Senator Aiken mentioned is correct, that a lot of people are happy about the storage price situation.

What you have said is undoubtedly correct. Wages have gone up. Storage is more expensive. The cost to the Government to store 13 million bales of cotton is so high that you could really put programs forward that would be helpful to the American farmer and would not cost nearly as much.

Senator AIKEN. In those days they were getting contracts to store cotton when they didn't even have a roof to store cotton under. It was the first subcommittee of this committee that I ever sat on and Senator John Bankhead was chairman of it. It certainly was a good initiation into the operations of some people who claimed to be great friends of the farmers.

Senator MUNDT. Roughly, Clint, if you have it in mind, what does it cost to store that 13 million bales of cotton?

The CHAIRMAN. About 30 cents a month, I think.

Senator ANDERSON. Thirty cents a month a bale.

Senator AIKEN. I think the Secretary's letter said that the storage charges equal the cost of a bushel of wheat in 8 years. I don't know how long it takes in the case of a bale of cotton, but they will equal it up pretty fast.

Senator ANDERSON. I think it is about $4 million a month to store cotton.

Senator MUNDT. I think we could have our clerk find that figure out. It would be nice to put it in the record at this point.

Senator JOHNSTON. I think you are going to find from this investigation, too, that we should go thoroughly into the storage business throughout the United States.

The CHAIRMAN. Will you find out for us what the average cost is for storing cotton per bale per month?

Senator JOHNSTON. Also find out what we store in South Carolina. Senator MUNDT. The total figure.

(See p. 3580 for information requested above.)

The CHAIRMAN. There is another charge made, Senator Anderson, with which I am sure you are familiar, in that in years gone by the millers in the case of wheat and those who make feed in the case of grain, and then spinners who handle cotton, used to handle large inventories. They used to pay the freight and the storage and that was included in the cost.

Today they don't do that because they can get what they want from the Commodity Credit Corporation.

Senator ANDERSON. I couldn't agree with you more. I mentioned one day--I don't want to mention the name again-the name of an individual who used to spend all of his time buying for one group of cotton mills alone. Their mills are located in Senator Johnston's State.

He told me the other day that he doesn't have to worry at all. He doesn't buy any cotton. When he gets ready for it, all he does is take it out under the loans. They don't have to stock it. The Government is carrying what he normally would carry in stocks.

That depresses farm prices, it adds to the cost to the Government, and it would be changed if there was a little bit of scarcity brought into the picture, instead of all this surplus.

The CHAIRMAN. All right; proceed, sir.

Mr. GARVER. By making inducements sufficiently generous, in terms of surpluses, or their equivalent, for participation in the acreage reserve, presumably substantial reductions in output could be achieved. The short-run effects of this could be unfavorable, however, because presumably participants would expect inducement approximating the yield of the land in the reserve; and if the inducements are of this order, the surpluses sold into markets would tend to offset any buoyance in the markets in response to the reduced output.

Senator JOHNSTON. Why would that be so?

Mr. GARVER. I think it would be because if you give as a rental inducement virtually the equivalent of the amount that would otherwise be produced, you are only substituting Commodity Credit stocks for what would be produced, so that it takes away virtually all the lift you are trying to give.

Senator JOHNSTON. Isn't that an infinitesimal amount, considered with the national income?

Mr. GARVER. Senator Johnston, I don't see how it could be infinitesimal if you are going to make it a very substantial amount with the large amount of acreages.

Senator ANDERSON. Do I understand you correctly? Do you mean that if you put 13 million bales of cotton back into the domestic market, and they knew it, this would tend to take the buoyance out of the market? And if you take the wheat surplus and feed it back on the market, you are going to hold down the price of wheat?

Mr. GARVER. That's right.

Senator MUNDT. It isn't that simple. At the end of year No. 1 suppose you are down to 9 million bushels of carryover, year No. 2 you are down to, say, 6 or 5 million. By the end of year No. 2, it seems to me, you would begin to realize that this Government storage program is coming to an end, and there would be buoyancy coming into the market from that source, would there not?

Mr. GARVER. That is why I said the short-run effects would be unfavorable, Senator.

Senator MUNDT. I am trying to show how short-run it actualy would be. It might be a year or two of short-run effects.

