to 1939 period, which was the depth of the depression, he received 29 percent as much for his labor and management as the industrial wage worker who was working received. From 1940 to 1949 his wages went up to where he was getting 69 percent or about seven-tenths as much. For the last 2 years he has received 74 percent as much as the average industrial wage worker.

This has been a persistent disparity during these years, and what is the cause or the reason for this? In the first place, there are only 5,000,000 separate business units in agriculture, and these units work with a very high fixed cost. About 75 percent of all their costs are fixed. They can't reduce their costs by reducing their output below that 75 percent fixed cost. Among these units of cost is fixed labor which would go to waste if he doesn't use it, the labor of his family which would go to waste if he didn't use it. Therefore, it becomes a fixed cost on him. The interest on his investment, the feed for his livestock, and numerous other items are all fixed on him and he can't reduce his costs even if he reduces his output. Therefore, the farmer doesn't reduce his output. He loses less money by not reducing his output during a depression than he does by reducing his output.

Exactly the opposite is true with industry. In 1932 and 1933 industry reduced its total output to where it was turning out only 52 percent as much product, physical goods, as it did in 1929, whereas the farmer was turning out within 12 percent below what he was in 1929. That probably was a freak of nature rather than the farmer's own intention.

This full output is of tremendous service to our Nation. I would like to ask the simple question to show you how important it is: Suppose the farmers in 1933 had reduced their output by one-half and the city people of this land had starved, because a large number of them most certainly would have starved to death, as is frequently true in India?

The agricultural service if of great importance socially, politically, and economically. I mean the service of stability of output. Not only does this fixed cost work against the farmer in that it tends to force him to sell when prices are being depressed in industry and when industry is cutting down its output; it forces him to sell a full output for a less than normal output on the part of the industry. He exchanges his goods for industrial output.

We don't decry that at all. We are glad that it is so, but it does create a lot of economic problems for the farmer. We wouldn't change it if we could change it, because we do not believe in a scarcity economy. The Grange has never advocated a scarcity economy in this country. Another thing works against the farmer, of course, from the standpoint of reducing this income to a very low basis, and that is that the increased efficiency of the farmer has caused him to constantly tend to bring on a larger supply of the commodity than is needed for consumption at home. Mr. Brannan, the Secretary of Agriculture, recently said that the increased output per man per hour of work on farms had increased more than three times as fast as industrial output during the last several years.

So, agriculture has increased its efficiency very greatly and as a consequence the prices of agricultural commodities tend to be below what we think parity is. That is, the price that would yield them an income comparable to nonagricultural employment income. This

table that I have shows that the price during these 31 years has been 77 percent of parity; that is, if it were 100 percent of parity, which it fails to be by 23 percent, expressing it that way, he would have had an income similar to the industrial wage worker. I think under those conditions you would not find the scarcity of services in agricultural districts that you do find.

Not only does increased efficiency press against his supplies and cause them to be constantly full and therefore low priced, but there is another marked characteristic of country life in this country that does the same thing, and that is the excess birth rate over death rates in the country. During the last 22 years for which we have data there have been approximately 500,000 boys or girls who were excess boys and girls on the farms and had to be moved off to the city. Those boys have been educated largely at the expense of country income, agricultural income. When they become mature they move into the cities and begin their earning life at the prime of their earning capacity. They pay their taxes. They not only move into the city and carry with them their cost of education and give to the city people the benefit of that education, but they also inherit their share of the agricultural wealth and carry it to the cities and pay their taxes on the basis of their share of the wealth that has been generated in agricultural districts.

This would not be so bad if there were a compensatory backflow of people from the cities to the districts but this 500,000 is not the gross flow, it is the net flow. It is the difference between the people who move from the city out to the country and the country people who move into the city. This pauperizes agricultural districts.

