Do you realize that the rayon companies yesterday reduced their prices 2 cents a pound?

Mr. SMITH. I was not aware of that, but I am not surprised.

Senator EASTLAND. And that rayon, a rayon mill, where it competes with cotton, costs that mill today 322 to 33 cents per pound against a comparable cotton cost of 42 cents a pound? That is the cotton that is clean and ready to be spun, where they become competitive? Mr. SMITH. I knew there was a price advantage to rayon.

Senator EASTLAND. There was a price advantage with spinning value, taking into consideration 32 cents a pound before yesterday. Now it is 52 cents a pound. The facts are that domestic consumption of cotton has declined on a per capita basis while domestic consumption of rayon is rapidly increasing.

I was in a plant a few days ago which is just being completed at Mobile that is going to be displaced that is going to displace 200,000 bales of American cotton. Don't you think we should compete with rayon?

Mr. SMITH. We are going to have to produce cotton.

Senator EASTLAND. That is right.

Mr. SMITH. I do not know what the future holds, but I know that there are some marginal farmers who are going out of business if they are caught in a price squeeze much lower than

Senator EASTLAND. Don't you think we have got to meet this rayon competition. After all, that is where the great problem is.

Mr. SMITH. We are going to have to meet it one way or the other. The CHAIRMAN. Tell us how.

Senator EASTLAND. That was the next question.

Mr. SMITH. I do not know. I have heard subsidies discussed. We farmers, at least I do, like to shy away from that. However, so many other people have subsidies, I do not guess it would be a disgrace for us to have, until our economy can balance out.

Senator EASTLAND. If the per capita consumption of cotton remained where it was at these levels, our domestic market would increase a million bales every 5 years as the population of the country increased. But that is not happening.

It is declining and staying stationary while rayon increases. Now, aren't we going to have to meet that rayon competition?

Mr. SMITH. We are going to have to do all we can to meet it.
Senator EASTLAND. Yes.

Mr. SMITH. I do not know the answer to that.

The CHAIRMAN. That is what we are looking for.

Mr. SMITH. I know that, sir.

Senator EASTLAND. With this expert sales program, which you advocate, why would not this 13 million bales surplus be a blessing if it were liquidated by selling to our mills, this surplus cotton, at the same price that we sell for export. You stated that you desire to stop the foreign expansion of acreage. I agree with you.

Now, should not we stop the new construction of rayon plants in this country by the same system?

Mr. SMITH. You might have a point there. I had not thought of it in that particular light.

The CHAIRMAN. How would you do that and preserve your way of life?

Senator EASTLAND. The Senate has already passed such a bill. It is pending in the House.

The CHAIRMAN. I doubt its constitutionality, but that is not it. We are coming here to hear the farmers. Let us not go into that. Thank you ever so much.

The next witness is J. Walter Hammond, of Waco, Tex.
Give us your full name and occupation.

STATEMENT OF J. WALTER HAMMOND, PRESIDENT, TEXAS FARM BUREAU, WACO, TEX.

Mr. HAMMOND. Mr. Chairman and Senator Eastland, my name is J. Walter Hammond. I am a farmer and I am president of the Texas Farm Bureau.

The CHAIRMAN. How many acres do you farm?

Mr. HAMMOND. I have a section of land, a little more than a section of land.

The CHAIRMAN. You live on a farm?

Mr. HAMMOND. Yes; I live on the farm when I am not at Waco; I spend a lot of time at Waco. I appreciate this opportunity to make a statement before this committee, and I think much good can come of your tour around over the country in getting the ideas of the different farmers throughout the country.

There is a tremendous lot of interest in the agricultural situation. It is evidenced by the press. Of every meeting you have had there have been accounts of what happened in our papers down here, when you started in Minnesota. And our people hang on to what you and other members of the committee have been saying. I think it is wholesome and good that you are going at it now.

What I am going to talk to you about-I do not think I am going to get into any details-I am going to talk about general ideas.

There are a lot of proposals to stop this trend of the farmers, that our net income is down 30 percent, as you know, and it is going to get the whole country into trouble if we do not do something about it.

