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products. We must have a safety reserve of food and fiber. But, today, we do not have such a reserve firmly established as national policy.

The principle of the set-aside should be made permanent and effective against the dangers of weather, war and rapid changes in economic conditions. Congress must decide what part of the present 7 or 8 billion dollars' worth of CCC supplies is needed as such a reserve for the general welfare. When this is established, steps should be taken to inform the public so that there will be a proper understanding of the costs of maintaining such a supply of the necessities of life.

A second reason why a firm policy on reserves is needed is so that the size of excess surpluses can be definitely and officially known. The emphasis of the proposals made by the President is on reducing surpluses by cutting down on acreage. If acreage reduction is to be the primary means for reducing surpluses, we must know how much they must be reduced. Only then can we translate such goals into the number of acres and the amount of payments necessary to do the job. Further, it is up to the Government to indicate in very specific terms what types of wheat and other commodities and what specific areas are involved.

The farmer's cooperation to make such an acreage reduction program effective will rest on the attractiveness of the incentives offered him. If these rewards do not increase the farmer's take-home pay, he will turn his back on the program.

I understand well that this committee is anxious to deal quickly with the immediate emergency, but we must develop also a comprehensive, long-range program to put agriculture on a sound business basis. Farm income must be established at a par with the earning power of capital and labor in other occupations. Therefore, I shall list some recommendations which I shall be glad to discuss later in greater detail, if the committee desires.

1. Price supports should immediately be raised to full parity.

Farm income is at least $8 billion below parity, with little hope that it will rise in 1956, unless price supports are raised. A business recession would make the picture worse.

The old parity formula should be continued for basic crops until a new and up-to-date formula can be devised by Congress.

The problem of dollar limitation on price supports poses a very difficult question. In our judgment, a limit of $25,000 to any one farm or farmer should provide some protection to the family-type farms.

2. Permanent set-asides of feeds and other commodities are urgent. Feeds are not now included in the set-asides. At least a 4-months' supply of feeds should be on hand at all times. No doubt other strategic commodities should also be added to those now included.

3. To cut back the feed supply sharply, soil-bank payments must be high enough to be effective in high-yield areas.

4. The acreage-reserve program for wheat, cotton or any other crop should return to farmers parity income from the diverted acres. Payments for further acreage cuts should be based on full parity supports, not upon the lower supports now in prospect for 1956. 5. Corn must be kept as a basic commodity.

Under no circumstances should corn supports be left to the discretion of the Secretary. Other feed grains must be supported at least in line with corn, if the program is to work.

6. Government sales in the domestic market should not be made at less than 105 percent of the support price plus carrying charges. The proposal to lower this figure to 100 percent would just cut farmers' prices in the market place accordingly.

7. Storage deducts and private swaps of grain should be outlawed. Arbitrary deductions for prepaid storage, now administratively taken off parity loan rates, appears to violate what Congress intended for price supports. Private exchanges between Commodity Credit and the processors violate the general principle of good government requiring public bids, and depresses prices in the market place.

8. Farm excise taxes could be used to finance the farm program. About $412 billion a year are now collected in taxes on tobacco, sugar, and alcohol. These revenues are more than enough to finance an adequate farm program. Such funds have been used for sugar for more than 20 years.

9. A food-stamp plan should be started immediately.

No American should lack a good diet while we have farm surpluses, but the cost should be charged to national welfare, not agriculture. 10. Emergency loans should be made available now to save farm homes.

A feature of the President's message that pleases us is his recommendation of special farm credit to protect farm families. Many younger farmers, especially GI's, are in danger of losing their homes this year unless emergency action is taken. Their homes are worth more to the Nation than the pride of those who preached eliminating the "inefficient."

11. A special program to modernize or replace farm homes is needed and would be possible if farm incomes were raised.

Present Federal housing aid discriminates against farm homes, which lag far behind city housing.

12. Recommendations to the United States Department of Agriculture of all advisory committees should be available to the public and not kept secret as at present.

If I may depart for just a second from the text

Senator JOHNSTON. What do you have reference to there? You say "kept secret."

Mr. THATCHER. Do you mind if I go ahead?

