The same is true of wheat. The 16-cent rise in wheat prices since the loan rate was raised would only justify an increase in the price of bread of not more than one-quarter cent per loaf.

Because the farmer has sought economic justice by getting the prices of farm products up to a comparable level with industrial prices and wages, he has been called greedy and selfish. And the organizations of farmers that have dared to fight for justice to the farmer have been condemned in the press as selfish pressure groups. That is what they say about us, and you members of the committee belong to our group.

I make no apology for fighting for parity for agriculture. I believe that parity for the farmer means prosperity for industry. It means more jobs and more income for workers in the cities, because they are on relief and in breadlines when the 55,000,000 people in rural areas cannot buy the products of their labor. Parity for farmers means prosperity and security for the whole nation.

The American Farm Bureau Federation has never asked for more than parity and we do not now seek more than parity. When the President had before him the 85 percent of parity bill this year, I wrote him to this effect. Later we opposed the bill to freeze cotton and wheat stocks and again reiterated that we seek no more than parity. The provision in this bill with respect to a 110-percent ceiling on agricultural commodities has been widely misunderstood and misrepresented to the public. Many people are under the impression that the purpose of this is to put a floor under farm prices at 110 percent of parity so farmers will get more than parity. Such is not the case. Its purpose is merely to prevent ceilings being placed so low as to prevent farmers from attaining parity prices. I will discuss this more fully later, but right here and now I want to make clear that we do not ask for more than parity.

American agriculture does not ask any special preferred position. We are against profiteering, whether it be in agriculture, industry, or labor. The American farmer stands ready to match dollar for dollar any sacrifices made by industry or labor or consumers generally in the defense program.

Coming now to the necessity to control inflation, the American Farm Bureau Federation favors legislation to prevent inflation, provided it is on a fair basis to all groups.

At the last meeting of the board of directors of the American Farm Bureau Federation, held at Concord, N. H., on September 10, 1941, the following resolution was adopted:

PRICE CONTROL

Inflationary forces are being set in motion which, unless Congress acts, will prove disastrous to all economic groups. In order to check effectively these inflationary forces, we favor congressional action to establish for the period of the existing national emergency and for an adequate time thereafter a Federal agency with authority to establish maximum prices for commodities on a selective basis, to the extent necessary to prevent inflationary price increases.

If price controls are to be effective in preventing inflation, it is also essential to prevent inflationary wage increases. For this purpose, we recommend: (a) That no Federal agency acting as a mediator, arbitrator, or fact-finding tribunal in any controversy affecting compensation for employment shall approve or recommend any wage increases which cannot be absorbed within a justifiable price schedule. Due consideration should be given to changes in the cost of living

and subnormal wage rates that may exist in any given industry. (b) In order to help control the inflationary influence of increased wages which may result despite the foregoing measures, we recommend that consideration be given to a plan whereby increased wages will be invested in nonnegotiable defense bonds redeemable only after the period of this national emergency when the threat of inflation shall have ceased; such a plan to supplement substantial increases in taxes and the recapture of excess profits, all of which would operate to avoid undue inflation.

In line with the foregoing policies and the necessity of preserving a fair economic balance, we insist that price-control legislation recognize the parity principle as between labor, industry, and agriculture. In order to prevent the average price of any agricultural commodity being depressed below parity through the operation of price controls, no price ceiling should be established on any agricultural commodity or the products thereof at a price less than 110 percent of parity.

Farmers know from bitter experience the disastrous consequences of runaway inflation and the inevitable deflation that follows. It has taken American agriculture 20 years to recover from the deflation that followed the other World War inflation. It is true that farm prices rose spectacularly during World War No. 1, but this represented very little real gain to farmers. Prices of things farmers bought rose so rapidly that by 1920 the farmers' purchasing power was only 99 percent of the 1910-14 level. Then the bottom dropped out of farm prices. In the deflation that set in in 1921, farm prices fell much more sharply than the production costs, freight rates, and taxes which the farmer had to pay. Chart 117 illustrates that very graphically, Mr. Chairman.

The CHAIRMAN. It will be inserted in the record.

Mr. O'NEAL. There has not been a single year in the 20 years that followed in which farm-buying power ever regained pre-war parity. I should like to have chart 118 and table 65 go into the record at this point.

The CHAIRMAN. That will be done.

CHART 118

PRICES RECEIVED BY FARMERS, AND PRICES PAID INCLUDING INTEREST, TAXES, AND WAGES, INDEX NUMBERS, UNITED STATES, 1910-40*

TABLE 65.--Prices and wages during and after World War

Mr. O'NEAL. This price disparity only tells part of the sad story. Hundreds of thousands of farmers lost their life savings and lost their farms through forced sales. No one knows better than farmers the

terrible consequences that follow land inflation and deflation. Land inflation follows price inflation, but it takes much longer to get over land inflation; it takes a generation to recover from land inflation and deflation.

