With normal yields, it was estimated that the acreage allotted in the commercial corn area would produce 1,311,941,000 bushels of corn. It was estimated that this amount, together with normal production outside the area, would result in a national corn production of 2,265107,000 bushels for the year. The anticipated crop, plus a carry-over of 395,893,000 bushels from the preceding season, was expected to result in a supply of 2,661,000,000 bushels, sufficient to provide for all domestic and export needs and to leave an adequate reserve of corn in the Ever-Normal Granary.

CORN PRODUCTION IN 1939

Even though corn plantings were well within the national goal, the unusually high yields of 1939 resulted in a crop far above expectations. In the commercial corn area, with an average yield of 41.7 bushels per acre on 41,541,662 planted acres, the crop totaled approximately 1,740,000,000 bushels.

Outside the commercial corn area, where corn is produced chiefly for home food and feed needs and where the use of hybrid seed corn has not been widely adopted, acreage and production were about normal. Noncommercial area yields were about equal to the 10-year average of 18.7 bushels per acre, and the noncommercial crop totaled approximately 879,000,000 bushels.

Thus, the total national crop for 1939 was 2,619,000,000 bushels, which was about 300,000,000 bushels above the 10-year average, even though the acreage planted to corn was the smallest since 1900. The crop, too, was about 354,000,000 bushels above the production that would have resulted from normal yields and that had been estimated as necessary to provide for domestic, export, and reserve needs.

QUOTAS NOT NECESSARY

In view of the supply situation, the question of whether or not it would be necessary to hold a referendum on corn marketing quotas in 1939 was important. The act is designed to insure a supply of corn 7 percent above the normal year's domestic consumption and exports. In any year when the total corn supply exceeds this normal supply by 10 percent or more, the act provides for marketing quotas for corn. However, quotas may become effective only if approved by two-thirds of the corn farmers voting in a referendum conducted by the Secretary of Agriculture.

The supply level at which marketing quotas would become applicable-that is, a supply 10 percent above the normal supply-was determined to be 3,030,000,000 bushels. This meant that if the supply estimated for October 1, 1939, exceeded 3,030,000,000 bushels, a referendum would be called to determine whether or not producers in the commercial corn area were to use marketing quotas.

The act requires the Secretary to proclaim a determination of facts with reference to the corn supply not later than September 15. In accordance with this provision, a determination of the corn supply was announced by the Secretary on September 13, 1939, estimating the total 1939-40 supply at 2,993,000,000 bushels. This figure included the 1939 crop, estimated by the Crop Reporting Board on September 10 as 2,523,000,000 bushels, and an estimated carry-over

of 470,000,000 bushels, based on the latest available information on disappearance of corn. With the estimated total supply well under the marketing quota level of 3,030,000,000 bushels, a referendum on marketing quotas was not necessary.

In the determination of the marketing-quota level, which was the key to the quota referendum question, due consideration was given to the clause of the act safeguarding the consumer, which provides for the maintenance of consumer supplies about equal to those of the 1920-29 period. The emergency situation in connection with the outbreak of war in Europe was also appraised carefully. Consequently, in working out the domestic corn consumption element of the determination, an upward adjustment was made for the increased population in 1939 over the average population of the 1920-29 period; and downward adjustments that might have been made for reduced exports were not included in view of the confused international situation and uncertainty as to the future.

The corn crop had abnormal growth in September and stood at 2,619,000,000 bushels in the December estimate of the Crop Reporting Board. The carry-over also proved larger than had been estimated and was placed at 583,000,000 bushels by the Bureau of Agricultural Economics in October. This resulted in a total corn supply for the 1939-40 marketing year of 3,202,000,000 bushels, one of the largest on record.

CORN PAYMENTS IN 1939

For their participation in the 1939 corn program, farmers in the commercial corn area earned conservation payments of 9 cents per bushel and parity payments of 6 cents per bushel, both computed on the normal yield of the acreage allotment. These payments, although a relatively small portion of the cash income of corn farmers, made up a substantial part of the difference between the actual farm price of corn and the parity price. In table 5 is a record of 1939 corn payments by States, not including increases for small payments, provided in the act.

TABLE 5.-Corn conservation, parity, and total payments for 1939, by States

In view of the large supply, corn loans assumed greater importance in the winter of 1939-40 than ever before in the history of the

A. A. A. programs. The resealing of corn stored under previous loans, the erection of new storage bins for many millions of bushels of the Ever-Normal Granary reserve, and a system of inspection to safeguard the condition of stored corn were features of the loan program. The amount of corn placed under seal set a new record.

THE RESEALING PLAN

Early in the fall of 1939 the A. A. A. announced a plan for resealing the 257 million bushels of 1937 and 1938 corn that had been sealed in storage under previous loans. This enabled farmers to store corn of these earlier crops for an additional year, and to earn storage payments of 7 cents per bushel in case they delivered their corn to the Commodity Credit Corporation in settlement of loans at the close of the extension period. A farmer who wished to use the payment to build additional storage space for resealing his corn could obtain it in advance.

Under the resealing plan, about 166 million bushels of 1937 and 1938 corn were resealed-150 million bushels on farms and the rest in elevators or country warehouses. About 91 million bushels were delivered to the Commodity Credit Corporation in settlement of loans.

