persons and the house itself constitutes something tangible in the way of wealth; something that has a definite value." This is in distinct contrast to Government deficit financing, Mr. Johnson asserted. "Deficit financing simply creates billions of more money which is poured into the Nation's monetary stream. This is done by a bookkeeping process and by borrowing. The only difference between this and fiat money is that Government does not resort to the printing press to turn out currency. It achieves the same result by issuing bonds, 91-day bills and other forms of what are in reality nothing more than IOU's. "The most dangerous and inflationary aspect of deficit Government financing is that virtually none of Government's spending creates new wealth, such as is the case with home buying. Government spending goes largely into salaries for its enormous bureaucracy, and into articles and commodities that are quickly used up, worn out or destroyed. It is certainly not productive. "Another Government-inspired inflationary trend is that Government apparently favors an increasingly higher wage level. If the production of things for workers to buy is limited, especially homes and home equipment, this will add dangerously to the inflation spiral. "It is true," Mr. Johnson said, "that a high volume of home building and mortgage credit increases the velocity with which money is spent in the Nation. Basically, however, this is no more inflationary than the selling of a pair of shoes or any other commodity. "The fact remains that home building and home ownership which is made possible by careful, prudent mortgage lending constitutes the greatest single bulwark against communism that we have. Furthermore, home building is basic to a high ratio of employment and a prosperous Nation. "Although these facts are well known as basic economic factors, I am extremely surprised that the Federal Reserve Board and others are advocating excessive down payments for home purchases," Mr. Johnson concluded. "If the proponents of unduly excessive mortgage credit curbs are successful in their plans, they will force the closing down of the Nation's largest non-agricultural industry and thus will pave the way for a severe economic depression. Furthermore, such steps as are being discussed at high levels of Government policy making can be regarded as another move toward socialization of our country. Never before has it been necessary to establish stringent mortgage credit regulations, and it is not necessary today." Senator MOODY. In the interest of people who do not have much money to make a down payment, Mr. Spiegel, if the Congress should decide that some regulation is necessary, but would perhaps be inclined to relax the requirements somewhat, would you be in favor of reducing the requirements on houses say of $10,000 to $12,000, downward from that, reducing the down payment requirement? Mr. SPIEGEL. You mean for that group up to $12,000? Mr. SPIEGEL. I would certainly be happy with some such arrangement as that. I think it would be very helpful if that could be done. Senator MOODY. Thank you. Mr. SPIEGEL. May I say one further thing, Mr. Chairman, that I think that in view of the BLS statistics which indicate the 88,000 starts for April, and our judgment-and none of us can foresee what the future holds-I think it would be most interesting if this committee would be able in some way to get the statitsics for May from BLS which I think will indicate this downward trend, and be a most significant indication as to what this housing picture is at the present time. The CHAIRMAN. There is a lag between the time they get the figures until it is prepared. Mr. SPIEGEL. I think that you can get those figures about June 10. They will be available for the month of May. The CHAIRMAN. We will try to get them. Mr. SPIEGEL. Thank you very much, Mr. Chairman. Senator SCHOEPPEL. I may say to the chairman that the other day I asked, and I think there is a notation in the record, to submit for the record in the livestock situation a statement of A. G. Pickett, secretary of the Kansas Live Stock Association of Topeka, Kans., and I am offering that now for the record in relation to the record on beef and cattle. (The material referred to follows): STATEMENT OF A. G. PICKETT, SECRETARY, KANSAS LIVE STOCK ASSOCIATION, TOPEKA, KANS. BEEF PRODUCTION COSTS Factors affecting the cost of producing beef are numerous and varied. It is impossible for anyone to give a definite figure. If, however, we knew the location and type of operation we can list cost items involved, apply probable local prices or values, and determine what cost figure we may expect. A FEW PRODUCTION COST ITEMS 1. Feed.--Feed production requires large investments in land, labor, and equipment. Even after we have determined feed requirements and cost, it is necessary to consider rate of gain. Two producers may each have a feed cost of 70 cents per day per steer but due to his ability as a feeder and manager one may get 24 pounds gain a day making his cost 32 cents, while the other man gets only 11⁄2 pounds gain per day making his cost 46% cents per pound. 2. Feeder or replacement cattle cost.-For the producer who purchases his feeders, cost is a major item. 3. Area or location. This involves both type and size of production. 4. Age of cattle.-Young cattle make more efficient use of feed, but require more attention and care. They also require a long fattening period. 5. Type of cattle and feed used. 6. Season or time of year.-In Kansas late summer and early fall feeding before the new corn crop is mature calls for carrying corn over 1 year and feed ing during the busy fall season when it would be easier to leave cattle on grass for 2 or 3 more months. This early feeding puts grain-fed cattle on the market in November and December when the supply is short and they command a premium price. OPS makes no provision for normal seasonal price trends and thus eliminates the incentive for such feeding. Distribution of the consumers' meat supply suffers. We could list many other cost items and in addition there is always a great risk factor. Unusual weather conditions such as drought, storms, blizzards, and floods may cause death loss or a reduction in growth and gain. Disease may also cause unusually heavy losses. TYPICAL BEEF PRODUCTION PROGRAMS IN KANSAS Kansas is one of the leading cattle States in the Nation, ranking from third to sixth in total numbers of cattle on farms. Types of operations followed are varied due to land and farming condition. In the west and southwest we have a short grass or 12 months grazing proposition, as well as fall and winter wheat pasture. In the east central is the blue stem or long grass area used principally for summer grazing. Northeast Kansas is a corn-producing area where grain feeding is practiced. Throughout the State we find thousands of farms producing a small number of cattle. At this point we want to show that the great volume, and steady flow of cattle to market comes from small farm producers. The 1945 agricultural census shows that out of 141,192 farms in the State, 103,034 farms sold cattle and calves alive. The annual sale was 2,020,401 head or an average sale per farm of 19.6 cattle. Following are actual examples of Kansas producers. Cost figures are conservative and can be substantiated. Labor and management or special equipment costs are not included. COWHERD PRODUCING FEEDER CALVES Cost of keeping a beef cowherd on central and eastern Kansas farms where it is necessary to confine and feed these herds in fields or lots during a 6-month winter feeding period: Labor, cow replacement, and herd management cost have not been considered. If we assume a 90 percent calf crop, each calf will cost $112.55 at weaning time. If the calf weighs 400 pounds (some will be heavier and others will be lighter) it will mean a cost of $28.13 per hundred to produce. KANSAS DEFERRED SYSTEM OF FULL FEEDING CALVES This is an actual example of a man who purchased steer salves last November and is handling them on a program that has for years proven to be the most economical system of producing beef using a maximum of roughage and a minimum of grain. |