Why then, and perhaps this is what you are leading to, sir, why did Canada make, the Government of Canada make, such a price for Britain for wheat? Had it been China that asked for that commitment or France, they never would have gotten it, but they were swayed little bit by their feeling, "Well, here is poor old Britain, and she has had a hard time; she spent about twice as much in personnel during the war than any other country in the world; she has sacrificed all of her investments; she is in a thoroughly bad way, and Britain wants to make an ageeement," and even though it is not economic, It is a force; it is a pull there.

Representative HORAN. It is a historic fact that you have reduced, by one whim or another, the total amount of wheat produced? Mr. STRANGE. Yes.

Representative HORAN. There has been no great effort to increase acreage, has there?

Mr. STRANGE. That is it. I am afraid, sir, that if you were to ask why was that not envisioned at the time, as it was to the economists, I hardly like to say this, sir, but I will put it this way: That you would be implying that our politicians in Canada have a good deal more vision than they actually possess, let me put it that way.

Senator FLANDERS. I would like to ask the indulgence at this point of the witness and the other members of the committee. I also have to run out, like so many others, and one of the members of this committee who left, left with me three questions, which I would like to ask you, and then I shall have to go.

Mr. STRANGE. Yes.

Senator FLANDERS. The first question is this: Why did the Canadian Government get into this wheat business in 1930? Mr. STRANGE. Because the wheat pools lost $23,000,000. Senator FLANDERS. I asked that question earlier, but some of these men were not here so, perhaps, you had better tell what a wheat pool is. Mr. STRANGE. The wheat pools are a large cooperative wheat organization owned by farmers and, as I explained in the text, sir, they adopted a system of avoiding the futures market. They did not hedge their wheat, and they found themselves with about 75,000,000 bushels of wheat unhedged, and the price went down on them, and they went bankrupt, and owed $23,000,000 to the banks, with no assets; $23,000,000 over and above their assets.

Fearing political repercussions, they asked the provincial government to look after them to guarantee this money, which the provincial governments did, and then the provincial governments found that it was impairing their own credit, and they called upon the Dominion Government to help them, and the Dominion Government said, "We will appoint the administrator," and his job was to feed that 75,000,000 bushels of wheat into the market without depressing prices, very slowly, hedge it in a way; that is what he had to do, and it took him a long time to do it, and so started the Canadian Wheat Board. He was a Government official, and he wanted some help, and then when prices fell, it is very interesting to note, in the depths of the depression, 1932 and '33, there was a great uproar from the farmers, so the Government then gave their administrator the right not only to sell that wheat, but to withhold it from the market, and then later on they gave him more power, which was to buy additional wheat to stabilize the market, all of which failed. It did not stabilize it. That is how it happened, sir.

Senator FLANDERS. The next question is: Does the Canadian consumer benefit from low wheat prices?

Mr. STRANGE. Very much so, sir, absolutely. Our farmers today are subsidizing 12,000,000 people with wheat at $1.55, whereas the world price of wheat, as set by the Canadian Wheat Board today is $3.35; they are losing $1.80 on every bushel, or farmers are giving cheap bread to 12,000,000 people in Canada today who are among the wealthiest people in the world, with the exception of the United States. Senator FLANDERS. I might say that I come from a border State, Vermont, and I have had a great deal of correspondence from the people living on the border inquiring why they have such a low price for flour, when across the border they pay such a high price.

Mr. STRANGE. Yes.

Senator FLANDERS. The next question is this: Are Canadian meat prices lower than in the United States? Meat prices.

Mr. STRANGE. What wheat prices do they mean?
Senator FLANDERS. Meat prices. M-e-a-t.

Mr. STRANGE. Meat. Very much lower, sir, because exactly the same condition that pertains to wheat pertains to coarse grains, which feed the livestock. I have in my bag, if anybody is interested, the exact prices. I publish them every 2 weeks. They are very much lower because the coarse grains are much lower, and again the farmers are subsidizing all the people in Canada with cheap meat and cheap butter.

Senator FLANDERS. There must be another element in that, however, because meat prices in this country, or the livestock prices, are well above the cost of production. In other words, you probably have a larger production in proportion to your home consumption than we do.

Mr. STRANGE. That is right. We have a much larger percent for export than you do; yes, that is true.

