Memorandum from Paul A. Porter to President Harry S. Truman

MEMORANDUN for the President ARCHIVEN SERVICE* REGORDS AKD from Paul A. Porter, Price Administrator Full Effects of the Amendments Decontrolling Livestock, Meat. Foultry. Eggs. and Dairy Products I. Sunmary Statement of the Effects It appears that many members of Gongress and many of the public believe that the only effect of these amendments would be a moderate increase in the prices of livestock, meat, poultry, eggs, and dairy products accompanied by large increases in production of these commodi- ties. Nothing could be farther from the truth. No appreciable increase in the production of these commodities as a whole is possible, without reduction in famine relief shipments, because total production is limited by available grain supplies. The general resulte of these amendments would be to nullify the program adopted this spring for orderly liquidation of the live animal and poultry population to a level consistent with available feed supplies, to impair greatly the famine relief program, and to precipitate such great inflation in this large group of farm and food products that a wage-price spiral would be inevitable. These full effects of the amendments would be widespread and serious because grains and the array of products into which grains enter -- live- stock, meat, poultry, eggs, milk, butter, cheese and other dairy products, distilled liquor and beer, flour, bread and other bakery products, cereal products, corn syrups and candy, many fats and oils, etc. -- constitute a closely-kmit group of products with such direct inter-relations that a price increase in any of the basic components of the group ramifies quickly through- out the whole group, and because the demand for all of these products greatly exceeds the available supply. This whole group of products represents much more than half of all farm and food products. The specific results may be summarized as follows: (1) Increases in livestoak and meat prices of 40-50 per cent, and increases in prices of dairy products of 25-45 per cent. (2) Even larger increases in grain prices resulting from strenuous competitive bidding, by livestock raisers, poultry raisers, dairy producers, producers of bread and bakery products, and producers of cereal products, corn syrups and candy, and distillers and brevers-unless consumption restrictions on them could be held--for short supplies of grain that would become even more scarce as farmers held for the price rise or fed more grain to their animals. Because of black markets in grain and the difficulty of getting feed grains into commercial channels so as to supply the deficit areas it would be completely impossible to hold any effective price ceilings - grain and these would have to be renoved.