(a) Action to insure a world market of not less than 5 million bales of American cotton each year; and adoption of such competitive pricing devices as may be necessary to insure this export volume.

(b) Impose reasonable and equitable restrictions against cheap foreign textiles.

(c) Revise the loan program to eliminate, eventually, undesirable cotton. It is suggested that this adjustment be made through a premium and discount system aimed at discouraging the production of low-grade cotton.

(d) Change the loan base from Middling inch to Middling 1 inch. In justification of this proposal, it may be said that the loan is supposed to be based on the average grade and staple, that the present average will support the view that Middling 1 inch is the proper and legal loan basis. By no means should this proposal be justified as a means of discouraging production of low grade cotton, since the CCC Board approves the schedule of premiums and discounts, individually, for each loan program.

Unless the differentials are broadened, a change in the loan base would result, simply in a price cut of the same degree on any and all grade and staple combinations.

(e) One change in the law applicable to cotton acreage allotments is desirable and practical at this time. It is suggested that a national reserve shall be established and allotted to States on a basis of need for small farm adjustments. Such reserve might provide minimum allotments of 4 acres, or the highest planting in the 3-year period preceding the allotment year, whichever is smaller.

(f) A Government study regarding the effect of price upon cotton consumption in both domestic and foreign markets is absolutely essential.

(g) Drastic revision or outright suspension of all foreign aid programs tending to stimulate production abroad of commodities already in surplus supply in the world market, or on which production is curtailed within the United States, is also essential.

(h) Ninety percent parity price supports should be established for the 1956 crop, and should be maintained until such time as present conditions have been corrected by a long-range program.

This suggested short-term approach would have the effect of regaining a fair share of the world market for American cotton, while providing reasonable protection for the American cotton industry against cheap foreign labor and lower manufacturing costs. Undesirable cotton would be eliminated from the loan. The proposed change in the loan base would recognize the trend toward higher quality cottons. Small farms would be recognized as a national responsibility and provided for accordingly.

An accurate and authentic price study would be available for development of future programs. Curtailment of foreign aid would take the Government out of dangerous, indirect competition with the American cotton producer to whom it owes its protection.

It is recognized that the suggested course anticipates a cut of approximately 10 percent in the price of raw cotton. This cut will be produced by the suggested change in the loan base and by the modernized parity formula which will be applied after January 1, 1956.

This price cut should be recognized as the maximum reduction which the cotton farmer can absorb in a period of 1 year. Particu

larly is this true in the light of an inflated national economy and rising production costs.

It is our desire to keep American farmers, ginners, and textile mills in the cotton business and we realize that the foregoing suggestions are emergency measures. For a long-range proposal, the National Cotton Ginners Association wishes to submit the following:

We believe we need a program which will put us back in the cotton business on a free-market and free-production basis. To accomplish this in a way that will offer least disruption to basic economic forces and at the same time give the American cotton farmer the measure of price protection to which he is entitled, we propose a domestic parity plan which will pay the farmer more for his share of the domestic consumption of cotton, but will protect our domestic spinners and merchants at the same time. It should also discourage further expansion of foreign production of cotton. It might result in cutting back this foreign production of cotton which our present program has encouraged. The plan will work like this:

All cotton to be sold at world market prices without marketing quotas or planting restrictions of any kind.

At the beginning of our crop year the Secretary of Agriculture would estimate the average market price for that year, or the preceding year for which market information is available. This average market price for a base grade and staple of cotton would be announced along with an announcement of the parity price of cotton for the year.

At the same time, the Secretary would announce the percentage of parity at which domestic parity plan payment will be made. The Secretary will arrive at this figure after conferring with representatives of the producers, merchants, spinners, and economists-preferably economists of the National Cotton Council. This figure should be set at a level to price cotton competitively with synthetics in the United States.

