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surance if you put your whole statement in the record and if you can highlight it for us and give us new ideas that have not been brought forth, the committee will appreciate it.

STATEMENT OF W. D. LAWSON III, ATLANTA COTTON ASSOCIATION, GASTONIA, N. C.

Mr. LAWSON. I will just read a few excerpts from my statement. Nothing in this statement we are presenting can be construed as any design on our part to do anything that would hurt the prosperity of the cotton farmer. To the contrary, what we are recommending will maintain his income. The cotton farmer is our customer-we are dependent on the distribution of his cotton to domestic mills and foreign markets for our livelihood.

I represent the Atlantic Cotton Shippers Association. All of us realize the cotton situation is serious. Regardless of cause we have a large surplus of cotton which we have been unable to decrease but, to the contrary, increased even with acreage controls.

The only observation we will make as to acreage controls is our belief that the small, family-size farms have been adversely affected. Of the 131,000 cotton farms having allotments of 5 acres or less, it is significant that 71,000 of these family-size farms are located in the Southeast.

The family-size-farm-acreage allotments should be increased not decreased.

We must realize, the United States does not have anywhere near a monopoly in producing cotton. The International Cotton Advisory Committee, in its October report, states free world cotton production outside the United States will approximate 17 million bales this year, highest in history. The 1954-55 production was 15.5 million bales.

The report further states that production of cotton is a major industry in countries where cotton was relatively unimportant until a few years ago and, if the present trend continues, in two more seasons foreign free world production may be sufficient to meet all consumption requirements without any imports from the United States. We believe it is significant to point out that increased production per acre and expansion in foreign production is due in no small way to the benevolence of our Government under the point 4 program of sending our agricultural experts to foreign countries to teach them more about producing agricultural products, including cotton. From April 1948 to March 1955 our Government spent $36,650,000 under this program for agricultural technicians and trainees, besides this $300 million for equipment, insect control, and so forth. If we set these countries up to compete we better get out of the business. The CHAIRMAN. That was all crops?

Mr. LAWSON. Yes, sir.

We cannot continue to set an arbitrary price for cotton and do other than further pile up cotton in Government stocks and Government loan. This is economically unsound. Storage, interest, and insurance is costing the Government or increasing the cost to get cotton out of the loan to a tune of $7.5 million per month, or approximately $90 million per year. These costs will increase as cotton goes into 1955

loan.

In 1949-50 the United States produced 16 million bales of cotton out of a total world production of 31 million bales of cotton. In 1954-55 the United States produced 13,600,000 bales of cotton out of a total world production of 37,160,000 bales of cotton. United States production decreased during that period by 2,405,000 bales of cotton. World production increased 6 million bales of cotton.

A contributing factor to increased world production is increased yield per acre of cotton in the principal cotton-producing countries. During the past 5 years the United States yield per acre increased 70 pounds; Mexico, 83 pounds; Brazil, 32 pounds; Pakistan, 29 pounds. India and Communist areas, no significant increase or decrease in yield per acre. Yield per acre of the 1955 crop in all countries will increase these figures.

United States consumption of cotton for the season 1950-51 was 10,509,000 bales of cotton; season 1954-55, 8,835,000 bales of cotton, or decrease of 1,664,000 bales of cotton. The consumption in foreign countries in the season 1950-51 was 20,763,000 bales of cotton; season 1953-54, 24,499,000 bales of cotton, or increase of 3,736,000 bales of cotton.

Manmade fibers affect United States consumption much more than does foreign production of cotton. Ten years ago, in 1945, we consumed domestically 4,500 million pounds of cotton; in 1945 we consumed domestically 818 million pounds of manmade fibers. In 1954 we consumed 4,125 million pounds of cotton; 1.5 billion pounds of manmade fibers. A decrease of 387,300,000 pounds of cotton; increase of 677,400,000 pounds of manmade fibers.

In 1945 the per civilian per capita consumption of all fibers was 29.6 pounds of which 22.2 pounds was cotton, 4.7 pounds manmade fibers. In 1954 the per capita consumption was 32.6 pounds of which 21.8 pounds was cotton, 8.2 pounds manmade fibers. Per capita consumption increased by 3 pounds; cotton decreased four-tenths pound, manmade fibers increased 3.5 pounds per capita.

