Mr. HAMMOND. Yes, sir. We are only trying to control the production of the commodities, and all of them start from the soil, and what we are doing is reducing the acres of soil that produce these surpluses. If you do not produce grains, you cannot produce milk and poultry. The CHAIRMAN. I wish to state that the questions that may be asked by myself and Senator Eastland are not to be considered as indicative of our position on any of these matters. We take the negative, if you take the affirmative. We do that in order to draw up the facts so that we can have a complete record.

Mr. HAMMOND. I can appreciate that, Senator. It does not bother me at all for you to ask me any questions.

The CHAIRMAN. I want that to apply to all witnesses.

Mr. HAMMOND. I agree with you that is the way to bring out all of the facts. I appreciate that.

Senator EASTLAND. Do I understand you, sir, to say that if you retire these acres from production, they then would not be diverted to grassing?

Mr. HAMMOND. No. This just pertains to tillable land. Here is the thing, this rotation-it might result in someone taking some acres out and putting them into grass, because he would not want to include it in his tillable acres, because for 8 or 10 years it would be his cropland, because he has got to rotate. If he had a gully or something that he retired for his 10 or 15 years, yet might continue. If it was almost worthless land he would say, "That is not a part of my tilled acres." He would just cut that out.

The CHAIRMAN. As I understood you, the 90 percent of the farm acreage, assuming that 10 percent would be set aside according to what you say there, would be planted to any crop that the farmer desires to plant?

Mr. HAMMOND. Yes.

The CHAIRMAN. And the only limitation placed on that planting would be in respect to the crops that may be supported under some program that is now in existence or may hereafter be placed on the statute books?

Mr. HAMMOND. I am not sure I understand that.

The CHAIRMAN. It is very simple. As I understood your statement, the 90-percent acreage left over will be planted by the farmer in any crop he desires?

Mr. HAMMOND. Not unless there were marketing quotas on it.

The CHAIRMAN. That is what I am saying, unless the present program remains in effect where you have a quota system, a marketing system.

Mr. HAMMOND. He would plant crops of his own choosing.

The CHAIRMAN. I understand that is the theory back of the flexible price-support program, in other words, to let the farmer choose the planting of crops he desires in the hope that the production will be such as to meet consumption requirements and thereby receive 100 percent parity at the market place. Is that right?

Mr. HAMMOND. Yes.

The difference between this-there is a little difference between this and the flexible, for this reason. In the flexible support price, if you get a commodity overproduced, there is no place for the fellow to turn, because basics are the only crops that would be in it that would bring a fair price. So he has no choice.

The CHAIRMAN. What, a fair price, you said?

Mr. HAMMOND. Yes; a fair price.

The CHAIRMAN. That could be as low as 75 percent of parity?
Mr. HAMMOND. NO.

The CHAIRMAN. Under the present program.

Mr. HAMMOND. I think now there is some question as to whether or not the parity formula reflects the cost of production as between the different crops because of improvements that have been made in the production and harvesting of these crops.

Some folks think the parity formula sets a price on wheat that is out of line with others. That is what a lot of folks say.

The CHAIRMAN. You mean, the modern parity formula?

Mr. HAMMOND. Yes.

The CHAIRMAN. But the old one does get him 38 cents more per bushel.

Mr. HAMMOND. Yes. Under this program-with this program we are talking about, and the 10-year moving parity, if the parity formula figures the crop too high in a number of years it would come down, because the farmers choose what crops they plant. If he continues to plant a crop that is 75 percent of parity, in spite of the fact that some other crop is bringing 100 percent, that would be evidence that he can produce that crop cheaper at 75 percent of parity than he can the other one at 100 percent of parity.

So that would, with the 10-year moving parity, bring that crop down year after year until it gets down to where it would be equal to the other crop.

The CHAIRMAN. What is your view as to the so-called modern parity formula? Would you want to leave it as it is, or have you any suggestions for changes?

Mr. HAMMOND. I think I objected to the modern parity formula when it was proposed.

