Senator YOUNG. Will you yield for a question? Is it not true that most of the hungry people in the world are in the Communist countries and that we have a provision prohibiting trade with them now? Senator CAPEHART. I could get you enough Indians in Latin America that could consume this surplus in quick order. If you do not give it to them they do not get anything.

Senator YOUNG. In the satellite countries of Eastern Europe there is a food shortage. Other surplus producing countries like Canada are selling goods at reduced price to those countries. Why should we have a prohibition against it when countries like Canada do not?

Do you think we ought to change our law in that respect?

Senator CAPEHART. Yes; I would do whatever is necessary here, first to do the right thing and to get rid of these surpluses.

Senator HICKENLOOPER. There is another factor that may seem a little foolish on the surface but I am convinced it is a very important factor, and that is the age-old eating habits of many of these people. We have had people trying for years to change the eating habits, to make people in other lands more adaptable to consuming our type of foods, and we have just run up against a stone wall.

You mentioned Latin America. You could go to Central America and try to get a lot of those people to have a certain diet. They have been trying to do that for years. But they go right on. They will not eat the products because traditionally they have not eaten our type of food. It is a very human factor.

Probably it is an unwise policy or an unwise attitude on their part, but nevertheless they eat what they want and we cannot change their habits overnight.

Senator CAPEHART. I think that is true. That is one of the problems, but we have to find some way to overcome these problems.

On page 4, I have never considered it unwise or wrong to give something away when it was both good business as well as being a charitable Christian act. I can demonstrate to you now that my program is, in fact, good business for the United States.

First, although there has been criticism that this administration has not done enough to relieve the farm problem, the investment of this Government in programs primarily for the stabilization of farm prices and income, in the years 1954 and 1955, has been $2,263 million. This compares with a total expenditure for such programs in the prior 4 years of $1,747 million.

These farm surpluses are not something new. They began to accumulate in the fiscal year ending June 30, 1949, at which time the CCC inventory of wheat was over 227 million bushels. It is now about 4 times that amount. By June 30, 1950, the CCC inventory of corn was over 332 million bushels. It is now about double that amount. Senator YOUNG. Could I ask you another question at this point? You say that investment in price support programs for 1954 and 1955 was $2 billion plus. Do you have a breakdown of that?

Senator CAPEHART. I do not have a breakdown with me. I could get it and put it in the record.

Senator YOUNG. I wish you would, because many of these breakdowns include, for example, the gift of wheat to Pakistan. That was not a price-support operation.

Senator CAPEHART. It got rid of surplus.

Senator YOUNG. The Department of Agriculture lists that as a price-support operation?

Senator CAPEHART. The periods of greatest accumulation of these surplus inventories were the fiscal years ending June 30, 1949, 1950, 1951 and again 1954 and 1955.

I say that it is not good business for the United States to continue to spend billions of dollars to inadequately and inefficiently support farm prices because we are unwilling to be realistic and give, to needy peoples of this and other friendly nations, that portion of our farm surplus that is depressing farm prices.

Now I want to talk to you just a few minutes, if I may about this, that there is nothing new about this giving away these surpluses.

For example, at the end of World War II, if you will turn to page 5, I am going to give you a number of concrete examples.

We thought we had surplus defense plants and what we thought were billions of dollars worth of surplus goods and we sold them.

Well, I will give you some of the prices. I will give you a few examples. One aluminum company purchased 4 plants at Newark, Ohio; Troutdale, Oreg.; Spokane, Wash.; and Trentwood, Wash., for $41 million which had cost the Government $150 million.

Another aluminum company purchased so-called surplus Government plants at Jones Mill, Ark.; Hurricane Creek, Ark.; Phoenix, Ariz.; and Chicago, Ill., for $48 million that had cost the Government $144 million.

They were supposedly surplus. They had been built during the war for the specific purpose of winning the war, just as this surplus was accumulated, in my opinion, for the purpose of winning the Korean

war.

And I do not know why the farmers are not entitled to just as much support in the reduction of surpluses, in the elimination of surpluses, as were the businessmen.

I will give you some more examples.