The Secretary would also estimate the probable amount of cotton which would be consumed in the United States for the year, including domestic manufactures and sales as well as imports of finished and semifinished goods. This amount of cotton would be allotted to cotton farms of the Nation. In making allotments, natural shifts in production would have to be considered. Each cotton farm would be allotted its share of the total allotment in terms of pounds, and a cerificate issued stating the number of pounds allotted to each farm.

This certificate would have a value in dollars of the number of pounds of cotton which it represents multiplied by the difference between the going market price of cotton as estimated by the Secretary and the percentage of parity.

The certificates issued each farm would be redeemable at par through the county ASC committees for transmittal to CCC, during marketing season in each locality, provided the particular farm would put 20 to 25 percent of total tilled acres in soil-conserving crops or practices.

Each spinner or other processor of cotton and each importer of cotton or cotton goods would be required to purchase from CCC certificates in the total number of pounds to cover the amount of cotton used in the manufacture of goods offered for sale.

64440-56-pt. 8-27

All CCC cotton stocks held at time such a new program is put into effect should be frozen, except to allow some trading and/or limited sales by CCC to private merchandising firms covering grade and staples in short supply on the free market during transition period of changing from our present program to the new crop under this proposed plan.

Then, a restricted sales program of 300,000 to 500,000 bales of Commodity Credit Corporation cotton should be sold each year to allow gradual disposal of CCC stocks down to a level of an "emergency stockpile" of approximately 4 million bales, which would be held for world emergency situations. Sales of CCC stocks should be limited to a period of time which would not interfere with marketing of current crops say, from March through August of each year.

EXAMPLE OF HOW THE DOMESTIC PARITY PROGRAM WILL WORK

On January 1 or 2 of the year the Secretary of Agriculture announces that the average spot market price in the United States for the past year on 1-inch middling cotton was 27 cents per pound. He also announces parity price for 1-inch middling cotton is 38 cents per pound.

After conferring with producers, merchants, spinners, and economists, the Secretary announced that 1-inch Middling cotton will be competitive with synthetics at a price of 31 cen s per pound and the domestic parity price will be set at 82 percent or parity, or 31.16 cents per pound.

John Doe, a farmer, has previously received an allotment certificate for 20,000 pounds as his share of the domestic market. He knows this certificate is worth 4.16 cents per pound, or $832 to him. With this information, John Doe can plan his yearly program, knowing he will have support of only 40 bales of cotton. If he thinks he can profitably grow cotton at 27 cents per pound, he would have the privilege of planting up to 75 or 80 percent of his total tilled acres of cotton. The decision would be his to make and there would be no dictation to him from any source other than the pure economics of the situation.

John Doe plants his crop and when he starts harvesting it, he will take his allotment certificate to his county ASC office and they will give him a draft on CCC for $832, the value of his certificate.

When the crop is harvested, the cotton is sold for what it will bring on a free, competitive market. Part of his cotton might be bought by a domestic spinner or by some exporter on a competitive price. If a domestic spinner buys the cotton and sells the goods in the United States, he will have to buy certificates from CCC in the number of pounds of raw cotton as represented by the amount of cotton goods sold.

The same conditions and procedures would apply in the case of importations of cotton goods from foreign spinners putting the domestic and foreign spinners on the same basis as concerns the American market, and the world markets, too. The cost of these certificates would add to the cost of the goods sold and would be borne by the consumer. If a domestic spinner sells for export to a foreign country, he will have bought his cotton on a competitive basis and his ability to com

pete in the foreign goods market rests entirely on his ability as a manufacturer and salesman.

The effects of this plan should improve business conditions throughout the Cotton Belt. Some increased production should mean more gross revenue for the farmer; more cotton for the merchants to buy and sell; more cotton for the railroads to haul; more cotton for the compresses and warehouses to handle; more cotton to be ginned; more cottonseed to be crushed. All this would result in greatly increased levels of business and employment in all lines mentioned.

The CHAIRMAN. Now, which program are you for? That is a different program from the one that you concurred in.

Mr. HARDY. Yes, sir; entirely different.

