The measures now being taken to meet future drought conditions are, to a large extent, intended to counteract mistaken policies and practices that have contributed to the destructiveness of the current drought situation. These measures will tend to build up the resistance of the large semiarid agricultural area to such hazards as drought.

Large sums are being spent by Federal agencies for the purchase of submarginal land and to increase the amount of forest land. The Forest Service is contributing to this end in its program of forest improvement and conservation.

The Government program of land acquisition was accelerated during the year. This, together with the plan to establish a hundred-milewide strip of trees across the Great Plains area to aid in retaining soil moisture and to prevent wind erosion, is directed toward preventing the growth of conditions that make the country an easy prey to drought.

RETURNING CULTIVATED LANDS TO GRASS

Research and conservation work by numerous agencies of the Government is being devoted to the problem of restoring cultivated land to grass, protecting the soil, and preserving its productivity. Experiment stations are carrying out grass-restoration and farmmanagement experiments; Government control of public grazing land is invoked to prevent overgrazing; the Civilian Conservation Corps has developed some 2,500 springs and wells and has constructed hundreds of thousands of dams and terraces for conserving water and preventing soil erosion.

The drought of 1934 was more serious because of the lack of a forward-looking land policy that would have prevented the exploitation, waste, and ill-use of our land resources. Yet, the experience gained will serve to good purpose in that the Government and the people as a whole realize that not only must the damage to our lands be repaired, but also future programs must be directed and coordinated toward the purpose of establishing a better balance between cultivated and noncultivated lands, and the farmer must be protected from the effects of the droughts to come. The programs of the Agricultural Adjustment Administration, as a part of the national policy in dealing with lands, have been, and continue to be, directed toward such a purpose.

COTTON

SALIENT FACTS ABOUT COTTON ADJUSTMENT

1. World carry-over of American cotton:

Aug. 1, 1933...

_bales__

11, 588. 000

Aug. 1, 1934.

Aug. 1, 1935 (estimated).

2. Average price received by producers per pound of lint:

In 1932-33 crop year..

.cents..

In 1933-34 crop year

6. 5 9.7

In 1934-35 crop year (preliminary estimate)

3. Number of acres taken out of cotton production and made available for producing food and feed crops and for soil building: 1933-34.

1934-35.

4. Total farm value of crops, plus benefits and cotton-option profits since these were distributed:

5. Number of adjustment contracts in effect at the 1st of March

1934 (preliminary)

6. Quota of tax-exempt cotton under Bankhead Cotton Act (478

pound bales):

12. 6

10, 497, 000 14, 603, 000

$483, 912, 000

$880, 097, 000 $871, 420, 000

1, 004, 000

1934.
1935.

7. Bankhead Act referendum:

Number of voters who cast ballots in 1934__.
Percentage of voters who favored continuance of act's provi-
sions in 1935___

89.4

With the 1935 cotton season, the Agricultural Adjustment Administration begins the third year of cotton adjustment.

In the 1931-32 season, beginning August 1, 1931, and again in the 1932-33 season, the world supply of American cotton was approximately 26 million bales. For the 1933-34 season the supply was 24,635,000 bales; for 1934-35 it was 20,365,000 bales.

World carry-over of American cotton, included in the world-supply figures above, was 8,868,000 bales on August 1, 1931. It rose to 12,960,000 bales on the same date in 1932, decreased slightly to 11,588,000 bales on August 1, 1933, and dropped to 10,634,000 bales in 1934. (See fig. 11.)

I. FACTORS IN DECREASE OF AMERICAN COTTON

SUPPLY

Factors that have contributed to these decreases in supply and carry-over have included adjustment in production, some improvement in demand, and in 1934, because of drought, a short crop in the Southwest.