Price to United States domestic mills must have been the contributing factor to the decreased use of cotton in the United States and increased use of synthetics. Increase in price of cotton contributes to decreased use of cotton. Decreased price of manmade fibers cause its increased use.

Loss of United States cotton in the export market to other cottonproducing countries is so evident—even with the United States grants and loan of dollars-that we will touch only lightly on this phase of the cotton situation. We have pointed out that foreign consumption of cotton has increased during the past 5 years by 3,736,000 bales, but the United States exported 2,470,457 bales less in 1954-55 than in 1949-50. United States exports of cotton compared to exports of foreign cottons, cotton produced in foreign countries, from 1949 through 1955 cotton years were:

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Cotton-producing countries such as Mexico, Brazil, Nicaragua, Pakistan, and Communist areas have supplied the increased foreign consumption-American price supports have made increased production profitable to these countries whereas the United States exports have steadily decreased. American cotton, being artificially priced above foreign cottons, must be the controlling factor. It will, I believe, be interesting to the committee to know prices United States cotton mills have to pay for United States cotton compared to prices foreign mills are buying foreign cotton:

Japan bought Mexican cotton, landed Japan, Strict Middling 1 1/16 inches at 33.50 cents per pound. The Government loan price for this quality of cotton at Macon, Ga., is 36.76 cents per pound. It will cost about 5 cents per pound to land it to Japan, which makes a difference of more than 5 cents.

The CHAIRMAN. Do you know what kind of money Japan used to buy that cotton?

Mr. LAWSON. They used our money, I am quite sure.

The CHAIRMAN. I just wanted it on the record. I know of many other instances. There are further instances I could bring out which I will not do.

Mr. LAWSON. Liverpool bought, landed Liverpool, Strict Middling 1 1/16 inches Russian cotton at 34.30 cents per pound; Iran cotton, 33.16 cents; Mexican cotton, 34.40 cents. The Government loan price for that quality at Macon, Ga., 36.76 cents per pound.

Canadian mills bought, landed Canada, Mexican growth, Strict Low Middling 1 1/16 inches at 29.25 cents per pound. Government loan price for this growth at Macon, Ga., is 34.61 cents per pound.

These prices are given the committee to show the disadvantage of our United States mills in competing with imports of foreign textiles which, taking into consideration pay of American labor versus foreign labor, especially Japanese, aggravates the tariff situation. The prices also clearly indicate why we have lost our foreign markets for United States cotton.

While exportation of cotton is important to our economy, little consideration has been given to our domestic market which is, and has been, the largest consumer of United States cotton. Any two-price system-high prices for domestic mills, low prices for foreign mills— is not the answer to the cotton problem. United States cotton must not be sold under any Government program to foreign cotton mills at less price than to the United States cotton mills.

If American cotton is supplied to foreign mills at less price than to our domestic mills, (1) the foreign mills would be in a position to export cotton cloth to the United States in larger quantities than at present for the simple reason they would be obtaining American cotton at less price than our domestic mills; and (2) our domestic mills will lose their export markets for American manufactured goods for the simple reason they would be paying more for American cotton than the foreign spinner would be paying for American cotton. The consequent reduction in the consumption of cotton by our domestic mills. would adversely affect both our cotton farmers and American labor. If, through any device, export subsidy or selling out of Government stocks cotton to foreign mills at less price than the domestic price, United States mills are required to pay more for American cotton than

foreign spinners, it would place our domestic mills at a further disadvantage not only in the exportation of their textiles, but would aggravate the complaint our domestic mills have registered as to decrease in tariff rates by our Government.

While we believe in and recognize the necessity of international trade, care must be exercised by our Government in interpretation of the peril-point provision of the Tariff Act. No international tariff agreement should be entered into that would adversely affect the domestic consumption of American cotton.

In entering into tariff agreement recently with Japan our State Department certainly did not consider the adverse effect the agreement would have on our domestic cotton mills. Steps must be taken at once by our State Department to remedy their ruthless and careless action.

We wish to make it abundantly clear the cotton producer must be assured of an income comparable to other lines of endeavor. With a minimum wage of $1 per hour, protection of United States industry by tariff, this is an obvious necessity.

