WK cx . ~~ - ~~ & d < = ) AGRICULTURAL RELIEF HEARING BEFORE THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES SEVENTIETH CONGRESS "UBROLRY 15 AND 25, 1928 Serial E—Part 8 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON 8 Ow COMMITTEE ON AGRICULTURE House oF REPRESENTATIVES SEVENTIETH CONGRESS, FIRST SESSION GILBERT N. HAUGEN, Iowa, Chairman JAMES B. ASWELL, Louisiana. D. H. KINCHELOE, Kentucky. HARVIN JONES, Texas. F. B. SWANK, Oklahoma. H. P. FULMER, South Carolina. THOMAS L. RUBEY, Missouri. THOMAS A. DOYLE, Illinois. JOHN McSWEENEY, Ohio. FRED S. PURNELL, Indiana. T. S. WILLIAMS, Illinois. C. J. THOMPSON, Ohio. JOHN C. KETCHAM, Michigan. THOMAS HALL, North Dakota. HARCOURT J. PRATT, New York. FRANKLIN W. FORT, New Jersey. FRANKLIN MENGES, Pennsylvania. AUGUST H. ANDRESEN, Minnesota. CHARLES ADKINS, Illinois. JOHN D. CLARKE, New York. CLIFFORD R. HOPE, Kansas. VICTOR 8S. K. HOUSTON, Hawaii. L. A. DARNELL, Clerk CONTEN 1. Statement of — Mr. B. F. Yoakum. Hon. Butler Hare. Hon. Charles R. Cris Mr. W. F. Hollingswo: Hon. Tom D. McKeown. Hon. William C. I.ankfar Page 591 611 619 621 623 630 AGRICULTURAL RELIEF Ec House oF REPRESENTATITVES, COMMITTEE ON AGRICULTURE, Wednesday, February 15, 1928. The committee met, pursuant to adjournment, at 10 o’clock a. m., Hon. Gilbert N. Haugen (chairman), presiding. Present: Representatives Haugen (chairman), Williams, Thomp- son, Ketcham, Hall, Fort, Menges, Adresen, Adkins, Clarke, Hope, Aswell, Kincheloe, Swank, Fulmer, and Rubey. The CHAIRMAN. The committee will kindly come to order. Mr. Yoakum. the committee will be glad to hear vou this morning. STATEMENT OF B. F. YOCAKUM. NEW YORK CITY Mr. Yoakum. Mr. Chairman and members of the committee, it is a very great pleasure to me and an honor to appear before you to discuss with you gentlemen who are endeavoring to solve it the most important question of the world, agriculture; and I have some figures and facts which, 'f vou will permit me, I will undertake to state. Every other big business is organized to distribute and market its products. Farming is the largest of all, and yet dealers dictate prices to both farmers and consumers. . The four leading farm commodities are estimated in money value annually as follows: Corn_______________. Cotton____.__. Hay and forage____. Wheat 31, 956, 000, 000 ~ 600, 000, 000 1 320, 000, 000 950. 000. 000 These products can be classed in volume with steel, oil, and auto- mobiles, all of which are highly organized, with the most efficient distribution and selling systems. Yet these farm commodities stand unorganized for marketing and unstabilized as to prices. Compare steel with wheat. From ore beds, coal mines for furnaces, and mills, 82 per cent of the country’s total steel production is controlled by 10 organiza- tions; 82 per cent of the total steel production is 47,500,000 tons, the standard price of which is $38 a ton. or a total money value of $1,805,000,000. } Mr. CLarkE. You are using pig iron there as a unit at $387 Mr. Yoakum. I am speaking now of the steel products, rails and steel, or manufactured steel. } Eighty per cent of our wheat production—640,000,000 bushels out of a total crop of 800,000,000 bushels—is produced in 14 States. 01 592 "AGRICULTURAL RELIEF At $1.15 a bushel, delivered at local elevators, this amounts to $736,000,000. I wanted to call special attention to those two commodities. There are 10 organizations controlling one of the products, and 14 States, which may be regarded as 14 corporations, controlling the other. If wheat were marketed at the same proportion between produc- tion, cost and selling price as steel is, and the price stabilized, as is that of steel, the wheat producers’ income would be increased $320,000,000 a year. The turnover in steel is figured at two and a half times a year. Wheat is confined to one crop a year. Steel is always sold at a substantial profit because it is organized. Wheat is sold for less than cost of production, because it is unorganized. Here we have two distinctive commodities, both basic in value. One is produced through manufacturing; the other is produced from the soil; but both are basic, and both credit values should be the same. Wheat, if organized under an organization to control its marketing and its distribution and conducted on the same business principles as steel, would be equally as profitable to wheat growers. It is such enabling legislation as would permit this that I would like to lay before your committee. Understand, Mr. Chairman, I am not presenting a bill; I am only talking of business principles. The CuATRMAN. Your statement is very interesting, I am sure. Mr. Yoakum. I am speaking of methods that will really and com- pletely place farming on the same business level and equality with other industries. We talk a great deal about that. We talk about getting the farming interests on the same level. And farming can only be placed on the same level through the same processes and methods as are adopted by other industries, and that is control of prices. It is the price. after all: it is the marketing that is the great problem. Wheat is produced: on about 1,300,000 farms, averaging 665 bushels to the farm, to be sold at prices fixed for them by others. Consumers in this great food-producing country have paid for 17 standard food products, taking those values from the Department of Agriculture, twenty-two and a half billion dollars, of which the farmers received only seven and a half billion dollars, leaving a spread between the man who produces and the man who consumes of $15,000,000,000 to handle a crop of our foodstuffs. Now, I have here this prepared statement which I will leave with you as Exhibit A. This exhibit shows the distribution as to where this money goes, and it is correct. It shows where this great problem rests. The food business has grown to such great proportions in our large distributing centers—in fact, in all of our small centers—that it is a great encouragement, a great inducement. If you will permit me to say it, I live in the country; I live on a farm. I pass in the morn- ings on one block—and I have called attention dozens of times to people riding in with me to the fact—where we have six grocery stores—six stores all selling practically the same stuff; that is, in that one block six rents, six clerk hires, six deliveries, and all of it could be done, easily accomplished, by one. For that reason we have reached a situation in this country where there are 19,000,000 “food dealer population”’—we are taking this AGRICULTURAL RELIEF 5903 now on a population basis—living off of 32,000,000 farm population. The distributing costs are twice as much as the farmer gets for pro- ducing the food, and this will continue so long as the farmers remain unorganized for united marketing. Local marketing means nothing. 1t only means they get together, cooperate, but it means no stabiliza- ion. Now, here is something that is interesting on account of its rapid growth. There are now $500,000,000 invested in food-selling cor- porations. This situation is growing rapidly, which will further have a tendency to actually grind down the farmer. The financial cor- porations organized on a big scale to purchase farm raw products and distribute to consumers with or without being processed, as conditions demand—they sell both raw and processed—financially strong, well-managed corporations, find no difficulty in placing with the investing public securities of large dairy, poultry, bakery, and other combinations. The securities of these organizations are excep- tionally safe investments for the reason that such corporations con- trol prices both from the farmer and to the consumer. That is, they make their own prices; they therefore can make their own profits. That is nothing in the world but a simple business propo- sition—they establish their own prices, therefore they establish their own profits. I am not criticizing these farm product corporations; they are based on sound and profitable methods. There is nothing to be gained by criticizing them, because they are to-day a thing that is with us, a situation that we are faced with. We have them, and they are doing a wonderful big business. But considering you as a producer and my- self as a consumer, there is only one place that those great corporations can hope to make money, that is to take your stuff as cheap as they can get it and sell it to me as high as 1 will pay for it; that is, as high as the business will stand. The criticism, which is a severe one, is that the Government has been neglectful in not enacting a permissive law under which the farmers can unite their strength under boards of control, with power to stabilize profitable prices of organized farm commodities. In the absence of such authority they will soon find themselves entirely under the dictation of a few purchasers. That is where we are drifting. Corporations engaged in purchasing farm products to distribute to consumers have outstanding more than $500,000,000 of stocks, and bonds sold to the public, paying coupons and handsome dividends from farm products distributed and sold to consumers, including milk, butter, poultry, bakeries, etc. I do not want you to get alarmed: I am not going to take up much of your time. Mr. CLarkE. We are not alarmed. I think this a wonderfully in- structive talk and a long-headed view of a difficult situation. Mr. Yoakum. I want to show you, Mr. Chairman and gentlemen of the committee; I want you to understand that I have made a study of this—no organized study, no corporation study, but a study that IT have made for the purpose, whether it is of any value or not; and I want to place the actual facts before you. I want this com- mittee to understand the facts as they exist. ~~ I have given you the amount of these securities issued; 1t runs a little mors than $500,000,000, and these are by the best bankers of the United States. There is no questioning these things. In one 594 AGRICULTURAL RELIEF instance—I am going to ask that names be not used, because I am not criticizing, because it is good business. If we were in that busi- ness we would be just as anxious and glad to make this money as they are. But what I am trying to do is to fix a way that the pro- ducers will stand hand in hand and on an equal basis with corpora- tions. They are purchasers; they are not doing a bad business. Here is one just out, $35,000,000." They show $14,000,000 net profit. And so it goes on through several of them. But here is the point that I am making to you that I have not made in my little document. This is interstate. Here are two big concerns, one of them doing business in 25 different places in the United States and the other in 18; and all of them have all the way from 5 to 12 different locations scattered throughout the country where their product is most available. Mr. Apking. They are handling some of the farm products? Mr. Yoakum. These are all farm products; nothing else. Mr. KincaELOE. Mr. Yoakum, they buy the raw product. Do the most of them process it before they sell it? Mr. Yoakum. Both. TI will just relate this. I have the