Senator ANDERSON. To get rid of a billion bushels on top of what we are now producing?

Senator MUNDT. About 4 or 5 million.

Senator ANDERSON. Four or five hundred million?

Senator MUNDT. You have got 13 million carryover. If you chop off 4 million, 1 year

Senator ANDERSON. Four million?

Senator MUNDT. Yes.

Senator ANDERSON. With reduction in acreage from 24 million acres down to 17 million acres, we built up a million bales this last year. If we cut it down 20 percent, which is extravagant in anybody's estimate, you would still have a figure of about 12 million bales, and we haven't got a disappearance that is that much.

But you steadily keep feeding and have this other cotton available, and no cotton producer has a chance to get a better crop as long as he knows that the whole 13 million bales eventually is going to wrap itself around his neck.

He just can't wait that long.

Senator MUNDT. Until it begins to operate, Clint. When your carryover gets smaller, then certainly that would have a buoyant effect on the market, I would think. That is the old law of supply and demand, which would have been completely validated.

Senator ANDERSON. I think that is true. I simply say if you knew definitely that that surplus was going to disappear and knew it was not going to be fed into the American market, then I think you would see a tremendous response in the American market.

Senator MUNDT. There is no question about that. We have not been getting that job done, though.

Senator ANDERSON. That's right.

Senator MUNDT. We pass laws and it doesn't happen.

Senator ANDERSON. And the Senator from South Dakota was helpful in trying to get something through that ought to have done that. Senator WILLIAMS. But would not the effect of disposal of these surplus commodities in our market be as Senator Anderson describes it here? Naturally it would depress the price during the period in which they are disposing of them in this market, below the support price.

Would not that likewise mean that 100 percent of all the cotton or wheat, or whatever the commodity is involved, that is being produced it would then automatically all go into Government storage, the Government would be the sole operator, either buyer or seller? Isn't that the almost inevitable effect? It would be utterly impossible to sell any commodity in the free market.

Senator SCHOEPPEL. Mr. Chairman, I want to point out here, I hope the impression has not become prevalent, though, that it is the thought and the idea to feed these surpluses rapidly into either the domestic market or the markets that control our domestic markets, to have that depressing effect.

I think, from all the indications that I have seen certainly, certainly statements made and thoughts expressed, they are to the effect that this is not going to be accomplished in any 1 or 2 years. It is going to take, maybe, as much as 4 years, and I have heard the term 5 years used, and maybe longer.

Now, I am sure that is the way we are going to try to approach this thing. Sure, if we go in here with these storage figures that we have today on wheat, and let it get out, or let a policy be determined that it will go into the domestic market either for feed or some other type of use, why, it is going to have a terribly depressing effect.

But that is not the idea. And I would not want to get into this. record at this stage, or the impression, that it is going to be done in the next 2 or 3 years. I think it is impossible to do it for a 2- or 3-year period. I think you are going to have to stretch it out beyond that period of time, and you are going to have reduced acreage, on top of it. Senator ANDERSON. I am only thinking, Senator Schoeppel, of how Senator Mundt would get along if he called a meeting of his farmers and said to them, "We have got a fine plan; in 5 or 6 years you are going to get some benefit from it."

They are talking about getting something done for them now. That is his problem, and it is the problem of all the people around this board. That is the viewpoint that we have to take a look at.

Senator AIKEN. Senator Anderson, do you think it is safe to depend on the income from sale of commodities alone to finance the acreage reserve program?

Senator ANDERSON. NO.

Senator AIKEN. That is the section of the bill, the administration's bill, which I think could get us into trouble if enacted just as it is, because he is required to sell on the open market enough commodities to meet the cost of this particular phase, and in the same paragraph he is not permitted to sell on the open market if such sale tends to depress the price.

You have got a contradiction in there, perhaps, if you come to put it into practical effect, and I think we want to take a pretty close look at that method of financing, Mr. Chairman.

Senator MUNDT. I think that section of the bill has got to be changed very substantially, because my concept of this whole program from the presentation is not 100 percent of the money to go back to the farmer from the sale of surplus commodities.

If that were the concept, I would have to agree with you it would have that depressing effect. But to the extent that a farmer cashes his negotiable certificate for cash, and the money that he gets comes from some other source than Commodity Credit, I think that begins to have an immediate benefit to the farmer.

