lation of parity prices according to title II of the Agricultural Act of 1948 for cotton, rice, and beef cattle would be as follows:

1. Determine the average price received by farmers for the particular commodity in question for the 10 immediately proceding calendar years, which would be, for the purposes of illustration, 1939 to 1948. The average prices for the individual commodities would be: Cotton, per pound..

Rice, rough, per bushel..

Beef cattle per 100 pounds.

$0.2047

1.66

12.50

That gives the price received by the producer for these particular commodities during the last 10 years.

2. The ratio of the general level of prices received by farmers for all agricultural commodities during the same 10-year period to the general level of prices received by farmers for all agricultural commodities during the base period (1910-14) is known as the "index of prices received," and under our calculations is 186. We must also distinguish between the prices received and the prices paid. We are now speaking of prices received. That is 186 and will continue so throughout the year.

4. Multiply "adjusted base prices" by the current parity index to obtain current parity prices. As of January 15, the parity index was 248 (1910-14-100).

Then you divide the 10-year average prices as we have given them by this index of prices received, which is 186. That gives you, for cotton, about 11 cents per pound; for rice, about 89 cents per bushel, and for beef cattle about $6.72 per 100 pounds. That is known as the adjusted base price, which takes the place of the old formula, the average price received during the 1910-14 period. That means that the new parity formula would provide a parity price for cotton of a little over 27 cents a pound, a parity price for rice of $2.21 per bushel, and a parity price for beef cattle of $16.70 per 100 pounds. Now, we compare that price as calculated under the new formula with what the price would be under the old formula to determine which one becomes applicable. The parity price according to the old formula, with the same parity index of prices paid by farmers, which under the new formula is 248, gives you a little over 30 cents for cotton, $2.20 for rice and $13.40 for beef cattle.

Since the new parity price for cotton is less than the old price adjusted by the 5 percent, the old price becomes applicable with its reduction to cotton. Under the new parity formula you would get 27 cents for cotton whereas under the old formula you would get a little over 30 cents for cotton. That has to be reduced, of course, by 5 percent, which would bring it down to 29 cents. For rice and beef cattle the new parity prices are higher than the old prices. Therefore, the transitional price does not apply at all. Here is a provision somewhat similar to the provision we are considering on support levels where a public hearing must be held.

The Department may at any time, and must when requested by a substantial number of interested producers, hold public hearings to determine whether a new parity formula for any agricultural commodity is required to achieve a fair relationship with the parity prices of other commodities. Decision must be announced within 60 days after the hearing.

That concludes my statement except for a few footnotes.

Mr. PACE. Mr. Hunter, may I now ask that Dr. Stine be prepared, if he can, to furnish the committee with a printed form by Friday morning giving similar calculations with regard to the other principal commodities, showing how this formula would operate. I do not know whether it should be 25 or 30 commodities.

Mr. HUNTER. I think similar formulas have already been printed up and can be presented.

Mr. PACE. Will you have those in printed form with sufficient supply for distribution to all members of the committee?

Mr. Hunter, the committee will not meet this afternoon or tomorrow, but we do hope it will meet your convenience to meet with us again, bringing with you all the other witnesses of the Department, at 10 o'clock Friday morning.

We are most grateful to you for the work you have done this morning with the committee.

If there is no further business, the committee will stand adjourned until Friday morning at 10 o'clock.

(Whereupon, at 12: 15 p. m., the subcommittee was adjourned, to reconvene at 10 o'clock Friday, February 25, 1949.)

AGRICULTURAL ACT OF 1948 (AIKEN BILL)

FRIDAY, FEBRUARY 25, 1949

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON AGRICULTURE,

Washington, D. C.

Mr. PACE. The committee will please come to order.

Mr. Hunter, we would be glad for you to return to the stand. Gentlemen, at the adjournment Wednesday morning, Mr. Hunter had completed the presentation of his statement, although the latter part of it had not been gone into with questions. At this time Mr. Andresen has some questions for Mr. Hunter.