resolu- tion in print somewhere but I have lost it, by what are known as the Binghamton, N. Y., the northern New York dairy people. They have 400 members in that association. They had their meeting in August, and a committee that was appointed to look into this ques- tion (because the dairymen find they are going to the wall there every day) reported that their product was sold in New York City at 200 per cent more than they were getting. They can not control that. It is all idle talk to talk about cooperation in a local way. They can not control prices, because their product comes from every section. Right in the same milk district there are eight big organizations. They can break the price. All they have to do is to name a price and that fixes the price for the entire territory; and so it goes through- out the United States. In that case they have got Canada to contend with, but they are now preparing to control Canada. Mr. Crarke. Have you figures there on the amount of capital of the different companies that are handling dairy products in amounts between $250,000,000 and $300,000,000, such as Borden, Sheffield. Mr. Yoakum. Yes, sir; it is all taken from Moody’s. It is actual; it is over $500,000,000. Here it is just within the last eight months: There is $10,000,000 issued by one corporation, here is $20,000,000 by another; these are securities offered; I want to read you something on that; and this goes right on through. There are $171,000,000 securities sold to handle only one thing, that is, farm products, and sold by the best bankers in the United States. Here is something which I believe will impress you gentlemen from an investment standpoint. A couple of days ago a corporation came out offering 20-year 5 per cent debentures. They sold those at 9714, an interest-bearing security of 5.20; and securities, as you all know, that will sell at 5.20 income are regarded as the best in this country. First-mortgage bonds do not sell for that. Their earnings, which they show, are 9.3 times interest requirements, that is, their earnings are sufficient to pay the dividends on this 9.3 times. That is what 1s going on; and it is not out of line. It is legitimate; it is business. | Mr. KercHaM. Net earnings? Mr. Yoakum. Yes, sir: that is the interest 9.3 times. AGRICULTURAL RELIEF 505 I am going to call attention to this. From what source must the payment of these bonds, coupons, and dividends be paid? There is only one, by lowering prices paid to the farmers and putting up prices to the consumers. What will be the result of this comparatively new financing now being indulged in by the best financial institutions of the country? It can—I do not say it will, but I think it will— it can, at the proper time, be thrown into a gigantic food-controlling combination, operated with $100,000,000 or $500,000.000 capital. [t is enormous. Now, almost continuously, small dairies and small butter plants and small cheese factories are being combined or absorbed. The cheese industry went in the other day for over $16,000,000. Those are all farm products. They have to buy their stuff cheap. That I did not mention here. Mr. KincHELOE. Mr. Yoakum may I ask you a question there? That is very interesting to me and it is new to me. These companies that handle these farm products take from the producer to the con- sumer? What kind of organization do they have to get it to the consumer; do they sell it through the jobbers? Mr. Yoakum. No; they sell both ways; they sell to the jobbers in certain places under distributing contract, and where they can not get one that distributes they make their own distribution: just handle it in a businesslike way, in whichever method or trade or plan they can adopt to get the most money, they naturally do it. They are well organized. What is the remedy for this growing discrimination against the farmer? There is only one answer—to prevent this custom before it grows beyond control by ‘extending to farmers equal opportunity to meet the situation. This can only be done through farm commodity organizations national in scope which can absolutely control the marketing of their products. They have got to control it. How can this be accomplished in the quickest time and with the quickest results to the farmers? Congress can provide the machinery for farmers to battle organized purchasers through the creation of authority to grant Federal charters to farm commodity organizations incorporated, thus enabling pro- ducers of standard farm commodities to organize, distribute, and market under a nation-wide system of marketing, with boards of control for each organized commodity to stabilize prices and main- tain them. Each organized commodity marketing under F ederal charter should be operated under its own separate charter. Taking the 17 standard food products, that would call for 17, if they reached it. But one organization, Mr. Chairman, does not prevent the others nor force them into it. It must be of their own motion and under their own control, such charters to be granted to producers of com- modity organizations who apply for a charter in compliance with the provisions of the law. i . Marketing commodities under separate charters, each will consti- tute a commercial unit in itself, controlled by a board of its own creation familiar with all its details and conditions, competent to deal with its problems as they arise. The same operating system that would work well for wheat, cotton. or tobacco. would not apply 596 AGRICULTURAL RELIEF to potatoes or other perishable products; that is, the mechanics of it have got to be different, because it is a different commodity and must be handled under a different operating arrangement. To be effective, the marketing boards of control should be charged with the responsibility of establishing rules for grading, classification, and packing; and to establish and maintain fair prices based on cost of production plus a reasonable profit, and given authority to direct shipments. Directing shipments is the vital element above all others in maintaining a stabilized marketing system, just the same as it is with the corporations handling the products. These boards of control should be given authority to direct ship- ments, both interstate and foreign. They can regulate the supply to meet the demand in an orderly manner, preventing scarcity in one market and a glut in another. The conditions that break prices or raise them leave the farmer at the mercy of the speculators. I have known that to be done; I have known personally where it has been done in many cases. I will not relate it, but we have many records of where it is done for that purpose. Here is something that is interesting, I think, in a way. Other countries are organizing for the purpose of controlling both foreign and interstate shipments. The boards would be in position to deal more. effectively in disposing of surpluses that must be marketed abroad. Other countries are organizing to control both production and marketing. Witness the Cuban sugar control. I just had a letter—I did not bring it with me—from that controlling power of the surplus of sugar. They name seven different foreign export sugar countries that have now joined their organization; and they say in their statements published from Paris, where this organization was largely put together, that this organization is for the purpose of controlling the surplus sugar of the world, and they are going to do it. As you all probably know, there was a “meat war” between the packers of London and the packers of Chicago in the matter of beef. They spent a large sum of money before they reached a conclusion, but their division was about 50-50 between England and America. They used the name beef brokers to distribute and market the cattle business of the Argentine. Now, that is going on all the time; I mean it is growing. Food products are becoming the great staple business of the world, from a money standpoint. If the American farmers can not combine or do not act with their united strength, they will in a very few years find themselves in even a less favorable position to control their prices in the markets of the world than they are to-day. This can not be regarded as entirely of the United States, because the other countries are coming under the same conditions. . Mr. ANDRESEN. Mr. Yoakum, will ‘you permit a question right there? How will you finance these corporations and what respon- sibility would the Government have outside of issuing the charters? Mr. Yoakum. I will come to that, if you will permit me. This is by suggested ideas and plans. don’t you understand? This is not a Organization is a necessity. We all admit it. How can it be brought about? Let us take wheat as a concrete example. Surplus wheat is our greatest trouble, you all know. I now come to my subject of marketing wheat under Federal charters. I think this AGRICULTURAL RELIEF 597 will give you an idea. If Congress would pass a farm commodity act—and that act has got to be broad and cover everything, of course—providing for the granting of Federal charters to associations of producers to market their farm products when organized-—nothing except as and when organized—the wheat associations could consol. date their marketing under such charters. I have been in corre- spondence with them, there are 22 very good substantial wheat associations in the United States, and they are all very anxious to do something. I do not mean in this particular plan, but they are very anxious to see something brought around. I have a letter here from one of them. I will just show vou one thing. He says, “A party to any such movement or all of them I have any knowledge of ’—that is cooperatives—‘“have an overhead handling charge away from 14 to 20 cents a bushel”’—that is the local cooperative organizations. Mr. KINcHELOE. You mean cooperatives when you speak of associations, do you? Mr. Yoakum. I speak of the present farm cooperative organiza- tions throughout the country. Mr. KincHELOE. When you speak of wheat associations, you mean cooperative wheat associations. Mr. Yoakua. Yes, sir. Mr. Apkins. That is the large ones that have the larce overhead, not the local cooperatives? Mr. Yoakum. It is the local cooperatives; I think so. This is the Farmers Grain Dealers Association of Indiana (Inc.); that is a local association; there are 22 of them. Mr. Apkins. I do not know his intentions, if he is talking about that much overhead. Mr. Yoagum. That is what he said. Mr. Apkins. They have one in Indiana. The large pooling associ- ations have shown that they can not carry that weight of overhead and that it is eating them up; that is, the large concerns. Mr. YoaruM. Maybe he refers to the large ones; I do not know. But that is all he says. C Mr. Apkins. The locals do not do that; they could not live if they did. Co Mr. Yoakum. Some of them have not been quitting. . Mr. Apkins. They are more successful this vear than they have been since the war. Mr. Yoakum. The wheat associations could apply for such a charter and consolidate their marketing under an “American W heat Marketing Board of Control (Inc.).” This does not mean that name will be used, this is only the idea—with authority to organize State boards of control when and where deemed advisable. Eighty per cent of any commodity controls its price; 80 per cent of our wheat is raised in 14 States. If the wheat producers of these States could under direction of a wheat marketing board of control, organize and operate under a Federal charter, they would control the domestic market and could, eventually, influence the foreign market by forming a “North American International W heat Pool, as this countrv and Canada contribute 68 per cent of the world’s surplus-wheat. 