The President's News Conference

FAMINE RELIEF FOR CHINA

THE PRESIDENT. The Chinese Government has accepted the proposal of the Farm Board for the purchase of wheat and flour, to be used exclusively for famine relief purposes. And the Chinese Government has undertaken the transportation, and they have undertaken that an equal opportunity shall be given to American flagships in the bidding for charters. The amount settled is about 15 million bushels, and I understand the Farm Board is willing to expand that amount if the Chinese Government wishes and if it is needed for famine purposes.

FEDERAL FARM LOAN BOARD

Mr. Floyd Harrison has resigned as a member of the Federal Farm Loan Board to accept a position on the staff of the Federal Reserve Board--not a member of the Federal Reserve Board but on the staff. And I have appointed Mr. James B. Madison, of Charleston, West Virginia, to membership on the Federal Farm Loan Board. Mr. Madison has been for some years the head of the Virginia Joint Stock Land Bank at Charleston, West Virginia.

STATE RELIEF EFFORTS

I have a telegram from the Governor of Delaware, in which he states that the citizens of Delaware can be counted upon to provide whatever financial help is required for those in need during the coming winter. That adds Delaware to California, Michigan, Connecticut, Illinois, and New York as States undertaking their own burden. Other Governors are making surveys, reorganizing their committees. No doubt we will have word from them later on.

PRESIDENT'S ORGANIZATION ON UNEMPLOYMENT RELIEF

I will give you out here a list of some further additions to Mr. [Walter S.] Gifford's organization by way of 14 State representatives and 6 members of the advisory committee at large.

PUBLIC BUILDINGS CONTRACTS

I have handed out today a summary of the public buildings contracts for the month of August and up to date, but as there was some complaint about the amount of statistics you are called upon to handle by telegram we have marked it for Monday morning, so you can mail it out if you want. It shows as a matter of fact more contracts let for the month of August than in any whole year in the history of the United States up to 1927.

WHEAT PRODUCTION

And I have some questions bearing on economic matters. One or two in particular which I was asked to discuss in background for you. I am perfectly willing to tell you what I know but only for your own information. I haven't any public pronouncements to make about them at all.

One of them is in regard to wheat. I am not going to make any recommendations or suggestions, but there are some phases of the wheat problem that are not well appreciated, I think. The difficulties in which the wheat farmers are--or the wheat production--are not wholly or even in fact in any major extent a problem of the depression. It is a problem the seat of which goes back much farther. Some of you will know that due to the advancement of work by the agricultural authorities various varieties of wheat have been developed and methods of cultivation developed that took in an immense semiarid area of land not formerly cultivated for wheat production, resulting in a very large expansion of the wheat area in this country, particularly in western Kansas and Texas and Oklahoma and sections of Colorado, western Nebraska and so on. Parallel with that development in agricultural science has been the revolution in mechanical developments for handling wheat. The development of the tractor plow and the combine and other mechanical devices has come parallel with this application of wheat growing in these areas.

This has been going on steadily for 10 years. The result has not alone affected the United States, but it has extended the wheat area enormously in the Argentine, in Australia, in Russia, and in Canada, and it has made possible the production of wheat at very low cost in those areas throughout the world. One effect of it has been a constantly accumulating surplus of wheat year by year since 1925. Every year has been a surplus of wheat of larger and larger dimensions in the areas with cheaper production as against the older areas of wheat production at higher costs.

The difficulties in the situation lie very largely, as I have said, outside the area of the depression. As a matter of fact, depressions rather increase the consumption of wheat. Wheat is the cheapest food in the world, and there is a very distinct tendency for the consumption of wheat to increase during a depression. So it is not a question of underconsumption we are dealing with but in fact a revolution in the production of wheat as important as the revolution in transportation when steam was applied to draw cars.

I don't know whether there is anything in that that helps you. But it has certain phases that separates that from other agricultural problems.

COTTON PRODUCTION

The cotton problem is to a small extent of that type but not in any major sense. There has been, of course, an expansion of cotton areas in Texas particularly. The boll weevil is more under control. There has been expansion in Egyptian production, but of course cotton has not been accumulating over a period of 6 or 7 years as stocks have been in wheat. And cotton would be all right with normal consumption. Cotton consumption obviously greatly decreases with a depression, and the cotton problem is a good deal a depression problem as distinguished from the other difficulties.

GOLD ACCUMULATIONS

There was one other subject, and that is the gold accumulation in the United States. As you know, we have the largest gold supply we have ever had. I don't know what the proportion is there--half the world's gold, I guess. But that gold is not accumulated to any large degree as the result of trade balances.

There is another phenomenon which is operating in that which causes a great deal of anxiety, and that is the flight of capital from practically the whole world to the United States in refuge. A very moderate estimate of the amount in capital in refuge here would be, I should think, anywhere near 2 billions. In one country alone where a survey has been made, it has 790 millions, and it is not one of the largest in the world either. It is money sent here by individuals and banks for deposit in the United States. So that we are dealing with foreign exchange again that is very puzzling.

We are also dealing with a gold question that is abnormal in the whole history of the world. I don't think that experience has ever been met with before, and we are not to be accused of hoarding this gold. I don't know of anything on the part of American citizens or the American Government or anything that Americans have done that has resulted in these accumulations. It is fundamentally due to the lack of confidence of people in their own governments and their own circumstances in their home countries. Its solution lies in the rehabilitation of confidence abroad and on the return of that capital to their own countries and its use in those countries. The difficulty that we are having over foreign exchange and the situation in various countries in a financial way is due to the migration of capital by individuals into the United States and therefore the denuding of their own countries of that capital and the multiplying of our difficulties.

I do not offer you any solution. I just offer you the explanation of what has happened. I might mention that that solution, however, as I have said, is the restoration of confidence abroad. I don't know that this accumulation of gold does the United States the slightest harm, and, therefore, we are not particularly suffering under it, but when people complain that we are hoarding it they ought to realize that it is not our doing. It is the hoarder who is sending it within our borders and putting it in our banks because he feels they are safer than any other banks in the world.

Q. Mr. President, what is the gold supply in this country now ?

THE PRESIDENT. I think it was announced this morning--something over 5 billion. I don't recollect the figure. And that is all I have got on this occasion.