AGRICULTURAL RELIEF

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Mr. FuLmer. And would only be used when we would find out
we had a surplus which was depressing the price of cotton?

Mr. KiLGore. Yes.

Mr. FuLmer. And only to the extent of buying cotton in a suffi-
cient number of bales to bring about a fair price, and then withdraw
from the market. Then, for instance, as the gentleman stated awhile
ago, the speculator would want to take advantage of that to boost
the market. You could then feed back the surplus you had on hand
and put him out of business and hold a stable market.

Mr. KiLGORE. A stable market; yes.

Mr. Harr. Doctor, you would go in or out of the market to the
extent of stabilizing the market when you had a surplus; when you
did not have a surplus the market would take care of itself?

Mr. KiLGorE. Yes.

Mr. Apkins. And out of that fund you could repay the money bor-
rowed from the Government?

Mr. KiLGorEe. It is a guaranty that the money borrowed from the
Government will be returned to the Government and kept intact.

Let me follow just the thought there expressed as to the ineffective-
ness of a loan fund in the loan bills, by this statement, prepared
with some care:

The effect which any “holding movement” would have on the
cotton market would depend to a large extent upon the trade's
judgment as to both the intent and the ability of the holding agency
to keep the cotton off the market as long as necessary

I want you to get my thought there, gentlemen—that the effective-
ness of any holding of the surplus off of the market will depend to a
large extent upon the trade’s judgment as to both the intent and the
ability of the holding agency to keep the cotton off the market as
long as necessary.

Any proposal to merely loan money to finance withholding cotton
from the market would not carry conviction to the trade’s mind and
would, therefore, have the minimum effect on the market. If with-
holding were financed by every grower contributing his pro rata share
to the cost of withholding a surplus, and a payment of such con-
tribution were assured beyond question, then such a move would Carry
conviction to the traders in cotton as to both the intent and the ability
to withhold.

That would be true with an equalization fee as a guaranty of the
integrity of the loan through the revolving fund. It would not be so
with mere loans from thé revolving fund of the loan bills.

I believe this is fundamental, and it is a serious obstacle to the
effective operation of any of the loan bills.

In this connection I want to call your attention to two provisions
in the latest loan bill. The Crisp bill, introduced December 5, 1927,
contains this provision [reading]:

(f) Whenever, in the judgment of the board, sufficient loans can be secured
by the corporation at reasonable rates from other lenders, it shall suspend the
further making of advances.

That shows conservatism. Our cooperative this year borrowed
some money at 4 per cent—less than it could get it from the inter-
mediate credit banks. Under those conditions this bill would not
likely operate to handle the surplus, because we have already reached
the point where we can get money at as reasonable a rate as the
intermediate credit banks or the Government source would furnish it.