not only farm machinery but also cotton gin machinery and oil mills, the most modern ones in the world.

The CHAIRMAN. Do many of the large concerns that you have mentioned produce cotton in the States?

Mr. PATTESON. I think some of them do; yes. I know they do.
The CHAIRMAN. Proceed.

Mr. PATTESON. Immediate action is needed to reverse the dangerous trends inherent in our current cotton policy. We offer the following recommendations to meet the problem:

1. Action to regain and return a fair share of the world market for United States cotton-5 to 5.5 million bales-and adoption of such competitive pricing devices as may be necessary to insure this export volume.

As has already been noted, the CCC already has the authority to sell competitively in world markets. That they have not used this authority is a clear indication that they will not do so in the future unless so directed by the Congress of the United States.

It is also significant that nearly all other countries stimulate exports by the use of some type of Government export pricing programs and that such devices are recognized as standard practices in international raw cotton marketings.

2. Improve reasonable and equitable import restrictions against cheap foreign textiles.

Senator EASTLAND. And now, let me ask you something about that point.

Go ahead please, that is all right.

Mr. PATTESON. On September 10, United States customs collectors put into effect sharply lowered tariff rates on cotton textile imports. These new rules were agreed to by the State Department in June 1955, for the purpose of building up the Japanese economy. Japan already enjoys a competitive cost advantage over our domestic mills because of access to lower priced cotton and cheap labor. According to the International Cotton Advisory Committee, Japan now has about one-fourth of the total world trade in cotton goods. Japan is buying 3 out of 5 bales of their cotton requirements from suppliers other than the United States. Imports are increasing rapidly and the lower tariff will boost the volume of cotton goods, fabric, apparel, towels, sheets, etc., entering this country to be sold at prices under levels which can be met with our mills. The importation of large quantities of foreign textiles will not only displace goods produced in this country but will add to our raw cotton carryover by cutting sharply into the consumption of cotton by United States mills.

Senator AIKEN. Then, Mr. Patteson, if we sold our cotton on a competitive market, that would not give the Japanese textile mills any greater advantage over our textiles, would it, if they are already buying the majority of their cotton at the world market price somewhere else? If we sold at that same price, they would not get additional advantages; would they?

Mr. PATTESON. No. But what we think, though, is that instead of lowering the tariffs, what we should do, you see, is to have import quotas in order to protect our mills from this competition.

Senator AIKEN. If you lowered the quotas too far, you would not be forcing the Japanese to buy all their cotton somewhere else; would you?

Mr. PATTESON. No; I do not think so because we would be selling the world market then and there would be no cause for them buying their cotton from these other countries.

As it is now, they can buy Mexican cotton, for instance, for from 6 to 8 cents a pound, or they have this past season; also, Canada, for instance. I do not think we have sold Canada any cotton this year, and I think up until this year, probably, we have sold them about 400,000 bales a year. Now, this year, they have gone to Mexico and bought practically all of their cotton requirements.

Senator AIKEN. Of course, we have not bought any oats from Canada this year, either. So it is rather complicated.

Senator EASTLAND. Now, you spoke of the State Department blocking an export program, and you spoke of four big international cotton corporations. I want to ask you this question. Is it not your judgment that those four corporations control the cotton policies of the United States State Department?

Mr. PATTESON. Senator Eastland, I would think that up until this year they have controlled not only the State Department, but the Department of Agriculture. There has been a change of heart in the USDA in the past 9 months.

Senator EASTLAND. Well, Agriculture has worked for this program; has it not?

Mr. PATTESON. Yes.

Senator EASTLAND. And it has been blocked by the State Department?

Mr. PATTESON. Yes, indeed.

Senator EASTLAND. That is correct.

Mr. PATTESON. That is right.

Senator EASTLAND. Now, do you not think that those big corporations, that it is not a Mexican industry, but that the foreign cotton policy is being cut by the State Department to enrich 4 or 5 big corporations?

Mr. PATTESON. Well, now, Senator, I would not

Senator EASTLAND. Is that your judgment?

Mr. PATTESON. I would not go that far.

Senator EASTLAND. Well, it is mine.

Mr. PATTESON. I think that might have some influence with it, all right.