There are many other forces. Take, for example, philanthropy. You don't usually think of philanthropy as discriminating against country people, but it does very definitely. Take Carnegie's libraries. All the libraries were put in cities and they serve city people. All kinds of philanthropy, philanthropy that is generated in the country, is usually situated in the city where a high concentration of people can gain the advantage of this philanthropy and therefore serve the greatest number, but not necessarily the most good because it is needed very badly in the country.

At one time I worked with the Metropolitan Life Insurance Co. on a special research job in New York City, and I served under the twenty-third vice president of that company. That was in 1933 and 1934. The twenty-third vice president of the Metropolitan Life Insurance Co. at that time got $27,000 salary. That was a pretty good salary in 1933 and 1934, I will tell you that. Yet in that block that I worked in were 10,000 employees who had their sources of income scattered on every rural district in this land, every rural district. I bring that up just as an illustration, because there are thousands and thousands of those examples that could be repeated. The modern industrial agricultural economy tends to concentrate wealth and income power and therefore benefits into the urban districts.

This is the real, the sound economic reason why the Federal Government should collect taxes all over this land from urban districts as well as every other district that has the proper income to pay taxes, and redistribute the cushion of those taxes so as to help equalize the service to all the people of the land. The reason I am emphasizing

this to you gentlemen is that there is a sound economic basis. This is no charity. It is the payment of a proper and just debt to the country people.

I think that is all.

Mr. TACKETT. Mr. Howell?

Mr. HOWELL. I think you have made an interesting case, Dr. Sanders, especially in your points about philanthropy not reaching into the rural and agricultural districts. It is a point I had not thought of before, but it seems to be quite obvious and very pertinent. You aren't worried that if we give more education and learning to some of the agricultural people it will aggravate the movement away from the farm?

Dr. SANDERS. Not at all. We feel that it is sound, that it is good for both the city and the country. I don't know what our cities would do if we didn't feed them that way. Our cities would be in a desperate situation for the manpower that they need.

I might mention to you gentlemen that during the past summer I spent 3 months in Burma. You asked about library service to foreign countries, Mr. Potter. Night after night when I would go into what I believe they called the USIS library in Rangoon, I would say literally scores of boys and girls in this library were pulling down magazines that were probably 2 years old, just looking at the advertisements, spending I would say 2 or 3 hours an evening there, children of all ages as well as old people. That convinced me that undoubtedly that was a great service, but I do believe that if we can appreciate that sort of service for foreign people we should appreciate it and provide it to our rural districts. I think you have a very sound point there. If I had my way I wouldn't restrict at all the library service to such countries as Burma, because I think it will do an untold amount of good in the end.

Mr. HOWELL. That is a very fine statement. That is all I have. Mr. TACKETT. Mr. Greenwood.

Mr. GREENWOOD. You made an excellent statement. I am particularly interested in the matter of moving the rural communities into the cities at the expense of the rural communities and giving their value to the thickly populated areas. I think that is a very practical statement.

Dr. SANDERS. It not only has been the case in the past, but there is every bit of evidence that it will continue for many, many years. In the first place, the birth rate will always be higher in the country than in the city because it is cheaper and it is more congenial climate in which to raise a boy or girl. The family life on the farm is much more conducive to raising children and to being interested in raising children than in the city. So that will continue. So far as we can see, the American farmer is going to increase his efficiency greatly over that which he has in the past, remarkable as it is. So we don't see any end to feeding the city district with fresh new blood from the country, and we think it should go on and do not at all preach discouragement of it in our organization.

Mr. GREENWOOD. With the modern facilities which the farmer has now more than he had before, isn't there a tendency to keep those men back on the farm more than before?

Dr. SANDERS. Keep men back on the farm?

Mr. GREENWOOD. Yes; or in the farming districts.

Dr. SANDERS. No, sir. When you stop to think about the economics of it, the force is nearly all in the other direction. For example, in 1930 in Iowa about 72 percent of all of its labor was family labor. Now 89 percent of all the labor on Iowa farms is family labor. The mechanization of American agriculture strengthens the family farm. Of course that gives the Grange a lot of hope for the future because we are distinctly a family organization and we just don't have any fear at all from mechanization and the family farm. We think they will go hand in hand and develop a much stronger family farm than we would develop without mechanization.