Senator JOHNSTON. Yes. Go ahead. We will not interrupt you. Mr. THATCHER. I should like to state here, out of the text, that we have just received from the printer and sent to all Members of the Senate and many Members of the House of Representatives this bound volume we refer to as our Farm Family Survey It has been sent to all of you, and I assume that it is in your office. I know that some of the Senators have received it.

Senator JOHNSTON. Yes. I have one.

Mr. THATCHER. The farm income survey that I referred to above is an outgrowth of my long-time awareness of the critical need for more complete information as to how farmers are doing. In the spring of 1952, testifying before the Senate Committee on Agriculture, I expressed regret at not being able to present a detailed report on the individual farmer's financial situation. Today, I am able to present you with the results of an authentic survey of what has been happening to the receipts and expenses of family-operated farms and the net income available for family living.

The survey covered the operations of 4,320 family-operated farms in 29 counties in the 5 States of Montana, North and South Dakota, Minnesota, and Wisconsin, for the 5 years, 1950 to 1954. Results for 1955 are now being assembled, and I hope to be able to supply you with the full 1955 data before the Senate debates the farm bill. I do have same preliminary information here with me.

This is not just another ordinary farm survey. It is, in fact, an unusual cooperative effort of several thousand farmers who were willing to open their tax returns to our auditors so that we might have access to the very data filed with the Bureau of Internal Revenue.

I recommend, without hesitation, that each of you peruse the copy of the report that has been placed before you. As a minimum. I would urge you to read the few pages under the heading, "What the Survey Shows About Farm Income"-pages 19–34.

Here is a graphic, realistic portrayal, county by county, of the postwar downward trend in farm income, the persistent upward trend in costs of production, and the generally inadequate level of net income. Here you will find verification of the fact that farmers in this region since World War II have not been able to earn both a moderate return on their essential investment and a moderate return for the long hours of farm-family labor. Income for 1954 would return only 77 cents per man-hour, with no return for an average investment of $12,000.

The returns for 1950-54 show depressed conditions throughout the entire period except for limited areas in years of exceptional yield. Prices received by farmers have gone down while everything they must buy has gone up. Farmers have increased production to attempt to make ends meet, thereby driving prices still lower. Returns for 1954 were about 25 percent lower than 1950, itself a badly depressed year for farmers. Further declines in 1955, and indicated for 1956, will make these income figures still smaller, and raise the size of mortgages.

As of the time of survey, farmers reported they needed an average of $5,000 per farm for repairs, new equipment and new buildings needed for farming.

Many farm homes were lacking some of the most essential facilities. such as running water or central heating, which have been enjoyed by city people for a generation or longer. Insurable valuation of farm homes indicates many new homes are needed, and very few have been built since 1920. Average needs for housing and home equipment are 2 or 3 times what is needed for farm production.

If farmers were making fair income, they would provide a tremendous market for capital goods, estimated to be at least $5 billion just in these five States.

The low incomes brought about by low prices, as revealed by this survey, go far to explain the startling loss of farm homes now shown by the 1954 United States census. In these 5 States, between January 1950, and the fall of 1954, 38,000 farm homes have disappeared. That means 1 family in 13 gave up trying to live the life of their training and choice. In 1955, more farm homes have disappeared, and the prospect for 1956 is bleak. Our figures show that even the biggerthan-average family farms are in difficulties.

Nearly half of the farms had been taken over since the war by their present operators. Now, many older men are near retirement. With present depressed conditions, their farms will go to the biggest opera

tors instead of to younger men. Many more farm homes will be wiped out unless the positive steps that I have outlined above are taken to aid family farms.

Senator JOHNSTON. Do you have some questions?

Senator HUMPHREY. Yes, I do, Mr. Chairman, unless you want— Senator JOHNSTON. Go ahead.

Senator AIKEN. We will proceed beginning at the foot of the committee?

Senator JOHNSTON. Do you want to ask some questions?

Senator AIKEN. I do not care.

Senator JOHNSTON. Go ahead.

Senator HUMPHREY. No. I will yield to you. I will take my turn. Senator JOHNSTON. Yes. All you have to do is open your mouth and start to speak.

Senator AIKEN. That is all right. Go ahead, Senator Humphrey, if you want to. I just wanted to know what order we would go in. Senator HUMPHREY. You go ahead, Senator, because you are in seniority here.

