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commodities in which there has not been an appreciable inflationary pressure because the supplies have been adequate.
Senator BRICKER. You mean price pressure.
Secretary BRANNAN. Inflationary pressure is a synonymous term to me.
Senator BRICKER. The amount of purchasing power to the amount of supply.
Secretary BRANNAN. In other words, we cannot keep up with it.
Senator BRICKER. Prices are an evidence of it and the result, but not wholly so.
Secretary BRANNAN. Not wholly so, but there are commodities which fall in that category. Let us take pork for example. Pork has not even stayed at 100 percent of parity. It has been below that level because the supply has been equal to the demand.
Senator BRICKER. Then you come back to your corn crop again.
Secretary BRANNAN. That is right. May I point out to you that we went into this year with about a 900 million bushel carry-over of corn, and we will go out of it with around 600 million bushels of corn. In other words, we are going to use all we produced last year plus 300 million bushels more that we carried in from a previous year trying to get an increased supply of hogs for the market, and we have gotten it. The hog numbers in this country are now the second largest they have ever been in history, I believe.
Senator BRICKER. One more question before you get away from that: Have you any revised estimate on the wheat crop for this year! Of course, you cannot until the spring wheat crop gets under way.
Secretray BRANNAN. We issued it Thursday of last week, showing a further decline of about 44,000,000 bushels from our previous month's estimate. It will probably run at or just slightly under a billion bushels for the total crop.
Senator CAPEHART. What will our carry-over be?
Secretary BRANNAN. Our carry-over will be around 400,000,000 bushels currently, even after we have shipped the million tons of wheat to India which is now scheduled, paid for, and en route.
Senator CAPEHART. A 400,000,000 bushel carry-over!
Senator CAPEHART. Of course, if we have a short corn crop we may well need that wheat.
Secretary BRANNAN. That is what happened the last time. We fed everything. As you are aware, we are hoping and doing all that we know how to do within our authority to induce the production of sorghum grain on the areas which have been blown out of wheat or taken out by green bugs or whatever else.
Senator Moody. Mr. Secretary, was not the main purpose and the result of the use of consumer subsidies in the Second World War to control inflation rather than to stimulate inflation?
Secretary BRANNAN. Certainly it was to control inflation.
Senator MOODY. And if subsidies had not been used in World War II you would have had much higher food prices and undoubtedly higher wages and the general spiral we did not get between 1943 and 1946; is that right?
Secretary BRANNAN. Tremendously so and accumulatively so. Take the dairy industry, for example. If some assistance had not
been brought into that area to maitnain a price at which farmers could produce and people could buy the commodity, either people would have to quit buying the commodity which was essential to our nutritional standards in this country, or the farmers would have gone out of business. As the farmers went out of business, then the demand for the diminishing supply would have been terrific, and accumulating and spiraling.
Senator MOODY. And that would have had its effect on wages and manufacturing prices and parity and everything else?
Secretary BRANNAN. Certainly, because those are key items, dairy products and milk.
Senator Moody. As you said a few minutes ago, none of us like controls and none of us like to spend Government money to subsidize things, but in view of that situation, and in view of the possibility of a short corn crop, I would like to renew Senator Benton's question to find out why a stand-by authority was not asked for in this act, to be used only as absolutely necessary.
Senator BENTON. Particularly when you ask for authority to subsidize coffee, let us say, as an example, which I feel strongly under no circumstances should ever be subsidized in line with the selling methods of the Brazilians.
Senator Moody. If you let me add to that question, would it not be just as sound or sounder to subsidize a domestic farmer as it would to subsidize a Brazilian coffee raiser?
Secretary BRANNAN. Of course, it would, sir.
Senator CAPEHART. You are not subsidizing the farmer, you are subsidizing the consumer.
Senator Moody. That is right.
Secretary BRANNAN. The only answer I can make to the whole thing is that we are searching for a device to use whatever dollars we can use most efficiently to stem inflation. If it is in the form of subsidies, then I see no reason for objecting to them.
Senator BENTON. Mr. Chairman, if Secretary Brannon, on the strength of his testimony this morning, has any further recommendations for us, if he thinks a broader right should be asked for in case of emergency such as the short corn crop or a subsidy program, I hope he will still be able to introduce them to the committee and put them in the record here.