598 AGRICULTURAL RELIEF Therefore, on the same general idea and the same general plan that the export sugar is now under the control of an international sugar pool or association, there is no reason, when we get the wheat- producing or exporting countries educated up to a point—and they are all anxious for something to get better prices—there is no doubt in my mind but that under an organization of the wheat growers of this country, operating under a charter granted by the Federal Government, it would give them a good starting point. This, of course, is in the future. Mr. KincaELoE. They are all selling their surplus in the same market? Mr. Yoakum. They are all selling their surplus in the same market. I have the list showing where each country’s surplus goes to. I have it all tabulated, but I did not want to be too long on that. The Cuairman. Will that be incorporated in your remarks? Mr. YoakuM. Yes, sir; I will furnish it for the record. (The statement referred to and submitted by Mr. Yoakum is as follows:) EXHIBIT B.—WORLD’S EXPORTATION OF WHEAT This statement discloses the wheat-exporting countries and their annual average wheat exportation during 1922-1925, according to latest figures available. United States wheat exportation averaged 23 per cent of its pro- Bushels duction (largely to Great Britain), or. ______.__________... 187,000, 000 Canada wheat exportation (to Great Britain) averaged 74 per cent of its production, or _ emma 285, 000, 000 Argentine wheat exportation averaged 69 per cent of its production (to Germany, France, and Great Britain), or_.___._______._._.. 143, 000, 000 Australia wheat exportation averaged 66 per cent of its production to Great Britain and France), or. __._ ee... __. 84,000,000 Total exported bushels_____. eo -.__. 699,000,000 Great Britain takes all surplus wheat of the Dominion of Canada. using it to make prices from other exporting countries. Mr. Krgromam. Mr. Yoakum, before you proceed, will you just permit one question which relates directly to the things you are dis- cussing just now? Mr. Yoakum. Yes, sir. Mr. Kercuaum. A little while ago I understood you to say that, taking wheat, the total amount of money received by the farmers of the United States was approximately $7,000,000,000; that when it was sold to the ultimate consumer it was $22.000.000.000. Were those the figures you used? Mr. KincureLos. No: that is the amount received on all food products. Mr. Yoakum. Food products. Mr. Kercaam. With those amounts it would be all products, of course? Mr. Yoakum. That is 17 standard food products, and the figures are taken from the Department of Agriculture. Mr. Kercaam. I wonder if you could make the statement now, as to the relative amount that was involved in distribution and that which is involved in processing? You said it would come later on in the detailed report and Exhibit A. : Mr. YoaxuM. Yes, sir; Exhibit A shows distribution, but it does not go into the processing. The processing is another proposition. AGRICULTURAL RELIEF 599 It would be almost impossible to get that information, because vou would have to go to the processing people, the same as you would have to go to the packing people. 3 Mr. KercaaM. You have given the amount involved in distribu- tion? Mr. Yoakum. Distribution; that is Exhibit A. Mr. KerceEaM. Can you recall what the totals of distribution are? Mr. Yoakum. Yes, I can. I will give them, the total charge. Mr. KercraMm. I would like to have it put right there. at that point in your statement. Mr. YoakuM. I have got it here, tabulated. Mr. Kercaam. That will be exactly what I want. Mr. Yoakum. I refer to Exhibit A, and I am going to insert it. If you want, it can be placed right where you want it. (The statement referred to and subnutted bv Mr. Yoakum is as follows?) EXHIBIT A Farmers received for 17 standard products (Department of Agriculture.) For the same food products consumers paid 37, 500, 000, 000 292 500. 000. 000 Cost of distributing the above seven and one-half billion dollars of food products: For transportation of this foodstuff, for which consumers paid the above enormous cost the railroads received 4 per cent of total cost to consumers, or____ _. i} After the products were delivered at destination terminals, liberally estimated, the cost of trucking from terminals to warehouses, cold storage, and exnressage, 10 per cent of total cost to consumers, or______.. _- - Allowing liberal profits and commissions to distributers who turn their business at least once a month, this being equal to 20 per cent of total to consumers, or_ _ 900. 000. 000 2 250. 000. 000 1. 500, 000, 000 A legitimate distribution cost aside from transportation between - producer and consumer amounting to__________._. ._.___._. Added to this the amount received bv the farmers was____. 7, 650, 000, 000 2 £00. 000. 000 The total amount received by farmers and a legitimate cost for distribution_ ____. _ —__.__ 15,150. 000, 000 Adding the many unjustifiable and unnecessary commissions, profits, rake-offs, etc., between the farm and the table makes the farmers’ income less than thev should actually receive by. 7, 350, 000, 000 Total of these amounts_ ...___. _. ._. oe _.___._ 22,500, 000, 000 Amount received by farmers for 17 standard food products is actual. (Depart- ment of Agriculture report.) Item No. 1 is actual. (Interstate Commerce Commission report.) Ttems Nos. 2 and 3 are results of close and careful investigation. Mr. Yoakum. Would the farmers combine in such an association? If not, why? First it will be the farmers’ own organization, con- trolled and operated by themselves in their own interest. It would improve marketing, direct shipments more effectively, and stabilize prices, enabling them to get more for their wheat and a dependable return. It is hardly necessary to comment on that. But that is the basis of credit. So long as the producers are not organized and prices are not stabilized, the banker does not know whether the farmer is going to et 85 cents or $1.25. Just as in the other commercial propositions. 600 AGRICULTURAL RELIEF the wheat growers’ organization would stabilize the price and that would be the fixed price. Every dollar of profit in this operation would go to the farmers, except the small amount necessary for organization expenses and operation. It would add hundreds of millions of dollars annually to the value of the wheat crop. The dollars-and-cents argument would tount for more than all the talk and enforcement regulations that could be passed. Financial inducement; backed up by educational persuasion, would accomplish more than any forcible control measure ever could. Once the farmers realized that their organization was working solely for them and in their interest; that it was obtaining for them better and more uniform prices, practically every farmer would take advantage of this, his own agency. With all required to submit their interstate shipments to the farmers’ board, the few who would remain outside would hardly be worth considering. This has got to be made an interstate proposition—80 per cent of the agricultural products, as shown by the investigation before the Interstate Commerce Commission, passes from one State to another. Now, I hold that if a farmer or organization of any kind wants to sell at home or give their stuff away, they can do it; that is their business. But they ought not to be permitted to ship that stuff into any other State and break down the prices of the farmers throughout the country. Therefore, the interstate feature of it is very important, in fact, it is essential. Overproduction, as we all realize, is the greatest menace to stabilization. It is the surplus that sends down prices. That was the cause of the trouble with wheat in recent vears, as it has been on surplus. Membership in a wheat-marketing association should, in my opinion, be based on “acreage planted.” By estimating in advance the acreage required to produce enough wheat for normal require- ments, the board of control could then allot fairly to the different wheat-growing States the acreage to be planted. They could not control that, understand, but farmers are beginning to realize that they have got to get together, that they have got to work under some combination. By allotting acreage fairly through boards of control, impressing upon the farmers the necessity of keeping within this limit if they expect to get a fair price for their wheat, production as well as marketing would be systematized. The first essential in any business, of course, is the production; the next is the marketing. Now one under control and the other un- controlled makes a proposition that is impossible to carry out. You have got to control both, but not a necessity production, because the marketing under a control of this character would control production. As to membership fees, just a little information based on acreage. Take wheat as an example. An average of 58,000,000 acres a year are planted. Mr. KincHELOE. What do you mean, in the world or in this country? Mr. Apkins. Acres, you mean? Mr. Yoakum. Did I not say acres? Oh, yes; acres Mr. KiNncHELOE. In this country 58,000,000 acres? AGRICULTURAL RELIEF 601 Mr. Yoakum. Yes, sir. Five cents an acre, the acreage member- ship fees, covering the entire wheat-growing area of the country would amount to $2,900,000. An increase in the price of 50 cents a bushel, which ought to be easily obtained under systematized mar- keting and stabilized prices, would increase the wheat growers’ income $400,000,000, based upon 800,000,000 bushels of wheat, which is about our general average crop. That includes seed wheat, which takes off an additional 77,000,000 bushels, but it is necessary, of course, in carrying on that business. The farmers are sensible. Man for man I will back them for their intelligence and appreciation—and that is growing all the time with them now—with any class or element of business or industrial activity in this country. I happen to know the farmers fairly well. I believe the farmers of Toledo will tell you that. I have been talking to them now over 24 years. I have made 150 talks before them. I keep in constant touch with them, all the time, and I say that if they can see big results with small expenditures, you can depend upon them to stand by the marketing organization and maintain their membership. Of course, in this case, 1f they should become a factor in the solution of this business, the farmers would have to stand by it. Mr. Apkins. Would you propose making that 