A decrease in the world supply of wheat has resulted in a very large increase in the price of that commodity.  The position of all agricultural products indicates a better balanced supply, but we can not yet conclude that agriculture is recovered from the effects of the war period or that it is permanently on a prosperous basis.  The cattle industry has not yet recovered and in some sections has been suffering from dry weather.  Every effort must be made both by Government activity and by private agencies to restore and maintain agriculture to a complete normal relationship with other industries.

It was on account of past depression, and in spite of present more encouraging conditions, that I have assembled an Agricultural Conference made up of those who are representative of this great industry in both its operating and economic sides.  Everyone knows that the great need of the farmers is markets.  The country is not suffering on the side of production.  Almost the entire difficulty is on the side of distribution.  This reaches back, of course, to unit costs and diversification, and many allied subjects.  It is exceedingly intricate, for our domestic and foreign trade, transportation and banking, and in fact our entire economic system, are closely related to it.  In time for action at this session, I hope to report to the Congress such legislative remedies as the conference may recommend.  An appropriation should be made to defray their necessary expenses.

MUSCLE SHOALS

The production of nitrogen for plant food in peace and explosives in war is more and more important.  It is one of the chief sustaining elements of life.  It is estimated that soil exhaustion each year is represented by about 9,000,000 tons and replenishment by 5,450,000 tons.  The deficit of 3,550,000 tons is reported to represent the impairment of 118,000,000 acres of farm lands each year.

To meet these necessities the Government has been developing a water power project at Muscle Shoals to be equipped to produce nitrogen for explosives and fertilizer.  It is my opinion that the support of agriculture is the chief problem to consider in connection with this property.  It could by no means supply the present needs for nitrogen, but it would help and its development would encourage bringing other water powers into like use.

Several offers have been made for the purchase of this property.  Probably none of them represent final terms.  Much costly experimentation is necessary to produce commercial nitrogen.  For that reason it is a field better suited to private enterprise than to Government operation.  I should favor a sale of this property, or long-time lease, tinder rigid guaranties of commercial nitrogen production at reasonable prices for agricultural use.  There would be a surplus of power for many years over any possibility of its application to a developing manufacture