in the fall of 1937 formed the basis of the present act that has been amended within the last few years, the so-called act of 1938, was fathered by me and other Senators who served on the Agriculture Committee.

In 1948 I returned with another committee, then headed by Senator Aiken, of Vermont. You know the Republicans were in charge in the 80th Congress and of course he was chairman and we went all over the country in order to hold hearings at the grassroots. It is nothing new. That is why we are here today, to find out from you good people your views and ideas, and it may be that some of you will give us a little spark from which we can change our agricultural program to make it work better for the benefit of the most important segment of our country, the farmer.

Unless the farmer can be made to prosper, my fear is that everything else will not prosper. The farmers are the foundation of our national economy. You let them get on the toboggan and go down where they cannot produce and cannot make money, and what will become of all your granaries here, flour mills, canning factories, shoe factories, and everything else? It is the farmers who produce most of the raw products that are so necessary to make our wheels of industry turn.

With that I am going to call the first witness, Mr. W. I. Boone. Will you step forward? I will call the next witness, Mr. Martin Byrne, and ask him to take a seat in the next chair there so that as soon as Mr. Boone concludes we can start with Mr. Byrne.

I wish to further say that we may cross-examine the first witnesses, and probably some of the other witnesses, and I want to say that the audience must not judge the views of a Senator by the questions he asks. What I usually do is to take a negative attitude, if the witness makes an affirmative statement I take the negative view of it in order to draw out the facts, so that when we cross-examine any of these witnesses, do not construe our questioning as indicating the way that we think things ought to be done. It is done in order for us to be able to get the facts in an orderly manner so that they can be of use to us when we meet in Washington in January.

You may proceed, Mr. Boone.

STATEMENT OF W. I. BOONE, PRESIDENT, KANSAS FARM BUREAU,

EUREKA, KANS.

Mr. BOONE. Senator Ellender, Senator Schoeppel, Senator Thye, and members of the Senate Committee on Agriculture and Forestry, and Senator Carlson, my name is W. I. Boone, of Eureka, Kans. I am president of the Kansas Farm Bureau and on behalf of the 71,689 Kansas farm family members of our organization I am happy to have this opportunity to appear before this distinguished committee. May I say that our members have had cause many times to be grateful for the farsighted, intelligent views this committee has taken on important farm problems. We are happy to have you here in Kansas for a closer look at some of our problems.

I am sure that this committee is one that recognizes that the farm problem is a very complicated one. Ailments in agriculture cannot be cured by a single magic formula. There is no easy answer.

Furthermore, I am sure this committee recognizes that, although some segments of our farming industry are in real trouble, other segments are doing quite well. As a matter of fact, many segments of our agricultural economy have been able to make those adjustments which must be made following a period of war and postwar inflation. This year we have seen real progress in the poultry industry, in the dairy industry and in many others. I submit to you gentlemen that those segments of the agrcultural industry in the best position today are those segments where there has been a minimum of Government intervention in the price mechanism and a minimum of Government intervention in the whole field of production and marketing.

But while some segments of agriculture have been able to make progress in establishing themselves in a sound position, other segments are in real difficulty. The wheatgrower certainly, and I need not remind you that Kansas is the No. 1 wheat State, is in a bad position. We will continue to be in a bad position so long as billionbushel surpluses continue to depress the market and continue to interfere in normal trade of wheat.

I have been alarmed at statements I have read and heard referring to so-called surpluses. We cannot blind ourselves to reality by talking of our billion-bushel wheat surplus as a so-called surplus. I submit to you that our billion-bushel wheat surplus is just as damaging to the wheat business today as a store full of shoddy, shopworn, and outdated stock would be to a retail merchant.

It is our contention that this surplus has been accumulated in large measure because of Government price-support incentives. I am realistic enough to realize that the high prices immediately following the war would have resulted in surpluses without Government incentive. But I submit that our surplus would not have reached its present proportions without a Government incentive continued for a longer period than was wise or necessary.