There has been some discussion about high supports and low supports. I do not think that either a 90-percent support or a flexible support price program will bring relief. One reason is that there is not an awful lot of difference, because farmers make money on acres, and they have the same formula for allotting acres for the flexible support price program as they do for the 90-percent support price program. It comes out with the same number of acres every time. And acres are what create surpluses.

We think we are going to have to get rid of some of the surpluses. Another difficulty about our present program is that it only involves about one-fourth of the total land in the United States, about 25 percent, or around there, that is involved in the basic commodities. A farmer cannot get along very well if you support the price of onefourth of his products.

Another thing about it is that when we support the price of cotton and tobacco and all of the others, we take some acres out of those commodities and we plant them in the nonbasics. Actually our total production, our overall production is no different when we start than when we finish-taking acres out of one crop, and putting them into

another, that is, into one that is already overproduced, and that just makes the crops worthless to the farmers.

I do not think we can ever have a support price high enough to bring relief to the farmers, if we just supply it to one-fourth of the land.

We have a proposal here that I am in agreement with. The fact of the business is that I was the first to start talking about soil-bank plan. The Texas Farm Bureau has a position on it. I have a statement here which is approved by the board of directors of the Texas Farm Bureau.

The CHAIRMAN. How about your national organization-has it taken any position on it?

Mr. HAMMOND. Yes, sir. At the last convention, last December, they passed a resolution which approves the general outline of the soil-bank plan. As you know-and I know that you have found out now-there are about 50 different plans.

The CHAIRMAN. That is right.

Mr. HAMMOND. Of the soil bank idea. Everybody seems everywhere you have gone that they are in favor of the soil-bank plan, but everybody is in favor of matrimony, but I can bring a gal in that nobody wants to marry. [Laughter.]

There may be some of these plans that would not be acceptable. I have this written out here. It is not very long and if you would like, I will read the whole thing.

The CHAIRMAN. You may proceed.

Mr. HAMMOND. The Texas Farm Bureau has long advocated a program that in the opinion of many people will eliminate surpluses in all commodities. The present farm program puts the basis of control on the commodity. The Texas Farm Bureau's program would be set up on the basis of total farm acreage control, that is, the number of retired acres would be determined by the total overproduction of all farm commodities.

It is not intended that this program shall be substituted for or replace the present farm program now in effect or any revision therein that might be made in the future.

We are not making any changes at all. This program can go right along and supplement the one we have.

Rather, it is a plan to implement any or all other farm programs to the end that our present price-depressing surpluses will be eliminated, and henceforth maintain production in line with demand for all commodities. The following analysis of the plan, while not contemplating the use of acreage allotments and marketing quotas, is adaptable to such instruments whenever the growers of any commodity elect to accept such instruments.

That is to continue the marketing quota plan of the six basics along with it.

The first step would be to determine from statistics and experience, the total overproduction that can be expected in all crops. The next step would be to determine the number of acres involved in this overproduction; then determine what percentage of the total acres in cultivation in the United States the overproduction represented. From the best estimates available, this overproduction might run anywhere from 5 to 15 percent of the total cultivated acres.

To bring the production of agricultural commodities in line with the estimated domestie consumption, plus exports, it would be necessary to require every farmer to reduce his total acres to that percentage. As an illustration, suppose there was an overproduction of 10 percent on all crops; then all farmers would be required to take out of production 10 percent of his land, using this 10 percent only for soil building and conserving practices, eliminating any use of retired acres that might contribute directly or indirectly to production of agricultural commodities. The acres retired would be rotated, that is, different acreage each year, until eventually every acre would have been retired over a periof of years. This would be the only requirement to make the farmer eligible for support prices for his commodities and he would be allowed to plant the remaining 90 percent of his acres in crops of his own choosing.

That means the nonbasics. Of course, if they are in cotton, and so on, they would have other requirements to meet.

The CHAIRMAN. Would you include pasturelands, too?

Mr. HAMMOND. No, I do not think we could do that.

