The demonstrations with cotton road reinforcing material under the methods most widely used have proved to be unsatisfactory. However, other demonstrations on airport runways have appeared to yield better results. Further development of techniques will be necessary to come to definite conclusions.

TOBACCO

During the fiscal year 1938-39 two diversion programs for tobacco were in operation. The first was a direct diversion program under which tobacco was diverted to the manufacture of byproducts of which the most important was nicotine sulfate for use in insecticides.

Tobacco stems and tobacco unfit for other use, have been the usual sources of nicotine. This program, however, paid benefits for the diversion of fire-cured and dark air-cured types of tobacco, of which there was a large surplus, to byproduct uses. The surplus resulted from a decreased use of snuff and chewing tobacco and a decline in exports.

Under this program 4,217,799 pounds of tobacco were diverted by tobacco cooperative associations and marketing corporations at a cost of $140,804.15 which represented the difference between the scheduled advances and the amounts received from the byproducts purchasers. This program which had continued for several years was effective in disposing of a large part of an accumulated surplus which had threatened the producers cooperatives with bankruptcy and at the same time it has contributed greatly to an increased use of nicotine for insecticide purposes.

It is believed that a large part of this increased market will be retained without indemnity payments, as the superior qualities of nicotine as an insecticide have been demonstrated more widely than ever before. One great advantage of nicotine over metalic poisons is that no toxic residue remains on the fruit when it is harvested and marketed.

SWEETPOTATO DIVERSION PROGRAM

In the fiscal year 1938-39, the sum of $60,000 was allocated to the sweetpotato diversion program, of which sum $33,163.67 has been used. Payments were made to producers at the rate of 20 cents per bushel, and a total of 1,659,844 bushels were diverted to the manufacture of starch. About 1,650,000 pounds of starch were produced or about 10 pounds per bushel. The average selling price of the starch for the year was 4.02 cents per pound.

While the plant closed the season with a deficit in operations, definite progress was made toward future profitable operation. With small production, marketing costs were still high and because the product is still not well known it does not yet command the premium price that its quality would justify. With a production in the 1939 season some 70 percent larger than in 1938 the plant showed a small profit for the year.

Progress has been made in methods of dehydrating sweetpotatoes to make possible more nearly continuous operation of the plant, which would greatly greatly reduce overhead costs. As a byproduct of these dehydration experiments it now appears that it may become profitable to produce dehydrated sweetpotatoes for livestock feed. If in this its first year of capacity operation, the Laurel Starch Plant can show even a small profit, it seems possible that with dehydration to permit of operation for 200 days in the year as compared with the present 100 days, it may soon be possible to operate on a commercial scale without indemnity payments. The payment per bushel has already been reduced to 15 cents.

The previous material gives an example of a typical year's operation of new use programs and a somewhat extended explanation of some of the programs themselves. The following material indicates the progress of new-use pro

grams to date.

Programs in Commercial use without Subsidy.

1. Cotton fabrics for use in the fumigation of tobacco seedlings.

2. Cotton materials for curing concrete.

3. Cotton for shading or protecting tree seedlings.

4. Open mesh cotton bags for fruits and vegetables.

5. Cotton fabric for lining irrigation ditches to prevent erosion.

6. Also, although not strictly in new use, might be listed the acceptance by the Army of an all cotton mattress as distinct from a ratio of 60% cotton, 40% linters, which not only provides a better mattress for the same cost but also saves linters for defense purposes.

PRODUCTS NOW SUBSIDIZED WHICH SHOW PROMISE OF EARLY COMMERCIAL ACCEPTANCE

Cotton Bagging.

Since cotton bagging for bale covers has been manufactured under new-use programs, the rate of payment has been reduced from 28 cents per bale cover in 1939, and 25 cents per bale cover in 1940 to 15 cents for the program now in effect. The percent that the payment is of raw material cost has likewise decreased from 82% in 1939 and 52% in 1940 to 33% in 1941.