How can this be done? Our recommendations are:

1. Increased acreage allotments to the family-size farm, thereby reducing cost of production;

2. Permit cotton to sell to domestic mills and foreign markets at competitive price; and

3. Pay direct to the cotton farmer on cotton produced on allotted acreage the difference between the price he gets for his cotton and a percentage of parity that will assure him of income comparable to other lines of endavor. We had such a plan in 1935 and only 115,000 bales of cotton went into Government loan and this 115,000 bales of cotton was redeemed by the producer that year. In 1935 our domestic consumption increased 1 million bales of cotton; exports increased 1,124,000 bales of cotton over the previous cotton year.

In our opinion, the Secretary of Agriculture is presently authorized to put into effect the recommendation we make as to what we term "compensatory payments" to the cotton producer, under authority of that part of the agricultural laws which authorized the payments of expert subsidies on cotton or selling to foreign markets at loss, by taking the funds out of tariff receipts.

The CHAIRMAN. Is that on the cotton sold abroad?

Mr. LAWSON. Cotton consumed by our domestic mills.

The CHAIRMAN. You mean a difference-I did not quite get that. Mr. LAWSON. Pay him the difference. For instance, if the Government will guarantee him a price on the amount of cotton consumed by the domestic mills, say 9 million bales, the market will be allowed to seek its own level. If the guaranty price is 33 cents per pound and the market is 30 cents per pound, the farmer has an allotment of 200 bales he would get a check for the difference.

The CHAIRMAN. You mean on domestically consumed cotton?
Mr. LAWSON. Yes, sir.

The CHAIRMAN. How does that differ from the so-called Brannan plan?

Mr. LAWSON. I didn't know the Brannan plan.

The CHAIRMAN. It is a production payment that is made. In other words, the price of a commodity to be paid the farmer would be fixed

and the farmer will sell this commodity on the open market for whatever it will bring, and if it brings 2 cents, let us say cotton, under the fixed price, the Government pays the difference.

Mr. LAWSON. Was that everything he produces?

The CHAIRMAN. Well

Mr. LAWSON. This wouldn't take care

The CHAIRMAN. The Brannan plan did not envision that, either; just envisioned certain commodities.

Mr. LAWSON. For instance, cotton. This would only apply—a man would be allowed to raise all the cotton he wants, but he would have an allotment of 200 bales. If he raised more he would have to sell that at the world market, whatever he could get for it, but the Government would pay the difference between the market the day he sold the cotton and the guaranteed price.

The CHAIRMAN. That is along the same line as I understand the Brannan plan, except you would give no protection for cotton sold in foreign markets; only on that portion of his production that would be used for domestic use.

Mr. LAWSON. It is a compensatory-payment plan. Some people call it a subsidy and don't want a subsidy. But if I pay a farmer 331⁄2 cents instead of 30 cents I am giving him a subsidy of 32 cents, and a rose by any other name is just as sweet.

At the end of each year the Government will know exactly how much the program has cost. It will discourage foreign production of cotton. It will make a free market in which the world demands for cotton will establish the price. The basic law of supply and demand will again be brought into play. It will enable our domestic mills to buy cotton in competition to foreign mills. It will eventually eliminate argument over acreage allotments. It will end a complicated and uneconomic present method of establishing loan prices on the many different grades and staples produced under the present system.

It is impossible for loan differentials to be reduced as long as the future market price and loan price remain in close proximity. The United States Department of Agriculture fixes prices on 336 different qualities of cotton for the coming year. I say it is impossible for one man, or group of men, to do this correctly. This practice causes much undesirable cotton that should be consumed to seek the loan.

As an example, last year there was a scarcity of low grades. Merchants who had sold short in the summer of 1954 were forced to bid up the price to an unreasonable level. This spring, using its customary procedure, the United States Department of Agriculture raised the loan price of low grades 1 cent per pound. This loan price made it unprofitable for cotton mills to spin them, forcing them to better grades of which there is a scarcity. As a result, low-grade cotton is pouring into the loan at prices that are out of line with other qualities. The compensatory payment plan will avoid many questions and allow the Department of Agriculture to reduce its operating expenses, and most important it will guarantee movement of cotton for export and eliminate large surpluses hanging over the market. It will allow cotton to offer stronger competition to synthetics which are slowly but surely replacing it in the markets of the world.

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