Senator FLANDERS. The next and final question is this: Is Canada threatened with inflation as we are? I should say that is a very mild statement about our being threatened with inflation, but that is the way the question is asked. Are you threatened with inflation?

Mr. STRANGE. Well, sir, I have not yet among all my economist friends had a definition that satisfied me as to what inflation is, where does it start, and where does it go.

Senator FLANDERS. I suggest that you move across the border.
Mr. STRANGE. It is a word in common use.

Senator FLANDERS. You may still be unable to define it, but you can see it.

Senator MYERS. You can feel it, too, Senator.

Mr. STRANGE. My wife tells me that she wants more housekeeping money. Is that a good indication?

Senator FLANDERS. That is an indication.

Mr. STRANGE. So that we are frightened by it, and I do not know, prices are certainly going up. But do not let us forget this, Mr. Chairman, that it is the farmer who gets the prices, and when you do anything about keeping prices down with foodstuffs it simply means this simple thing, as I see it, you are saying to the farmer, "We are going to pay you less, that is all."

Senator KEM. How is it that the Argentine Government can sell their wheat for $5.25 a bushel in a world market, where the prevailing price is $3.30?

Mr. STRANGE. Well, sir, today, unfortunately there is no Liverpool tures market, and there is no Winnepeg futures market, and no Suenos Aires futures market, and a lot or most of the wheat in the world oday is not bought and sold on futures markets as it is in the States and few countries that buy it from the States, but the great bulk of the heat in the world today is a government monopoly and bought by overnment boards, what they call bulk buying and bulk selling, and oday the world is hungry, so that the Argentines discover a country with great hunger, such as Brazil, with a fair amount of money, and hey say, "There is our price; take it or leave it." They say, "All ight, we will get some wheat from the States," but they cannot get nough from the States; they can get some from Canada, and the Canadian Government says: "We are not going to give you any," and finally, they find the only source of supply in the world with xcess capacity is Argentina, so that they can get away with it. Senator KEM. When those transactions are made, does not the world price become $5.25?

Mr. STRANGE. I have heard it said, sir, and it is very difficult to contradict it, that the Chicago prices, the prices registered on the Chicago market, are much too low. They are not prices, world prices, if you want to put it that way. I do not know.

Senator KEM. It would seem to me that the world price is the price that a willing buyer will give to a willing seller.

Mr. STRANGE. Quite right, sir, so that today there is no question that the price, the proper price, of Argentine wheat in Brazil is $5 a bushel, because that is what Brazil is paying for it.

Senator MYERS. Major, I regret exceedingly that I missed your testimony, but I was attending another committee meeting. I heard you say a moment ago, however, that the farmers in Canada are subsidizing about 12,000,000 people.

Mr. STRANGE. Subsidizing.

Senator MYERS. I say subsidizing, yes; and that the prices of meat are low in Canada because the farmers are also subsidizing those who are eating meat.

Mr. STRANGE. Yes.

Senator MYERS. Let me ask you this: Are the farmers making money today in Canada or are they losing money?

Mr. STRANGE. Well, sir, it is very hard to apply profit and loss to farms, because it ends in what standard of living do they live at, does it not? I mean, it is not a business transaction like in a business, where you can employ a bookkeeper, and you know what your expenses are, and you know how much you are taking in and if you have made money or not.

But on the farm, a farmer can reduce the standard of living of his people down low, with low prices, and he gets by with it, and he stays on the farm, and he does not send his children to school.

Senator MYERS. Has the Canadian farmer reduced his standard of living?

Mr. STRANGE. Pardon me, sir?

Senator MYERS. Has the Canadian farmer reduced his standard of living?

Mr. STRANGE. Well, he has not reduced it, sir, because he started it almost the other day with the great depression, when it was exceed

ingly low. His level of living today is higher than it was, at present prices, than it was in the years of the great depression.

Senator MYERS. Of course. How is his standard of living today compared with the standard of living 2 or 3 or 4 or 5 years ago or 1939?

Is his standard of living higher today than it was in 1939?

Mr. STRANGE. I would say perhaps the same, not an advance; perhaps the same; but definitely lower than the standard of living of the American farmers, most definitely lower.

Senator MYERS. Well, I think, generally, the standard of living of the Canadian industrial worker and city dweller is somewhat lower than the standard of living of the industrial worker and the city dweller in the United States.

