the flexible price support under which we operate now, nor the rigid 90 percent is the answer. There has got to be something else. It has to be implemented by other things, marketing orders, and so forth.

I would say this, Senator, that I think that the only use I would have of a flexible parity support would be a differential applied to quality in the commodity. For instance, there is no point in paying 90 or 100 percent of parity to produce something that we do not want, something of inferior quality. In other words, I think the top parity should be on a very top quality product. Then if you want to use flexible parities, put it down on the inferior grades of commodities.

The CHAIRMAN. Thank you. Are there any other questions? Senator AIKEN. I notice, Mr. Smith, that you agree pretty thoroughly with Mr. Wright on the use of compensatory payments and the support level as indicated in the Brannan plan except where the Brannan plan would provide the supports for 75 percent of the commodities produced, you would provide 90 or 100 percent for all he produces, everything.

Mr. SMITH. That is right.

Senator AIKEN. You also agree on letting everything go into the free market.

I was wondering, and I do not know whether you are speaking in an official capacity or not-do you agree on the limitation of production which is contained in the Brannan plan and which at the time it was introduced would limit the production for price support per farm to $24,000?

Mr. SMITH. No. I do not think that I agree to that. You have got to bring it up to date, certainly.

Senator AIKEN. Would you agree with the provision of the Brannan plan which would require any farmer in order to be eligible for supports to operate his farm in accordance with plans laid down by the Department of Agriculture?

Mr. SMITH. Well, I am not one who fears regimentation by the Department of Agriculture. I am not afraid of that.

Senator AIKEN. You would not worry about that?

Mr. SMITH. I would not worry about that. I think that has been stressed and overstressed. I think somebody else has tried to put out propaganda that that is a terrible thing to put that yoke on your neck. I am not afraid of it. I do not believe the average farmer is.

Senator AIKEN. I have delineated the main points of the Brannan plan. The one you would not go along with is the one which limits the amount of production for price support per farm?

Mr. SMITH. The amount of production per farm.

Senator AIKEN. The $24,000?

Mr. SMITH. Not to a specific amount.

Senator AIKEN. Approximately $24,000?

Mr. SMITH. It was named 7 or 8 years ago; no.

Senator AIKEN. That would be, well, 1949. I think prices were a

little below what they are now, but approximately the same.

Mr. SMITH. I am not saying that I would go along with all features of the Brannan plan. It is the principle of the Brannan plan as generally known that I am for, I think should be applied.

Senator ÄIKEN. Those were the four features-100 percent support for approximately 75 percent of the agricultural production, Gov

ernment direction of the operations of the farm, limitations on production and the other one that I mentioned.

Mr. SMITH. I am for the principle of that. It has to have supplements. I do not have this written out, but I have an idea how the milk surplus could be controlled. If I owned all of the cows in the United States of America that are making this milk, I would probably sell off 15 percent of the cows that were making the 10 percent too much milk, but I do not own all of the cows. They are owned by thousands of different individuals. But a way it could be done through the Federal Government that would accomplish the same thing, in my opinion, is this: Beef prices are low. Dairy cows sold for beef are very low, say, 7, 8, 10, 11 cents a pound.

Mr. Brannan could say to each producer, "There is too much milk produced in the United States of America. Let us get rid of some of the cows that are producing this milk. The ones to get rid of are the poorest cows. Sell them for beef."

But beef in so low that you would not get much out of them. Beef is so low that if Mr. Brannan told them that, they would not do it. But if Mr. Brannan said, "I will give you $100 on top of the beef price for every cow that you dispose of, and take out of the dairy," then you would see some dairy cows move into the beef channels. And you would see 6 or 8 percent of your cow population go out on that kind of a basis.

He could do that. There is plenty of justification for that subsidy which he would have to pay the farmer.

Senator AIKEN. Do you understand that your views correspond to the official views of the State of New York?

Mr. SMITH. I do not know that they do. No; there will be a paper right here later this afternoon. Although you can say that I am speaking from the standpoint of a poultry-dairy farmer, and as assistant commissioner of agriculture and markets, however, there will be another paper read here this afternoon which represents the opinion of the State of New York.

Senator HOLLAND. I note with interest that your program would involve the retirement of 15 percent of the dairy cows, largely at public expense, for beef purposes.

Mr. SMITH. That would be about 50-50-50 at public expense and 50 at the expense of the owner of the cow.

