culates a parity price. Since then revisions have been made on a monthly basis. Adjustments, as required by the law, for grade, season, and location differentials are being made continuously.

MANPOWER

We have also done a great deal of work in the manpower field in connection with this act and other legislation. We have effected an arrangement providing for official consultation between draft boards and our agricultural mobilization committees. On the basis of our representations, the Secretary of Labor has added farm operators and essential help to the official List of Critical Occupations. This action became effective April 23. The list is used as a guide by the Defense Department in granting delays in call to active duty of reserves. has also been transmitted to Selective Service Boards for their information in considering deferments.

It

STOCKPILING, TRANSPORTATION, OTHER RESPONSIBILITIES

Stockpiling and other procurement work for defense agencies are carried on by Commodity Credit Corporation under authority of the Defense Production Act and prior legislation. Early in the emergency period, CCC held certain of its stocks of cotton, cotton linters, cottonseed, and naval stores for orderly distribution and preferred uses. CCC has bought wool for the Army from foreign sources, is buying long-staple cotton, and has continued to make barter arrangements such as trading wheat to Belgium for industrial diamonds.

At the request of the Defense Transportation Administration, we have made recommendations dealing with efficient use of port terminals in bulk grain exports. Well over 300 permits have been issued, establishing preference and priority in storage and handling of grain in port terminals.

In cooperation with the civil defense authorities, the Department has made a field survey of normal, food inventories carried in large metropolitan areas, and the Bureau of Human Nutrition and Home Economics has prepared a handbook on emergency feeding.

In addition to the forestry applications for tax amortization and production capacity loans, which I mentioned, the Department handles similar applications in certain other fields.

In accordance with the act, we have established 30 industry advisory committees.

Our research agencies have undertaken a number of special jobs for military and other defense organizations in addition to redirecting some of their regular work for defense purposes.

The act has also greatly increased the work of the Bureau of Agricultural Economics, the Office of Foreign Agricultural Relations, the Office of the Solicitor, the Office of Information, the Office of the Secretary, and other agencies and staff offices.

I should like next to discuss the proposed amendments with which I am most directly concerned.

AMENDMENT OF PARITY PROVISION

The first of the amendments I should like to take up is that which deals with the use of parity for price-control regulations.

This is covered in the bill before you in the latter part of section 104 (b). The amendment provides that the parity price used for establishing the minimum ceiling price for an agricultural commodity shall be the parity price for the commodity prevailing at the start of its current marketing year or season, rather than the changing parity price which is published from month to month. Thus, for ceiling price purposes, the parity price of an agricultural commodity at the beginning of the marketing season would remain in effect until the beginning of the next marketing season.

Let us examine the application of this proposal-whether or not it is fair to farmers. Most of the investment made by a farmer in his crop is already reflected in the parity calculation by the time the marketing season starts. If prices paid by the farmer for production supplies used to grow the crop went up during the growing period, those increases would be reflected in the parity used in computing the legal minimum ceiling. Furthermore, most of a crop is sold soon after it is harvested. Thus, if ceilings were increased later in the marketing season, persons other than farmers would get most of the benefit. If parity increased by

the time another marketing season rolled around, the ceiling would of course be adjusted upward for the new crop.

The proposed change would simply apply to the price-control program the same principle of administration which has been found essential in the pricesupport program-the principle that the price standard must be stable long enough to permit farmers and business firms to make plans and carry on their operations. It makes for simple administration and we have found it very workable in price-support programs.

This change would not in any way affect the other parts of the legal minimum provision. Parity would still be the minimum below which no ceiling on any agricultural product could be established. It would not keep any commodity which is below parity from rising to parity. That principle would not be changed. The parity formula would not be changed. Parity would still be computed as it is today. The amendment would simply hold the legal minimum for purposes of the Defense Production Act, stable for each agricultural product for a marketing season so that firm ceilings could be established and made known to the people concerned for a full season. For most field crops the marketing season would run for a full year starting at the time of harvest, while for commodities produced continuously, such as livestock products, we would probably divide the year into two marketing seasons.

Much of the criticism of the parity standard for price control has been based on the fact that parity is a continuous, month-by-month moving level. Even well-intentioned people have misinterpreted this to mean that the parity standard amounts to built-in inflation. They are mistaken, of course, and should realize that parity can go down as well as up, that it follows rather than precedes changes in prices that farmers have to pay. But be that as it may, this amendment will do much to eliminate the arguments and enable people to better understand and support the price control provisions.

The other side of the coin is the comparable disadvantage in rejecting this proposed change. People who have been fighting the parity principle would renew their contention that farmers and their leaders are seeking special privilege or working against an effective stabilization program. This would be most unfortunate. Lately, attacks on the entire parity principle seem to have subsided. I think we have made some headway in our effort to show how fair the principle is.

We have shown that there has to be some kind of a standard below which ceilings cannot be imposed and that for farm products parity is the fairest available. Business and labor are protected by similar standards. We have shown that farmers are less well paid for their labor, their investment, and their management than are any other comparable groups. Farm income is just now regaining the ground it lost in three recent years while nonfarm income was staying high or gaining. We have shown that food is a better bargain in relation to wages and business profits than in prewar years. We have shown that if farm products which are now below parity were to increase to parity, this change would have very little effect on the cost of living. We have also shown that any upward movements in parity reflect failure to hold down the prices of goods and services that farmers have to buy.