The CHAIRMAN. Which one are you for?

Mr. HARDY. To begin with, sir, we are for the program as stated by Mr. Parker as an emergency measure for the present time. This other program

The CHAIRMAN. This other is an alternative?

Mr. DIXON. Yes, sir.

The CHAIRMAN. How are you, sir?

Will you give us your name in full for the record, and your occupation?

STATEMENT OF HUGO DIXON, PRESIDENT, AMERICAN COTTON SHIPPERS ASSOCIATION, MEMPHIS, TENN.

Mr. DIXON. I am Hugo Dixon, cotton merchant, Memphis, Tenn. Senator EASTLAND. What company are you with, Mr. Dixon? Mr. DIXON. I am with George H. McFadden & Bros., Senator Eastland.

Senator EASTLAND. What is your capacity with them? Are you president?

Mr. DIXON. I am a partner.

Senator EASTLAND. Sir?

Mr. DIXON. I am a partner of the firm.

Senator EASTLAND. In fact, you operate the firm, do you not?

Mr. DIXON. I am one of the older partners.

Senator EASTLAND. Yes.

Mr. DIXON. Senator Ellender, I did not know that our firm was going to be mentioned this afternoon. I would like to make a statement on that subject, but I will make it either after reading this report of the American Cotton Shippers, or I will make it now. The CHAIRMAN. Make it whenever you want, sir.

Mr. DIXON. Seeing that Senator Eastland has brought up the question, I would like to make the following statement. I figured this out since this matter was mentioned.

In Mexico, we handle about 8 percent of the crop.
The CHAIRMAN. How much?

Mr. DIXON. Eight percent.

Senator EASTLAND. That is your company?

Mr. DIXON. That is my company.

Senator EASTLAND. Yes.

Mr. DIXON. In Brazil we have about 8 percent, again.

Senator EASTLAND. Yes.

Mr. DIXON. In Nicaragua, it might be 4 percent.

Senator EASTLAND. Yes.

Mr. DIXON. Some very small figure. I think

Senator EASTLAND. Now let me ask you a question right there, sir. Mr. DIXON. Yes, sir.

Senator EASTLAND. Of the cotton that you handle in those countries that you have mentioned, how many bales of that are covered in the export sales program that we now have?

Mr. DIXON. You mean the quality, Senator?

Senator EASTLAND. I mean just exactly what I said.

Mr. DIXON. How many bales are covered?

Senator EASTLAND. How many bales of cotton under our present export sales program of 1 million bales-is any of that cotton competitive with cotton that you handle from the countries that you mentioned?

Mr. DIXON. With Brazil, to some extent; Mexico, no; Nicaragua, no, or only a very slight percent.

Senator EASTLAND. Now, the Department of Agriculture wanted to begin a program at 31/32-inch staple cotton, did they not?

Mr. DIXON. I do not know. It may be.

Senator EASTLAND. Now, that was competitive with Brazil; was it not?

Mr. DIXON. Yes.

Senator EASTLAND. Now, didn't representatives of your companies, of the companies mentioned-not just yours-but wasn't there a drive in Washington, through the State Department, to exclude from that program cotton of a staple length of 31/32 inch?

Mr. DIXON. Senator, not that I know of. Our firm certainly did not participate in it.

Senator EASTLAND. Yes, sir. All right, sir.

Has your firm ever been to the State Department on a competitive sales program for cotton?

Mr. DIXON. Sir, I am glad to say, I have never set foot in the State Department.

Senator EASTLAND. I said, your firm.

Mr. DIXON. Our firm, as far as I know—at least none of the policymaking members of our firm.

Senator EASTLAND. Yes, sir.

Mr. DIXON. I have never set foot in the State Department. I have never telephoned the State Department in recent years. I think I remember telephoning

Senator EASTLAND. I am not talking about you. Let us say your firm.

Mr. DIXON. Well, I think I would be the one who would go there. Senator EASTLAND. Yes, sir.