Senator AIKEN. I take it, Mr. Thatcher, that you do not feel that we have too many farms today? You feel that we should preserve the number of farms that we have now?

Mr. THATCHER. I think there are constantly some farms that are going to go out of existence.

Senator AIKEN. Are you familiar with the report made by a committee, I think of which Mr. Keyserling is president, and has Mr. Patton, Mr. Reuther, and about a dozen others on it, that recommends a reduction of 950,000 of the smaller-sized farms over the next 4 years? Mr. THATCHER. I did not know that until I read an editorial about it 2 days ago.

Senator AIKEN. Were you surprised

Mr. THATCHER. Yes; I was.

Senator AIKEN (continuing). To find that that recommendation was made? And I think Jim Patton sent these books around recommending that we reduce the number of the smaller farms by about 950,000, and increase the number of the next, middle-sized, 400,000, and retain the number of giant farms we have now.

The book is, Full Prosperity for Agriculture, published by the Conference on Economic Progress.

Mr. THATCHER. I have not read it.

Senator AIKEN. It is on the last page, page 108, where the recommendation for reducing substandard farms is made, from 1,300,000 as of 1955 down to 350,000 in 1960. Then they would take the middlesized farms and increase them from 1,600,000 to 2,000,000 by 1960; the moderately-sized farms, or the somewhat larger farms, would be increased by 400,450, and the large, giant farms, would remain at 100,000, as they are now, making an overall reduction of 400,000 farms in the next four years, or 100,000 a year.

I wondered if you were familiar with that.

Mr. THATCHER. I am not familiar with the statement you read. I do not know on what they base that. Offhand, I do not approve it. I will stand on my statements, and whatever this institution has doneand I am a sponsor of it

Senator AIKEN. Yes; you are. I had not noticed that.

Mr. THATCHER. Yes; I am.

And I read an editorial where I was questioned about my belief about these farms.

What the organization did and what they recommended, I am not yet aware of. I will say this: I have been both a Republican and a Democrat, and I have never fully agreed with either party, and although I sponsor something, I am not bound by its conclusions at all. I am bound by my own testimony; I am bound by my own survey and my own comments, and I would be glad to be questioned for a month on that.

Senator AIKEN. I would like to read into the record the names of this national committee which recommends a very large reduction in the number of farms over the 4-year period. It begins with Thurmond Arnold. I think they are all well known:

Thurmond Arnold, attorney; former Assistant Attorney General, United States, and judge, United States court of appeals;

William H. Davis, attorney; former Director, Office of Economic Stabilization;

Abraham Feinberg, chairman, Julius Kayser Co.;

Richard H. Frost, president, National Pneumatic Co.;

A. J. Hayes, president, International Association of Machinists; vice president and member, executive conclave, I guess it is—American Federation of Labor;

Fred V. Heinkel, president, Missouri Farmers Association;
J. M. Kaplan, president, Welch Grape Juice Co.;

Leon H. Keyserling, economist and attorney; former chairman, President's Council of Economic Advisers;

O. A. Knight, president, Oil, Chemical and Atomic Workers; Murray D. Lincoln, president, Nationwide Mutual Insurance Cos.; Armand May, president, American Associated Cos., and American Factors Co.:

James G. Patton, president, National Farmers Union;

Miles Pennybacker, president, Voltarc Tubes, Inc.;

Walter P. Reuther, president, Congress of Industrial Organizations and United Automobile Workers;

Marvin Rosenberg, chairman, Cameo Curtains, Inc.; and

M. W. Thatcher.

The reason I asked about this book was that I thought your testimony was rather contradictory to what this committee recommends. Mr. THATCHER. It may be. I am not familiar with its contents. I do not know what kind of surveys they made.

I want to add, however, that I know most of those men very well and I am very proud to be associated with them on any project that they undertake.

Senator AIKEN. I know most of them. But it was surprising that they should be lambasting some of us who said that we did not think we could stop the reduction in the number of farms, and then coming out and recommending reducing the number of small farms 950,000 in their own report.

However, that is not what I wanted to ask you about. A month or so ago there was in the press generally throughout the country an excerpt from an address made by Harold Stassen in St. Paul, which disturbed some of us considerably, and I quote from that address. He says this:

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