The CHAIRMAN. So did I. And in order to protect the farmers I was instrumental in having the law amended, so as to retain the old formula-whichever of the two formulas, that is the old or the new, that would give the higher support price why that woud be it. Mr. HAMMOND. Yes.

The CHAIRMAN. Under the new law this dual parity is going to expire pretty soon. Have you any suggestions on that?"

Mr. HAMMOND. At that time I said I was opposed to it for a different reason than some of the others, because this 10-year moving average will work out, if you do not have any support prices.

You see, they use the market price of the commodity. They change it from year to year on the basis of what the product brought in the market, but when you support a product at 90 percent, it cannot work, because the market might be down to 60 percent, if you did not have a support price.

The CHAIRMAN. I would dislike to have this 10-year average to be the rule on the prices that the farmers are receiving this year and last year and maybe the years to come, would you not?

Mr. HAMMOND. Yes.

The CHAIRMAN. Good.

Mr. HAMMOND. I am not approving the 10-year moving or against it. That is in the law now, you know. I am just saying what we are

going to do here and what will happen under the law now if we do this thing.

The CHAIRMAN. All right, proceed.

Mr. HAMMOND. In a few years this program would, by using the modern parity formula as provided in the present law, develop a true concept of the cost of production of the different commodities and eliminate the criticsm that some are supported too high as a result of modern methods of production and harvesting.

If there is danger of continued overplanting of the basic commodities, it could be eliminated by continuing the marketing quota program on basic crops with this provision: that the producers of basic commodities must first comply with the overall production program before being eligible to participate in the basic commodities program. They'd have to comply with this.

Under the existing program, the most difficult problem is in distributing the allotments fairly to the producers of that certain commodity, and we have the difficulty of allotments to new growers. This plan would eliminate the allotment and new grower problems, for the reason that allotments would be identical percentwise on all farms, and new lands could come under the same regulation of old lands or old producers. New producers would not be a problem for the reason that new lands would be such a small percent of the national total cultivated acres.

This program would simplify administration. It would eliminate the necessity of committeemen measuring different crops on the same farm, and would eliminate the farmer's worries about whether or not he had all his different crops within the acres allotted to him.

The only requirement of the committees would be to determine whether or not each farmer had his percentage of total acres in retirement and would not be concerned with what the farmer had planted on the other percentage of acres.

The CHAIRMAN. Except as to those crops on the program?
Mr. HAMMOND. Yes.

The CHAIRMAN. You would have the same difficulty there, would you not?

Mr. HAMMOND. You would have the same difficulty. I think this program, with a good administration, that eventually the basics would decide to come under this, rather than the other.

The CHAIRMAN. Do you think that this program that you are advocating now would better the plight of the farmer and would it improve our chance to sell more cotton abroad?

Mr. HAMMOND. No; there is no part of this program that would increase the sales.

The CHAIRMAN. That seems to be the problem, sir. Today we have cotton running out of our ears. The problem is to dispose of it in some way, and not leave it dangling over the market and depressing the prices.

Is the program you are advocating going to relieve that? If not, are we on the right track?

Mr. HAMMOND. Here is the thing-here is the way it would relieve it. Did you know that a lot of farmers plant cotton for no other reason that to hold the allotment? That is what they do. They plant it for no other reason. So they will plant cotton to keep the record.

The CHAIRMAN. It would mean less production of cotton then— you want to get out of the cotton business?

Mr. HAMMOND. That is it. If he could not market it.

The CHAIRMAN. To get out and leave it to the foreign countries to produce it?

Mr. HAMMOND. I do not think that is so. What we are trying to do is to provide for the farmers an opportunity to prosper just like everybody else in the country. That is a natural thing to do.

The CHAIRMAN. Yes, and the method you advise there would be to let the farmer be free to shift to the planting of the commodity that will bring him the most money.

Mr. HAMMOND. That is right.

The CHAIRMAN. Do you envision that this program, if enacted, would increase our ability to sell cotton abroad?*

Mr. HAMMOND. No, this program in itself would not.

The CHAIRMAN. It would not, so that if this program is followed it. would result in the farmers of this country producing cotton solely for the domestic market?

