AGRICULTURAL RELIEF

Mr. Fort. The same thing is not true of acreage, which is the test
of production, not the yield.

Mr. KiLcore. I will come to that in just a minute. In the five
years just following the war, the price of wheat went down and
there was a production in round numbers of 800,000,000 bushels of
wheat. In other words, we have two cases where a lower price
brought higher production than a bigger price.

There is something in the matter of stabilizing a price sufficiently
high to give a reasonable standard of living. The more nearly you
stabilize a price up to a cost that will give people a reasonably
standard of living, the less tendency there is going to be on their part
to go ahead and over produce. I think that is economical; it is
practical. It has operated in labor.

In a measure we know that acreage follows price. Then, if we
want to put it in a Jogical statement, we would have to say that
a high price is followed by increased acreage; a low price by a de-
creased acreage. Then a stabilized price would be followed by
stabilized acreage. That is not unreasonable and it is right in line
with what has happened with labor; it has reduced its hours as its
pay has increased. It has gotten enough with fewer hours of labor
to take care of its standard of living.

I think stabilization under the MecNary-Haugen bill would be at
a higher level than under the loan bills, with a producers’ guarantee
to take care of any loss on the surplus. And with such higher price
stabilization as would give the producers enough to take care of a
reasonable standard of living, there would not be the tendency to
overproduce that there is in wide savings in prices or with prices
stabilized at lower levels.

Mr. Fort. In other words, you and I agree, Doctor, that stabiliza-
tion is the cure. I have not any quarrel with you on that.

Mr. KiLcorE. Yes.

Mr. Fort. What I want to ask you is this—-

Mr. KiLcore. Let me state just this thought, so as to finish ny
thought on that: That under the McNary-Haugen bill, from my
analysis of it, there would be a stabilization at a higher level than
there would be under the loan bills, for the reasons I have already
given. There would be an equalization fee there to protect it, and
with that stabilization up where it would give the producers of wheat,
cotton, tobacco, peanuts, corn, and all those products sufficient
returns for a reasonable standard of living. There would not be
the incentive to overproduce in order to get enouch to take care of
that standard of living.

Mr. Fort. Doctor, I agree with vou entirely on stabilization. I
think you will agree with me on one other thing, that stabilization
implies some control at both ends of the price; in other words, that
vour whole plan will be upset by too high a price as well as too low.

Mr. Kincorg. I think so. We think that has got to be felt out
and that is experience the board has got to get.

Mr. Fort. Thdt would be the board’s business, in your judgment,
to carry some of the commodity with a view of preventing a rise In
price in a subsequent year, would it not?

Mr. KiLcore. A surplus would be carried as long as necessary.

Mr. Fort. It would be used to hold prices down?

Se. KirLcore. It would have that effect when sold back in the
market.

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