standing that they are not completely able to ship this cotton in and maintain stocks in these foreign countries and they were prior to the Second World War.

The CHAIRMAN. Does your plan envision a fund created by the Federal Government for that purpose?

Mr. STEVENS. We will have to set up some sort of insurance program that will justify these boys in sending this cotton into these foreign countries to maintain these stocks where it will be readily available to the mills as needed.

The CHAIRMAN. Proceed.

Mr. STEVENS. There is much talk of the two-price system. With this we cannot agree. To hold the domestic price at a high level and export price at a lower level would be unfair to our own mills and our consumer and at the same time open the doors wider for expansion of the manmade fiber field.

The CHAIRMAN. Suppose we have export controls. Would you change your mind on this paragraph?

Mr. STEVENS. Export controls?

The CHAIRMAN. Yes; I mean import controls of the commodities. that may be produced from this cheaper cotton.

Mr. STEVENS. I think we are dealing with synthetics there.

The CHAIRMAN. We have had proposals that would have the effect of permitting the cotton to be sold on a competitive basis with world prices and since the foreigners would get cheaper cotton we would then have the proposal to limit their exportation to our country of the finished goods.

Mr. STEVENS. I think you have to do that. Japan is an example of that today. I think that I mentioned earlier we are going to have to do something about it. I don't think we could sell this cotton competitively in the world market, if it happened to be several cents or a given amount below our price and open the doors to let them come in. It would have to be on a quota system.

The CHAIRMAN. You would not object to the sale of this American cotton abroad at a cheaper rate than the domestic manufacturer would pay for it provided you protect against importation?

Mr. STEVENS. I think it will have to be worked out on that basis.

The CHAIRMAN. The committee cannot handle both. We have the Finance Committee to handle one and the Agriculture Committee the other. To make it operative the two acts would have to be adopted imultaneously.

Proceed.

Senator SCHOEPPEL. Mr. Chairman, I would like to mention one thing. You say we ought to liberalize trade. At one of our meetings we were presented with some exhibits, pretty compelling to me, what we saw. Here was an American blouse, manufactured in this country, $3.30 or 40-some cents

The CHAIRMAN. $3.89.

Senator SCHOEPPEL. The same type, looked the same, felt the sameI am no expert-the price was just a little over $1 and it came from Japan.

Now they are pretty good at moving out in to these things and I have every reason to believe these other countries will follow suit. I think you are putting your finger on something important. What will we do about that if we liberalize trade policies?

Mr. STEVENS. We would get something in turn for reciprocal trade agreements. At the same time in the case of Japan that is a hot question today and they are flooding this country with manufactured goods from Japan out of this cotton produced some in this country and some in other countries.

We have to set up quotas and not let them flood this country.

Senator SCHOEPPEL. I can see where your textile industry will be up against a serious problem and if that competition is tough they will say "I cannot take thousands of bales of your good cotton because I cannot make it up and compete."

Mr. STEVENS. We know that and they are our best customers and we want them protected as far as possible. And that is the reason we think in cases like Japan we will have to set up quotas on those boys and not let them flood it.

A few years ago, I am told, they had a voluntary agreement of the amount of import this country could take from Japan and it was recognized as an agreement, a gentleman's agreement. They don't think now a gentleman's agreement would work with the Japanese mills and therefore you have to do it by act of Congress.

Senator SCHOEPPEL. Today, of course, it is Japanese, but tomorrow it may be be our British friends or South American friends or India or someplace else. It is a problem we have to recognize. It is a touch and go picture.

Mr. STEVENS. I agree, but in reciprocal trade agreements, don't you have your committee set up and they don't go into this thing unless they feel that this country would gain something by letting an import of a product come in?

Senator SCHOEPPEL. The problem is how will you get rid of your cotton if this thing goes on? You would not be able to sell too much of it domestically, more than you are now selling, and you will ship it over and cut the price and let those fellows come in. We are in trouble on wheat but you may be in more trouble on cotton. Mr. STEVENS. I doubt it. They are both bad enough.

Senator SCHOEPPEL. All right.

