Mr. ANDERSON. It would only control that portion of it which is due to acreage, but my guess would be that if, for example, the acreage of wheat could be controlled within forty-eight to fifty million acres, your surplus would not exceed, on the average, 100,000,000 bushels. You would have years of bumper crops and probably years of deficient crops, but on the whole you would have a surplus which might be handled in such a way as to make effective a large proportion of the existing tariff. I feel very certain that any scheme of this sort can not possibly be effective without control of production. I think the equalization fee, particularly if assessed upon the mills, and therefore an indirect tax upon the producer, would be wholly ineffective in that respect. Even if it were applied to the farmer direct, the obvious benefits as compared with the concealed disadvantages would, I think, inevitably result in overproduction. The whole supply and demand must some time come to a state of stabilization. There must be an equating of the supply and demand somewhere, in terms of price. If you increase the surplus of this country and maintain the production of other countries upon the same basis, that surplus will be effective not only upon the price here, but upon the world price. That equation is bound to occur sometime, somewhere. I think your production would gradually increase to the point where your equalization fee would be equal to your tariff, in effect at least, and the reduction of your world price would more than offset the advance in the domestic price. There is one other thing to which I want to call the attention of this committee. The Department of Ariculture has recently gotten out some figures showing the trend of consumption of flour over the past 25 years. Those figures indicate that there has been a reduction in consumption of flour in the United States of approximately 24 per cent in that period. Senator KENDRICK. Do you mean per capita? Senator HEFLIN. How do you account for that? Mr. ANDERSON. That would be equivalent to more than 100,000,000 bushels of wheat. Senator SMITH. You say reduction? Mr. ANDERSON. Yes. If this board could find some way to stimulate our own people to eat as much wheat as they did 25 years ago, you would not have any surplus. Senator KENDRICK. We would have no surplus in the production of beef if the per capita consumption had not been reduced, as I believe, in the same proportion that you indicate it has been reduced in connection with wheat. Senator NORBECK. What are our people eating if they are not eating wheat and beef? Senator SMITH. Gasoline. Senator HEFLIN. How do you account for that? Mr. ANDERSON. I think there are a number of factors which account for it in part. The change in the method of living, the concentration of population in large cities. Senator HEFLIN. And decreased purchase power? Mr. ANDERSON. No. Senator HEFLIN. You do not think the decreased purchasing power of the people has had anything to do with it? Mr. ANDERSON. I do not see how it can, because the purchasing power has increased instead of decreased. Senator HEFLIN. Do you think the average man has got more money now to buy with than he had a few years ago? Mr. ANDERSON. I haven't any doubt of it, Senator. Senator SMITH. Mr. Anderson, there is no question but that in vast areas of our country, though the average purchasing power in a statistical sheet may show an increase in very vast areas of our country the purchasing power for actual food is greatly less than it was 15 or 20 years ago. Mr. ANDERSON. I think that is true, Senator. I was speaking in terms of the total purchasing power of the Nation. Senator SMITH. Right at that point the total purchasing power may have increased, and increased in such a way as to indicate a tremendous decrease in the distributed consumption, and the distributed consumption is the thing that would increase the total consumption. The purchasing power of a vast number of people being decreased to where they could not consume this flour, and the purchasing power of another part vastly increased, they would eat no more, would consume no more flour than they would were their purchasing power less than it is. Therefore, you have decreased consumption forced by the inability of this vast number being unable to purchase it, and I think the lack of distribution of our purchasing power is the seat of this trouble. Mr. ANDERSON. I do not know what the causes are. I think they are very numerous. The Senator doubtless referred to one of them. The fact still remains, however, that we have a surplus very largely because our per capita consumption is greatly less now than it was 25 years ago. Senator SMITH. I should imagine that is true. Mr. ANDERSON. If this board could find some way by which that situation could be corrected, we would not need to worry very much about our wheat surplus. There is another factor which tends, I think, to maintain and stabilize the acreage of wheat, and that is the tendency toward diversification in farming. The establishment of definite rotations which could not be safely or wisely or profitably changed from year to year; once the rotations have been established, then, as to those sections as to which the rotations are established, you only get changes in acreage while your price is permanently at a point-and when I say "permanently" I mean for a period of time-sufficiently high to justify the change in the rotation. Senator SMITH. Have you the figures to indicate what has been the increase of wheat acreage in the last five years? Mr. ANDERSON. The average postwar over prewar is about 13,000,000 acres. Senator SMITH. Increase? Mr. ANDERSON. Increase. That accounts for 121,000,000 bushels of wheat more, on the average, postwar than prewar. I think it might be very definitely asserted that if we had not had that 120,000,000 bushels over the past five years there would not have been any complaint over the price of wheat. The price, I think, would have been abnormally high instead of abnormally low. I think that is about all I have to say, unless the Senators desire to ask me some questions. The CHAIRMAN. Well, have you anything further to say about the remedy for the conditions? Mr. ANDERSON. Well, I can not point out what the remedy is, except to say that it seems to be the remedy is in not having a surplus. The CHAIRMAN. I know; but we can not get