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.