Mr. SIMPSON. Then actually, the subsidy has not cost the taxpayer anything, it has been taken out of Mr. POAGE. Well, I do not think it is fair to say it is not going to cost the taxpayers anything. I wish that were so, but obviously, if you take money out of the Treasury, it does not make much difference how it got in there, whether it came from income tax, whether it came from excise tax, it all came out of the Treasury. Mr. SIMPSON. It is not a special tax? Mr. POAGE. It is not a special tax, no. Mr. HILL. In other words, it did not change what the taxpayer already was paying for his price of wool. It just changed how the money from the tariff was being used. Mr. GARLAND. How much did it cost for what, may I ask? Mr. POAGE. Ed, can't you tell us what that costs? Mr. GARLAND. The Department representatives here would have that in detail, I am sure. I have it, but I do not have it in my state ment. Mr. POAGE. I am asking some of these fellows if they cannot tell us that, because it would be very helpful if we could get these things answered as they come up. STATEMENT OF EDWIN E. MARSH, EXECUTIVE SECRETARY, NATIONAL WOOL GROWERS ASSOCIATION, SALT LAKE CITY, UTAH Mr. MARSH. The first year the program cost about $57 million and the second year, about $52 million. It would be less on payments to be made this year because the price of wool was higher last year. I think payments this year will be somewhere in the 20 millions. Mr. FISHER. I think it would be well to point out that the fact we have had this program financed from the income from the tariff may help prevent the tariff from being lowered during this period. Mr. JOHNSON. In that case, the consumer pays, because if the tariff Mr. HILL. That is exactly what happens on everything. I know of nothing where the consumer does not pay Mr. JOHNSON. I did not want to get the idea it was not costing us something. Mr. HILL. We are paying on milk, I remind the gentleman, too. Mr. POAGE. It is not for free; we do not get anything for free. Mr. HILL. We do not look for it; we are not disappointed. Mr. QUIE. Mr. Chairman, in order to get a better understanding of what this will cost, do you have the average price that was paid for the 2 years previous to the 2 you gave? You gave the 1958 price and the 1957, 1956, and 1955. Mr. GARLAND. Did you allude to the price paid per pound or the gross cost to the 37.7. Mr. QUIE. Similar to those figures you gave of 52.3 for 1957 and Of course that is not an average price for 1958 because we do not know what it will average out for the year. Mr. GARLAND. The Department has those figures. I believe the support price, incentive price, was set at the same figures both years. I stand subject to correction by the members of the Department who are present. I believe it was 62 cents. Mr. QUIE. For both 1955 and 1956? Mr. GARLAND. That is my understanding. Mr. MARSH. The average farm price of wool for the first year of the program was approximately 42 cents, and the percentage difference between the 42 cents and the incentive level of 62 cents was paid to the producers. And the second year the farm price was around 44 cents. For the third year it will be around 52 cents. In each case the percentage difference between the farm price and the incentive level of 62 cents is added to the producer's net return and this constitutes his incentive payment. Mr. POAGE. Mr. Marsh, I think that what Mr. Quie wanted to ask would be answered by pointing out that in 1954, just before this program came into effect, that the average price was 53.2 cents, and that was the then support level because prior to this time we supported wool through a loan program exactly as we support cotton and wheat. And that loan program was 53.2 cents, and the market price was 53.2 cents in 1954. And in the previous year, 1953, the market price was 54.9 cents and the support price was 53.1 cents. Mr. QUIE. But according to these figures that 52.3 we received in 1957 was higher than the 2 years previous, so the 1958 price really is not unreasonable, if it were stimulated a little bit.it would be back up there around 42 and 44 cents. And it costs the Government about the same as it does those first 2 years. Mr. JOHNSON. How could he arrive at that 53 percent of parity on page 4? Mr. GARLAND. That is the presently quoted price for wool, domestic price, without the incentive payment. Mr. JOHNSON. How much a pound? Mr. GARLAND. That is the present quotation, 37.7. That was as of April 15, 1958. Mr. POAGE. You may proceed. Mr. GARLAND. In addition to this price structure disparity, we are convinced that other harmful effects are resulting from the uncertainty of the reenactment of the law. Speaking now, in part, from years of experience in the banking business where a large part of our clientele consisted of farmers and also as one now who must convince the banker or lending agency of the soundness of the credit of the borrower, we are convinced that the present uncertain state of the act is contributing to tighter and more difficult operating credit arrangements for the producer. We are just as certain that this credit restriction is unfavorably influencing the number of ewe lambs being held over to increase breeding stock numbers. It is also apparent to us that the manufacturer is projected into a state of indecision by the present uncertain status of the law. Among specific advantages of the act is the general increase in the flocks. In the case of my client, Mr. Salyer of the Salyer Land