The most important factor which stands in the way of almost universal unsubsidized use of cotton bagging for cotton bales is the practice of grossweight trading which tends to penalize the farmer who markets his cotton in lighter weight cotton bagging. A large number of mills and other cotton handlers have already agreed to make a proper allowance for the lighter tare of cotton-wrapped bales and as others join in the practice, this unwarranted discrimination against cotton wrapped in cotton will tend to disappear. Legislation has been proposed for compulsory net weight trading and the Department of Agriculture has gone on record in favor of such legislation. Cotton for Fine Writing Paper.

When the 1940 cotton-for-paper program was first made effective, doubt existed in the minds of processors as to whether lint cotton was mechanically or chemically adaptable for paper-making purposes. Preliminary conclusions derived from that program indicate that cotton paper not only compares favorably in quality to paper made from rags and clippings but also that cotton utilization offers possibilities for economics in the normal processes of ragcontent paper production.

These economies include savings in the preliminary treatment of raw stock, smaller quantities of chemicals and bleach needed, reduction in the required cooking time and cooking pressure, and savings in power consumed in the washing, heating and jordaning processes.

The amount of subsidy paid by the Department under the 1940 program averaged about 62 cents per pound of cotton. Consideration is now being given to a new program under provisions of which payments would be considerably below the 1940 rate and would be made on only a portion of the cotton purchased and actually used (41⁄2 cents per pound on 75% of the cotton used by each manufacturer). Although some payment is still needed to encourage continued mill investigations of cotton, present indications are that the use of lint cotton for paper making purposes will become permanently established after definite determinations are derived relative to costs, proper processing techniques and the qualities of cotton best adapted, both physically and economically, for paper making purposes. Macerated Dates.

The marketing of dates grown in Southern California and Arizona offers an instance of the development of new uses for a product so old that its use extends further into the past then any recorded history.

Under a diversion agreement with the Secretary of Agriculture, substandard dates are withheld from commercial channels with benefit payments being made for this diversion. Prior to the institution of this program, many dates which were substandard in respect to dryness and degree of maturity, were "hydrated" and then sold in competition with first quality fruit. Under the diversion program such dates are macerated and the resulting product is sold for manufacture of bakery goods and confections. Considerable expansion of this new use has occurred. In the past, there has also been some diversion of dates to such outlets as stockfeed, alcohol and brandy. Other new uses include the preparation of date flakes, date sugar and date crystals. At present stock feed is not included in the program. Cotton Insulation.

Following announcement of the 1941 cotton insulation program arrangements were made between the participating manufacturer and a large national organization for the commercial distribution of cotton insulation. It is anticipated that such distribution will be extended gradually until it includes the entire country. The agreement to act as sales agency for cotton insulation followed careful investigation of the entire insulation field and of the ability of cotton to compete on a commercial basis without subsidy by the Department of Agriculture after it becomes widely introduced. Such an agreement, therefore, is evidence that the manufacturer and the distributor believe that they can make and sell cotton insulation on a competitive basis without subsidy in competition with mineral and other forms of insulation. The potential use of cotton for this purpose is estimated at 450,000 bales.

XMONTHLY DATA SEASONALLY ADJUSTED

U. S. GOVERNMENT PRINTING OFFICE: 1941-0-304946

Пuse programs of the Department are centered on developing entirely
r agricultural products. Every expenditure made on a successful new
in a continuing annual increase of consumption of the product without
from the Government. While there can be no question of the necessity
Lance of more direct aid to growers of individual crops in particular
1 that to the extent new uses programs are feasible they offer a signifi-
-un aid to domestic agriculture.

EXHIBIT No. 2808

uced in connection with statement of Donald E. Montgomery, supra,

INDUSTRIAL OUTPUT

and Lowest Output in 1940, Compared with Highest Monthly Output,
1936-1939 inclusive