The CHAIRMAN. What are we to do then? You are the farmer. Mr. LARCHE. If we could cut price whereby the Government would take a part of it and the farmer take part, if we could cut our price and sell our surplus The CHAIRMAN. I can well understand you might do that. Somebody has suggested a two-price system whereby you take the lid off and let farmers plant all they want, but be guaranteed a price support on that domestically used; is that what you have in mind? Mr. LARCHE. I wouldn't suggest taking the whole control off. The CHAIRMAN. You would want controlled acres and to be guaranteed a fair price on your entire crop? Mr. LARCHE. That is right. But if it is possible that we might sell our acreage, certainly we want out from under controls. The CHAIRMAN. What is your average production per acre? Mr. LARCHE. A little better than three-quarters of a bale. The CHAIRMAN. You live in the hill section? Mr. LARCHE. Yes; I think my average is about a bale. The CHAIRMAN. Is that as good as you have done in the past? The CHAIRMAN. Would you say a bale is about your average? The CHAIRMAN. Thank you. Any questions? Senator EASTLAND. How much does your production per acre have to be to break even? Mr. LARCHE. Sir, it costs me about a half a bale to the acre doing my labor and hiring the hoeing, at present prices. If I raise a bale I have a half-bale profit. The CHAIRMAN. You mean when you pay for your labor? Mr. LARCHE. Yes. The CHAIRMAN. That is what you mean? You don't have a profit over what a fair wage you pay yourself? Mr. LARCHE. No. The CHAIRMAN. I wanted the record to be correct. Senator EASTLAND. Mr. Larche, as your acreage has been reduced, has your cost of production gone down? Mr. LARCHE. No, sir; it has certainly gone up. Senator EASTLAND. Your living expenses go up? Mr. LARCHE. Yes, sir. Senator EASTLAND. You think the solution to this problem, you think we have to avoid further acreage reduction if the cotton farmer is going to stay in business? Mr. LARCHE. I know it is that way with me. Senator EASTLAND. The solution is to expand these markets and get into competition with synthetic fibers in the United States and compete with these new foreign producing areas in cotton; is that right? Mr. LARCHE. That is right. Senator EASTLAND. To get back to a decent acreage. Mr. LARCHE. Yes. Senator THYE. I would like to ask Mr. Larche a couple of questions. What kind of livestock do you have? Mr. LARCHE. I raise cows and hogs. Senator THYE. Dairy or beef? Mr. LARCHE. Beef. Senator THYE. Beef cattle. Mr. LARCHE. Yes, sir. Senator THYE. And are they purebred cattle or just Mr. LARCHE. They are grade cattle with a purebred bull. Mr. LARCHE. I have in the neighborhood of 40. Senator THYE. Forty cows or 40 head? Mr. LARCHE. Forty head. Senator THYE. You have upland pasture that you run the cattle on? Mr. LARCHE. Yes. Senator THYE. How big is your total acreage? Mr. LARCHE. I have 170 acres. Senator THYE. And do you grow enough feed for your livestock? Mr. LARCHE. I buy very little feed. Senator THYE. Then your livestock brings in somewhere near the total amount you get for your cotton? Mr. LARCHE. No, sir. Senator THYE. How much? Mr. LARCHE. I suppose it would be one-fourth. Senator THYE. And you could not expand your herd because you couldn't grow enough feed, is that it? Mr. LARCHE. Well, sir, it is the amount I make per acre on the small place that I have and that to me is the reason why I want cotton. The CHAIRMAN. Thank you, Mr. Larche. Is Mr. Ransom here? STATEMENT OF PAUL S. RANSOM, MONROE, LA. Mr. RANSOM. I am Paul Ransom. I am a farmer from Ouachita Parish in northeast Louisiana. My principal crop, along with most of my neighbors, is cotton. My testimony before this committee today will primarily regard cotton. The early history of the United States indicates cotton played an important part in the economic struggle of our country to gain international prominence. Throughout our history, cotton has been a crop that depends a great deal on exports. The United States has a history of cotton exports dating to the founding of our country. Our modern history indicates that cotton plays a large role in the economic wellbeing of many of our citizens. The United States still depends on exports for the economic health of this industry. The point I am trying to make, gentlemen, is the United States is no "Johnny-comelately" in the cotton business, and we had an estalished export market up until the last few years. The story of how the United States has lost a portion of its export market is a matter of modern history well known to the committee members. Upon the completion of World War II the United States embarked upon a plan for world prosperity. Dollars were spent abroad to try to lift the standard of living of the free