rid of the surplus by a legislative act, of course, or at least if we can I do not know it. Mr. ANDERSON. You might put a tax on acreage. The CHAIRMAN. Do you advocate putting a tax on acreage? The CHAIRMAN. Well, then, we can eliminate that. Nobody would advocate it. Mr. ANDERSON. Senator, the problem here is exactly the same problem as every industry in the United States is struggling with to-day overcapacity and overproduction. The CHAIRMAN. There is not any other business in the United States that is depressed like agriculture. Everybody concedes that. Mr. ANDERSON. Not to the same extent. I concede that. The CHAIRMAN. What everybody wants to do, I think, as a general rule, the farmers as well as others, is to put agriculture on a higher basis if it can be done. Do we come to this proposition—and if we have come to it, I am not criticizing the man who says we are there that we can not do anything, and we can just keep our hands off? If that is true, we ought to meet it. Senator SMITH. Mr. Anderson, what about Senator FERRIS. I would like that question of the chairman's answered, if he has an answer. Mr. ANDERSON. Well, that leads me to say this, that it seems to me this legislation is, in a way, putting the cart before the horse. The CHAIRMAN. Well, let us reverse it, then. Put it around where you would like to have it. Mr. ANDERSON. If you had an agricultural organization through which you could exercise some control of production, at least a control of production equal to that which is exercised in industry-and that is voluntary control-there are no combinations in industry that I know of which control production. It is a general recognition of the fact that there is no economic advantage in producing for a market which does not exist. It does not make any difference whether it is a domestic or a foreign market. A manufacturer may manufacture for domestic consumption or he may manufacture for a foreign market, but he does not manufacture for either if he can help it, unless that market exists at a remunerative price. Now, as an individual he can only adjust, so far as it is possible for him, his production to the general situation. He can not agree as to what his production will be. Therefore he is, in a sense, up against exactly the same problem that you have here. If you had an agricultural organization, capable by voluntary action, of controlling the acreage, your problem would be, to that extent, solved. The CHAIRMAN. Do you contend that it is possible to get that kind of an organization? If so, how? How can we do that? Mr. ANDERSON. I do not think you can through this bill. The CHAIRMAN. Well, any other bill. Mr. ANDERSON. Because I think this bill has the opposite tendency. The CHAIRMAN. Is there any suggested by bill which that may be done? Mr. ANDERSON. I do not think it can be done by law. Senator KENDRICK. Is this not the actual fact in connection with it, that nearly all kinds of production other than agricultural production, proceeds in a localized way, under which the product may be more or less restricted and limited to meeting the needs of the market, whereas agriculture proceeds over a territory so vast that no direct influence can be brought to bear upon the amount produced? Mr. ANDERSON. No; that is simply saying that because your agricultural production is far more diffused and your problem of control of production is far more difficult than it is in industry, but it is the same problem, nevertheless. Senator KENDRICK. Well, take as an illustration the steel products of the country. As we are led to believe from the figures, a majority of them are under the control of one organization-one company. Mr. ANDERSON. Now, I do not know whether that is true in the steel industry or not, but I do not think it is true of industry generally. Senator KENDRICK. Well, I think it is true from the figures easily ascertainable, that more than one-half the steel in the country is produced by the United States Steel Corporation. Obviously it would be a much easier thing to control the production of steel. Mr. ANDERSON. I admit that it is easier. All I say is that it is the same problem. The CHAIRMAN. Well, the question in my mind is, if there is any solution, whether it is the same problem or any other problem, is it possible to bring about an organization of the farmers so that the same result could be obtained as is obtained in other lines of industry? If it is, how can we do it? If it is not, that ends it. If that is admitted to be true, and if that is the only remedy, then we are all wasting our time. Senator FERRIS. I want to know whether you acknowledge that agriculture is in a critical condition. I did not know but that possibly you felt, more or less, it was the run of nature and that by and by, somehow, we would come out in better condition without legislation. Mr. ANDERSON. Well, Senator, I am perfectly willing to admit that there is an agricultural problem. I think that is the same problem with which each part of industry is struggling. It is more acute as an agricultural problem because agriculture is less organized, and consequently less able to take up the slack. Senator FERRIS. There is a tremendous difference between agriculture and manufacture, because the farmer has the elements to contend with. However careful you might provide for your acreage, you may lose out by a drought, tornadoes, nature might be against him, and the manufacturer certainly does not have all of those problems to contend with, does he? Mr. ANDERSON. No, sir. The CHAIRMAN. Isn't this true, as a general proposition, that agrirulture is not prosperous, and practically all of the lines of industry cge prosperous? The prosperity that you speak of, of the country eanerally, is because industry generally is so prosperous that on the general average, the country is considered prosperous. Yet here is one very important element that is lagging behind, languishing, suffering, if the testimony before this committee can be relied on. Well, I guess that is all unless there are some further questions. The hearings are closed. The committee will meet in executive session to-morrow morning, with the idea of taking some action. The committee stands adjourned until to-morrow at 10 o'clock. (Whereupon, at 11.50 o'clock a. m., the committee adjourned to meet in executive session to-morrow, Tuesday, April 13, 1926, at 10 o'clock a. m.) |