I don't think the 11.5 figure has been used since July of last year. I may be wrong, but I don't think so. Here is the farm-income situation for December 16, 1955, and it is 10.6. 11.8 is the 1954 figure.

Mr. GARVER. Well, it would make a somewhat smaller figure, but the point would still remain, Senator

Senator ANDERSON. $1 billion isn't hay.

Mr. GARVER. 10.8, you say?

Senator ANDERSON, 10.6 is the farm income situation for December 16, and when the new one comes out, the newest figure, it will drop maybe a little below that. But it certainly is somewhere around 10.5 billion.

Mr. GARVER. Well, that would make the decline 7 or 8 percent rather than 6, in terms of my figure here. Actually, the figure we used in our comparisons was $11 billion, as shown in the Farm Income Situation No. 156, page 10. The $11.5 billion is a typing error in preparing the statement.

Senator ANDERSON. Where did you get the 14.5 figure?

Mr. GARVER. This is the average of the 6 postwar years, 1945 through 1950.

Senator ANDERSON. Why don't you use the postwar years 1946 and 1947?

Mr. GARVER. That would make some difference in the figures, but you would still have

Senator ANDERSON. It would raise the figures $2 billion on the postwar figure, and then you drop $1 billion here, and $3 billion is quite a little difference, because there is $3 billion between your figures, and there should be 6. In other words, it is just half of what it should be.

Mr. GARVER. Well, I say using 1946 and 1947, the postwar years up to 1951 were a period in which you had a reasonably long period to go on, which still was not too much affected by the Korean inflation. Senator ANDERSON. It wasn't affected by the Korean inflation at all. Are you familiar with what happened after World War I?

Mr. GARVER. Yes, sir.

Senator ANDERSON. When did the big drop in farm income come? Mr. GARVER. In 1949.

Senator ANDERSON. No; in World War I?

Mr. GARVER. Oh, I am sorry. It came in 1921.

Senator ANDERSON. That's right; the first 2 years after the armistice. The armistice this time came in 1945, so the first comparable 2 years would be 1946 and 1947.

If you use those two figures, you get twice as much difference as what you are getting here. In other words, I am saying if you are going to present a factual statement of what has happened, I think you ought to take the $6 billion drop in farm income rather than a set of figures that produces a $3 billion drop. It makes a very substantial difference, but go ahead.

Mr. GARVER. I am sure the Senator is aware the shorter the period you take, the more sharply you can make the comparison seem, and that is one of the dangers in statistics, of course.

Senator ANDERSON. The other danger in statistics is, you select the ones that prove your point. I am only trying to say that if you are going to compare what happened postwar and what happens today, you ought to take postwar and today.

Mr. GARVER. Senator, the reason I included a longer period was because in all statistical work it is better to use a longer period as the basis of comparison. Furthermore, by including these later years, they included the period under which the acts of 1948 and 1949 were written, and against which we compare changes.

Senator ANDERSON. If you take 10 years, why not take the first 5 years, and then say this is the average, and the last 5 years, and say this is the average?

I think the thing that points it up is that steadily farm income has been dropping. Under 90 percent supports, flexible supports, and everything else down it has been going.

National income has been going up, so that the farmer is receiving, instead of a 12th to a 15th of the national income which he used to receive, he is receiving a small fraction of it today, he is receiving a 30th, and the difference between a 12th of the national income and a 30th of the national income is the farm problem.

Mr. GARVER. Our only point, Senator Anderson, is that this is only to some extent mitigated by the fact that there has been a transition of people out of farming as a source of livelihood.

Senator ANDERSON. Yes, indeed. When farm income goes down that fast, they have to go some place else.

Mr. GARVER. That's right.

Senator ANDERSON. They can't stay on the farm.

Mr. GARVER. That's right.

Senator SCHOEPPEL. That was the question, Mr. Chairman, that I was going to ask of Mr. Garver, when he says that the number of family workers engaged in farming declined from the early postwar figure of 8.1 million, by a total of 1,800,000, it declined more than one-fifth.

Now, to what do you attribute that? Why did they get out of it? Was it because of the economic factor involved or was there a more prospective field somewhere else?