5 cents per acre mandatory? Mr. Yoakum. It might be, in working this out, found to be more practicable to place it on the bushel basis. But this fixes the amount to be—— Mr. Apxins. That is not material, but my point is, would you make that mandatory or voluntary? Mr. Yoakum. As to membership, it will have to be voluntary. But they would have to pay it, if that was put up. I am not so cer- tain about that. This problem has so many angles that you think one thing out and think you are right, and then it stumbles and then you go back and start over again. But from all my figuring I believe that an acreage on wheat would be the most desirable for member- ship. It gives them a membership, this membership belongs to their organization. These fees would go into their treasury, of course and it would be a little help in the beginning. But I want to say I am not tied to this as against other suggestions. Give them a broad, constructive enabling law that will enable them to establish a marketing system as efficient as that of other industries; give them authority to organize and sell their products at fair stabilized prices under control; put them in a position where they can obtain through the Federal reserve banks—this has been a great thing against the farmers—on equal terms with other industries, the credits which the value of their products justify, and they can finance the entire marketing proposition themselves and reap large profits. I know you have had some experience in that; you know that can be done if they are organized. Mr. KINCHELOE. Yes. i Mr. Yoakum. Farm commodity marketing can be established for only a fraction of what other plans would cost. Mr. Chairman, if [ am talking too long you will call my attention to it. No large Federal appropriations are involved; no elaborate governmental machinery of administration and enforcement. 602 AGRICULTURAL RELIEF All that would be required would be small loans for organization expenses. The farmers are devilish poor; they need it. You get 40 or 50 of them together at any place, Chicago or any place else, and you will find they simply are not able to pay their way. They have got to have some organization help; they have got to send out lecturers; they have got to get the farmers to believe in what they are doing. : To organize wheat producers and establish an American Wheat Marketing Board of Control would not cost more than $1,000,000. The amount required for smaller commodities would be less. To cover the operating cost of handling crops and stabilizing prices involves larger sums. That is answering your question, Mr. Andresen. But for that purpose under this plan not one penny would be required of the Government. Pools market wheat for less than 1 cent a bushel. How, then, could the necessary operating fund be provided? It could be done by the farm marketing boards forming commodity marketing pools based on a percentage of the commodities handled. For instance, 2 cents a bushel on wheat of an average crop of 800,000,000 bushels, including seed wheat, would provide $16,000,000. I want to say in that connection that this does not mean that if an organization, which I will show you in the next sentence, is strong enough that that should not be treated by the United States Treasury Department or the Federal reserve. It is the same as anyone else, and I will show you the reason why. It would not be compulsory, because the banks of this country are strong and could furnish every dollar necessary to carry out any kind of a proposition, big or little. Remember, this is a marketing plan. We have a precedent for marketing cost from the Canadian wheat pool, which markets 100,000,000 bushels of wheat for a fraction less than 1 cent a bushel— that is, marketing costs. - An American pool controlling 80 per cent of its total wheat production, or 640,000,000 bushels, could cer- tainly market for 1 cent a bushel, not over $6,400,000—I mean, that is the marketing cost—giving them a net return many times larger than its cost or 1 cent a bushel on our average crop of wheat means to the American farmers $8,000,000. And here is what I wanted to say in answer to this gentleman’s question: Credits are based on values. The first thing a bank asks for when a loan is applied for is value and a balance sheet. It does not make any difference what the organization is, coal, oil, or anything else; that is the first thing, if they want several millions dollars or several hundred million dollars. Could not a great wheat-marketing pool, operating under a charter granted by the Federal Government, controlling the wheat for distributing and marketing purposes, with warehouse and elevator receipts for six or seven hundred million bushels of certified and graded wheat, show a healthy balance sheet? It could show a credit basis as great as any institution in the United States. Therefore, under organized control, its credit would be equal to any other big industrial institution of the country. That is bringing it right down to the final concrete operation. But you have got to have those things; and no big banking organiza- tion or combinations who are lending their money would loan money unless they could know that this wheat was under a marketing control supported by the Federal Government, so far as its charter AGRICULTURAL RELIEF 603 would require. Then they can get all the money they need, and on a fair basis with the lowest rates, because it would enjoy probably the best credit in the United States, or equal to any. ) In a short time under nation-wide farm marketing these would be among our most solid institutions, with hich standing and unlimited credit. This would not only increase the farmers’ income, but it would put agriculture on a solid business basis, as solid as manu- facturing or any other great commercial business of the nation. ve can not expect agriculture to prosper permanently until that is one. Farming, like other business enterprises, can not prosper unless it is put on a paying basis. You can not expect the farmer to work for nothing. You can not expect him to plod patiently along when dealers get $2 out of every $3 paid by consumers for his products, and the farmer gets only $1. This injustice should be remedied, if there is any way to do it. Systematized nation-wide marketing is the way, and I am convinced that these farm commodities can as easily be organized and marketed under Federal charters as the products of any other class of industry. The two outstanding acts of Congress in our generation have been those establishing the Interstate Commerce Commission and the Federal reserve banking system. An act creating a nation-wide farm commodity marketing system will rank with them in importance. There is nothing complicated or involved in such action. This would be merely an enabling act, permitting the farmers to form marketing boards of control with authority to establish a compre- hensive efficient marketing system in their own interest. But they must control the merchandise. They must have this authority, the million three hundred thousand farm producers, to work out their own salvation. Mr. FuLmer. May I ask you a question right there? What effect would your marketing proposition have on the regular channels of marketing farm products? Mr. Yoakum. It would revolutionize them. No matter what plan or bill any Congressman is advocating, I feel that they can consistently support a marketing system of the farmers. And I want to say, Mr. Chairman—1I believe I have said before—that I do not come here to back or support any measure. You are familiar with them all, and have your personal views regarding them. I am only bringing this as a practical suggestion which I hope may be helpful. I have no ready-made bill to submit, asking your support. You gentlemen are experienced in legislation—the legislation that will enable the farmers to relieve themselves. The farmers do not need any financial help, except to get started in their organization. Mr. MENGEs. Mr. Yoakum, may I ask you a question there? Ifl understand you, you advocate cooperative commodity control? Mr.YoakuMm. Yes, sir. Mr. MENGES. 4m I right? Mr. Yoakum. Yes, sir. } } i ] Mr. MENGES. Now, here is a thing that is happening right now. Over here in West Vriginia in the bluegrass region they sed bo Yun duce catt'e. As you know, bluegrass 1s one of the best cattle feeds that the Lord ever made? Mr. YoakuM. Yes, sir. W160—98——SER E. PT 8———° 604 AGRICULTURAL RELIEF Mr. Menges. They could no longer make the cattle business pay, so they have changed from the cattle-raising business to the dairying business, and now they use these thermos-bottle cars. 1 use that name because I am not thoroughly familiar with the technical name of the car. But it is a car in which the product can be shipped 800 miles or further with one refrigeration. They use those cars and they ship milk into the Philddelphia and New York markets for less than the New Yorker of the Pennsylvanian can produce it. Now, with your proposition how would you cope with that kind of a condition? Mr. Yoakum. That is the very objective of a regulated commodity. If they were operating under a Federal charter and properly organized, all of those difficulties would be overcome, the same as we have had in every other big economic question, and they would be worked out to the general good and interest of the farmer. You can not specif- ically work out those plans until you come in contact with them through a board that is authorized to control the situation and that would naturally go to each one of these great producing places or districts, and take up these questions and work them out on the same general principle that the Interstate Commerce Commission has worked out its many problems in the last 30 years. This is not a very likely proposition. Mr, MENGES. 