of the countries.

How would you get around that, Senator? Have you any suggestion to take the State Department out of it and let the Department of Agriculture handle it?

Senator CAPEHART. Under this bill we set up a Commission whose sum total responsibilities are to get rid of this surplus and we mandate them by Congress to do so.

I will get into the explanation of the bill a little later. It is their responsibility to do what? To do just what you are talking about, to say to the Department of State, "We are going to get rid of these surpluses" and to say to other departments, "We want your cooperation," and if there are any laws or rules or regulations that are hindering the disposal of these surpluses, either in the United States or in foreign countries, it will be the duty of this Commission to come immediately to Congress and say, "We want this law or that law changed and we want to set ourselves up in a position to get rid of these surpluses."

Senator HICKENLOOPER. There are some very practical problems in existence now, most of which are backed up by law.

For instance, there are 16 nations in the world that embargo American pork today. We cannot sell pork in those countries. They use as an excuse certain diseases which they claim we have here. But pork is embargoed. We cannot sell it.

We have on our books antidumping laws where we can determine under certain circumstances that another country is dumping products in this country, that is, getting rid of their surpluses in this country and we can stop it.

In fact, it is mandatory that we do stop it if the decision is made that dumping practices are going on here.

Other countries have similar laws on dumping. And those laws are perhaps a little bit more subject to discretionary action than ours. They can find all kinds of excuses for preventing the importation into their countries of products which for one reason or another they might not want.

I am only suggesting that there is the factor abroad of attitudes of other countries. We run up against those antidumping laws.

Senator CAPEHART. If you will yield, I know that that is true. I know there are a lot of problems involved and I know that there may be some laws that will have to be changed and new rules and regulations made, but the purpose of this bill is to dispose of the surpluses to the peoples in the United States, and all free countries; that if you didn't give them this food they just would not have any. If you give food to somebody and if you did not give it to them, they just would not have it, then you have not interfered with the free market.

You have not interfered, in my opinion, with any of these laws that we are talking about.

The purpose of this commission is to find ways and means and places where they can give away this food and fiber to people that if you did not give it to them they just would not have it.

Senator HICKENLOOPER. I am not necessarily saying that I am opposed to your position.

Senator CAPEHART. I know you are not opposed, and I appreciate your view.

Senator HICKENLOOPER. We have in the budget we have available now, an amount equal, I believe the chairman can correct me if I am wrong-it is an amount approximately equal to $1,700 million for surplus disposal.

The CHAIRMAN. That has been reduced.

Senator HICKENLOOPER. That was the original amount set up last year. Here is what our laws contemplate, that we do not move in with surpluses and disrupt existing established market but only attempt to put it in to areas where it will be an overplus and go to people who otherwise would not buy.

We can accept a certain amount of soft emergency. We can give it to them on loans and a certain amount of grants out of that. The experience has shown, at least my information is, that from a mechanical standpoint you can only move a certain amount. There are practical deterrents to moving out $1,700 million worth of surplus. You simply cannot do it.

We have today, according to information I get, prospective outlets for this, but there is this question of mechanics. We are moving more this year than last year.

Senator CAPEHART. Let me say this, that the administration, I think has done a good job in moving these surpluses but my point is it is not good enough because if they had gotten rid of all of it, then you would not have the low farm prices.

Senator HICKENLOOPER. I understand.

Senator CAPEHART. My position is that we have to do more and this bill is an effort to do more.

I just feel confident that if this Congress will mandate the President and the administration by passing some such legislation as I have recommended here that they will find ways and means to overcome all of these physical difficulties and get rid of this surplus. It is only intended to get rid of it.

If you did not give it to these people they would not have it. There are many people in the United States and millions in foreign countries that you could give this surplus foodstuff to as well as fiber,

that if you did not give it to them, they just would not have it. That is all.

Another way I think we can give away a lot of this foodstuff is to give it away in lieu of cash that we have been giving away.

I cannot sit here, neither can you gentlemen and work out all of the ways and means in which it can be done. That is the purpose of the legislation, to set up a commission that will spend 24 hours a day studying this subject, that will spend 24 hours a day working out ways and means, because my observation has been that at the present time the getting rid of this surplus is everybody's business in Washington.

And my observation is that everybody's business is nobody's business. The result is tht we do not get rid of it.

Senator MUNDT. It seems to me, Mr. Chairman, I wonder if Senator Capehart will agree, I read the bill pretty carefully; I was one of the cosponsors of it. It does simply three things which need to be done.

In the first place it concentrates the authority to solve the problem in one place.

Secondly, it fixes the responsibility. There cannot be any beating around the bush, or any alibiing. This Commission, once established, has the responsibility of getting the job done.

And, third, it provides the machinery.

Senator Hickenlooper pointed out quite correctly in this surplus disposal program there are certain problems. The Department of Agriculture finds its hands tied by international commitments, finds its hands tied by local legislation; certain stipulations as to what we can do and what we cannot do.

I think we should approach the surplus disposal problem with the emergency psychology that we used, for example, prior to World War II when we approached the problem of peace and they passed H. R.

1776.

I happened to be on the House Foreign Affairs Committee at that time. We debated one phrase in that bill, I remember. That says "the provisions of any other law notwithstanding." This put us in the business of taking American taxpayers' money and giving it to other people which may or may not prove to be wise in the final analysis of history.

But to do that-you had a whole body of American statutes for years prohibiting all types of things like that-you had to have a bill as big as a Sears & Roebuck catalog to have achieved the objective provided by that one phrase.

And I think that incorporated in this bill should be that phrase. I do not see it. I think in the working features of it we should start out by saying that the provisions of any other laws notwithstanding this Commission shall be authorized to take whatever steps are necessary to get the job done.

In that way you clear the desk and can get action. It is the only way I know that you can do it.

Senator CAPEHART. It is perfectly agreeable with me, to tear this bill up and completely write a new one as long as we get a commission charged with the responsibility to get rid of the surpluses mandated by the Congress to do it. That is all I am trying to do in this instance here.