CHAPTER VI AGRICULTURAL SUBSIDY AND RELATED PROGR HISTORICAL BACKGROUND Department of Health, Education and Welfare Estimated Appropriations for Fiscal Year 1970—Continued [In millions of dollars unless otherwise stipulated] Millions 17. 8 Training grants 3. 3 Child health and human development: Research grants. 45. 1 Collaborative research and development contracts 8. 2 Fellowships. 3. 6 Training grants. 9. 4 General and special research services: General research support grants. 4S. 2 Biomedical sciences support.. 7.5 Health sciences advancement support 5.0 General clinical research centers. 3:, 0 Special research resources 10.5 Animal resources... 4. 6 1. 3 2. 1 Regional medical library grants.. 2. 1 $100,000,000 appropriated for use over 5 years. ? Total through fiscal year 1972. The farm price-support programs in operation at the presen are a direct outgrowth of earlier experiences dating as far back 1920's. Changes in farm programs throughout the past 30 year been evolutionary rather than revolutionary in character. farm prices fell sharply following World War I and failed to r their prewar relationship with the prices of nonfarm products gress illthorized special intermediate term agricultural cred farmers and ranchers. This credit legislation was supplement the Capper-Volstead Act giving agricultural cooperatives il status within the framework of antitrust legislation. To reiterate, it is not the intention of the House Committee on Agriculture to pass judgment on the necessity for such programs, or on the efficiency of their administration. Rather, it is our intention to demonstrate the scope of such assistan, a programs, the level of Federal involvement, and the amount of Federal funds being channeled into such programs. The appropriations for these programs tend to increase on a geometrical rather than a simple mathematical progression. The tangential, supporting programs multiply at an even greater rate. More services and goods are required and the total number of eventual beneficiaries soon outnumber the figures that legislators originally had in mind. The prognosis calls for an increase, rather than decrease, in the funds necessary to carry on the programs of the Department of Health, Education, and Welfare. M'SARI-HALGES AND FARJ BOARD OBJECTIVES When, in spite of additional credit and the best efforts of cooperatives, agriculture continued to lag behind the nonfarm of the economy in the mid-1920's, leaders proposed legislati signed to make the tariff effective” for such major agricultural crops ils wheat, cotton, and tobacco. These proposals becan VIC Vary-Haugen bills allthorizing segregation of domestic and prices. The bills passed both Houses of Congress in 1927 and as 1925, but were vetoed both times by President Coolidge. The Agricultural Marketing Act of 1929, creating a Federal Board with a revolving fund of $500 million, was a direct onts of the unsuccessful attempts to get the VIONary-Hangen p?o enacted into law. It was endorsed by President Hoover as stitute for the proposal to increase the domestic price level major export crops relative to the world level. The Federa! Board had two major fields of activity; that of strengthening cooperatives and that of engaging in direct price stabilization tions. Mr. Alexander Leoge, former president of the Interna Harvester Co., was recruited by President Hoover as the first man of the Board. EARLY BEGINNINGS OF PRODUCTION CONTROLS Unfortunately, the depression of the 1930's began about the time that the Federal Firm Board started its operations. Eco conditions deteriorated rapidly and the Farm Board soon found stabilization funds committed, yet farm prices continued t Alexander Legge, drawing on his experience as former president International Harvester (0., soon became convinced that fa should restrict the production of wheat and other major crops il of the sharp decline in farm prices. · Prepared by Dr. Walter W. Wilcox, senior specialist, agriculture, Legislative Reference Servici 1 lic Latr 792, Oct. 2, 1942). In a sense, the precedent for the amendment grew out of the commodity Jouns started in of 1933 and made available to farmers each year since that t another sense it was considered an equitable method of com. farmers for subinitting to price ceilings during World Tar experiencing many prewar years of low prices. He was not alone in his belief in the necessity of production controls if farmers were to realize better prices. Most farm leaders, acquainted with the inability of the Federal Farm Board to improve economic conditions for farmers were of the opinion that in adjustment restriction in the production of the major farm crops was needed at tliat tiine. Then the new adınini-tration came into office as a result of the elections in 1932 ther promptly sponsored passage of an Agricultural Adjustment Act. This act authorized production adjustment programs: a direct outgrowth of the experience of the Federal Furm Board. The Agricultural Adju-tment Act of 1933 also authorized