1 believe in cooperation. I am heartily in favor of it. But that thing came under my observation only recently, and 1 was wondering whether you could tell those West Virginians, “You quit producing milk and let Pennsylvania and New York farmers do that and charge the consumer more?” This question was not answered. Mr. Aswern. How is the price of steel handled? Mr. Yoakum. I have gone into that some. Mr. AsweLL. It is the same process? | Mr. Yoakum. If the Pennsylvania or the Baltimore & Ohio or any other railroad wanted to buy a hundred thousand tons of steel rail they would all get the same price. It is standardized prices; it is fixed prices; and that is what we want in agriculture. I do not want to take up your time, but it might be well for the committee to know that this is not a new subject to me, Mr. Chair- man, and it may not take me but a half minute. In 1910 I wrote an article published by the Saturday Evening Post, and this is one of the paragraphs [reading]: It is not the amount of potatoes, cabbages, onions, grain, dairy products, or other foodstuffs in a community of farmer producers that fatten their bank accounts. It is the price for which they can sell them. Now, that will always hold good. In that same connection, in 1911, 17 years ago, I made a talk before the Agricultural College of Lincoln, at Lincoln, Nebr., in which I said [reading]: The growth of the organization of farmers will be the next important step in the development of the country. We will then have commercialized farming. That is just what we are trying to get, commercialized farming. That is what we want. In an address before the convention of the southwestern growers, at Dallas, Tex., October, 1912, I also said: _ The broad and comprehensive principles of the National Producers’ Associa- tion should not be misunderstood. Its basic principle should be to formulate AGRICULTURAL RELIEF 605 and put into operation a syste i istributi field such a way that they will i eo Bir ering Vie protyis of fin tion will permit. L just called attention to that to show you gentlemen.that for a long, long time I have made a study of the subject. I was talking then just as I am talking now, for the reason that anyone who has studied it as I did could see what was coming—the great breakdown of agricultural interests, the hundreds of thousands of farms that have been foreclosed—and all this, of course, could have been avoided if we had had what I was appealing for and urging 17 years ago. Now we have gotten to a point where something is actually neces- sary, some action. What can that be? It does not make any dif- ference what legislation is enacted; it does not make any difference what action is taken; eventually and finally this proposition will pre- vail. This will be the final solution of agriculture, to meet the de- mand, placing it on as solid a basis as financial interests and manu- facturing. It has got to come, and it has got to come in this way: [t has got to come under a control. Mr. Apkins. If I get your idea correctly, speaking of organization, this country has got all sorts of commodity organizations. Mr. Yoakum. I know it has. Mr. Apkins. And every other sort of organization. Mr. Yoakum. I know it has. Mr. Apkins. If I got your idea correctly, it is to have some enabling legislation so that these various organizations may be amalgamated. Mr. Yoakum. That is it; you have covered the whole thing. Mr. Apkins. To get Mr. Yoakum’s record straight, he refers and puts in a quotation of America’s wheat associations? Mr. Yoakum. Yes. Mr. Apkins. The overhead being from 14 tn 20 cents? Mr. Yoakum. Yes, sir. Mr. Apkins. But he goes on and says the local cooperatives are 14 to 46. Mr. Yoakum. They have still got another to contend with. Mr. Apkins. The point I want to make is this: He refers to the wheat pool in Indiana. We have a number of them in the North- west. Canada has one. Your theory is that you must have a Government agency to sort of amalgamate them into one organiza- tion? Mr. Yoakum. No. .You are getting it wrong—not a Government agency, but a farmers’ agency under Federal authority and operated under Federal charter. Mr. Apkins. Do you know of all these agencies, the wheat pool in Indiana, of which I know a good many men who belong, and the wheat pool of the Northwest—do you know of any reason why under the present law that they can not amalgamate and operate now? Mr. Yoakum. Yes, sir; they are absolutely unorganized in a aational way. a Mr. Apkins. Yes; I say they have authority of law to orgamze 1 they want to? This pterstate proposition Mr. AKUM, s 1s an interstate p . Mr Amari Answer my question. Under the law they could preanize? 606 AGRICULTURAL RELIEF Mr. Yoakum. I am just calling your attention to one thing. "It is published and advertised and heralded through propaganda throughout the country—even our President once referred to it— that marketing cooperation was making great progress; that this last year they handled $2,500,000,000. Mr. Apkins. I understand all that. Mr. Yoakum. Hold on. It does not make any difference if they handled $12,000,000,000. It is not in handling. It is the money they make. ‘That two and a half billion dollars is to-day banked in all the country in spots. Why? Because they have not one great power, one controlling power to establish and maintain prices for this two and a half billion. If they had they would have been rich men to-day. Mr. Apkins. The point I am trying to get at—you do not under- stand my question. Mr. Yoakum. I think I do. Mr. Apkins. The point I am trying to get at is this: Under the law—we have all sorts of Federal and State laws, enabling laws for cooperation. But I can not conceive of any sort of either national or local organization, that is, if the wheat producers of the country wanted to organize and operate as you suggest, they did not have authority of law to do it. The point 1 want to get at is, what sort of legislation or what sort of authority you want to give the Federal Government that would assist those fellows, that they have authority of law to do now in working out their schemes? That is the point Mr. Yoakum. Give them a Federal charter, with authority to maintain the rates or pass upon all shipments, interstate or foreign, and you have got it solved. Mr. Apkins. The thought I had in mind, Mr. Yoakum—— Mr. Yoakum. We are talking of wheat. Mr. Apkins. That is just to illustrate. Mr. Yoakum. Wheat is only 10 per cent. Mr. Apkins. They can do that now. But the point I had in mind is, what enabling legislation we would have to have that would be of any assistance to them in doing that; for instance, the wheat pool of Indiana, the wheat pool of the Northwest could get together an almost nation-wide wheat pool. They attempted it once in this country and failed on it, I think. The point I had in mind was what you have studied out now that will enable them, whether compulsory or how, to enable them to do that. They have au- thority of law to do it now; for instance, if they should want to organize a nation-wide organization—and that seems to be a popular idea and virtually what you have in mind—controlling the wheat production of the country. They would not get enough farmers voluntarily to sign up. Here is an association in Indiana, a number of them in Illinois, one in the Northwest. Thus far their carrying charges have been high. The point I had in mind now is this: They can undoubtedly get together and do the things you are stating. What authority have you in mind in a law that would be of assistance to those fellows in carrying out the very thing you advocate and the very thing they are trying to do? The point I do not get clear from your talk is the character of legislation that will help them, where they have authority of law now to go ahead and do things to help them. I just can not see AGRICULTURAL RELIEF 607 where additional legi ion 1 ! gislation . a wit help them to do that, ceded, unless you make it compulsory, Mr. CLarkE. Have you studied N ) careful ig . gr, ADKINS, Jes ; I have studied all iy ClrtisAswell bill? ts sien u of Mr. Yoakum, because I know he h Br be ge ; would just like for hi : 2s made 3 study of the legal im to explain wh tion egal authority we have, what additi 230 0n aafition 19 them to do that. , tional legislation will enable Mr. Yoaxum. It would be an organizati which would mean the Federal Ge n Federal charter, : arter we would have some board with Hi an under that Federal orelen Shipments, with authority to fix the orton. of interstate and Mr. Apkins. Is this to be a Federal vou i a Mr. YoaxuM. It is to be a booed ther aa Td are talking about? gyempent when we get to it. If you have got y Hpraved by the Mr. Apkins. I just want to get your idea. or } ir. Yoakum. It would be approved by th G selected by the Gover y, the Government bus, not soll : nment, I mean this associatio But it i really a cooperative organization with the G on. has 1 i st what A Jy he Government. That is Ir. Apxins. For inst 7] nation-wide corporation? with wheat they have to establish a rE Yoru. Yes. Mr. Apkins. Run on th ; arly come and Join the ®heory that the farmers would volun- Mr. Yoarum. They would v : : ship their stuff out or Site. less he dor they can not % Mr. Apkins. What would hinder them from shippi tate? : ipping out of the - Mr. Yoakum. Because thi : inspection nding. cause this board would be given control of the Mr. Apkins. That would b ing 1 - Mr. Roseoy, No, it is not, making it compulsory. Ir. ADKINS. < 100i BL] ins. How would you keep me from shipping out of the Mr. Yoakum. The board i . would pass upo i i Pilon end keep a hand on their divtribution, the gending ond tor Ir. Apkins. Suppose our elevator com any h y ; inking whee and we do not ink that = ation 2s good ers as we are, and so we would ship d y [i Do vou y hip down to New York. Joins u contemplate under the proposed law to prohibit them from Mr. Crarke. It is . purely a legal question. ink ought 5 press him for an answer on that? bor D0 Fo think you r. Yoakum. 1 have stated that twice. It wo 1d enforcement, but it would be a law permitting the i i out the purposes of their organization. Now, these farmers are not numbskulls. When they find that they have got for themselves an organization they are going to work with it, if that organization is authorized to establish prices that are paying. I have telegraphed all over the country, not over 10 days ago—to North Dakota, South pains, and Oklahoma—and the present-day price delivered at the does e levator is $1.20. Any sensible man who has followed this ows that it can not be produced for that on the average. There 608 AGRICULTURAL: RELIEF is no wheat that can be produced nowadays, considering labor and other conditions, including the difficulties they are operating under and the high prices—we might mention the tariff and other things— for less than $1.45; that is the cheapest. Therefore, you should have a board that would bé national in operation, and the board would be approved by the President of the United States or such authority as the legislation would give; it would be sent to him for his approval—he would not name them; let us keep it out of that if we can. In that way you would then estab- lish what? Authority in 14 States the same as the authority, with- out being written into law, as to-day handles 10 organizations handling 82 per cent of all the steel in the United States, which is of twice the value of all the wheat. Mr. Apxins. As to the credit. I suppose you have studied this cooperative business. I do not presume you know of a single com- modity cooperative organization that has ample assets to-day that has any more trouble getting credit than private organizations. It is only the ones that are bankrupt that can not get credit. So that such an organization and set-up as that, which was sound financially and het sufficient assets, would not need any particular legislation to get credit. Mr. Yoakum. Yes. We cover the whole United States, which is the only way to handle any competitive product. You would have to have assets that would enable you to operate just the same as your machinery of the Federal reserve would do. Mr. FuLmMer. Mr. Yoakum, do you propose under your bill to allow this board to fix a fair price on the commodity based on the cost of production, etc.? Mr. Yoakum. Yes, sir; it would have to. There is no use taking this half way. If we can not do that, what is the use? If