Mr. STEVENS. It is unfortunate that there has developed two factions regarding prices. One the high rigid and the other the flexibleeach claiming to be the salvation of the farmer.

These have been talked about so much that many people have lost sight that there can be any other solution.

The philosophy of the American farmer is to produce and produce abundantly, but with tremendous surpluses we realize we must curtail production to permit absorption of the surpluses.

We approve in principle the idea of the soil-fertility bank. It is more feasible to spend a reasonable amount of money to build fertility in the soil for an emergency than to pay fixed warehouse charges and have the products go out of condition.

We quote our 1956 resolution regarding same:

We recognize that many problems would arise, and inequities result in the application of diverted acreage controls. However, the nonbasics, with 0-90 percent support prices based on supply, must have some protection from the production of diverted acres of the 75-90 percent supported basics when controls are applied. Therefore we prefer and endorse the soils bank except for absorbing a large portion of diverted acres to reduce overall production to meet real market demand.

The application of the soils-bank concept must not be rigid enough to legislate scarcities to the extent that we price our market high enough to lose present export markets or encourage importation to meet domestic needs. Rentals must be commensurate with those prevailing in the several basic commodity areas and on a voluntary basis. Concessions as to percentage of acreage, price, and penalties should be provided for the smaller farms.

Historical plantings of nonbasics and the relative supply of basics should be considered in historical commodity areas in determining the duration and cancellation of rental contracts.

Present legislation for production controls and price supports should be continued after the adoption and application of the soils-bank concept except as provided for in other sections of these resolutions.

Few farmers can afford to take diverted acres out of production. with no income from these acres, yet, if not restricted we could find ourselves faced with enormous surpluses in other fields that the same isn't true at the present time.

Our dairy industry is in better position than we found ourselves in a year ago. We have no direct resolution regarding this position, but I being a dairyman also have checked with many dairymen and all agree that we are in a better position.

The CHAIRMAN. That is in Mississippi?

Mr. STEVENS. Yes, sir.

Most dairymen in our State are worrying for fear that too many will now go back into or go into the dairy business.

I have just attended the executive committee meeting of the American Dairy Association. Representatives from 44 of the 48 States were in attendance officially at this meeting. Representatives of many other dairy organizations were in attendance. It was the sentiment of all that the dairy industry was in a healthier position than had been the case for several years and all hoped no change would take place legislatively.

Senator YOUNG. Is it not true that with respect to the dairy-support program, the Federal Government has done more for dairying than for any others in the last 2 years?

Mr. STEVENS. Yes.

Senator YOUNG. For the fiscal year ending July 1, 1955, the cost of the dairy-support program was over $440 million; the year before, $150 million; before that practically nothing. We have given away a lot of dairy surpluses. We converted dried milk to livestock feed. If the Department of Agriculture was as aggressive to get rid of surpluses of others as we have been with dairy we would be in better shape. I do not want to condemn them for what they did in dairying, but I would hope they do the same thing for other commodities. Mr. STEVENS. Yes; I would, too.

The CHAIRMAN. Proceed.

Mr. STEVENS. Beef-cattle production, though not comparable with the war years when every businessman, lawyer, or doctor went into the business, seems to have stabilized; and the real cattleman seems to be settling down to a normal operation.

We hope the next Congress will provide a method to allow farmers to grow small grains for their own need regardles of quota provisions in the event he uses this production on his own farm, not to be sold or a loan made for the commodity. This plan in the South would not take any market from the producers of these grains, but would allow the farmer to maintain his cattle in a better physical condition.

64440-56-pt. 6-3

Our agriculture is varied and we can grow many crops and produce livestock in abundance, all of which will be needed in a long-range program as our population increases and our farmers become fewer in numbers.

Much has been said about small farmers. Certainly a farmer who has ability should be provided the tools in the form of adequate credit to convert the small unit into a larger unit that could be made economically sound.

We continue to approve an expanded program for research and education. Many farmers through commodity organizations are making contributions to research and education, but limited income is so widely scattered they must rely more or less on Government for more of this program.

We continue to support rural roads and truckline-highway systems, REA, and farmer cooperatives. Farmers must preserve the right to do collectively for themselves what they can't do alone.