In 1920 farm prices had advanced to 214 percent of the pre-war level and farm property values had advanced from about 42 billion dollars to more than 80 billions, but the farm-mortgage debt had risen from $4,444,000,000 to $12,321,000,000, so that the farmers' equity at the peak of farm prices was actually reduced to about 85 percent compared to 87 percent in the pre-war period. Thus farmers were relatively worse off despite a paper increase in their property values of about 38 billions. When the deflation came, this paper value largely melted away, so that by 1924 farm property values had dropped to $59,325,000,000 but farm debts rose still higher to $13,506,000,000, and the farmers' equity was reduced to 77 percent. On January 1, 1940, this equity had increased to 79 percent-still less than the pre-war equity, so that we have not yet fully recovered from the land inflation and deflation of the World War No. 1.

We want to avoid going through another such cycle if possible. Right here I might say that I attended a conference called by Governor Black of the Farm Credit Administration in which he had called together those interested in the farm-mortgage situation throughout the United States-investment bankers, the American Bankers Association, big life-insurance companies and farm-organization officials— and it was suggested in that meeting, and, I think, very constructively so, that the Governor request these various organizations to appoint a committee that might sit together and devise plans to prevent this radical inflation that we had in the other World War period.

Now, as to selective control, we favor a selective method of price. control because we believe it is unnecessary, inequitable, and unwise to go to the extreme of freezing all prices in order to control inflation. It is unnecessary to place price ceilings upon thousands of inconsequential articles-ranging from hairpins to toothpicks-which have little or no effect upon the general price level. Moreover, the administrative difficulties involved in placing ceilings upon all prices of all commodities would constitute a very serious problem. Mr. Donald Nelson testified before your committee recently that one mail-order house handles probably 30,000 different items, and that the ordinary city drug store handles in the neighborhood of 15,000 to 20,000 articles. Take cotton, for example. The Price Administration today is holding in check the price levels of cotton goods by ceilings on about 30 major items, which constitute 90 to 95 percent of the total consumption of cotton goods, without undertaking the enormous task of enforcing ceilings on about 500 miscellaneous cotton items.

It would be inequitable to freeze all prices as of a certain day unless wide discretion is given to make readjustments, because some prices have already risen much higher than other prices. This might require thousands of readjustments and in the process many industries might suffer irreparable damage. In reality, this method uses the selective principle, since the Administrator must be given wide discretionary power to make readjustments. But this procedure imposes price ceilings on everything whether they are needed or not and whether they are equitable or not. The burden of proof then rests upon every branch of industry to show to the satisfaction of the

administrative agency that an adjustment should be made. Under the other selective method, ceilings, are imposed only where necessary to prevent inflationary price increases, and the burden of proof is upon the administrative agency to determine and establish that fact. Most important of all, however, we shrink from the extreme regimentation which would result from the attempt to freeze the prices of everything. It would mean complete regimentation of our entire economy in all of its processes and operations. It would be tragic, indeed, if in this crucial struggle in behalf of democracy, we should lose democracy itself. I recognize fully the necessity during the period of national emergency, of conferring upon duly constituted authorities extraordinary powers, but I do not believe it is necessary or advisable to completely regiment our entire economy at this time. As the chief proponents of democracy, let us preserve even during this emergency, the greatest measure of democracy in our undertakings.

I want to say right here, for the record, Mr. Chairman and members of the committee, that I have had the pleasure of working with Mr. Henderson on several agricultural commodities. My good friend, and your good friend, Mr. Chairman, Donald Comer, worked with him on this textile agreement with the cotton people, and I was delighted to hear Mr. Comer say that he was pleased with the price control that was agreed on.

As far as I know, Mr. Henderson has certainly been a friend of the farmer thus far, and if he is put in charge, I am sure that he will continue to be; for in the contacts that we have had with him, he has been exceedingly fair, and, as I understand it, he believes in our parity concept for the farmers. I hope that he agreed to the provision in this bill for 110 percent of parity.

I want to say further that I am very gratefully devoted to Barney Baruch. I have known him for many years. He has really been the guardian angel of the farmers, but I cannot agree with his philosophy of freezing across the board; I cannot see it.

I am delighted that he claims-I heard only part of his remarks, but I understand that he said that he "bread and buttered" this concept of parity. However, he says that he does not think that our suggestion of 110 percent of parity is sound. But he just does not understand. However, he is a very fine gentleman, and he has certainly helped agriculture over the years.

I come next to congressional standards to guide administrative discretion. Let us avoid either extreme of Congress freezing all prices or turning over complete discretion to an administrator. To avoid these extremes, I believe Congress should empower a duly constituted agency with authority to check maximum ceilings wherever necessary to prevent inflationary price increases, but in conferring such authority, Congress should carefully safeguard the use of this power by setting forth in the statute specific conditions and standards within which this authority must be exercised to carry ou the declared policy of Congress. In this way Congress, as the representative of the people, will reserve control over the exercise of these powers, and the administrative authority will act as the agent of Congress in carrying out the congressional policy.

Referring further to recognition of the parity principle, we insist that the parity principle be recognized in price-control legislation