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Mr. BROOKS. So that actually what will happen is you will sell about a million bales, if we sell the million, competitively that will start selling January 1 and then the other million and a half will be in economic programs or 480. That is what you will do this year. You have to meet the competitive price or use programs or you are already out of the export market.
Senator EASTLAND. Say we reduce our price to where it is competitive with Mexican cotton or Brazilian cotton; we are going to be competitive. Will that get these markets back, a competitive price, or do we have to make terms that they cannot meet to get the market back? What is your judgment?
Mr. BROOKS. If we meet terms, if we make terms, of course, it will mean we will not have to go as low in price. If you can do it by indirection you will not put as much pressure on the world price. It would be determined by which method you use.
Actually, it is very difficult once you get into production to pull that production out, and I think it would be very difficult, for example, for us to place a price in world markets that would put out of production that that is in; but certainly we can be competitive to the extent that we stop further expansion and if we can even do that in 3 to 5 years we will be out of our export troubles.
Senator EASTLAND. I agree, but here is what I was leading to: Public Law 480 is not a weapon with which we can move a lot of cotton; we could use it as a weapon to dry up some foreign production because no country could meet that kind of competition.
Mr. BROOKS. Yes, but all we are doing, we are doing two things in 480. It depends on how far we go. The governments themselves like 480 very much, but often the domestic mills in these countries don't like 480.
Senator EASTLAND. Because our cotton is not competitive?
Mr. BROOKS. That is right. What is happening is that our price of American is far higher and 480 is very beneficial to those governments because we let them use some of that money for economic aid in the country. But for that mill itself, who is taking money in terms of currency of his country and paying this high price for it, he is not very enthusiastic about 480.
Senator EASTLAND. I agree. Would you recommend an amendment to 480 to provide for sales of cotton or other commodities under that bill at competitive prices?
Mr. BROOKS. I will have to do that or work out some way to where this domestic mill in these countries that I am speaking of is not penalized as he is at the present time. The Government is getting benefit of 480 but he is not.
Senator EASTLAND. We set up 660,000 bales, I believe, to be exported under Public Law 480 from August 1 to January 1. Actually we will export only about 150,000 bales during that period under that law; is that correct?
Mr. BROOKS. That is approximately correct. I haven't seen any figures in the last week or so, but you have tremendous resistance on the part of these mills in every country. You just have to choke it down their throats because it is a penalty to them.
Senator EASTLAND. Do you think the law ought to be amended to provide for competitive sales of cotton under the provisions of that bill?
Mr. BROOKS. I think you have to do that to make it competitive.
The CHAIRMAN. Have you not heard it said that the Secretary of Agriculture has the power now under the existing law to sell this cotton at a competitive price if he chooses to do so? Mr. BROOKS. WellThe CHAIRMAN. Foreign sales, not domestic. Mr. BROOKS. Well, under foreign sales The CHAIRMAN. Is that not true? Mr. BROOKS. I am not sure, Senator.
Senator EASTLAND. I think that there is a legal power under Public Law 480 to sell competitively but if it is not being done
The CHAIRMAN. How can you force it? We can put all the laws on the books, but if the Executive will not do it, what can we do? Impeach him?
Senator EASTLAND. Under the original Public Law 480 it provided for the State Department to have the veto power on sales made under that law, and Congress last year took that provision out of the law by amendment and now the State Department has nothing to do with it. We can meet it by legislation, I think.
Mr. BROOKS. Senator, I think we must analyze it from this standpoint: That if we make the cotton competitive in price, then we are competitive actually. I mean with the mill as well as with the Government. We are competitive actually, then, with other countries. These other countries are selling cotton to the same---producing countries are selling cotton to the same consuming countries and accepting their exchange for their cotton.
Now we have one advantage and which no doubt the administration has tried to use, and that was that in the case of 480 we did take the funds and didn't bring the funds back to this country, but we did make them available to these foreign governments. From that standpoint, there is probably great justification for our trying to do as good a trade as we can because we, in effect, are giving them economic aid through 480.