Mr. GARVER. That, too, Senator Schoeppel, was an economic factor, but I think most of them got out because they found better opportunities in other parts of the economy.

Senator SCHOEPPEL. Don't you feel, though, that this drop in farm income and the shrinking of their net dollars left them about only one avenue of real practical consideration, namely, to get into something where you can make a living

Mr. GARVER. That's right. Or make a better living. I think this decline is an important factor in making those other opportunities look better; that's right.

Senator SCHOEPPEL. Then we have had the statistical data indicating that there has been a decline in the overall agricultural farm people?

Mr. GARVER. That's right.

Senator SCHOEPPEL. The farming units, haven't we?

Mr. GARVER. That's right.

Senator SCHOEPPEL. Now, that does not exactly point up a rosy picture, in my way of thinking.

Mr. GARVER. I say later that this is not a rosy picture, and I would agree with you heartily, it is not a rosy picture.

Senator JOHNSTON. Isn't it true that individuals in America, as a whole, seek to go where they can make a better living?

Mr. GARVER. That is a part of our American free enterprise system; that's right.

Senator JOHNSTON. And isn't that at the present time hurting agriculture? Is it not drawing a lot of people from the farms to town? Mr. GARVER. Senator, I could not say that it is hurting agricultureI think it is helping agriculture, because it is leaving the business of producing our food and fiber to a smaller group of people, who thereby make a better living out of it, and I am not so sure that that hurts agriculture. It might hurt it in the sense of taking away population from some areas and putting them in others.

Senator JOHNSTON. You are certainly cutting out small farmers, aren't you?

Mr. GARVER. No, I don't think so.

Senator JOHNSTON. Cutting down on the number, I mean.

Mr. GARVER. Well, there is a reduction in the number of all farms, of course, in all categories.

Senator JOHNSTON. What I mean by that, the small farmer that is just barely making a living, he is the first one to get hurt, he is the one who is going to leave and seek some other place to make a living.

Mr. GARVER. Insofar as the opportunities are better, he is the one that finds those opportunities most attractive.

Senator JOHNSTON. So we are facing a pretty desperate situation as far as the farmers are concerned; isn't that true?

Mr. GARVER. I wouldn't say that it was desperate in that sense. I think the situations are drastic in some areas and in some commodities, but I would not generalize to say that agriculture faces a drastic situation.

Senator JOHNSTON. If the small farm families leave the farmsnaturally, many of them own their farms; isn't that true at the present time?

Mr. GARVER. Some of them do; that's right.

Senator JOHNSTON. If you get a man off of a place that he owns, do you make a better citizen, or not, out of him?

Mr. GARVER. That is a sociological question, Senator. I am not competent to answer it. But some of them get out of the homes they own there and acquire homes in new locations, and new occupations. I don't believe it can be answered categorically.

The CHAIRMAN (presiding). Go ahead.

Mr. GARVER. May I here emphasize that I am citing these figures not to offer a rosy picture-it certainly is not that but because I want to come back to them in a moment for the light they shed on the problem of adjustment in agriculture.

Taken as averages, these figures are a crude measure of adversity in agriculture, although they may, like most averages, cover up as much as they reveal. The same may be said about averages for other segments of the economy. I am sure this committee is familiar with recent studies of another committee of the Congress which show a somewhat similar and disconcerting picture for an important segment of the nonfarm business community, generally designated as "small business." What do they signify? Certainly it is clear from such figures that even in a period of unprecedented economic activity there is adversity for some.

As if the adversity represented by the decline in net income per family farm worker were not enough, mild as it seems to some, the

much more significant factor, in our judgment, is the fact that the farmer feels he is virtually alone in this adversity-that he is going it alone and the wrong way while almost every other major part of the economy is setting new records of high income. It is our belief that the really important basis of farm discontent is this relative adversity. While there is little in this for the farmer to be thankful for, it seems certain from what we know of the nature of the domestic demand for farm products that agriculture would be in a much more distressing position if the whole economy were going backward or receding by as much as 6 percent below the postwar base.

This relative adversity, coupled with the farmer's recognized lack of control over most of his economy, has led to a sense of frustration. Farmers are no different than any other economic group in their motivation. The farmer, like everyone else, wants very much to sell high and buy low. Right now he can do neither. Hence his frustration.