FURTHER STATEMENT OF CARROLL HUNTER, SOLICITOR, DEPARTMENT OF AGRICULTURE

Mr. ANDRESEN. There is one matter that I want to clear up. If you will turn to page 7 of your statement, the part relating to price support above 90 percent of parity, for the benefit of the record where is that found in existing law?

Mr. HUNTER. Section 202 in the Aiken bill, which amends section 302 of the Agricultural Adjustment Act of 1938. It is on page 9 of the printed bill.

Mr. ANDRESEN. 302?

Mr. HUNTER. Yes.

Mr. ANDRESEN. Does that section become operative January 1, 1950? Mr. HUNTER. That is right.

Mr. ANDRESEN. So it is not the law at the present time?

Mr. HUNTER. No.

Mr. ANDRESEN. Under existing law, under which we are operating for the 1949 crop, is there any provision of that law that gives the Secretary the authority to fix a support price on either basic or nonbasic commodities above 90 percent of parity?

Mr. HUNTER. The basic commodities are to be supported at 90 percent of parity and the nonbasic between 60 and the level of support in 1948, whatever it happened to be at that time. Most of them were around 90 percent, I believe.

Mr. ANDRESEN. Then there is no provision of existing law dealing with the 1949 crop where the Secretary has the discretionary power to increase the support price above 90 percent?

Mr. HUNTER. As to the nonbasic Steagall commodities, the Secretary is required to support them between 60 percent of parity and the level of support that was given in 1948. These are commodities for which the Secretary had asked for increased production during the

89277-49-ser. d, pt. 1- 4

war. For flaxseed, I think the level of support in 1948 was above 100 percent of parity in order to get increased production.

Mr. ANDRESEN. Was flaxseed the only commodity that you could support above 90 percent of parity for the 1949 crop?

Mr. HUNTER. Yes, that is the only one. I do not think there was any other Steagall commodity supported in 1948 above 90 percent of parity.

Mr. ANDRESEN. Then the provision in the so-called Aiken bill, becoming effective on January 1, 1950, in fact gives the Secretary arbitrary authority to provide for a support price on both basic and nonbasic commodities above 90 percent of parity?

Mr. HUNTER. It gives him authority after a public hearing and a finding made on the basis of that hearing to provide for a level of support above 90 percent of parity for the purpose of increased production in the interest of the national security.

Mr. ANDRESEN. But it leaves up to him to use his discretionary power after the hearing to determine whether or not such action is necessary to increase or maintain the production of any agricultural product in the interest of the national security?

Mr. HUNTER. Certainly he has the discretion to come to a sound judgment on the basis of that hearing.

Mr. ANDRESEN. When you make your determination as Solicitor, do you consider the evidence submitted at the hearing to ascertain if the Secretary's judgment is sound?

Mr. HUNTER. Any docket prepared pursuant to a hearing of that sort comes to the Solicitor's office before it goes to the Secretary. We issue an opinion on every docket of the Commodity Credit Corporation, giving our opinion as to whether that action proposed to be taken is legal.

Mr. ANDRESEN. As I understood you at our last hearing, your office would not be inclined to question the judgment of the Secretary should he make such determination.

Mr. HUNTER. The statement that I made on Wednesday and that I repeat now is that we take the same view of that that we think a court in a somewhat analogous case would take. When the administrative officials exercise their discretion and the action proposed to be taken has a substantial relation to the objectives of the legislation, whatever it happens to be, and there is nothing in the action which occurs to us as arbitrary or capricious, we give our opinion as to its validity without hesitation.

Mr. ANDRESEN. Your answer now is the same as you gave the other day and I understood that you had indicated to the committee that you would not consider any action on the part of the Secretary capricious.

Mr. HUNTER. Oh, no. I do not think I went that far. I do not like to talk about the Secretary's action being capricious. These dockets come to us before they are acted upon by the Secretary. It is easy for me to conceive of a proposal-and I suppose all sorts of proposals are made during the course of the year-which at some stage might stop in its tracks. Those proposals might appear in an informal discussion in our office with some of the administrative officials. I can conceive where a docket might be presented to undertake to carry out this provision which in our opinion would be wholly invalid.

Mr. ANDRESEN. But we would have to assume that when the Secretary did make a determination within his discretionary power that it