On the other hand, if we are going to get actually competitive we might have to give up that viewpoint and go to the other one, which would mean that we would sell at competitive prices and accept foreign currencies.
Senator SCHOEPPEL. How different would that be in theory to the two-price system?
Mr. BROOKS. Senator, I get quite confused here. I can't, you know we whip words around, but I can't see anything but what in the end that we must sell our cotton in foreign countries competitively; and if that is cheaper than the price at which we feel is fair for this country, then it must be a two-price system regardless of what you call it.
Senator SCHOEPPEL. And protect the American farmer on his domestic production?
Mr. BROOKS. Yes. That puts the American farmer somewhat in the same competitive position as labor is protected in this country and industry and many other economic units.
The CHAIRMAN. May I point out to you that a moment ago, Senator Eastland pointed out not only is it authorized in Public Law 480 but we have it in the law of 1949. Section 407 of the act of 1949 states: “The Commodity. Credit Corporation may sell any farm commodity owned or controlled by it at any price not prohibited by this section." · The only prohibition by this section is to domestic consumption. It states that unless the price is 105 percent of the support price plus storage charges and interest, no domestic sale can be made. But the act further states that this shall not apply to sales for exports. So today you have a law on the statute books that permits the Commodity Credit Corporation to sell these surplus commodities on a competitive world market. There is no price restriction. What else do you want us to do to make them do it? Mr. BROOKS. I understand that. The CHAIRMAN. You are familiar with that law? Mr. BROOKS. Yes.
The CHAIRMAN. And you would state that the Commodity Credit Corporation has the right today to sell this cotton on the world market at competitive prices?
Mr. BROOKS. Yes; and beginning January 1 they have announced they will sell a million bales which I said may be a very small and very weak start, but at least it is a start and what I think is that we want to be certain that that is the beginning and not the end of doing this job. That we must do if we are going to meet this situation.
I have some recommendations, Senator, and I know you like to get recommendations as to what we should do.
The CHAIRMAN. I know you have the problem solved for us. Go to it.
Mr. BROOKS. I wish it were that simple and I could, but I had a situation once before and they asked me to solve the problem of cotton and I told them I was too much involved and too much in it, but if they would let me handle this potato problem I could handle that because it was up in Maine and I knew little enough about it to handle it.
But the recommendations as we have worked them out, our cotton group here, are as follows:
First, that we sell our cotton competitively in world markets in order to increase sales and to slow down foreign expansion.
The CHAIRMAN. We have the law on the statute books to do that. Mr. BROOKS. You have the law to do that.
The CHAIRMAN. How will you force it? That is the point. No matter how many more laws we pass it is now the law that they can do it; what else can the Congress do to make them do it? Mr. BROOKS. I think
The CHAIRMAN. I suggested impeachment awhile ago, but we may not want to go that far.
Mr. Brooks. I think the Department of Agriculture is making a tremendous effort to get this done. Now what I think this committee, as an agriculture committee, ought to get in with the Department of Agriculture and help them fight the State Department to the end if it takes that to do it.
The CHAIRMAN. We have been doing that all the while. The committee has done it. As I said a while ago, as chairman of the committee I selected my good friend, Senator Eastland, to head a subcommittee to find out the facts and that was done and they recommended
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and I think they asked the Department what else they could do, except through persuasion. Efforts were made to do that very thing, and the whole committee has talked to, as I recall, the State DepartmentI know I have as chairman-but to no avail so far.
Senator SCHOEPPEL. Mr. Chairman, might I inject in here-and my good friend Jim Eastland is here who headed that subcommittee I was a member of that committee, listened to that testimony. In utter fairness to the Department of Agriculture, we had officials of the Agriculture Department on a very high level who came before that committee and pointed out to us the difficulty that they were encountering by reason of the State Department. Let us call the tune on this thing. They were most sympathetic and respectfully suggested that the Agricultura Committee and other Members of Congress could be most helpful if this matter were arranged in some way so that the Agriculture Department itself, and the officials in the Agriculture Department, would be free of the difficulties they were encountering on the foreign side from members of the State Department.