Mr. STRANGE. Perhaps. Might I make this comparison, sir, that might be a picture. The standard of living of our industrial labor in Canada has gone up since 1939 very, very much higher than the farmer's standard of living, from the index numbers published by the Government.

Senator MYERS. . Still, it is extremely difficult for you to answer the question as to whether or not the farmer is making a reasonable profit today?

Mr. STRANGE. Yes, I would not say that. My own personal opinion is that he is lagging behind; he is lagging behind the industrial worker of Canada.

Senator MYERS. That may be very true, but my question was directed to whether or not he was making a fair profit; whether the farmer, the Canadian farmer, is making a fair profit; whether the wheat grower of Canada is making a fair profit.

Mr. STRANGE. I cannot answer that, sir; it is too entangled. I would say that he would not be prepared to go along for very long as shown by this simple fact, that 79 percent of the farmers, from a recent survey, are extremely dissatisfied with present prices.

Senator MYERS. There is no question about that. Many people are dissatisfied with present prices, and some would like to see them go a lot higher, and some in America would like to see them go a lot lower; that is not my point.

I am just wondering whether he was making money; when you say he is subsidizing all of these people, very frankly, he might be making a lot more money, but I am wondering whether he was getting a fair and reasonable return for his labor. That was the only purpose of my question.

Mr. STRANGE. My answer would be, no; as well as I can answer it, because there is no yardstick that you can apply to farm enterprise. First of all, somebody has got to be able to say what the farmers should have; what they should have to live as well as the man in the city; should they live better than a man in the city? Should they be able at certain times to recoup a higher price, because of the low prices they have to take other times?

Now, for instance, during the years of the depression they took a tremendous beating; they went into debt; they had debts, and they owed a lot of money.

Senator MYERS. Well, everyone did that, Major; millions and millions were unemployed in the cities here in America, and they took a beating, too.

Mr. STRANGE. Quite right, sir. But what I am thinking of is his: Has the farmer then, when good prices come along, the moral ight to have those good prices to recoup somewhat for the difficulties hat he had 5, 10 or 20 years ago?

Senator MYERS. What controls, price controls, are in effect in Canada, Major?

Mr. STRANGE. They are pretty well all off but just now, with the exception of wheat, the other day, they were reimposed on some mported vegetables, because of the difficulty Canada is in in being nable to pay the United States for all we are buying from her. Senator MYERS. Are they the only price controls that were eimposed?

Mr. STRANGE. Two or three.

Senator MYERS. When did they go off, Major?

Mr. STRANGE. They went off about 2 weeks ago.

Senator MYERS. Two weeks ago.

Mr. STRANGE. But they have been reimposed because they came. to the conclusion, when we have had to control importations from the United States, because we owed the States more than we could pay her.

Senator MYERS. Did prices increase rather rapidly in those 2 weeks, that 2-week period?

Mr. STRANGE. Yes; they went up, not very rapidly; they went up quite a little, which was evidence that they had been held down, the economists think, too far before by the price ceilings; they made a bumper when the price ceilings were increased.

Senator MYERS. What percentage increase would you say, Major? Mr. STRANGE. I would say, it is very difficult to say that, but I would say if you take this rather as a rough estimate on my part, sir. Senator MYERS. That is all I would expect.

Mr. STRANGE. Perhaps 15 percent.

Senator MYERS. And then controls, certain controls, were reimposed?

Mr. STRANGE. Certain controls have gone back on a few important things that mainly we import, and do not grow in Canada, from the United States.

Senator MYERS. Did you have any black markets in those articles or products during the time of price control?

Mr. STRANGE. No. As in Britain, black markets are not considered to be the thing to do in our country; very little of it.

Senator MYERS. I think that both you and the British are to be congratulated because both countries have a great respect for the law. Mr. STRANGE. That is very kind of you to say that.

Senator MYERS. And obey the law.

Mr. STRANGE. Yes.

Senator MYERS. That is all, Major.

Representative HORAN. Mr. Chairman, I would like to call attention, to assist the witness, in your prepared statement on page 4 at the bottom of the page, you state, and I quote,

The Farmers Protective Association draws attention to the simple fact that Canadians who are supplying Britain with lumber, pulpwood, paper, nickel, asbestos, copper, zinc, lead, automobiles, and farm machinery are selling these things to Britain at full world-market prices, and that moreover, the goods that Britain is selling to Canada, much of them purchased by Canadian prairie farmers,

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