Senator EASTLAND. Of course, it does.

Mr. PATTESON. Because they do have influence over there. I do not think that they are entirely responsible for the predicament that we are in right now.

Senator EASTLAND. You do not think that they are responsible for the State Department's veto of an export sales program of cotton?

Mr. PATTESON. Well, in talking with the State Department-we have had several meetings with them in the past 9 months the biggest argument the State Department has put up to us is the fact that they could not afford to sell our cotton competitively with these foreign countries because they were friends of ours, and

Senator EASTLAND. Yes; but the cotton that they were prohibiting being sold competitively was the cotton that was financed by these 4 or 5 big concerns; was it not?

Mr. PATTESON. Yes; I think partially, of course.

Senator EASTLAND. Of course, it is.

The CHAIRMAN. Proceed.

Mr. PATTESON (continuing). We recommend that the basis for the loan be shifted from Middling seven-eighths inch staple to the average grade and staple of the crop or to Middling 1 inch, whichever the USDA deems most desirable; that premium and discount schedules be revised; and that 90 percent of parity price supports be established and maintained until our carryover is reduced to normal.

In justification of these proposals, it may be said that the loan for other crops is based on average grades and that the basis for future contracts is being shifted to Middling 1 inch this year. This change together with the reduction, under the new parity formula, will bring per pound cotton prices down about 3 cents. This represents the maximum cut that cotton farmers can absorb. Particularly is this true in the light of an inflated national economy and rising produc tion costs.

One change in the law applicable to cotton acreage allotments is desirable and practical at this time. With the drastic cuts in acreage, county and State committees in many areas find it impossible to prevent real hardships on small farms by use of available reserve acres. We recommend a national reserve, not exceeding 1 percent of the national allotment, to be allotted to States on the basis of need for small-farm adjustments. Such a reserve, which should be over and above the national allotment, if used to provide minimum allotments of 4 acres, or the highest planted in the last 3 years, whichever is smaller, would make a substantial contribution toward enabling small-cotton farmers to achieve better incomes.

The CHAIRMAN. How much, in your opinion, would that raise cotton production?

Mr. PATTESON. That would raise it less than 100,000 bales.

The CHAIRMAN. Less than 100,000 bales?

Mr. PATTESON. Yes, that is right. In other words, it would amount, Senator, to about 150,000 acres, and on these small farms, most of them are hill farms, and so forth, and the production per acre is not as great as it is on the Delta farms.

So the chances are, it would be, as far as baleage is concerned, less than 100,000 bales.

We are opposed to the "acreage reserve" of the soil-bank bill as it pertains to cotton-surplus reduction.

There is every reason to anticipate that withdrawal of domestic cotton acres would continue to be matched by increasing acreage abroad. Commodity purchase certificates would fix the market price of cotton at or near the face value of the certificate, channeling all current production into the Government loan. Administration of such a program would be complicated, expensive, and deleterious to many or most of the normal market outlets.

It is not contended that the soil bank as a conservation program is without merit. It is urgently suggested, however, that the entire cotton industry, and the entire cotton economy, have a big stake in any governmental cotton program. The dispersal of surplus cotton through the soil-bank withdrawal plan would have the effect of reducing the flow of dollars and a corresponding reduction of income in the cotton economy. Any small temporary relief to the cotton

producer would be overshadowed by market losses and a permanent economic blight on the cotton community.

We are also opposed to mandatory provisions which might be designed to further cut back cotton allotments. Individual farm allotments have already been reduced to uneconomic levels. In the Mississippi River Delta area, normally considered an area of greater than average efficiency, allotments for 1956 average about 30 percent of cropland. In most cotton areas, farmers have few alternate crops that offer opportunities for profit, and these crops are also under allotments. What industry could operate utilizing only 30 percent of its assets?

The CHAIRMAN. Would you oppose this acreage conservation even though the farmer were paid the profits that he would have made had he planted?

Mr. PATTESON. I think this, Senator, that if the payments are large enough, there is no question in the world but that you will get some acreage put into acreage reserve.

The CHAIRMAN. In other words, as I see it, it is a device intended to reduce our surplus.