If we continue looking through this book-I am talking about a book here now-you will notice by a statement that was gotten out by GSA, we find an oil refinery at Cattlettsburg, Ky., sold for $2.3 million which had cost the Government $16 million; steel properties in Utah that cost the Government $191 million were sold for $47 million. An aircraft factory in San Diego that cost $9.7 million was sold for a million.

A chemical plant in Sterlington, La., that cost $17.6 million being sold for $5.8 million.

I am not criticizing that. I think it was the wise thing to do. Why? Because we put them into the hands of private enterprises who have since created huge payrolls, paid huge taxes, and created industries and businesses.

I do not bring this up to criticize it. I only bring it up to show how this Congress; then they had surpluses in the past that affected businessmen, they had no hesitancy in selling them for 10 cents on the dollar, which I think was a good thing.

I am not criticizing but now we come along here with a huge surplus of some $8 million, whatever it is, of farm surpluses and we say, "No, we cannot even give it away to the poor peoples of the United States and of the world. We have got to keep it and further depress the market."

And then possibly we will end up, I hope not, working out a farm bill here that will further aggravate surpluses.

Senator HUMPHREY. I want to say I am very interested in your proposal. The facts that you are giving here are facts that have long needed to be emphasized.

I think there is a point that I would like to get your observation on. You cite the years of the accumulation of some of our surpluses, and, of course, you were very right when you say that the most significant portion of the surplus was accumulated in the Korean war period, particularly right at the conclusion of the Korean war.

Is it not right to say that from 1943, or 1942, on through, you had, starting out even before that with the Steagall amendment, you had 90 percent of parity?

You had 90 percent of parity price supports in 1946, 1947, 1948, 1949, 1950, 1951, 1952, 1953, and yet it is interesting to note that the 90 percent of parity was not enough by itself to get the production, that the Secretary of Agriculture had to set bigger production goals, and had to go out and have these farmer committees encourage farmers, literally persuade them, to expand their production?

I think if you will go back to the record you will find that actually happened, where the Department of Agriculture said, "We need so many million more acres of wheat and corn," and sold the farmers on the patriotic duty of raising that additional wheat and corn and cotton. Is that not your recollection?

Senator CAPEHART. That is right. You are 100 percent right. Senator HUMPHREY. So it appears to me, No. 1, the factor that you are bringing up, that it was a war surplus in the sense that it was an encouraged production surplus.

Senator CAPEHART. That is right.

Senator HUMPHREY. Is that a very sound observation?

Senator CAPEHART. And before you came in I think I pointed out that the Government owns and controls this surplus.

Senator HUMPHREY. That is correct.

Senator CAPEHART. And only the Government can dispose of it because they own it, they have physical possession of it. Only they can control.

Some people say to me, "You ought to get rid of all farm legislation. We do not need any."

Let me say this to you, you could repeal every law on the books tomorrow if you wanted to, but you would still have an $8 million surplus.

You will not get rid of the surplus by repealing laws.

Senator HUMPHREY. That is correct.

Senator CAPEHART. You are not going to get rid of the surplus by working out new laws here that avoid the creation of surpluses in the future. You will still have this surplus hanging over your head.

You have to take, in my opinion, whatever drastic steps are necessary to get rid of it, and I honestly believe that the American people, the businessmen, the people, and the farmers themselves, are perfectly willing to have you do it, just as they were willing at the end of World War II, to get rid of all of these surplus defense plants.

You will remember we sold billions of dollars' worth of surplus shoes and clothing, almost every conceivable thing. Why? In order

to get it off of the market so it would not compete with business, to create jobs.

I think the decision was correct, in most instances. Much of it may have gone too cheaply, but I am talking about the principle, that it was correct, because it was something accumulated during the emergency.

Now you have the same thing with the farm surplus. All I am asking us to do as the Congress is to accept the responsibility, mandate the administration to get rid of it, in every conceivable way, and to set up a commission whose duty is to get rid of it, a commission that we can call over here and say. "Why did you not get rid of it? How are you trying to get rid of it? What do you want us to do to help you get rid of it? Do you need to have any laws changed? What can we do to study the problem?"

My observation at the moment is if you wanted to find out how this surplus business is being handled it would take you 2 or 3 hours to call up all of the people in Washington that are dealing with it and then possibly would not get the right answer.

