HEARING BEFORE THE COMMITTEE ON AGRICULTURE AND FORESTRY UNITED STATES SENATE SIXTY-FIFTH CONGRESS SECOND SESSION ON WHEAT AND BEEF CATTLE WEDNESDAY, AUGUST 28, 1918 Printed for the use of the Committee on Agriculture and Forestry PART 2. WASHINGTON FOOD PRODUCTION ACT, 1919. WEDNESDAY, AUGUST 28, 1918. UNITED STATES SENATE, COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee met, pursuant to adjournment, at 10.30 o'clock a. m., Senator Thomas P. Gore presiding. Present: Senators Gore (chairman), Sheppard, Kenyon, Wadsworth, and France. Present also: Senator James D. Phelan, of California. The CHAIRMAN. I want to say to the members of the committee that Dr. Spillman, of the Department of Agriculture, is here. I have been intending for some days to give him an opportunity to appear before the committee. Mr. Carmichael said he would take only a few minutes, and we will hear him first, as the doctor has kindly agreed to wait. (The committee then heard the statements of witnesses on the provisions of the bill relating to the prohibition of the manufacture, etc., of intoxicating liquors, which are printed separately. Thereupon the following occurred:) The CHAIRMAN. We will first hear Dr. Spillman. Dr. Spillman, I would like to ask if any inquiry has been made by the Department of Agriculture as to the cost of producing wheat and the cost of producing cattle in the United States? STATEMENT OF DR. WILLIAM J. SPILLMAN, CHIEF OF OFFICE OF FARM MANAGEMENT, DEPARTMENT OF AGRICULTURE. Dr. SPILLMAN. I will state, Mr. Chairman, that for 10 years past the office of farm management has been investigating the entire subject of cost of production on the farm, and that it has given more attention to the cost of producing wheat and beef cattle than it has to any other farm products. The CHAIRMAN. I wish that you would, in a few words, outline the method of arriving at costs, if you have formulated a method, and then give us, as far as you can, the results of your investigation. Dr. SPILLMAN. In the study of this subject we were confronted by the difficulty that on the great majority of American farms the farmers do not keep any records, and at first it appeared to be a very difficult task to get the facts about the cost of production on those farms. We solved that problem in a way that appears to be satisfactory, as follows: We instituted a system of bookkeeping on 150 farms, scattered pretty well over the country. On some of those farms we have as much as nine years' continuous records, in which the farmer recorded, on blanks we furnished him, every quarter of an hour's work he did during the year and every cent that he spent or received. We have found only two important farm products that are not included in those records; one of them is sugar cane and the other is rice. With the exception of those two crops those records showed us the items that enter into the cost of production; then it was necessary for us to learn how the farmer carries those items in his head, and to test the accuracy of the farmer's knowledge. For instance, in getting at the cost of an acre of wheat it is necessary to know the number of hours of man labor required to plow an acre of land. Now, when we go to a farmer who keeps no records and ask him that question he throws up his hands and says, "I don't know a thing about it; I never thought of that." But when we ask that same farmer in a different way we get a prompt and highly accurate reply. We ask, "Suppose you are sowing wheat after wheat and you are plowing stubble in the summer time, what kind of rig do you use?" He says, "I use a 14-inch plow and a couple of 1,200-pound horses." We ask, "How much do you plow in a day at that time of the year on wheat stubble?" He replies, "Well, sir, I can plow about an acre and five-eighths at that time of the year." Now, that is an answer given by an expert, frequently of 40 years' experience; it is not a guess. After learning the nature of the items that enter into the cost of production-and we learn that through bookkeeping work-and after learning how the farmer carries those items in his head, we tested out the accuracy of the farmer's knowledge as he carries it in his head. In general, we found that when the questions asked call for information in the form in which the farmer carries it in his head, the degree of accuracy in the answers is very satisfactory. The CHAIRMAN. Have you formulated a series of those questions that you submitted to the farmers? Dr. SPILLMAN. Oh, yes. The CHAIRMAN. I wish you would attach that to your statement. (The questionnaire referred to is given at the end of this hearing.) Dr. SPILLMAN. On the basis of this 10 years' work in bookkeeping we formulated blanks and provided columns for recording the information in the terms in which the farmer thinks, and then another column for calculating the information in the form in which we have to have it. After that we experimented to find how many farmers we had to get in order to obtain an average that would be reliable. In general, we have found that if we obtain two sets of 40 farms each in one community the averages of the two sets differ very little. If the number of farms is much smaller than this, the differences begin to become considerable. There is one other great difficulty. A plow, for instance, is utilized in the production of five or six different crops on the farm; there may be 10 acres of this, 40 acres of that, and 70 acres of something else. It is no small task to apportion the cost of that plow among these various crops. The CHAIRMAN. Or the depreciation? Dr. SPILLMAN. Yes. The cost of the plow includes depreciation, repairs, and interest. How are you going to apportion that to all these various crops? One large Government organization in investigating the cost of production of an important agricultural product omitted all charge for the use of agricultural implements on the ground that these implements were used for other things on the same farm, and there was no way of getting at an estimate of those costs. The CHAIRMAN. Dr. Spillman, in relation to the wheat figures that you are going to submit, did you make any allowance for weather risk? Dr. SPILLMAN. No. As I say, this work had to be gotten out so hurriedly we did not have time to do that, Senator. The figures I shall give you here this morning make no allowance whatever for weather risk. The CHAIRMAN. That is one of the most important factors, is it not? Dr. SPILLMAN. It is a very highly important factor, but it is not in these figures, because we have not had time to put that in. The CHAIRMAN. Is that the only important factor that you think of that has been left out? Dr. SPILLMAN. I think it is; yes, sir. The CHAIRMAN. I should be very glad, Doctor, if you would give us the results of your investigation as to wheat, upon the method you have outlined. Dr. SPILLMAN. I will give you the results for wheat. We have a big map showing the production of wheat all over the United States, production being indicated by dots. That map, by the way, is reproduced in that little Geography of World Agriculture which we published some time ago. On that map we picked out the localities that would be representative of the wheat areas of the United States, and we got farms enough in each of these areas to give us a reliable average. The figures that I am giving you relate to the crop of 1917-18, the crop we are now beginning to eat. The CHAIRMAN. Harvested this summer? Dr. SPILLMAN. Harvested this summer. The figures do not include any risk the farmer takes in planting wheat, but do include everything else we know of. First, there is a region around where the States of Colorado, Kansas, and Nebraska meet, an extensive wheat-growing region, where the methods are themselves very extensive; and we find cheaper production of wheat in that locality, when we leave the risk out of consideration, than anywhere else. But we know the risk there is greater than it is in any of these other localities, so it will probably about even up the final cost. In that particular region the cost of the present wheat crop was $1.60 a bushel. The average yield was 8 bushels to the acre. That is based on the cost to a renter who pays one-fourth of his crop as rent, which is the prevailing practice for that region. Next is the State of North Dakota. We have quite ample figures from North Dakota, from five years' bookkeeping records. We have made a careful study of the increase in prices in North Dakota during that five-year period, and we applied those prices to the data that we had accumulated during the five years. The cost there for this |