Frustration can find three kinds of outlet. It can be fanned into anger and hate. It can be lulled into resignation and despair. But frustration can also simmer to the point where the individual resolves it by arriving at basic decisions and making basic adjustments by which he extricates himself. I assume that this committee and the Congress would agree that it is not in the public interest either to fan frustration into anger, or to lull it into hopeless resignation. The task before us as a nation, then, is to promote the basic adjustments without which the frustration will continue.

As we see it, there are five primary factors that have combined to make the present situation in agriculture.

The first is the loss of markets. The bulk of this loss is due to the fact that some of the wartime and postwar demands were temporary and excessive in relation to what could be marketed in less critical periods. This applies mostly to export commodities. Farmers themselves know now and knew at the time better than a lot of the rest of the Nation's people that these markets were only temporarily so avidly hungry.

But some part of the lost markets must also be laid to past mistakes in national farm-price policy, in continuing supports too high and too long. That is water over the dam, providing that we collectively learn from those mistakes the lesson they teach. Fortunately, more and more farmers and their leaders, other citizens, and Members of the Congress, are coming to realize that there are definite limits to how much you can play with prices without irreparable damage to the general welfare and particularly to farmers themselves.

The second factor is the size of present stocks of some commodities. The degree to which these stocks are excessive and surplus is largely a matter of point of view and definition. There seems little doubt, however, that they are currently excessive in terms of their impact on the farm price level, helping to keep it too low in terms of the price and income levels desired by farmers faced with their present cost structure.

It seems certain that these stocks are of their present size in large part also because of past mistakes in price policies. Farmers were assured by the Congress during the war a period of 2 years of protection after the war for an extensive list of important commodities as a means of cushioning any possible postwar decline. To the ex

tent that these stocks today are unduly depressing prices, that is the result of having continued accumulating stocks too long, and/or at too high a price so as to make the Commodity Credit Corporation a market for products that should have been sold into use or left in the soil. In this sense the basic readjustment from wartime in agriculture has been too long postponed.

But that, too, is water over the dam. The point need not be labored if we have learned the lesson it teaches.

It should be clear, however, that not all of this accumulation can be fairly blamed upon the so-called mandatory fixed 90 percent price supports. If the cushion assured by the Congress was to mean anything to farmers at all, it was a foregone conclusion that the Gover ment would acquire some amount of commodities during the cushioning at whatever level of support might have been set, unless, of cours the support was set at so low a level as to afford no cushion whatsoever.

Senator ANDERSON. Are you familiar with what the accumulation of stocks was at the end of the 2-year period guaranteed by the Steagall legislation?

Mr. GARVER. I think so, Senator.

Senator ANDERSON. How much was it?

Mr. GARVER. I think it was about 31⁄2 billion, as I remember. Senator ANDERSON. The Steagall legislation expired in 1948. It was extended by another act into 1949.

Mr. GARVER. That's right.

Senator ANDERSON. I doubt if the stocks were that elaborate. We had maybe 400 million bushels of wheat on hand when 250 is required for good housekeeping. You wouldn't regard that as extremely ex

cessive?

Mr. GARVER. No, sir.

Senator ANDERSON. The cotton situation was such that it wasn't extremely excessive. In other words, I am not quite sure that the Steagall legislation was responsible for too much of an accumulation of stocks. It is an important factor.

Mr. GARVER. I think that's right, Senator.

My point here is that even if you had nothing at the end of the Steagall period and you accumulated something, the cushion was promised and the nosedive would have done some damage if there hadn't been some cushion.

Senator ANDERSON. That's right. I am just trying to get out of the discussion the things that aren't really controversial points be

tween us

Mr. GARVER. That's right.

Senator ANDERSON (continuing). Because I think that you agree that the farmer was entitled to some protection

Mr. GARVER. That's right.

Senator ANDERSON (continuing). Because he was asked for larger production.

Mr. GARVER. That's right.

Senator ANDERSON. You don't question that?
Mr. GARVER. No.

Senator ANDERSON. That's fine. Thank you.

Mr. GARVER. The price-depressing size of present stocks cannot be separated in their effect on the price from the third factor, which