you can not fix the price. If you go to a peanut stand the fellow fixes the price, but the fellow who grows the peanuts in Georgia has nothing to do with fixing the price. Mz. Chairman, I am very much obliged. Mr. KincuELOE. Mr. Yoakum, may I make a request? Exhibit A you have filed contains a whole lot of information. If you can amplify that I would like to have you do it. Of course, you have said it is impossible to put in the cost of processing, but I would like for you to take the time to go over your remarks carefully, and I think the committee would not object if there is anything you can think of in the way of statistics to go ahead and put them in, because I am frank to say that I have had the pleasure of hearing you several times before, but I think your talk this morning is the most funda- mental, not only so far as American agriculture is concerned, but agriculture of the world, I have heard before this committee in my short term of eight years I have been a member of the committee. Mr. CrLarkE. And I want to compliment you upon your presenta- tion. I think it is not alone fundamental, it is far-reaching, it is instructive. We have got brains enough around this table so that if we could sit down with a few of you fellows and get together we could whip this into something that could be made of everlasting benefit to agriculture, and I am grateful to you for coming here. Mr. Fort. Have you any copies of your memorandum other than the one you left with the reporter? AGRICULTURAL RELIEF 609 Mr. Yoakum. I am going to have additional copies by to-morrow. Mr. Fort. We will not get the printed record for come time. v Mr. Yoakum. I know the talk can not be as well understood as something that may be read. As I say, I am inserting Exhibit A in the record, and the Chairman has requested I shall enter another exhibit, and that is the exportations of the different countries of wheat and where it goes. 1 have that all compiled, and I will also insert that exhibit. Mr. Fort. The only reason I asked that was because it will be perhaps 10 days or two weeks before these hearings are printed, and [ would like very much to have the opportunity of studying that. Mr. Yoakum. I will do that, and see that you get a copy. The CaHairRMAN. Are you through? Mr. Yoakum. I am through. The CuairmaN. Thank you very much. Mr. AswerLL. I happen to know that Mr. Yoakum has spent 25 years of his life in his study and $100,000 of his own money investi- gating these various problems, and he knows something about them. Therefore, I would like to make this request, that he be granted the permission to amplify these points in his statement. The CaairMaN. Without objection it is so ordered. Mr. AsweLL. And he is doing all this, and so far as I know he is not a candidate for any office. (Laughter.) Mr. Apkins. I would be very glad to read that. I spent many years in that investigation. (The committee thereupon proceeded to the consideration of H. R. 10562, which is as follows:) [H. R. 10562, Seventieth Congress, first session] A BILL To establish a farm surplus board; to aid in the orderly marketing, control, and disposition of surplus of agricultural commodities, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this act shall be known as the Federal farm surplus act. Its administration shall be under the direction and control of a ‘arm surplus board, hereinafter created. Sec. 2. (a) There is hereby created and established a Federal farm surplus board charged with the execution of this act and all acts amendatory thereof (the same to be hereinafter referred to as the board). In addition to the duties nereinafter provided for, it shall be the duty of said board to assist producers of certain farm crops, including livestock, in the United States, to control supply thereof and stabilize the markets for same from undue and excessive fluctuations; to provide for the control and disposition of the surplus of such farm cominodi- ties, and to promote orderly marketing of same in interstate and foreign com- merce. (b) In order to secure the maximum benefits from this act it shall be the further duty of said board to obtain, from any source available, information necessary to be fully advised at all times as to crop and livestock prospects, their supply, demand, exports, imports, markets, transportation, methods of market- ing, costs of production, both domestic and foreign, and other information that said board may be able to intelligently cooperate and advise with the officers and directors of cooperative associations or other organizations of producers 1D the adjustment of production and distribution of nonperishable farm crops. Sec. 3. (a) Said board shall consist of one member from each of the twelve Federal land bank districts, the twelve members to be appointed by the President of the United States, by and with the advice and consent of the Senate, not more than seven of whom shall be from one political party, and all of said members shall be citizens of the United States, and shall receive an annual salary of $10,000, payable monthly, together with actual necessary traveling expenses and expenses incurred for subsistence, or per diem allowance in lieu thereof 610 AGRICULTURAL RELIEF when away from principal office on official business, said office to be located in Washington, District of Columbia. (b) Four of the members of said board to be appointed by the President shall be designated by him to serve for two years, four for four years, and four for six years, and thereafter each member so appointed shall serve for a term of six years, unless sooner removed for cause by the President. In case of vacancy in said board by death, resignation, or otherwise, the President of the United States, by and with the advice and consent of the Senate, shall appoint a suc- cessor to fill out the unexpired term. Any member in office at the expiration of the term for which he was appointed may continue in office until his successor qualifies and takes office. (3) No person shall be eligible for appointment as a member of said board who is not well advised in methods of production and marketing the leading agricultural products in the district from which he is appointed, and he shall have been engaged in the production or marketing of one or more of the crops grown or produced in the district from which he is appointed at least five years prior to and at the time of his appointment. No member of said board shall, during his continuance in office, be an officer or director in any cooperative associa- tion, or in any other institution, firm, or organization engaged in holding or marketing any of the crops or livestock named or in any way referred to herein, or the products thereof, and before entering upon his duties as a member of said board each member shall certify under oath to the President of the United States that he is eligible under this section. The President shall designate one of said members as commissioner, who shall be the active executive officer of said board. (d) The salaries and expenses of the farm surplus board and all employees employed therein shall be paid by the United States, and said board is authorized and empowered to fix salaries and employ attorneys, accountants, experts, assistants, clerks, and other employees necessary to carry on the business of said board, the same to be appointed in accordance with the classification act of 1923 and subject to the provisions of the civil service law. (e) It shall be unlawful for any member of said board or any employee therein to furnish or give any person, firm, or corporation confidential or advance informa- tion relative to any of the activities of the board; or to purchase or sell for future delivery on any exchange any or either of the commodities handled or that may be handled through the operations of said board, and any such person or persons being found guilty of violating this provision of this act shall be subject to a fine not exceeding $10,000, or imprisonment for a period of not exceeding ten years, or both. Sec. 4. (a) That for the purpose of carrying out the provisions of this act it is provided that the board herein provided for shall keep advised by investigation, from time to time, made upon its own initiative or petition of an approved farm organization or cooperative association, as to the domestic and world require- ments, prices, the existence of a surplus or probable surplus of any nonperishable farm crop, including livestock, or the products thereof. (b) Whenever the board finds that there is or may be in the hands or possession of producers during the ensuing year a substantial surplus above the normal domestic or world requirements of any nonperishable farm crop or product thereof within the United States, said board is hereby authorized, upon the request of the organized producers of such crop, to avail itself of any provision or provisions of the Federal reserve act, the intermediate credit bank act, the Federal warehouse act, or any other act of Congress, not inconsistent with the provisions of this act, and arrange for financing or otherwise aiding such organized producers in removing from the market and storing under any approved ware- house system any such farm crop or crops to the extent of the estimated surplus of such crop or crops. That the advances so made or provided for under this section shall be on the basis of the market value of such crop at the time of purchase, storage, or removal of same from the market. Sec. 5. (a) That the board is further permitted and authorized, upon such terms and conditions as it may prescribe, not inconsistent with this act, to make such advances or loans out of the revolving fund, hereinafter provided for, to any approved cooperative association or farm organization of producers engaged in purchasing, holding, marketing, or storing any nonperishable farm crop or commodity: Provided, That no advance or advances under the provisions of this act shall be made to any person, organization, or association whatsoever when the ensuing production of such crop or commodity shows an increase in planting or breeding according to the estimates of the United States Department of Agri- culture over and above the five-vear average immediately prior thereto: Provided AGRICULTURAL RELIEF 611 further, That any loan or advance under this section shall bear interest at a rate not exceeding 414 per centum per annum and that such loans or advances on any crop or commodity for any one year shall not exceed the sum of $50,000.000., (b) Loans or advances made under this section may be secured or unsecured; however, the board shall provide stipulations, rules, and regulations so as to insure reasonable prospect of repayment of same, but shall not require for the repayment of such loans or advances any assessment or charge against any member of such cooperative association or farm organization: Provided, That the books or accounts of any cooperative association or farm organization to which advances have been made shall at any time be subject to inspection by said board, and that all financial transactions of the board shall