the rise of marketing agreements and licenses which had been - 11 sed successfully on a sma!! sale by California produrers to promote orderly marketing of peri-ilable fruits and vegetables. The le of nonrecourse Government loans dous which could be satisfied by delivery of the prodirt to support thie porire of storable (Tops Schus cntton and wheat beran in a very modet var in the first year's utilities tofilie igri:tural Adjustment Admini-tration. In order 10 2-1!re farners of immediaie market prices in line with the eseted longer run prive levels the Secretary of Agriculture in the fall of 1933 made available lonrecouse loans on cotton and corn at levels in excess of current inarket prices. EARLY POSTUAR OBJECTIVES The wartime price supports adopted under the Steagull ane expired at the close of 1915. Congress, anticipating their expiru the Agricultural Act of 1945, extended price supports 10 19: sub-tantial list of farın products at wartime levels and pru range of price support: from 60 to 90 percent of purity after th 1935 legislation providing for the inrocation of markeiing qo the basic crops—cotton, corn, wheat, rice, tobacco, and jie: when supplies become excessire, came back into use. During the war and early postwar years a shift in polies e: had occurred. In the prevar rears the central purpose of the ment farm program was adjustment in supplies. Price-sa;) loans rere a supplement to the adjustment programs. In the 1! subsequent post war legislation, major interest centered on the tory price support lerels. Little thought was given to the pro keeping production in line with arailable market outlets at ibe: price lerels. Acreare allotments and marketing quotas 25 prori in the 1935 legislation trere believed to be adequate. OBJECTIVES OF AGRICULTURAL ADJT STMENT IN THE 1930's Through the 1950's the agricultural adjustment program attempted to adjust annual supplies of the major crops in line with available market outlıts at satisfurtory prices. Iarketing agreements and orders which promote orderly marketing and give producers increased barguning poirer also were utilized by the producers of many of the perishable fruits and vegetables and by the producers of milk for fuid use in a number of city milksheds. Since United States imports much of its sugar, special legislation was passed allocating the domestie market among domestic producers, Cuban, and other offshore producers and providing for supplementary payinents to domestic producers from a special tax on all sugar. It was 1939 before revisions in the basic agricultural adjustinent legislation made it mandatory for the Secretary of Agriculture to offer price-supporting loalls on the major storable crops. By that time, however, Government price-supporting loans had become one of the most popular feutures of the farm prograin.” During the 1930's it is fair to say that the general philosophy of the farın progruin was that of assisting producers adjust their production and inarketings to improve and stabilize farin prices and income in a period of continued un'mployment. ADOPTION OF FLEXIBLE PRICE SCPPORTS Expunded domestic and foreign demands for farm produs result of the hostilities in Korea temporarily reversed the bui Commodity Credit Corporation stocks which took place in 19 1949 as a result of price-supporting operations. There is genera ment that the main objectire of the farm program in the 1 years has been the stabilization of farm prices and income ii relation to other sectors of the economy. Congress bad 011€ sharpest farın policy debates in 1954. howerer, on the que: whether this could best be accomplished by a program of stable a prograin of flexible-price supports. Secretary Benson, the lican adininistration, and most Republican Members of Congre the position that flexible price supports in the long run tunni effective in stabilizing farin prices and incomes in a favorab ei to other sectors of the economy. The Democratic leaders in C a majorits of the Democratic Vembers, and a number of 1 Republican lembers from farm districts had little faith in the price-support approach. As is usual in the case of controversial issues, the legislation i was a substantial compromise between the two poiris of moderate degree of flexibility in price support lerels Tras introd a result of the Agricultural Act of 1954. WARTIME FORCES MODIFIED FARM PROGRAM OBJECTIVES Then general price control legislation has adopted soon after the United States was drawn into iTorld War II, in view of the continued low farm prices at that time, the Secretary of Agriculture was given the reto power over price ceilings on farin products. The most innportant single farm price action taken during the war period, however, was the so-called Steagull annendment requiring Gorernment support of many farın prices for 2 years following the close of the war (Pub OBJECTIVES OF RECENT LEGISLATION Congress, in the same session where more flexible price si were approved, passed an Argricultural Trade Development and |