The CHAIRMAN. If you have an oversupply of cattle-how would you meet that?

Mr. HAMMOND. I know we are getting an oversupply of cattle. The way we think about that surplus is a surplus of beef in that. We put it in the feed lots. That is where you put the weight on the cattle, in the feed lots.

If we have this sort of a program and we only have enough acres to produce the feed that is necessary, then that would control indirectly the production of beef.

The CHAIRMAN. You would be surprised at the large amount of meat that goes into the market that is not fed as you now say.

Mr. HAMMOND. I know that there is. Under these programs we have now there are many farmers who got in through the production of beef for the reason that they had excess acres that they planted in grain crops, that produced grain that they could not sell at a very good price, so they would buy some white-faced cows and put them on the farm and that adds up finally to an oversupply of beef.

The CHAIRMAN. You mean the fed beef?

Mr. HAMMOND. All of it together.

The CHAIRMAN. Corn-fed beef?

Mr. HAMMOND. Grass would be just the same. A considerable portion of the beef is produced in feed lots. We think it would reduce the supply of beef if there were not so much feed-even dairy. A farmer does not like to milk a cow, but if he has not anything else to do with the feed he has he will buy some milk cows and start milking.

This plan that we have here, this proposal, will not cost the Government anything. I should have warned you before I said that, because it might knock you out of your chairs, somebody proposing something that does not cost the Government anything.

The CHAIRMAN. I am not surprised at anything I hear today. Mr. HAMMOND. In following this procedure, if the farmers overplanted any one crop, that crop would automatically go down in price. But since there were only enough acres to produce all crops necessary, some other crop would be underplanted, which would result in a price for this crop of more than 100 percent of parity. How

ever, you could expect the farmers to shift from the overproduced crop to the underproduced crop in the next season. Prior to 1933, before any farm program was made available, the farmers kept a balance in production as between the different crops produced in the United States.

Under this soil-bank plan it would be desirable to have a support price designed to encourage producers to shift production from overproduced crops to crops that were in short supply and bringing more than parity.

The CHAIRMAN. Would you carry that through to every crop produced?

Mr. HAMMOND. Every crop that is storable.

The CHAIRMAN. Basics only?

Mr. HAMMOND. Every crop that is storable. We could have a support price for it.

The CHAIRMAN. Basics only?

Mr. HAMMOND. On what?

The CHAIRMAN. Only basics?

Mr. HAMMOND. All crops that are storable.

The CHAIRMAN. All right, name me some besides cotton, wheat, tobacco, and what we now call basics, and dairy products, I suppose you would put those in-would you put in eggs and chickens and turkeys and the like, and pork?

Mr. HAMMOND. No, you could not, I do not think so.

The CHAIRMAN. What would you put in then besides these? That is easily said. You can store anything if you can build the facilities for it. Let us be realistic.

Mr. HAMMOND. We are not proposing perishables.

The CHAIRMAN. So you are really getting your program to the basics?

Mr. HAMMOND. No-well, not in the general term of basics. There are six in that. We would include grain sorghums, oats, barley, rye. The CHAIRMAN. Any grains?

Mr. HAMMOND. Any grains, or broom corn and some others like that.

The CHAIRMAN. Would you exclude poultry and products like that?

Mr. HAMMOND. Yes, I think now that this

program

The CHAIRMAN. Would you exclude dairy products, too?

Mr. HAMMOND. Yes, you would have to. I think, as I said before, that this will indirectly help the dairyman, because farmers who have grains that they cannot sell at a profit, start milking cows in an effort to get a profit. If he does not have that surplus grain, he would sell it and the regular dairy people would produce the dairy products and indirectly it would help the dairyman and the poultryman and all of them.

The CHAIRMAN. You might be surprised at the number of dairy people. I do not know of any that do not want support prices. You do not have much of a dairy industry in Texas?

Mr. HAMMOND. I do not object. We do not object to what the support price for the dairy products is, but we are not including that in this overall plan.

The CHAIRMAN. You mean the Texas Farm Bureau?