Senator HOLLAND. You know, of course, what straits the livestock industry has been in and how little their product is bringing. How happy do you think they would be about that?

Mr. SMITH. I am not touching on that phase of it.

Senator HOLLAND. Having to absorb that 15 percent of the dairy

COW.

Mr. SMITH. I know that.

Senator HOLLAND. In addition to all of the livestock slaughterings. Mr. SMITH. I realize that. There is potential demand in other sections of the world for some of this product, perhaps. If you could translate that into an actual demand in some way.

Senator HOLLAND. We are not trying to work out something that the world approves. We are trying to work out something that the representatives of the people throughout the Nation might approve.

Do you think that Senators and Congressmen from States that are predominantly livestock States would be happy about this program that you suggest?

Mr. SMITH. Probably not. There is dairying in almost every State in the Union. I am just simply saying that this would accomplish the result we are trying to accomplish, if it could be done.

Senator HOLLAND. How many cows do you milk at your dairy?
Mr. SMITH. Eighty.

Senator HOLLAND. And the number that was fixed has been fixed before us from time to time as a family unit, which is about 30, it is not?

Mr. SMITH. I think about that. It varies.

Senator HOLLAND. You would be more generous than Mr. Brannan. Instead of limiting it, the 100 percent or the 90 percent of the price support to the 30 cows, you would want it to go up to 100 or 80 cows? Mr. SMITH. Sure.

Senator HOLLAND. You see, it makes a difference what kind of shoe each man is wearing. He works out his program to fit his own situation.

Mr. SMITH. I know that.

The CHAIRMAN. All right. Thank you.

Mr. SMITH. Thank you.

The CHAIRMAN. Is Congressman Anfuso here?

(No response.)

The CHAIRMAN. We will next hear from Mr. Keane. You are a rural banker and a farmer.

STATEMENT OF EDMUND J. KEANE, VICE PRESIDENT AND DIRECTOR, AGRICULTURAL PROGRAM, MERCHANTS NATIONAL BANK & TRUST CO., SYRACUSE, N. Y.

Mr. KEANE. My name is Edmund J. Keane, I am vice president and director of the agricultural program of the Merchants National Bank & Trust Co. of Syracuse.

In the interest of time, Senators, I see no point in reading this statement. I am perfectly willing to make it a matter of record. The CHAIRMAN. That will be so ordered.

(The prepared statement of Mr. Keane is as follows:)

I would like to say that the Merchants National Bank & Trust Co., of Syracuse is one of the few larger institutions in this State that maintains a complete department for the handling of agricultural credit. Due to our many years of experience, we have the privilege of doing business with a great many farmers. The large majority of our loans are with dairymen because of the area we serve. After our years of experience, we feel that we understand the many problems that dairy farmers face. During the past 2 years we have had to spend a great deal more time than formerly to supervise loans to dairymen so that they do not become delinquent. Whenever extra expense items arise, most dairymen find it necessary to adjust their payment schedules because they do not have the income to pay for these expenses. Extra expenses that have come to our attention include: replacement or repairs to machinery, equipment or buildings; extra help for planting or harvesting; in the event of an accident or illness. The close margin that they are operating on doesn't permit them the opportunity to face these situations without refinancing their loan and attempting to spread their indebtedness out over a longer period of time.

During the past months, I talked to a dairy farmer in this area who had just voluntarily petitioned himself into bankruptcy. In going over his situation with him, it didn't appear to me that his position was that bad and that he

shouldn't have resorted to this action. However, he explained that his wife had recently died and previous to her death, he had incurred sizable medical expenses. In looking over his situation and considering the possibility of realizing enough income from his dairy herd to pay these obligations and continue his normal operational expenses, his situation appeared to him to be hopeless. His only recourse was voluntary bankruptcy.

To us, as an institution extending farm credit, this is a serious situation as this man maintained a dairy average of about 25 milkers and was attempting for the most part to do his own work, with extra help during planting and harvesting periods. This feeling of hopelessness represents a new problem that must be given serious consideration whenever extending farm credit. We very much fear that there are many others whose thinking is of the same kind. Nothing can upset a credit arrangement more than to have the borrower loose his desire to continue his operation for any reason. Our economy is based on credit and the dairy farmer needs credit.

For nearly 20 years the Merchants Bank has offered a farm auction service to assist farmers who wish to dispose of their property. While this service was originated to provide a service for individuals who wished to retire, the demand has changed a great deal in the past 2 years. This year we are running far above average in the number of dairy dispersal sales that we will handle. They are mainly from farmers who are finding that they cannot operate at a profit even though they have a large capital investment, therefore are going out of business. The CHAIRMAN. You may proceed.