You will get the answer if you mandate the administration to do it, if you set up a commission charged with the responsibility of doing it. Senator HUMPHREY. I want you to know, as you may recall, I listened very attentively to your address in the Senate on this particular subject. My feeling is there has been much to-do with much overexaggeration about the impact of 90 percent of parity as a surplus producing price-support level, because the facts are that in the beginning of the crop year of 1953, our surpluses were not at all dangerous. They were not much more than a normal inventory.

And one of the reasons that we have this surplus today is just what you have pointed out, namely, that the war was brought to an end, the necessity for expansion was no longer with us, and the crop nevertheless was in the ground and the crop was harvested and it was an unusual bumper crop.

Senator CAPEHART. The weakness of the parity system, of course, whether it is 90 or 50 or 40 or 75, is that the Government takes the excess production and puts it in a warehouse, and there it sits; whereas if you go the soil-bank route you do not produce it in the first place; therefore, you do not have anything in the warehouse.

And in my opinion, if you do adopt that kind of a policy, the law of supply and demand will take care of your prices for your farmer. That has been the weakness of your system in the past. It has been that regardless of what the parity is. You create more than you can

consume.

Senator HUMPHREY. You would not want a situation where you did not have an inventory, would you?

Senator CAPEHART. NO.

Senator HUMPHREY. You wouldn't say there is no need of processing steel, just leave the iron ore in the pits up in northern Minnesota. You would not want that. You have to have some inventory.

Senator CAPEHART. The bill I am introducing mandates the President to arrive at what at the moment is a surplus and then he turns: that surplus over to this commission with instructions to get rid of it. Senator HUMPHREY. That is what I wanted to clear up.

Senator CAPEHART. Likewise the bill permits the President if a week or 2 weeks from now you had a growth or something happened and it looks as though you are going to raise less corn, let us say, next year,.

he adjusts that surplus and says, "I told you a month ago we had❞— let us say "a billion-dollar surplus in corn; I now find it is only $500 million."

What this commission is charged with is the responsibility of getting rid of that portion beyond our needs and what we need as a normal

reserve.

It is that portion, as I pointed out a minute ago, that is causing us the trouble because it is that 5 percent of anything that either makes a scarcity or creates a surplus.

Senator YOUNG. Just one more question: I dislike interrupting, but this is right along the line of what you were talking about.

Agriculture production this year is at an alltime high. That, despite the fact that the prices of farm. commodities this year are at the lowest point in 15 years.

How, therefore, are you going to keep from piling up surpluses in the future when you reach an alltime high in production this year with the lowest prices in years?

Senator CAPEHART. The reason you have the low prices is because you have a surplus.

You always have a low price in any business when you create a surplus, unless somehow, someway you have a monopoly that can completely 100 percent control it.

Senator YOUNG. I agree with you. You were talking about wartime incentive and surplus. It is generally believed or advocated by many people if you lower prices you will get rid of your surplus, that you would not accumulate surpluses.

How do you account for the fact that this year we have alltime high production when we have the lowest prices in years?

Senator CAPEHART. Because we have the biggest surplus. Production and surplus is what govern prices.

Senator YOUNG. Then you are advocating, you are saying that lower prices create a surplus and induce farmers to produce more.

Senator CAPEHART. I am not saying anything of the sort. Physical things create the surplus. The bushels of corn and wheat and rice and pounds of meat that are produced on the farm create the surpluses. That is regardless of whether you get 90 percent parity, 80 percent, or what you do. It is the physical thing that creates the surplus. That is the surplus.

Let us put it that way. Maybe it does not create it, but it is the surplus. You have it at the moment and you have to get rid of it. Senator THYE. We have had very favorable crop years and we have stepped up agricultural production by scientific know-how.

So, today we have too large a farm plant, so that surpluses have been produced that overhang the market and have ruined the price of most of the commodities. Therefore, the Senator is endeavoring to set up an agency charged with the sole responsibility-no other responsibility of moving the surpluses into whatever channels can be found.

Senator CAPEHART. To sell at the regular price, barter some, give them away; that is correct.

Senator THYE. The other step we must take is to reduce the overall farm plant. But if we reduce the farm plant sufficiently so as to eliminate the trend to surpluses we would practically have to cut cer