be subject to exami- nation, at such time and in such manner as the Comptroller General of the United States may by regulation prescribe. Sec. 6. (a) For the purpose of carrying out the provisions of this act there is hereby appropriated, out of any money in the Treasury of the United States not otherwise appropriated, the sum of $250,000,000 to be used and administered bv the board as a revolving fund in accordance with the provisions of this act. ” \b) For expenses incurred in the administration of this act, as herein provided, there is hereby appropriated, out of any money in the Treasury of the United States not otherwise appropriated, the sum of $200,000, or so much as mav be necessary, to defray expenses incurred prior to July 1, 1929. SEc. 7. The term “cooperative association or farm organization’ referred to in this act shall be interpreted to mean any association of persons engaged in the production of agricultural products, such as farmers, planters, ranchers, dairymen, nut growers, or fruit growers, organized to carry out any purpose specified in section 1 of the act entitled ‘An act to authorize association of pro- ducers of agricultural products,” approved February 18, 1922, if such associa- tion is qualified under such act, and any such association or organization enter- ing into an agreement with the board under the provisions of this act shall, to the extent of its operations in accordance with the provisions of the antitrust laws as designated in section 1 of the act entitled ‘“ An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes,” ap- proved October 15, 1914. Sec. 8. If any provision of this act is declared unconstitutional or the applica- bility thereof to anv person, association, organization, circumstances, or com- modity, or class of transactions in respect of any commodity is held invalid, the validity of the remainder of the act and the applicability of such provision bo other persons, associations, organizations, circumstances, commodities, and transactions shall not be affected thereby. } Sec. 9. That this act shall become effective upon approval by the President of the United States. The CuairmaN. Congressman Hare of South Carolina wishes to make a statement on his hill H. R. 10562, and I am sure the com- mittee will be glad tu near hun. STATEMENT OF HON. BUTLER HARE, REPT""7NTATIVE IN CONGRESS FROM THE STATE OF SOU YA Mr. Hare. Mr. Chairman and gentlemen of the committee, I am very sorry that I did not have the pleasure and the privilege of hearing the first part of Mr. Yoakum’s testimony. I was very much impressed with the part that I heard, and while he has made some very valuable suggestions he said that he was unable to suggest a definite legislative program. I am glad to report that in my judgment, in view of the statements he has made, H. R. 10562 will in a measure accomplish the results he seems to approve. The CuairMAN. That is, you refer to your own bill. Mr. Hare. That is the one I have the honor to have introduced. [ believe it will in a measure take care of the ideas he has advanced. My idea is that in legislation we should be governed very much in the same way that any business enterprise is directed. In other 512 AGRICULTURAL RELIEF words, if you were going to enlarge the activities of any successful business enterprise, you would see to it that the additions or increased activities would coordinate and dovetail into the other—operations, agencies, or activities of the enterprise. I think, therefore, in legisla- tion we should be governed by the same principle. We should see to,it that in any successful legislative program new ‘laws should, so far as possible, dovetail into existing acts or legislation. With this idea in view the bill referred to was introduced and it attempts to coordinate the financial agencies already provided for by the Government with the warehousing system and the coopera- tive marketing system in such a way as to give definite farm relief. In other words, we have the Federal reserve bank and the inter- mediate credit banks and, in my opinion, they are sufficient to finance any agricultural operation or agency. We have the warehousing system that ini my opinion will take care of any of the storage require- ments of any farm commodity, and two years ago we provided for a cooperative marketing division of the Department of Agriculture. If the one great problem of agriculture is the control of production, and if the other great problem is the control and handling of surplus, it appears to me that these three agencies—the financial agency, the warehousing system, and the cooperative marketing agency—sbould be correlated and coordinated in such a way as to solve both problems without the necessity of creating any additional organizations. I might say that the bill I refer to is not unlike the other farm relief bills in so far as the board is concerned, for I think there should be one governmental agency charged with the duty and the responsi- bility of bringing the financial agencies of the Government, the warehousing systems of the Government, and the cooperative market- ing systems of the Government together, so that the producers of this country would be able to utilize the united and combined agen- cies of these three great systems, to contriol their production and at the same time handle their surplus. I agree with Mr. Yoakum that any legislation that does not look to the control of the production of farm crops in the end must fail. In other words, unless there is some agency, some means whereby we can regulate or control production, all of our efforts will be in vain. And if the organization of farmers, with the aid of these three agencies of the Government, are not able to control the production of the com- modities they are producing and handling there is no other agency under the shining canopy of heaven that can do it; and I feel that with proper legislation, with a proper governing board supervising, advising and directing, so as to bring these three agencies together for the benefit of agriculture, the end can be easily accomplished, and accomplished without the creation of further governmental agencies. } Further than that, this board or this governmental agency will be able to coordinate these three agencies in one harmonious union and one harmonious action on the part of the Government in controlling and regulating the production. i Mr. Apkins. Do you make that compulsory, that regulating acreage, etc.? Mr. Hare. We do not make it compulsory. But make it so that any organization of farmers, expecting the benefit of the provisions of this act will not be entitled to it unless their acreage will justify 1t. AGRICULTURAL RELIEF 613 Mr. Apkins. Our cooperating agency over here in the department has recently issued—you ought to get it—the outlook for the next season, based on all the information available as to what the out- look on about 61 commodities is now. So that we are already getting to the farmers the information that would be sort of keeping him informed on the matter of acreage on any commodity. Mr. Hare. That only supplements what I said, that we could take those agencies already in operation by the Government, take the products of their labors, hand it to the commodity organization of the farmers, and they would understand by the passage of this act that if the acreage for any particular commodity or crop was increased over and above the average acreage for the five years previous thereto, the benefits of the act would not be available. The bill to which I am inviting your attention has that provision in it. Mr. CLarkE. Have you a copy of that bill you have introduced? Mr. HARE. Yes, sir. Mr. Chairman, the time, as I understand, is about up, and I will not be able to go further into the details of the operation of this bill this morning, but I would like to have an oppor- tunity to discuss it further and enlarge upon its provisions later. Mr. KincHELOE. You have 20 minutes more. Mr. Hare. Then, I shall be glad to go further into it now. Mr. Apkins. How do you propose to handle this surplus? That is the main thing. Mr. Hare. My idea is this: I hate to repeat, but with the finan- cial agencies existing sufficiently strong to finance any agricultural operation, with a warehousing system already provided and in operation for storing and taking care of any surplus, and with the cooperative marketing division in the Department of Agriculture, coordinating their activities should be able to handle the surplus. In this bill we would have a board quite similar to that in all of the other farm relief bills, whose duty it would be to see whether a sur- plus of any farm commodity exists, and if a surplus is found to exist, and the organized farmers request it, this board will arrange with the financing agency, arrange with the warehousing system and arrange with the cooperative marketing division for the organized producers, for instance, wheat growers or cotton growers, to take the surplus of such particular crop off of the market through coop- erative organization, just as they are trying to do to-day. Mr. Funmer. And under vour bill these various agencies—the financial agency and the others, would function under an emergency like that, when brought to the attention of the agencies by this board representing agriculture. } Mr. Hare. Pretty much in the same way as provided for in the Haugen bill, the Curtis-Crisp bill, the Aswell bill and the other outstanding bills proposed for farm relief. nN Mr. KiNCHFLOE. What are the fundamental differences between your bill and the Crisp-Curtis bill that was considered in the last 9 rE. If I understand it, that bill provides for a board that will enable individuals, or cooperative associations to take charge and care for the surplus of any commodity, without regard to the ination of existing governmental agencies. “ bill proposes a legislative program that will bring fs fees agencies together, and let them operate through one board, 614 AGRICULTURAL RELIEF through the cooperative organizations of farmers, for the purpose of handling the surplus, regulating acreage and controlling production. Mr. KincaeLOE. 