Because Government programs are in large measure responsible for our huge surplus, I feel that we are justified in asking continued Government aid to reduce this surplus. Wheatgrowers in Kansas sincerely hope that there will be vigorous Government action to dispose of surplus supplies. This action must be realistic to the extent that it recognizes that a large part of our surplus probably will not find a ready market for consumption as human food. A large part of our surplus was never capable of arousing an active demand from flour millers, and we feel certain that additional millions of bushels in our surplus have gone out of condition to the extent that millers of flour are not interested in them. In other words, a substantial portion of our surplus will have to be consumed as animal feed if it is ever to be used.

There is one point which should be obvious. The Government program which helped to build this surplus was a program of high support prices with provision for rigid controls. If we are to escape from the present dilemma and prevent an accumulation of greater difficulties, it would be utter folly to return to the program which helped to cause our present difficulties. To return to a program of high Government supports with rigid controls would be like eating more green apples to cure a stomach ache caused by eating too many green apples. We are all agreed that our objective must be to get supplies back in balance with demand. This objective can be attained by relying

on the free market mechanism to as great an extent as possible. I have said that we will need Government aid to eliminate the surplus. But our real objective for the future is to allow a free and active market to interpret consumer demands for the wheat producers. I submit that Government cannot compare with the free market as an interpreter of consumer demand. So while Government makes every effort to eliminate the surplus it must keep in mind the real objective of reducing its intervention in the market mechanism.

We are agreed that the farm problem is a complicated one and that our approach to it must be on a broad front. We have failed to recognize this fact in previous approaches to the farm problem. In the past our efforts have been concentrated on trying to determine an arbitrary fair cost of production by complicate mathematical formulas. and then we have undertaken to guarantee that cost of production to producers. Such an approach meets the problem less than half way because such an approach does not recognize the market demand and distribution problems. In other words, we have not taken steps to determine whether our products can be sold at the prices which have been determined as "fair costs of production." Of course, we cannot be positive that the costs of production we have tried to guarantee are correct.

Farmers like to know that they are producing goods to be used by people. They have a real interest in merchandising their products. But an approach confined to guaranteeing production costs does two things: (1) merchandising is ignored, (2) such a program will freeze production patterns, hinder development of efficiency, and eventually will result in utter stagnation.

I would like to submit this morning that the role of government should be largely limited to removing roadblocks which hamper the operation of our free markets instead of trying to take over that market. There are many things which can be done to remove roadblocks which do hamper the operation of active demand in the market. I will cite a few, not necessarily in the order of their importance:

1. Our tariff policy needs improvement so that potential buyers of American agricultural products can send us goods with which to earn dollars with which to buy our products. I am sure you are all familiar with the Swiss watch matter which certainly reduced sales of agricultural products to Switzerland.

2. More work needs to be done on the convertibility of foreign currencies. I would like to compliment this committee for the active work that members of this committee have done in making it possible this year to sell $1.5 billion worth of American agricultural products for the domestic currencies for foreign nations which have no dollars.

3. Cargo preference clauses have discouraged sales to some countries. American shipping should continue to play a real role in world trade, but when cargo preference clauses operate to prevent a sale of American agricultural products, then certainly American shippers are not benefited because a sale has been canceled or prevented.

4. Government can be helpful in reducing costs in many fields. I am sure that this committee is well aware that farm gross income is still at near the high level of 1947, but because of increasing costs, the farmer's share of the consumer's dollar has dropped from 53 to 41

cents. Taxes are higher, freight costs are higher, profits in industry are as large as ever and while the farmer's share of the consumer's dollar has tumbled from 53 to 41 cents, labor's share of that same dollar has advanced from 23 to more than 32 cents. Government can be helpful in preventing some of these increased costs.

5. We also believe that Government can continue to be helpful in providing research needed to improve producer efficiency and to provide marketing research to help the farmer in merchandising his products. We are grateful for the assistance which Government has given in this field over a long period of time. There is room at this time for an expansion in marketing research.