portion of the world. This was done through a series of plans, gifts of money, grants, loans, and economic aid in the form of technical assistance to start these countries forward agriculturally. As a direct result of this and other things, we see the rest of the world increasing cotton production and sales at the expense of the domestic producer. The United States 20 years ago produced 60 percent of the world cotton, today only 30 percent. The United States, as a result of its technical-assistance program, has greatly aided our competitors and is responsible to a degree for the surplus of cotton that now exists. Another interesting feature of the increased foreign production has been the part that private American capital has been invested abroad to take advantage of our uncompetitive position. Our curtailed acres and fixed prices have made us easy prey for the cotton producing world. The CHAIRMAN. You heard me say this morning that in many areas of the world that our own cotton people, our own big concerns went abroad to, say, South America, and started a cotton business there. You are familiar with that? Mr. RANSOM. Yes. The CHAIRMAN. Don't you think that had a lot to do, particularly with regard to South America, in opening up more production? Mr. RANSOM. I am sure it did. We presented a sitting target and it was a bonanza for American dollars abroad. The CHAIRMAN. How would you prevent that? Mr. RANSOM. After it starts, a situation like that is hard to stop. It should never have been allowed to start. The CHAIRMAN. How could Congress have enacted a law to prevent it? Mr. RANSOM. In my personal opinion I think it all started probably during the Korean conflict when we cut our acres very sharply. The CHAIRMAN. This is long before the Korean conflict because you have had some of these cotton factories out of Texas that I know of in South America the last 15 years. They built quite a big plant. Mr. RANSOM. They got their foot in the door at that time. They opened the door wide since then. The CHAIRMAN. As you know, that is something we cannot legislate against; it is something that concerns those countries. Let's not put all of the blame on the technical aid program. Mr. RANSOM. I stated it would be responsible to a degree. The CHAIRMAN. Yes. Senator EASTLAND. Mr. Ransom, do I understand you that where we hold a price rigid and at very high levels we are sitting ducks for whoever wants to expand their acreage under that umbrella? Mr. RANSOM. Yes. Senator EASTLAND. That is what happened. Mr. RANSOM. Yes; and it is not altogether the price but the factor of curtailed acres and a fixed price which certainly leaves us in a position we cannot compete with. The CHAIRMAN. Suppose, instead of putting these acreage controls in and guaranteeing a price, that we had permitted planting of all cotton that farmers wanted to plant; are you willing to tell this committee that we would have regained our foreign markets and that we, as a Nation with our economy as highly geared as it is could compete with peon labor out in Peru? Mr. RANSOM. I haven't traveled abroad extensively and I get most of my information by reading, but I believe if we had been competitive from the very start that this would not have that is talking about something that has happened. We have to solve the position from where we are now which is much harder to solve than it would have been 5 or 6 years ago. The CHAIRMAN. It is easier to go back and see your mistakes. The CHAIRMAN. I do not know many people who were opposed to the program at first. Everybody was for it. It just turned out that we built the plant here that produces far in excess of the imagination of anybody. When you stop to think, as I pointed out, maybe not at this meeting, our production on the same acres averaged a 42 percent increase in the past 10 years. The good weather we have had on top in my opinion may be the cause or explanation of a lot of our troubles today. Senator YOUNG. Under the flexible price support program if the price support were placed at 75 percent, that would be a rigid price for that year; would it not? Mr. RANSOM. In other words, you say flexible price supports are only flexible 1 day each year. Senator YOUNG. Don't you think it would be possible for foreign cotton producers to lower their price just a little below that 75 percent of parity price we would have and still keep the world market? Mr. RANSOM. You mean at the present time? Senator YoUNG. Yes. Mr. RANSOM. At the present time flexible price supports won't work. I think before we had the surplus and before these foreign countries really got in high gear on cotton production it would have worked, but it is completely out of the question at this time. Senator YOUNG. I suppose you would recapture some of the