In 1933 the first cotton-adjustment program resulted in the removal from cotton production of more than 10 million acres of cotton land, preventing a record crop which would have added at least another 4 million bales to the burdensome surplus of American cotton. The 1934 adjustment program restricted the planting of cooperating producers by about 38 percent of their base acreage. The effect of this reduction, together with that of the drought of 1934 in the Southwest which off-set the larger than average yield in the South

east, will be to further diminish the carry-over, which is expected to be, on August 1, 1935, about 8,500,000 bales.

The objective of the 1935 program, while it contemplates a production increase over that of 1934, is to make a further reduction in the carry-over by August 1, 1936. With average growing conditions

FIGURE 11.-Production, world consumption, world carry-over, and price of American cotton, 1920-21 to 1934-35.

and with the domestic and foreign consumption of American cotton that is indicated at present, the carry-over as of August 1, 1936, should be about 7,500,000 bales.

ADJUSTMENT IN 1933

Adjustment of cotton production was the objective of the first basic-crop program under the Agricultural Adjustment Act. Soon after the passage of the act, the Secretary of Agriculture and the Agricultural Adjustment Administration faced the necessity of immediate action to avert further decline in cotton prices.

The 1933 crop already had been planted and there were prospects of a 1933-34 supply of American cotton considerably larger than those of the two previous seasons.

A program was developed, in conference with representatives of cotton producers, and was announced June 19, 1933. Under its operation producers withheld from production 10,500,000 acres which, at average yields that year, would have produced 4,500,000 bales of cotton. The 1933 crop was held to 13,047,000 bales.

In consideration of their participation in this program, cotton producers to the number of 1,032,000 received in cash rentals approximately $112,600,000. Some of these producers also received options on a quantity of Government-owned cotton, on which they have made a profit of more than $70,000,000.

RISE IN FARM PRICE OF COTTON

The average farm price of cotton rose from 5.7 cents per pound in 1931-32, to 6.5 cents a pound for the 1932-33 crop, to 9.7 cents per pound for the 1933-34 crop, and to 12.6 cents per pound (preliminary estimate) for the 1934-35 crop. The farm value of the 1933-34 crop was $717,000,000 as compared with $483,912,000 for the preceding year's crop. For the 1934-35 crop it is estimated at $756,420,000. (See figure 12). A comparison of prices received and paid by cotton farmers is shown in figure 13.

When rental and benefit payments and profits on options to producers are added, the gross return from the 1933-34 crop was approximately $880,097,000, or an increase of about 82 percent over the

FIGURE 12.-United States production, average December 1 price to producers, and farm value of cotton, 1921-22 to 1933-34

return from the 1932-33 cotton crop. This return is estimated at $871,420,000 for the 1934-35 production. (See table 7.)

1 December 1 estimate of production and December 1 price

125757°-355

TABLE 7.-Price received by producers and estimated farm value of United States cotton crop by years, 1932-33 to 1934-35

1 Based on Bureau of Agricultural Economics reports on farm prices and production as of Dec. 1, 1934. This method usually results in a lower total estimate than use of the weighted average price for the crop

year.

The unusually high acre yield in 1933, notwithstanding the reduction in acreage, brought about a world supply of American cotton in the 1933-34 season that totaled 24,635,000 bales. For the same

FIGURE 13.-Farm price of cotton and index numbers of prices paid by farmers, 1910 to 1935.

season the world supply of all growths, both American and foreign, was 42,135,000 bales, the highest on record.

It was evident that an oversupply of threatening proportions still existed.

A series of conferences throughout the Cotton Belt resulted in the conclusion that adjustment of cotton production should continue because there was still a burdensome surplus of American cotton. Accordingly, the basis of the second cotton-adjustment program was developed.

THE 1934 PROGRAM

On September 22, 1933, the Secretary of Agriculture announced details of a cotton-adjustment program which was to include the 2 crop years 1934-35 and 1935-36.

The plan contemplated a 2-year voluntary agreement with producers. The base acreage used in the program was the average cotton acreage in cultivation during the 5-year period 1928-32, except on farms where cotton production had been begun later than 1928.