Mr. HAMMOND. It might eventually, Senator. Are we interested in producing a crop that is of no value to the farmer?

The CHAIRMAN. I am asking you the questions. I am trying to find.

out.

Mr. HAMMOND. I am sorry, I know that I am not supposed to ask questions.

The CHAIRMAN. That is perfectly all right. You have land in this country that is suitable for nothing else but cotton.

Mr. HAMMOND. Here is the thing about this program, it is in addition to shifting these acres, suppose that they did away with the marketing quotas on cotton and wheat, then the farmers would plant cotton and wheat in the most adapted areas, and they might produce cotton or wheat at a cheaper rate than we do when we have quotas, and scattered all over.

It might result in some additional sales, because they could produce it cheaper.

The CHAIRMAN. You think then that we can produce cotton to compete with Mexico, our neighbor, across the border from Texas, and also with Brazil and Peru-do you think we can?

Mr. HAMMOND. I am not sure that we can, Senator.

The CHAIRMAN. Why do you not say that we cannot. You know that to be the fact.

Mr. HAMMOND. Yes, sir.

The CHAIRMAN. As I see the program you are advocating, it will result in our producing cotton solely for the American market.

Mr. HAMMOND. It might do that. Here is our plan. We are going to follow this, if we can get it adopted. At the same time we are going to continue to try to make sales of cotton. Now we have the Cotton Council. You are familiar with that?

The CHAIRMAN. Yes.

Mr. HAMMOND. We are spending $12 million a year promoting cotton. We are going to continue.

Senator EASTLAND. The Cotton Council does not take any stand on exports.

The CHAIRMAN. The reason why I am asking these questions is that the cry today from the wheat growers, as well as from the cotton

people is, "We have lost our markets abroad. We have got to recapture them."

That is what we have heard from all over the country. The question is how can we recapture those markets? You say that your program here will result, if entered into law, in our producing cotton for only the domestic market.

Mr. HAMMOND. We are going to continue to try to get those world

markets.

The CHAIRMAN. Sure you will. I know. But when you are confronted with cheap labor abroad and high labor here I am just wondering if you can attain that goal.

Mr. HAMMOND. I do not think we can under the existing situation. The trade barriers

The CHAIRMAN. The what?

Mr. HAMMOND. The trade barrier is why we cannot. I think, Senator, that if there were no trade barriers we could compete with those countries. You see, the only way we can export cotton is to trade for some goods outside of this.

The CHAIRMAN. You want to put the barriers down and let the Japanese buy cotton as cheaply as the American can, and put the American spinners out of business. That is what is going to happen. So that is the program you are really advocating; is it not? Well, is it not-I would like to know.

Mr. HAMMOND. Well, all right.

The CHAIRMAN. Because that goes in the record, you understand. You want trade barriers away, and you want to sell the cotton to everybody alike and let the spinners of Japan come in here and overload the market with cheap silk and cheap cotton. Really, you would put everybody out of business, not only the cotton farmer, you would also put the spinners out of business; would you not?

Mr. HAMMOND. I think you misunderstood me.

The CHAIRMAN. No; I did not. I think I follow you.
Mr. HAMMOND. I did not say what I intended then.
The CHAIRMAN. Maybe so. I will agree to that.

Mr. HAMMOND. Well now, what I am saying is that these trade barriers hinder the cotton farmer in trading his cotton in foreign markets.

You know, last year they raised the tariff on watches. Well, that means we are not going to trade cotton. And they raised the tariff this year on bicycles.

The CHAIRMAN. You are going to put them all out. You are just naming two very small segments of our industrial production.

Mr. HAMMOND. There are thousands of others. The fact remains that if you got some cotton to trade, you load it on a ship, and you go to Europe, and you trade it for any commodity that has a tariff. When you get back to the border the Tariff Commission is going to be there to take part of those goods away from you that you traded for.

Senator EASTLAND. You have mentioned a few instances, and that is true in those, but as a matter of fact, foreign countries today are earning adequate dollar exchange to buy American cotton, if the price was competitive, are they not? Answer my question, please, sir. Would you answer my question?

Mr. HAMMOND. I thought you made an observation.