The CHAIRMAN. I did not understand the Secretary to say he had more, but he may if he wishes. The corn crop goes to far more than feeding and far more than hogs. As you know, it goes to manufacturers, to various manufacturers. In the last war we had to substitute corn for certain manufacturing processes and substitute wheat and other grains for feed.
Secretary BRANNAN. That is right; and we used—I do not remember the number—but we used a considerable number of tons of sugar to make alcohol the last time.
Senator Moody. Mr. Chairman, I know it is pretty early to tell, but what is your size-up of the corn crop, is it going to be a short corn crop ?
Secretary BRANNAN. Nobody can predict at this time, but we are confident that we are going to get the acreage that we asked for, enough acreage for a big corn crop. As far as we can see now mois
ture conditions are such that we ought to get the big corn crop that we are looking for.
The CHAIRMAN. You cannot tell what the harvest is going to be.
Senator CAPEHART. The acreage will be planted, and if we get good weather we will have a big crop; if we have a bad crop year we will get a short supply.
The CHAIRMAN. And meantime the carry-over has gone down from 900,000 to 600,000.
Secretary Brannan. Yes. And hog numbers and beef animals have gone up.
The CHAIRMAN. To be fattened ? Secretary BRANNAN. Yes, sir. Senator Moody. I wonder if you will discuss the price of meat. Mr. DiSalle told us yesterday that since January 1950 the general rise in general food prices has been about 15 percent, but the rise in the price of meat has been over 50 percent. It seems to me that is a key point in the program to hold down inflation, because as you know every housewife that goes to the grocery store and finds hamburger comes home and asks her husband to go get a raise. It is difficult to have wage controls under those circumstances, and it is difficult to control prices under those circumstances. It seems to me that the price of beef is a very important key point in this whole program. Meat has gone up very substantially more than the prices of other farm products.
Secretary BRANNAN. I can supply tables on that for the record if you would like, and I can summarize them briefly for you right now.
For example, starting with 1947, the prices received by farmers for 100 pounds of beef cattle was $18.50. The next year the average price was $22.40. In 1949, it was $19.90. In 1950, the average was $23.10. In 1947 the average retail price of choice grades of the several beef cuts was around 61 cents a pound, 61.1; in 1948, it was 73.7; in 1949, it was 66.8; in 1950, it was 73.5.
Senator Moody. My point was, Mr. Secretary, that the prices of these various farm products seemed to be out of line with parity here and out of line with each other. As you know better than any of us, the prices of many foods are below parity, and the price of beef is above parity. It is very high. I am wondering whether for that reason the effort of Mr. DiSalle to reduce retail prices of beef by roll-back is not a sound program.
Secretary BRANNAN. Well, Senator Moody, I think it was essential to roll back prices of meat.
Senator CAPEHART. Beef now, we are talking about beef. That is the only one that has been rolled back.
Senator Moody. I meant beef, Senator.
Senator CAPEHART. We are going to raise a lot of corn for you this year.
Secretary BRANNAN. Everybody hopes so, Senator.
Senator SCHOFPPEL. Mr. Chairman, I would like to ask: Do you have any judgment to express, on the basis of cost to feeders now, that the feeder will have to have about $10 a hundred more for cattle if he wishes to make a profit on his meat production?
Secretary BRANNAN. Senator, that is a somewhat complicated question, and I do not think you can draw that conclusion forthwith. As
a matter of fact, it is possible that many people who bought feeders before the first of the year, even for long-term feeding programs, will be able to get out all right, with some margin of profit under the present roll-back.
It is equally true that the man who bought after the first of the year, who engaged in bidding up the prices after DiSalle told them that he was going to put on ceilings, nevertheless bid up the price from around $31 to $35 for heavy steers, is going to get hurt, but he did it with his eyes wide open.