Mr. KEANE. I would like to make one comment about a problem we find, with the possible suggestion that this committee might take under consideration a study to see if the same exists in other parts of the country and, that is, namely, setting up some kind of a program by existing credit agencies to enable young people to establish themselves in farming.

We here in this area at least find it a very serious problem in banking as part of the agricultural program, existing regulations and rightly so on banks and credit institutions. They are such that no matter how capable, worthy, or responsible a young man may be, there is no existing means of helping him substantially in establishing himself in an agricultural operation.

That would be my suggestion if the suggestion is in order.

The CHAIRMAN. Very well, sir. We have some laws on the statute books now. Those suggestions have been made by quite a few wit

nesses.

Mr. KEANE. Thank you, sir.

The CHAIRMAN. Yes. We have received testimony asking that we liberalize credit, as you suggest. Thank you, sir.

Mr. Berghold, will you come forward, please, and give us your name in full for the record.

STATEMENT OF WILLIAM F. BERGHOLD, NEW YORK, N. Y.

Mr. BERGHOLD. My name is William F. Berghold. I am editor of the Rural New Yorker. I do not, however, appear here today as editor of the Rural New Yorker. I appear at the request and on behalf of 660 dairy farmers who have signed their names to a petition authorizing me to appear, which petition has been given to the stenographer. (The petition signed by 660 dairy farmers is as follows:)

We, the undersigned farmers, authorize William F. Berghold, editor of the Rural New Yorker, to appear and testify on our behalf at the hearing before the United States Senate Committee on Agriculture and Forestry, to be held in Utica. N. Y., November 19, 1955.

Mr. BERGHOLD. Because of the crowded condition of the calendar you have, I am deliberately confining my remarks to the milk situa

tion here in the Northeast and specifically to the milk marketing orders.

The CHAIRMAN. Have you anything to add to what has already been said?

Mr. BERGHOLD. What I am going to cover, Senator, I promise you has not been covered today.

The CHAIRMAN. All right, proceed. That is what we want.

Mr. BERGHOLD. May I, however, first state for the record that the great majority of dairy farmers here in the Northeast are, as a matter of principle, opposed to price supports of any kind, but at the same time they feel that, if it is adjudged there must be a temporary support program, then there should be no discrimination in favor of the grain farmer as against the dairy farmer, as there has been-you cannot get blood out of a stone.

And, second, that dairymen do not look with much, if any enthusiasm on the so-called helf-help programs that have again been resurrected, first, because they are predicated on assessments against milk checks and you cannot get blood out of a stone; and, second, because they feel primarily that these self-help plans are designed to guarantee dairy products manufacturers against loss in their manufacturing operations-an operation, incidentally, on which their highest profits are made.

May I also express to this committee the appreciation for this opportunity to place the views of 646 individual dairy farmers on this record. No doubt this committee has already ascertained that in many cases the policy of the so-called farm leaders and farm organizations does not truly represent the sentiment at the grass roots. That situation is also true here in New York State; otherwise I would not be here before you today with signatures of 646 dairymen, regardless of their affiliations.

We in the East understand that midwestern dairymen resent their exclusion from all milk markets, principally by reason of the milk marketing orders. Let me assure this committee, and midwestern lairymen likewise, that, while New York dairymen may be married to the Federal order, they are not necessarily in love with it. It was put into effect back in 1938 as an emergency measure under the provisions, and pursuant to the declared policy, of the Agricultural Marketing Agreement Act of 1937, to bring order out of chaos-which it did. It is also true that, to a large extent, it has continued to prevent chaotic conditions. But dairy farmers feel they are entitled to more than just prevention of chaos. Time and time again they have been told they are entitled to 100 percent of parity in the market place and, while this may be a political rather than an economic goal, they believe that at the very least they are entitled to a voice in the market place. They have not had that voice for 40 years, and the Federal milk order is removing the producer further and further away from the chance of ever entering much less being heard in the market place. With both Federal and State statutes sanctioning unit voting by cooperatives, with the dealer-conceived and dealer-manipulated classified price plan still the dominating factor in the Federal milk order, and with complications constantly heaped on complications, the dairy farmer finds himself completely deprived of any voice in, or control over, the pricing of his own product.