NEW STORAGE BINS PROVIDED

As suitably located elevator space was available for only about one-third of the corn to be received in settlement of loans, the Corporation adopted a new method for keeping the corn in the country, near the farms where it normally would be used either as livestock feed or for sale in commercial channels.

This method was the purchase and erection by the Corporation of more than 33,000 steel grain bins, having a total storage capacity of about 75 million bushels, which were placed under the supervision of county A. A. A. committees. The bins were distributed throughout the Corn Belt, for the most part near existing warehouses and transportation facilities.

By storing the corn in these steel bins the Corporation avoided the accumulation of storage charges that would have resulted had corn been shipped to terminal points away from feeding areas, and was able, later in the season, to make corn available for livestock feeding at considerably less cost than otherwise would have been the case.

About 61 million bushels were stored in the steel bins. The rest of the corn delivered to the Corporation was placed in terminal and subterminal elevators and country warehouses. Steel bins not immediately needed were held in reserve for use in future loan programs.

HOW THE 1939-40 CORN LOAN OPERATED

The act under which the A. A. A. operates requires the Commodity Credit Corporation to make loans on corn when the November crop estimate for corn exceeds a normal year's domestic consumption and exports, or when on November 15 or at any time thereafter during the marketing year the farm price of corn is below 75 percent of parity. Both of these conditions prevailed on November 15, 1939; therefore corn loans were made available.

The act also provides that the loan rate shall be 70 percent of parity if the crop estimate for the year does not exceed the normal domestic consumption and export requirements by more than 10 percent. As the November 1939 crop estimate placed the total crop at slightly less than 10 percent above the normal domestic consumption and exports, the loan rate accordingly was fixed at 70 percent of the parity price of corn, or 57 cents per bushel, the same as in 1938. With the market price relatively low at harvesttime and with more farmers than ever before eligible for corn loans because they had planted within their corn allotments, the 1939 loan program was widely used.

The loan became available in December 1939, and by the close of the loan application period on March 31, 1940, a total of 301,909,000 bushels of corn had been placed under loan. This far exceeded the previous high of 271,000,000 bushels under the 1933-34 loan program. Most of the loans were made in the commercial corn area, only a few being made in the noncommercial area where the rate was 43 cents per bushel, or 75 percent of the commercial area rate, as provided in the act.

INSPECTION OF STORED CORN

If the corn in storage under the corn program was to have maximum value both as an emergency reserve and as a means of improving corn prices-it was essential that safe storage be provided. Safeguarding the stored corn was among the outstanding achievements of the Nation's corn farmers in 1939-40.

In every commercial corn county, one or more corn inspectors work under the direction of the county A. A. A. committee to aid farmers in maintaining good farm storage of corn. Both cribs and corn are inspected before loans are made. Reinspections are made as frequently as necessary to make sure that deterioration is held to a minimum.

TABLE 6.-Condition of loan corn stored on farms and in steel bins, as of May 31, 1940

As a result of these safeguards, the Ever-Normal Granary of corn came through the difficult spring storage period of 1940 in excellent condition. An inspection report showed that 99.6 percent of all farm

stored loan corn graded No. 3 or higher on May 31, 1940. All corn loans were originally made on corn grading No. 3 or higher. During the entire storage period only about one-tenth of 1 percent of all corn loans were called.

Of the more than 33,000 steel bins containing stored corn, 97.6 percent were reported grading No. 3 or higher on May 31. Removal of corn from steel bins because of poor condition was necessary for only four-tenths of 1 percent of all corn so stored.

Table 6 is a report by States, showing the condition of loan corn stored on farms and in steel bins at the close of the 1940 spring

season.

EFFECTS OF THE CORN LOAN

The resealing program and the 1939 loan program together resulted in withholding from the market, either under loan or in the hands of the Commodity Credit Corporation, about 558 million bushels of corn. The supply of "free corn" available for market sale was, of course, reduced by a corresponding amount. This situation was undoubtedly a principal factor in the much stronger corn prices of 1939-40 as compared with 1938-39. Table 7 shows a comparison of corn supplies and prices for the two periods.

TABLE 7.-Corn supplies and prices for the marketing years 1938-39 and 1939–40

Within a few months after the outbreak of war in Europe in the fall of 1939, it became apparent that the export demand for livestock products was to experience a sharp decline and that, since abundant reserve supplies were available, a somewhat lower corn acreage than in recent years was advisable.

For 1940, the commercial corn area was extended to cover 599 counties, 13 counties in 6 States being added to the area when they met the specifications provided in the act. It was determined that production of about 1,264,000,000 bushels of corn in the commercial area would be advisable. The national allotment accordingly was set at 36,638,000 acres, which, it was estimated, with normal yields would produce the desired amount.

Farmers outside the commercial corn area were expected to produce about 936,000,000 bushels of corn, bringing the national production to the 1940 production goal of 2,200,000,000 bushels. To attain this production, the national corn acreage goal was established at 88,000,000 to 90,000,000 acres.

The 1940 planted corn acreage, slightly more than 88,000,000 acres, was well within the A. A. A. acreage goal.

Table 8 shows how the 1940 national corn acreage allotment applicable to the commercial area was divided by States, with actual corn