Senator SCHOEPPEL. All right. Now, in all fairness to that margin of 6,000,000 farmers and cattlemen in this country, there was no indication that there was going to be a roll-back, was there, Mr. Secretary? There was some talk about establishing a ceiling price, but what about this roll-back in three successive stages? That is what I am talking about in relation to this group that went out and purchased cattle at these high prices and put them in the feed lots. If production is what we want, on the hoof, to put on the table, that group is going to get hooked some place. Do you agree with me?
Secretary BRANNAN. Some of them will. There is not any question about it. The man who bought heavy steers since January may take a loss under the roll-back, and the only thing you can say to him is that he sure did it with his eyes wide open.
Senator BRICKER. What should he have done?
Secretary BRANNAN. He need not go into the market and bid up the market the way he did.
Senator BRICKER. That was the only way he could get his steers, was it not?
Secretary BRANNAN. Maybe so, but maybe those steers could have gone
Senator BRICKER. I do not see how you could blame him because Mr. DiSalle told him something. How was he going to get steers? He would have to quit business or else he has got to buy at the market price. You cannot blame him for it if he is going to stay in business, and if he does not stay in business you are not going to get meat on the table, that is one thing mighty sure.
Secretary BRANNAN. Remember this, though: He had his choice of several types of animals to buy and fed, and it is chiefly those fellows who bid up the heavy steers that are in trouble. I am not blaming them at all, but I do say that we all have to face the fact that they did it with their eyes open.
Senator BRICKER. You say all he could have done then was buy some other type of feeding steer or else stayed out of the market.
Secretary BRANNAN. Or not compete intentionally, overbid for the available supply.
Senator Benton. In a free economy the price might have gone down. He might have been stopped. This was a risk, as you said before, if he is an experienced operator.
Secretary BRANNAN. That is correct. And in the 1948-49 season lots of feeders did lose money. They took a risk.
Senator CAPEHART. He does not expect his own Government to stick him in the back.
Senator Moody. As a matter of fact, is it not true, Senator, that in the law in which you played such a fine part in writing last year, there
was certainly an indication that the Congress did not want prices to rise very high. I would like to read you the section which says:
No ceiling shall be established or maintained for any agricultural commodity below the highest of the following pricesand then it cites parityand the highest prices received by producers during the period from May 24, 1950, to June 24, 1950, inclusive.
It seems to me that anyone who is familiar with the situation and the law, and was familiar with the dangers of inflation to the general economy ought to realize that efforts were going to have to be made if wages were going to be controlled to hold the price of beef down.
1 Senator CAPEHART. They should have put it on when the law was passed.
Senator Moody. I agree.
Senator CAPEHART. They should have put it on right then, then the farmer would have known exactly what to expect.
Senator SCHOEPPEL. Mr. Secretary
Secretary BRANNAN. May I point out, if I remember their proposal then was not to just put it on the items which were seeming to get out of line but to put it on everything from one end to the other.
The CHAIRMAN. That is right, but you had your hardship clauses, you could have straightened those things out.
Senator CAPEHART. That is exactly what they did on January 23. They did on January 23 exactly what they should have done, in my opinion, last July 30.
The CHAIRMAN. Let me say this, Mr. Secretary. I have read your statement, and the other members have also, and I am going to ask, without objection, that it be made a part of the record at the end of your testimony.
Senator SCHOEPPEL. Mr. Secretary, I am sure you are familiar with the increase in the hourly wage from 1940 to 1951, and I think that that figure is approximately 138.5 percent. In the consumer price index in 1951 it was about 184.5. The thing I want to get at—the question I want to ask, with an increase in the hourly wage of 138.5 percent since 1940 and an increase in the consumer prices of only 84.1, is not labor, and all of us who work, able to buy more goods for an hour's work than in 1940? I think you pointed that out very clearly in your testimony before the House.
Secretary BRANNAN. We did say just that, sir.
Senator BRICKER. May I say to you, Senator Schoeppel, that right here on page 9 he says that “we have shown that food is a better bargain in relation to wages and business profits than in prewar years." That is in your statement here this morning.
Secretary BRANNAN. We say that; yes, sir.
Senator SCHOEPPEL. I am glad to note that. Therefore, is not the real cost of living lower today than it was in 1940?
Secretary BRANNAN. I do not know whether I can make a statement as broad as that, because that includes rent and that includes a lot of