Co., the number of breeding ewes has been doubled or increased from 6,000 to 12,000 head together with the necessary increase in the number of breeding rams which now number approximately 400. These numbers will be further increased by my client with the reenactment of the law. This is further evidence of the fact that potential gains remain to be realized from the act and suggest the advisability of permanent status for the law. The degree of unanimity for approval of reenactment of the law we believe will justify its permanent reenactment. We also believe that the disadvantages we have enumerated will be eliminated. Any corrections or revisions of the act will always be possible in any general session of the Congress. Section 708: In the category of emphasing the importance of certain sections of the Wool Act, we desire to dwell on section 708. The underlying principle interwoven into this section is indispensable to the success of the act and to the accomplishment of the purpose we believe the Congress envisioned at the time of adoption. The deduction of funds from the growers' payments in amounts agreed to by the Secretary of the Department and the ASPC is a sound, simple, and well-established practice. The principle of expanding consumption through advertising and sales promotion as well as establishing consumer preference in the market place is now a necessary part of business. Building prestige and good will in behalf of commodities is likewise accepted as good business practice. It so happens, I have for 35 years contributed to the building of demand for California Sunkist citrus fruits, for Blue Anchor grapes and tree fruits, and to the expansion of the olive market on almost the same basis as far as deductions are concerned. The success of these groups is well known and certainly due in great measure to the degree of promotion involved. Had the financing of the sales promotion in the case of these products been dependent on the individual growers' contributions in a less certain and direct way, failure would have resulted. We know of no case wherein a sheep and wool producer or anyone else who is sincerely interested in the success of the Wool Act of 1954 is possessed of a radically different opinion. To disrupt the procedures and practices provided for in section 708 of the act would be to trifle with the very purpose for which the act came into being. The contractual arrangements between the Secretary of the Department and the ASPC which stem from section 708 provide adequate and constant safeguards which assure the continuity and success of the whole act in behalf of the producer. Activities carried out under this section also lend valuable demand and price structure stability to the manufactured end products of wool. The constant and growing competition from synthetics and other fibers cannot be successfully dealt with in any other way. In conclusion, we believe that reenactment of the Wool Act of 1954 on a permanent basis is now advisable. Reenactment, however, on a term basis should by all means be with an indisturbed continuation of section 708. Mr. Chairman, that concludes my written statement. Mr. POAGE. Thank you very much. Congressman Hagen wanted to ask you a question. Mr. HAGEN. Mr. Chairman, Mr. Marsh is present, is he not? Gordon, I wish you would put in the record yourself, with the help of Mr. Marsh, a list of the vital uses of wool. One of the justifications for this act is that this is a commodity which we must have in wartime, and therefore we should preserve the wool industry. I wonder if you or Mr. Marsh could supply that information for the record? Mr. GARLAND. The quantitative uses of wool for what purposes it is used, and insert it in the record? Mr. HAGEN. All, an exhaustive list. Mr. GARLAND. Yes, I would be very happy to participate in that with Mr. Marsh. (The information above referred to is as follows:) End use consumption of apparel wool, scoured basis, United States, 1955 Million pounds 54. 8 5.0 5. 4 8.0 26. 3 17.5 28. 7 .6 13. 7 5. 7 7 2.0 8.0 .6 .8 7.3 5.9 191. 0 17.7 21. 3 1.7 10. 6 .8 66. 6 11. 2 1.9 5.5 3 .1 .2 1. 1 4. 6 143. 6 2.8 End use consumption of apparel wool, scoured basis, United States, 1955-Continued Includes new and reused and reprocessed wool and other animal fiber used in the production of items other than carpets and rugs. The survey measures the poundage of fiber consumed in the production of textile products in the United States and hence includes imports of textile raw materials and semimanufactured goods. Wool used in the production of military blankets is not included, but wool used in the production of military garments, except those cut from Governmentowned fabric, is included. Source: Compiled from Textile Organon, a publication of the Textile Economics Bureau, Inc. Apparel wool consumption and fabric production within the woolen and worsted industry, average 1935-39, annual 1939-45 Source: From Wool During World War II, War Records Monograph No. 7, Bureau of Agricultural Economics, USDA. Total mill consumption and fabric production are from Bureau of Census reports except for fabric production in the years 1940 and 1941 which were estimated in part from reports of the National Association of Wool Manufacturers. The breakdown is part between military, export, and civilian was obtained as follows: Fabric production, 1934-38, 1939, 1942-44, and first half of 1945, material as published by the WPB. 1940, 1941, and second half of 1945 from announced |