The growing and protection of timber should be encouraged. Adequate appropriation for research to control insects and diseases in our forests should be provided.

One of our youngest agricultural enterprises in Mississippi is the production of tung oil. This was encouraged by the Government during the war years to produce sufficient amount of high-grade oil for defense needs. Today importation of these oils is a very serious threat to these producers.

We thank you again for the privilege of appearing. We know you gentlemen have a Herculean task, but have every confidence in your ability to solve the problems.

The CHAIRMAN. Are there any further questions?

Thank you ever so much.

Mr. STEVENS. Thank you.

The CHAIRMAN. The next is Mr. George Bazemore and Mr. M. M. Kimbrell.

STATEMENT OF M. M. KIMBRELL, VICE PRESIDENT, GEORGIA BANKERS ASSOCIATION, THOMPSON, GA.

Mr. KIMBRELL. Mr. Chairman, my name is M. M. Kimbrell. I am the executive vice president of the First National Bank of Thomson. I represent this morning the Georgia Bankers Association, of which organization I am also the vice president and chairman of the executive council.

I have with me Mr. George M. Bazemore. Mr. Bazemore is the president of the First National Bank of Waycross, and his bank is maintaining one of the outstanding farm-service programs in the entire Nation. We express to you our genuine appreciation for being heard this morning and our views on this very important subject.

Georgia, of course, is still predominantly an agricultural State and, as the trustees of its economic resources, the bankers of Georgia are tremendously interested in the welfare of its farm people.

During the last few years we have seen tremendous changes come in Georgia, particularly in the cash cost to the farmer for operating. Farming is no longer the industry here where there is a low cash cost for his labor involved.

To illustrate, the average investment today or total investment in farm machinery and equipment in the State of Georgia is something like $525 million. A comparable figure in 1932 would have been about $31 million. Total farm income in that year would likely have been about $100 million. Last year, 1954, saw a drop in farm income of about $50 million; drop in 1 year.

What I am trying to say is that the farmer today is buying so much of the items that it requires to produce his crop. Actually the Department of Agriculture estimates that about two-thirds of the items he uses in production are purchased out of the stores. It means if he is going to have the funds with which to continue to operate there must be some cash income, sustained cash income from the items he has to sell.

We, of course, at that point are tremendously interested in seeing that there be no sharp drops and breaks in his total farm income such as we have seen more recently. It is forcing even the efficient operator to turn to other endeavors. It is requiring him to do many jobs that he would not like to do as an efficient farm operator.

It brings us to the point that the banks of this State, if they are to continue to finance as they want to do, there must be some reasonable assurance to the farmer that his income will not continue to suffer such sharp ups and downs.

It is therefore our feeling that he is unable to cope with weather conditions, there is nothing in the world he can do about that, there are so many other variable factors involved that he cannot control. It does seem, though, a very reasonable request that the return he gets from his crop once he has been able to produce it, his farm products, that he have some reasonable assurance of what he will be able to get in the way of price.

For that reason we are very anxious to see continued firm price supports for farm products.

We recognize that as perhaps relatively temporary. We realize that continuing price supports may not be the whole answer. We think that there must be some long-range program of a more permanent nature. We speak of surpluses and yet when we realize that maybe half the world, half the population of the world, tonight will go to bed hungry it may not be a question of surpluses. It may more properly be that of markets, distribution, the finding of and bringing together under satisfactory circumstances those people who need and our people who have to sell. It would seem that in that field, in the field of market as a long-range viewpoint, much can be done. Actually we are of the opinion that our export markets, our export picture could use an awful lot of emphasis.

Quite frankly, we are of the opinion that we could sell more of our commodities or so far as an outright gift, if that is necessary, to the free countries of the world.

The CHAIRMAN. Mr. Kimbrell, in that connection, do you not think any sales of cotton we make abroad may have to be subsidized by the Government?

Mr. KIMBRELL. Senator, I hate to hear the word "subsidize" continue to be used in connection with the farmer. It is still that word, I guess.

The CHAIRMAN. You use your own. What term would you give it?