Mr. TACKETT. Mr. Potter?

Mr. POTTER. If I understand your economic theory, to carry it to its ultimate conclusion you would advocate that the Federal Government take over the responsibilities of all governmental units as a means of equalizing the differential between rural communities and urban communities. Am I correct?

Dr. SANDERS. No indeed. By all means no.

Mr. POTTER. I was wondering if we were adopting Huey Long's policy.

Mr. SANDERS. We believe, Mr. Congressman, that there are certain functions that belong in that local level and they should never be impaired. One of them is schools. We have passed resolution after resolution for Federal aid, but every resolution we have passed was with a proviso that there would be no Federal control. No; we don't say that. I am sorry I gave you that impression because I certainly didn't intend to give you that impression.

Mr. POTTER. Is your testimony here a result of action taken by the National Grange itself?

Dr. SANDERS. Yes, sir. I should have read that. I have that here. I am glad you called my attention to that because I intended to read it at the beginning of my testimony.

We approve the extension of library service to all rural areas and will support all efforts to extend such service so long as they are consistent with our policies and objectives.

Mr. POTTER. What is that from?

Dr. SANDERS. That is a resolution passed at the National Grange session and it is in full force as a resolution.

Mr. POTTER. That is all I have.

Mr. TACKETT. We certainly do thank you, Dr. Sanders, for coming here.

Dr. SANDERS. Thank you.

Mr. TACKETT. Mr. Angus McDonald, Farmers' Union.

Dr. SANDERS. Excuse me. Would it be proper to put these figures in the record, this table?

Mr. TACKETT. Yes, sir.

Dr. SANDERS. I can give you copies of it and if you will put them in the record there are enough copies for each of you gentlemen to have a copy if you would like to have it.

(The table referred to is as follows:)

Estimated farm operators' labor earnings and income necessary to yield industrial wage parity to operators, 1920-51 (tabulated from official sources by the National. Grange) [In millions of dollars]

1 Realized net income adjusted for changes in inventory. Farm Income Situation, July-September 1951. 2 Based upon days worked off own farm as shown in census reports of 1929, 1934, 1939, and 1944, and Bureau of Agricultural Economics' estimates of average farm wage rate and average income of the industrial worker. Information on days worked off own farm is not available from 1949 census; however preliminary reports show 28 percent more farm operators worked off their own farms in 1949 than in 1944, likewise there was a 23 percent increase in the number who worked more than 100 days off their own farm, consequently a 28 percent increase in the 1944 reported aggregate was spread over the period 1945-49. The days worked as reported for 1929 are used for prior years, straight interpolations are used for 1929 to date. A factor of 300 is used to convert the annual industrial wage income to a daily rate.

3 Column 4 is a summation of the three preceding columns.

4 The number of unpaid workers is derived by deducting number of operators, presumed to be the same as number of farms, from Bureau of Agricultural Economics' estimate of family workers. Earnings factor derived by dividing average number of hired workers into total cash wages paid for farm labor. Unpaid family workers' earnings estimated on full time basis. Number of operators in 1951 assumed to be the same as in 1950.

5 Interest earnings are based on data in the Balance Sheet of Agriculture and reflect physical assets, excluding household equipment, plus 50 percent of deposits and currency (assumed to be used as working capital) minus total liabilities. Interest earnings computed at two-thirds of the average interest rate of all lenders on farm mortgage loans, published in Agricultural Finance Review.

• Column 7 equals column 4 minus columns 5 and 6.

7 Number of operators multiplied by annual average wage per employed industrial worker.

8 Column 10 is obtained by subtracting column 7 from column 8.

9 Receipts from marketings plus value of home consumption adjusted for change in inventory, Farm Income Situation, July-September 1951.