Senator ANDERSON. So do I.

Senator AIKEN. I think we have got to be careful on that provision. Senator THYE. Mr. Chairman, I do definitely want to be on record on that question. As I understood it from the Secretary's statement, it would be optional whether the farmer took a cash certificate or desired to take the commodity as a supplement to his own feeds grown on his farm unit.

I would never have been a cosponsor of the bill had I known that that paragraph had the language that it does.

I only was governed by what the Secretary had said, and not by the interpretation of the language in the proposed bill that was laid before this committee.

I want to be crystal clear on the question. I would not be a party to any such proposal, because that could break your grain market the moment the Secretary tried to administer those provisions as presently written in that paragraph.

The CHAIRMAN. Well, the Senator will remember that when this committee first met, I suggested that instead of drafting bills and putting them before the Senate, they might send their ideas to us and let us come out with a committee bill. That is what I had in mind,

really.

Senator AIKEN. Mr. Chairman, with hundreds of requests for the bill, you couldn't do much else but have a bill.

The CHAIRMAN. I know, but we are the ones that are going to be responsible. I felt that they could wait until we drafted a bill. Senator AIKEN. I have constituents who wanted a bill to read. The CHAIRMAN. I understand that, but we have ideas here. We have a bill drafted-had a bill drafted by our staff here, based on the hearings we held last fall.

Now, that was a starter. We are receiving the views of the farm organizations, with a suggestion that they put theirs into the form of a bill to present to the committee, not to the Senate.

The same suggestion was made to Mr. Benson, so as to put into legal language his proposals and let the committee consider it, and then let the committee draft a bill and present it to the Senate.

Senator JOHNSTON. Anything that has been done, though, they can do as they please.

The CHAIRMAN. Why, sure they can.

I understood yesterday the mere fact that the bill was introduced by the Department, why, it had a terrific effect on the grain market. Prices went down.

Senator AIKEN. Prices went up yesterday, according to this morning's paper; not very much, but up some.

The CHAIRMAN. They might have put a different interpretation, then, on that section of the bill.

Senator AIKEN. If you were getting the requests for the bill, you would have had to had something for them to read, and this provision is not in your bill at all. If it hadn't been in here, it might not have got caught, at least at this stage of the game, and this defect might have caused us trouble later. Since it is in here, witnesses are calling our attention to something that has to be straightened out.

The CHAIRMAN. But, Senator, if all of the bills had been put in legal form and were submitted by the Department to us, it would have been open to the public, the public would have gotten it. Within 6 hours after the bill was printed, I gave it out to everybody. All these newspaper boys got it, and they could have done the same thing with the other, and not made it a Senate bill.

What I had in mind when I first started, was to put it in legal form, put in legal form the views of the Department, the views of the committee, from the hearings-not to bind anybody, but based on the facts that we gathered last fall, and then the various organizations could have done the same thing. We would have made all that public, and let the committee then come in and draft its own bill.

Senator AIKEN. You would not want several sets of committee prints out; would you?

The CHAIRMAN. No, no.

Senator AIKEN. Would this have been printed as a committee print? The CHAIRMAN. No; it would not. It would have simply been publicized as the views of the administration in legal form. It could have been sent here to the committee, but that is all water over the bridge.

Will you please proceed, Mr. Garver.

Mr. GARVER. If the priority is given to reduction in output, the conservation objective may become to some extent obscured because again the tendency would necessarily be to concoct conservation aspects in some situations in order to provide a respectable basis for participation.

Whatever the scale of priorities, certain relationships will be important to the success of any soil-bank plan that may be tried. Participation should be on a voluntary basis. The choice in the use of his land, labor, and capital should be left to the farmer. Given sufficiently generous inducements, we believe substantial farmer participation in a program of this type can be achieved. However, if the inducements are only in the form of aids or cash which the farmer is required to put into practices and performance for strictly conservation purposes, the inducement will not constitute the kind of supplementary income that some are asking for farmers at this time. Senator SCHOEPPEL. Mr. Garver, could you suggest quickly-and I know it is probably an offhand suggestion-what those inducements, in your judgment, should be?