529 
{ AGRICULTURAL RELIEF 
tion of the bill, relates mostly to its operation with respect to wheat, 
because that is the product about which I know the most and con- 
cerning which I am perhaps justified in attempting to speak more or 
less authoritatively. 
We are consequently directly affected by any condition which 
adversely or favorably affects the farming community and its methods 
of marketing the product which constitutes our raw material. 
We think there is a great agricultural problem, a problem which, 
as you gentlemen well know, manifests itself in a dislocation of the 
relations between the prices of agricultural commodities and those of 
industrial concerns. We think the permanent solution of this prob- 
lem depends largely upon the development of a long-time program of 
agricultural production and marketing, a greater degree of coopera- 
tive activity among farmers, accompanied by a degree of self-help in 
the reduction of the costs which are a definite part of the problem. 
Within this general field which constitutes the general agricultural 
problem there is a series of problems, each of which in a large measure 
is a distinct commodity problem, and these problems lie almost 
wholly now in the field of marketing and distribution. Each of 
them must be considered in the light of the peculiar and special 
circumstances, methods and practics which are characteristic of the 
marketing of the crop. 
This series of problems manifests itself in periodic acute crises 
caused by occasional abnormal surpluses, which force the price down 
below the cost of production and result, if continued, in bankruptcy, 
mortgage foreclosures, and acute depressions. 
We think that a distinction must be made between what we may 
consider as normal surpluses and what we may consider as abnormal 
surpluses. A surplus is not an abnormal condition, either in agri- 
culture or in industry. A surplus may represent the protential 
ability to produce more than the market will absorb, as well as the 
actual production of more than the market will absorb. Practically 
every industry in the United States, except those that are best 
organized or who have a practical monopoly of the sources of supply, 
is confronted with exactly the same sort of a problem as gariculture 
is confronted with here, because they have the potential capacity to 
produce far more than the market can absorb. The industry which 
I represent could produce more than twice the flour which could be 
marketed both in domestic and foreign markets; and I do not mind 
saying to you that we are to-day struggling with the problem of 
preventing this excess capacity from creating a competitive condi- 
tion which completely destroys any possibility of profit. 
The factors which influence prices are not only economic, they are 
psychological as well. The condition which produces a depression or 
stimulation of prices is often as much a state of mind as it 1s a state 
of supply and demand. The velocity of price changes, that is, the 
frequency with which they occur and the extent to which prices are 
forced up or down, is often more a matter of psychology than it is a 
matter of immediate or prospective supply and demand. This psy- 
chological situation—a good illustration of that is a condition which 
we had in cotton a year ago—often carries the price below the point 
of the economic level, which is the basis of supply and demand either 
present or prospective would otherwise justify.