domestic markets but I doubt if you would go far. I have a set of tires on my care now, nylon or rayon cords. They cost $10 apiece more than cotton cords. If you reduce the price of cotton to 60 percent of parity it wouldn't make more than a dollar difference at most in that tire and I would probably buy the same tire. Mr. RANSOM. That is correct. Senator EASTLAND. By reducing the support price you are saying you are not going to move in and compete with foreign prices that are 7 cents a pound under our price. Mr. RANSOM. It is too late. Senator EASTLAND. The United States Government owes an obligation to do for cotton what has been done for wheat and that is sell the cotton competitively. Mr. RANSOM. You are right. I feel that through policies of our Government that they have helped, the farmers have helped too and I feel that it is a dual responsibility of both Government and farmer to help dispose of the surplus. Senator YOUNG. I agree, and the only way you can compete in world markets is to have a flexible price every day throughout the year, the same as wheat. I thing the Government does have a responsibility and I think it is the only way you will be able to export much cotton. The CHAIRMAN. Proceed, sir. Mr. RANSOM. The surplus has been increasing steadily for the past several years and no workable plan has been brought forth to cope with our foreign competitors. The two current devices, or "gim micks," that seem to be getting the most national attention, are the so-called rigid 90 percent supports and flexible system. The so-called rigid 90 percent supports, as I see it, certainly is not the answer. The guaranty is a rigid 90 percent of parity, a flexible acreage or volume (ever-decreasing), a flexible net cost (ever-increasing), and a downward spiral of net profit. Flexible price at this time supports the same things, except we have a flexible price which certainly can only mean economic disaster so long as the mountainous surplus exists. In my opinion, as long as the attention of Congress centers upon the controversy of these two unworkable programs, the real solution, the problem of disposing of the surplus, is made harder to solve. As long as the attention is focused on these two plans, the American cotton producer is sentenced to the dungeon of poverty. Senator THYE. I think you are putting your finger on the most sensitive and most vital point in the problem we face. You have just said that as long as we center our attention solely on the question of whether it be rigid 90-percent supports or flexible, we are dissipating our strength. When we permit that dissipation of our strength, it is like getting in your car, with the brake set, giving the motor all the power it is qualified to transmit. The net result is damage to the clutch, the power unit, or to some other essential mechanical part. I wrote to three major farm organizations in Minnesota, and I have asked them to sit down with me on December 15 to see if we can't get a meeting of minds. I say this in all sincerity. So long as time is spent in conflict and argument, bringing about disunity because of the rigid versus flexible question, we are just causing needless delay in the solution of the problem, and the farm organizations are only dissipating their strength and efforts in helping to solve the whole agricultural problem. The reason I am here with you folks today is to try to find the answer to this problem. This young chap is giving us some of the answers to some of the questions. I want to say that Senator Eastland has been instrumental as any man in the United States Senate in the effort to open up foreign markets. He was instrumental in the authorization of funds to go into foreign markets with our surpluses. But I wanted to comment on that remark of yours because we should not dissipate our strength in argument over whether it be rigid 90percent supports or flexible. I am glad you touched on this because we need to give it some thought. We must come up with a legislative program that will unite all agriculture. We will have differences, of course, but they should not prevent our joining in a united effort to raise agriculture out of its present depressed economic condition. I am sorry I took this length of time, but this young man was putting his finger on a very vital point in the whole problem. The CHAIRMAN. Thank you, Senator. Proceed, Mr. Ransom. Mr. RANSOM. Perhaps from my testimony the committee has drawn the conclusion that the Government has done no good whatever in its farm legislation toward aiding the farmer. Such is not the case. I would like to point out one of the many things I feel has been of great service to American agriculture. Perhaps more than anything else, the CCC loan service has enabled the farmer to market his |