Mr. PATTESON. Well, Senator, we cannot

The CHAIRMAN. If you cannot sell it abroad and use it at home, and this huge amount of cotton keeps on dangling over the market, it is bound to keep on depressing the market.

Mr. PATTESON. It might slowly reduce your surplus by selling that cotton in the domestic market. That is the way it would have to be sold. But in the meantime, you see, we are cut back to a 10 million bale production for this coming year, anyhow. We are receiving another 10 percent cut. Then on top of that, you see, if 20 percent of this would be taken out, that would bring us back to an 8 million bale crop.

The CHAIRMAN. Yes. But you are saying something now that did not take place last year. Last year on a million and some-oddthousand acres less than you had the year before, you made almost 2 million bales more cotton.

Mr. PATTESON. I think we have an answer to that, too, Senator. The CHAIRMAN. I wish you would give it for the record.

Mr. PATTESON. Well, you know in the last 4 years, in the South, we have had more or less of a drought each summer, you know, until last summer when the rains came just at the right time. And we feel that all the fertilizer

The CHAIRMAN. You mean the weather was unusual?

Mr. PATTESON. The weather was unusual. It is something that has never happened before, and I am sure it is something that will never happen again. It might 10 years from now but the law of averages is that we will never have the weather conditions and that type of again.

crop

Now, I have on a little farther down here, but while we are talking about it, in 1950 we had about 18 million acres of cotton and we produced only 10 million bales of cotton. I know people are saying that we are learning how to farm better and more fertilizer, etc., but in our section we are farming about the same now as we were farming in 1950.

Now, we might be putting a little bit more fertilizer and poisoning a little bit more to control the insects better but I see no reason in

the world not to believe that it is entirely possible next year or the year after next, on 17 million acres of cotton, we might produce only 7 million or 8 million bales. I think it is entirely possible, and this tremendous crop that we had this last year, it was just a gift of the Lord, that was all.

The CHAIRMAN. All right, proceed.

Mr. PATTESON. We are opposed to limitations on price supports and graduated price-support scales. Such policies would cause distressed selling of farm commodities and would disrupt marketing procedures. We are opposed to quantity allotments. Such a program would remove the incentives for efficiency and increased productivity in American agriculture that have enabled the farmers to meet increasing costs, the demands of an expanding population, and, at the same time, supply vitally needed food and fiber for national defense. Except in time of national emergency through price ceilings, it has never been the policy of our Government to establish maximum limitations on productivity. To establish maximum limitations would push farmers still further behind in terms of efforts to attain comparable productivity and comparable incomes.

Present cotton market prices are determined by loan values and depend upon eligibility of every bale of cotton to Government loan. Withdrawal of the floor beneath any substantial part of the current crop will degrade market prices, and will react to the disadvantage of every farmer, large or small.

The proposed dollar limitations on price supports and various proposals for reduced loan levels for different dollar volumes strikes at the heart of orderly marketing as a factor in farm income stabilization for storable commodities. The critical need for orderly marketing was recognized by Secretary of Agriculture Ezra Taft Benson, who urged cotton growers to spread out the marketing of their 1953 crops in an official statement issued September 14, 1953. A copy of the statement is provided for the record.

It says in part:

"As we enter the period when cotton will be harvested in heaviest volume, it is very important that producers market their crop in an orderly way." Secretary Benson said additionally, "Producers themselves can do a lot to promote continued stability by avoiding unnecessary marketing during the September-November period. In most years about four-fifths of the crop is harvested during these months, and the danger of market congestion is greatest at that time. The experience of other years has proved definitely that orderly marketing pays in better returns to the producers."

Senator Clinton P. Anderson, a member of this committee, when he was Secretary of Agriculture recognized orderly marketing and the use of CCC loans as a major tool whereby farmers could help themselves in meeting temporary gluts in production. It appears to us that unrestricted access to CCC loans is highly essential for storable commodities.

And I think, Mr. Chairman, that every Secretary of Agriculture that we have ever had recommends the same thing.

Mr. Benson indicates that the acreage reserve is needed to provide "room" in the market by a further cutback in current production. For export commodities like cotton and rice it will be to no avail unless effective programs are put forward to sell our cotton and rice at competitive prices abroad. Otherwise, both friendly and Com