I said a moment ago that I thought it would be folly to return to a Government program which in large measure has been responsible for the accumulation of unmanageable surplus. I repeat that we will need Government aid to dispose of these surpluses. We recognize Government assistance for producers will be necessary during an adjustment period while surpluses are being moved. We have always said and will continue to say that Government price supports can serve a real need during an emergency period. This is an emergency. However, we cannot afford price supports at an incentive level. At the same time there is real need to reduce supplies. Producers who will accept a somewhat lower price and at the same time curtail their acres in order to reduce supplies will be, in many cases, in an imposible income position.

For that reason I would like to suggest consideration of some sort of soil bank plan under which Government would aid producers in taking land completely out of commercial production. I am not today in a position to be very specific on the level at which Government aid should be extended in taking acres out of production. Delegates from 105 county farm bureaus are meeting in Wichita today for a 4-day convention to develop the policy of our State organization in these matters. A month from now delegates from our own State Farm Bureau will be meeting with delegates from other States to develop our final policy.

However, it is my personal opinion that Government aid in taking acres out of production should be at a level sufficiently high to get cooperation and compliance, but should not be at a level which will put the Government in the position of completely subsidizing a farm operation. Furthermore, my personal opinion is that Government aid in taking acres out of production should be granted only when the producer will comply with acreage allotments and other Government restrictions necessary to bring supplies in line with demand. I thank you.

The CHAIRMAN. Thank you, Mr. Boone.

I notice on the first page of your statement you said that you want a minimum of Government intervention in the price mechanism and a minimum of Government intervention in the whole field of production and marketing.

Which do you prefer, the rigid price supports or the flexible?
Mr. BOONE. Well, our organization-

The CHAIRMAN. I am talking about you, the farmer. your organization. Let us talk about you the farmer. I want to hear from, the farmer.

Forget about
That is what

Mr. BOONE. I want it clearly understood, then, I am speaking for myself.

The CHAIRMAN. Yes. That is why, as I said before, I am speaking personally I may be overruled with two Republicans and only one Democrat present, but what I want to hear is your own views. Forget your organization, forget that you are a member of the Farm Bureau. Speak as Mr. Boone, the farmer. What would you suggest the committee do to assist the farmers?

Mr. BOONE. As a producer principally of livestock, general farmer, I grow a little wheat, I would prefer price supports at a level that would permit us to orderly market our product and not at a level that would be an incentive to overproduce. I think if you have it at that level it is relatively unimportant whether it is flexible or rigid. The only advantage of the flexible program is you have some opportunity to attain that level.

The CHAIRMAN. Do you grow wheat for sale?

Mr. BOONE. Yes, sir.

The CHAIRMAN. How long have you been growing wheat?

Mr. BOONE. Since about 1935 or 1936, attendant with drought in our area we move to small grain.

The CHAIRMAN. What kind of weather have you had in the last 10 years?

Mr. BOONE. Last 4 years have been continuous drought and 10 years before that we had very favorable weather.

The CHAIRMAN. Is that not the period of time that much of this surplus has filled the bins in the country?

Mr. BOONE. The last 4 years?

The CHAIRMAN. Yes.

Mr. BOONE. That is right, yes.

The CHAIRMAN. Surely. Now, do you not think that has something to do with these huge surpluses in the light of the fact that the Government itself asked the farmers to produce?

Mr. BOONE. I think the fact that the Government has encouraged them to produce has something to do with it, and I think in our area in Kansas we shift from one crop to another in response to weather conditions somewhat, but I intended to get out of growing wheat years ago but it was attractive and I didn't do it. I have land that should be in grass.

The CHAIRMAN. How much have you increased your acreage? Mr. BOONE. I have been in compliance with my allotment and therefore I decreased it from 75 to 48 acres.

The CHAIRMAN. You followed the rules.

Mr. BOONE. I have been in compliance.

The CHAIRMAN. Now, generally speaking, let us forget about the condition in Kansas. Is it not true that in the past 10 years the wheatgrowing section of the United States as a whole has had very good growing conditions compared to the previous years when you had the dust storms?

Mr. BOONE. Yes, I think that is generally true.

The CHAIRMAN. As you know, the flexible price-support program was put on the dairy products 2 years ago; you remember when the President was elected Mr. Benson reimposed the 90 percent support, the first year of the administration. You remember that?

Mr. BOONE. Yes.