Farmers have as much at stake in the fight against inflation as anybody in this country. I do not believe they want any class exemption from the stabilization effort. On the contrary, I believe they want to contribute their full part in the stabilization program as well as in all other phases of our national mobilization. They are subject to being gouged even more injuriously than are most people. They need a stabilization program that really works. All they ask is that comparable actions will be taken in other fields of the economy.

In recommending this amendment to you, I point out that it is not an isolated measure but part of a strong effort to tighten up all our defenses against inflation throughout the whole economy.

AMENDMENT TO MILK PRICING PROVISION

In the same section of the bill to which I was just now referring, there is a proposed change in the special pricing standard for milk.

The purpose of both the original language and the amendment is to provide similar treatment in case of price ceilings for all fluid milk whether sold in a federally regulated market or in a nonfederally regulated market. The amendment would substitute a relatively simple and workable formula for one which we believe to be very difficult if not impossible to put into effect.

The provision now in the act apparently contemplates the imposition of ceilings by individual marketing areas, with the legal minimum prices based upon parity prices for fluid milk in each such area and the average prices received for fluid milk in each such area.

It is extremely complicated and time consuming, if not impossible, to compute parity for fluid milk, average farm prices received during the base period, and current farm prices for each such marketing area in the United States. The Department does not have, or does it know of, readily available sources of adequate data to make such computations.

Furthermore, the base period standard for nonfederally regulated areas requires that ceiling prices for fluid milk in such areas must not be less than "prices which in such marketing areas will bear the same ratio to the average farm price of milk sold wholesale in the United States as the prices for such fluid milk in such marketing areas bore to such average farm prices during the base period." This provision ignores the difference in standards applicable to fluid milk sold in federally regulated and nonfederally regulated areas. The result probably would be maladjustments of supplies in the industry and provide an inflationary trend.

To summarize, we do not have and do not believe we can get reliable data that would be required by the formula in the law; the provision is therefore probably impossible to administer; and if it could be put into effect the resulting prices probably would not be consistent with the stabilization objectives of the act.

Under the amendment, legal minimum prices for fluid milk in any nonfederally regulated milk area would be determined in the same manner as the legal minimum prices for any other agricultural commodity. In addition, the proposed amendment requires that whenever the Secretary of Agriculture determines that the prescribed minimum ceiling prices for such milk are not reasonable in view of the price of feeds and other economic factors, the Secretary shall determine such price as he finds will reflect such factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and no ceiling price shall be below the price so determined.

The proposed amendment would extend to milk producers in nonfederally regulated areas substantially the same benefits and protection as are accorded under the act to producers within federally regulated areas.

AMENDMENT FOR CONTROL OF COMMODITY SPECULATION

Now let us consider the amendment which would authorize control of margins for speculation on commodity futures markets. This is found on page 35, starting with line 20 in the bill.

The President said of this proposal: "Whenever the speculative fever hits these markets, we should be able to dampen it promptly with reasonable requirements for minimum margins. This is the same kind of authority which the Federal Reserve Board now exercises in respect to the stock markets."

It is interesting to note that we have controls on margins for transactions on the stock exchanges, which amounted to $17 billion last fiscal year, and have no margin control on futures trading in commodities, which amounted to more than $32 billion in the same scal year (counting only those commodities covered by the Commodity Exchange Act).

The proposed regulations would not apply to hedging transactions but only to speculative transactions in commodity futures.

Low margins make speculation in commodities attractive. Speculators some times come into the markets in a mass movement, buy on margin, and run prices up to unrealistic levels. This is a constant inflationary threat. At present the Government is in the position of telling people they must make a down payment of one-third to buy a car while at the same time they can buy a carload of butter with a deposit of less than 6 percent (whatever the exchange itself requires). As of April 30, you could buy a 5,000-bushel wheat futures contract by putting up $1,250 margin, just 25 cents a bushel. With $1,000 you could pick up a contract for 14,400 dozen eggs-that's about 7 cents a dozen.

I do not necessarily imply by making these particular comparisons that these or other margins should always be higher, and I am not expressing an opinion as to whether they are too low right at this time. I do want to point out that we should be able to raise margin requirements when speculation in a particular commodity or group of commodities is causing erratic daily price fluctuations, creating unstable conditions and building up inflationary pressures.

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The Defense Production Act provides that cellings must how fair margins for processoTK. We recognize that margins vary considerably among diferent groups of processors and, thus at times it might be far cheaper for the country * make Zmied use of subsidies that to raise reings in order to provide für Ilargius for a few processors caught in a squeeze. A possible example is that of nonprocessing catie siugiterers. The sma operators who ảo nó process ng beyond sikuzinering and selling fresh beef have more difficulty living under uniform cellings than those who have additional sources of profit as a result of Processing operations. A program of this type was in effect in World War II on beef and, we understand, was applied to some 700 firms.