I found the Agriculture Department very, very sympathetic to a broader approach to this problem, free from a lot of the entangling difficulties and roadblocks they had encountered in the State Department. My friends in the State Department will not like this, but it is true and Jim can correct me if I am wrong.
Senator EASTLAND. That is absolutely true.
Mr. BROOKS. I don't think your problem on this job is in the Department of Agriculture. It is across the way.
Senator EASTLAND. What it is, it is discretionary in the law now whether this cotton be sold competitively or whether it be sold at all, is it not? Mr. BROOKS. Yes.
Senator EASTLAND. And the State Department has been able to block it in the Cabinet and at the White House; that is true, is it? · Mr. BROOKS. So far yes, except to the extent of 1 million bales.
Senator EASTLAND. A limited program.
Senator EASTLAND. Do you think in your judgment it would be helpful if we would remove that discretion and order it sold ?
Mr. BROOKS. I think this: That the roadblock must be removed or otherwise we are going to have an economic collapse in the Cotton South that is going to be far more serious than I think anybody in the State Department yet realizes, and I think some way the State Department must be reached with the facts because I realize that we have great responsibilities around this world now and we are the leaders of the free world and we must measure up to this responsibility.
On the other hand we can't measure up to it by going broke ourselves and we have reached the point now that we are going broke with this program if we do not make some changes. If we go broke we cannot finally help our friends.
Senator EASTLAND. You are exactly right.
The CHAIRMAN. I thought you meant the country. I was going to inject we are almost broke now.
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Senator EASTLAND. Drastic acreage reductions that we have are largely due because these stocks are not sold; is that not right?
Mr. BROOKS. Yes.
Senator GEORGE. I have one thought. The State Department has had the rather restrained view that they could make sales only to governments, they could 0. K. sales only to governments, and that what the government did with the advantage they got under 480 sale was up to the foreign government,
In that, I think the State Department has been wrong because I do not think it constitutes dumping in any fair sense of the word to permit sales under 480. But unfortunately the State Department wished to use our 480—I hesitate to make this statement for this record, but I am compelled to say I believe it to be true some in the Department wish to use 480 when used sparingly and in a way to indirectly add to the foreign aid that we are already giving in very liberal quantities to these foreign governments. I believe the State Department has undergone some change of mind and thinking. . I would like to join you, Mr. Brooks, in saying while I disagree very strongly with many of Secretary Benson's suggestions, on this particular matter he was most anxious to use 480 as you and I and Senator Eastland, who is familiar with it, part of the forces that organized the legislation which finally became law-he wished to use it as we conceived it should be used; not for the benefit of governments necessarily and certainly not as a coverup method of foreign aid, foreign assistance to those governments, but to get the cotton out of this country. And in order to do it I think you are entirely right when you put the finger on the fact that the governments got the benefit but not necessarily the spinners in those foreign countries or the people who wanted this cotton for use in those foreign countries.
Mr. BROOKS. Senator, in fairness to a statement I made I want to make this additional statement. I said that some of the cotton firms of this country had used their finances to help expand production. The reason why I stated that was because a lot of producers in this country have felt that maybe some of the benefits of what the State Department has talked about that was going to some of these foreign producers, that lots of it flowed back into this country from other people.
Also, I want to say that not all cotton firms in this country have done that because there are cotton firms in this country who feel that we ought to do everything we can to protect the cotton economy of the South and they have been very vigorous in their position.
I did not intend to condemn the cotton industry or cotton firms as a whole by any means or to question it. In fact, if you are interested in making money, certainly maybe those cotton firms had the right to do that and go down and use the money to expand foreign production, but it has been disastrous as far as domestic producers are concerned. It has been very difficult for us.
Now our second proposal is that we protect domestic mills through quotas on goods coming back into this country because we must, if we sell this cotton at lower prices in foreign countries, we must protect the domestic consumer of goods because otherwise we will soon lose that one, to. We must protect this domestic mill, either voluntarily or through invoking section 22 of the law which we already have on the statute books.