1 am just asking for information. = Of course, all these bills provide that, giving the board created under them thé right to coordinate any other branches of the Government for the purpose of information .or working this; and they provide for an appropriation our of the Treasury, a revolving fund like this does? Mr. Hare. Yes. Mr. KincaELOE. In other words, under the curtis-Crisp bill they would have the power to coordinate these agencies? Mr. Hare. I think probably they would have the power, but they would not have the direction and the specific instructions as provided for in this bill. Mr. Apkins. Would you figure on covering the losses by appropria- tions from the Government, whenever you had a loss? Mr. Hare. I take this view, that any legislative program that does not enable a surplus to be sold at a sufficiently high price or 4 sufficient increase in price to take care of the expenses, then that legislation will sooner or later fall to the ground. Mr. Apkins. You will never get any of that kind. Mr. Hare. Then legislation for taking care of the surplus will not amount to anything. In other words, if as the result of legislation fair prices are not to be maintained, and if the surplus is not to be sold at a price equal to or above the cost of production, then that legislation will not serve the purpose for which it was enacted. Mr. KincaeLoE. Your idea is that over a term of years the surplus will be sold and not any loss? Mr. Hare. Yes; I think if the surplus can not be sold over a term of years at a profit, then any legislative enactment will not be worth a penny, because if the surplus must be sold at a loss over a period of years and the remainder at Jess than a fair price you do not aid agri- culture but you are placing an added burden upon the farmers and tying a millstone around their necks, because there is going to be some costs, and unless there is a profit there will certainly be a loss, and hence no benefit to the farmer. Mr. Apkins. Do you know there has never yet been any nation- wide commodity organization that has not been 100 per cent failures up to date? Mr. Hare. I am not prepared to make that statement. Mr. Apkins. I make it; I make it for the record. Mr. Hare. I think there are some commodity organizations that have been quite successful. That 1s, they say they have been successful. Mr. Apxkins. But I am talking about nation-wide commodity organizations. xr Mr. Hare. I do not think that the gentleman gets the purport of my remark. What I mean by commodity organization is that there should be unity of action, that every organization should have a head to which it should look. As I tried to illustrate at the beginning for instance, we have a cooperative cotton organization in my State of South Carolina; North Carolina has one; Texas has one; Okla- homsa has one; Alabama has one; and probably the other cotton- erowing States all have one; and they all have their overhead charges to take care of, and the cost must come out of the members of the AGRICULTURAL RELIEF 615 organization and the producers. My idea is to eliminate a dozen or more managing heads, have only one with subsidiary organizations f necessary and eliminate much of the overhead expense and have unity of action and effort. Mr. FuLmer. Under the present system they may work in com- petition to each other instead of working along the same line? Mr. Hare. Absolutely; for instance, the South Carolina associa- tion may sell its cotton in competition with the Oklahoma coopera- five organization under existing arrangements. ~ Mr. Apkins. Your idea is to coordinate them? Mr. Hare. Exactly. Mr. CLarkE. And confederate them? Mr. Hare. That is right. I say that this idea is politically sound, for the reason that it 1s absolutely in harmony and absolutely in keeping with the legislative enactments already provided for. _I say that it is economically sound because it 1s the embodiment of cooperation. It is cooperation between and among the govern- mental agencies themselves, coupled with the cooperative and united affort of the producers themselves, and therefore the embodiment of cooperation throughout; and to my mind the production problem, the surplus control problem, will be controlled in no other wav than by cooperation. Mr. Fort. Mr. Hare, I notice at the top of page 6 you provide that the advances to be made would be on the basis of the market value of such crop. Do you mean thev are to make a 100 per cent loan? Mr. Hare. That is right. If you are going to begin to loperate when vour commodity is down at the cost of production or below cost of production, to insure the cooperation of the producers them- selves provision must be made for them to obtain the market value of the crop at that time. } Mr. Fort. Mr. Hare, that is just what I was coming to. You have no limitation, that I have found in looking through this bill, on the point of marketing value at which the loans could be made. Mr. Hare. That is true, but I take this position, that if you would give a man an umbrella, a sensible and intelligent man, he will know when to put it up and when to take it down. I think if you put the operation of this bill in the hands of intelligent men they will not use the Government as an instrumentality to work an injury to the people they are supposed to represent, nor will they attempt to work an injury to the Government they are representing. Mr. Fort. No; but it would be possible under your bill to make loans at the market value, for instance, we will say last year, of 23 or 24 cents on cotton? Mr. Hare. That is true, and it is possible for the Federal reserve bank to-day to go broke in 6 months; it 1s also possible for the inter- mediate credit banks to lose millions of dollars in the next 12 months; and some of them have lost money; but in every public undertaking some one must be trusted to do the right thing. ; Mr. Fort. But they are now limited by law to a percentage 0 OR Hag. Yes; they have limitations r. HARE. Yes; they have limi . } Me Fort. And you are proposing that they should be allow ed fo loan 100 per cent. 1 am now speaking of the intermediate credit 616 AGRICULTURAL RELIEF banks—you are proposing they should be allowed to loan 100 per cent’ Mr. Hare. No; not the intermediate credit bank. I do not pro- pose to change any regulations of the intermediate credit banks whatever. Mr. Fort. Where does the loan of 100 per cent come from? Mr. Hare. I am coming to that in just a minute. If any organiza- tion of producers wants to sell its crops through this commodity organization, the board will arrange with the intermediate credit bank for the financing of that operation. If under the rules of the intermediate credit bank they are unable to secure more than 75 per cent of the market value of the commodity at that time, then the board will have the right—it is not compulsory, and it would only be in the case of emergency—through the revolving fund provided for in this bill to take care of the difference of the 25 per cent. Mr. Fort. The chief difference between your bill and the Crisp bill in that respect is that the Crisp bill puts some limitations in the law itself on the points at which the board may make loans, and you leave it entirely to the board to make its own rules. Mr. Hare. I leave that out, for the reason that under the Crisp bill where you would begin to fix the price of the crop or the point where you would peg the price, as it was referred to, there was the criticism that it is the purpose of Congress or the purpose of the Government to fix the price of a commodity; whereas I am leaving it with the producers of a particular commodity to fix the price and to say when they will ask for this advance or for this loan. After they ask for it, then it will be referred to the board to say whether or not the circumstances and the conditions under which they are operating justify it. The producers themselves, therefore, under that condi- tion will determine when the price is below the cost of production or when it approaches the cost of production, plus a reasonable profit, and whether they want to store the surplus of their commodity and take it off of the market and remove it from the channels of trade. Mr. Fort. They have no individual liability on the loan? Mr. Hare. No. Mr. Fort. Therefore, there is no restraint on the point at which they would use their judgment. Mr. Hare. Except by the action of the board. In other words, if the board would say, “Now, gentlemen, understand, this price-is far above the cost of production as shown by the existing agencies of our Government, and we think it unwise to begin operations at this period.” The board would have this right, and operations would not egin. Mr. Former. In other words, Mr. Hare, your 100 per cent loan would only operate when this board would find that we had a surplus of any commodity that was so depressed, the price that it was at or below the cost of production, and therefore it would want a hundred per cent loan, because if they would take care of the surplus naturally there would be a profit. Otherwise, it would not be of any interest? Mr. Hare. Exactly. Mr. Fort. If that is clear, I see that is your purpose and I see Mr. Fulmer agrees that is what it should be, why should not we in some way in the legislation indicate that that is what Congress thinks is AGRICULTURAL RELIEF 617 the board’s method of operation and not give them an absolute and unlimited power to loan anywhere they please. Mr. Hare. Personally, I would say to the gentleman that I would have no objection whatever to the Congress putting that provision in this bill. The only reason I left that out was to remove the objection to the idea of price fixing by legislation. I hope that the fundamental idea in this bill will be incorporated into some bill that will come a law and afford the much needed relief. Mr. Fort. Should we not also take another provision of the Crisp bill which is in some of this other legislation, which the grange people have said lately they favor, namely, a recognition of the grading; that is to say, the attempt to stabilize the market only on such com- modities and on such grades as we want in this country. Mr. Hare. I think that would all be taken care of through the cooperative marketing system already provided for by the Govern- ment, just like it is taken care of to-day in our cooperative cotton associations. Mr. Former. Under the present grading laws of the United States? Mr. Hare. Under the present system. In other words, we are establishing nothing new under this bill further than legal coordina- tion of existing governmental agencies. Mr. Fort. We are growing in this country certain products for which there is no domestic demand—certain grades of some com- modities. Now, should we put Government money into an effort to stabilize the price of something we do not want? Mr. Hare. Well, if there is any commodity that we are growing to any extent without any particular market for it, I am not aware of it. Mr. Fort. No; there is an European market, and a Chinese market, for instance, for certain grades of rice; but there is no American market, because Americans will not eat those grades of rice, yet their statistical presence in the country depresses the price of our rice. Undoubtedly the Nation would be better off if they did not grow those, if the farmers would grow other grades. We would be better off if we did not grow those grades of rice. Mr. Hare. I see no particular objection to that, but to my mind that class of legislation probably would not be embodied in a bill of this kind. Mr. Fort. It was in the Crisp bill, and Mr. Taber and Mr. Goss, of the grange, admit that it ought to be in any piece of legislation. Mr. Hare. As I said, I see no particular objection to 1t, but I am not prepared to argue that it would be an additional virtue mn the bill. . . Mr. Chairman, with the consent of the committee, I would like to briefly summarize the purposes and provisions of this bill, but if the time has expired I will just ask permission to give it to the stenographer and let him include it In my remarks. The CuarmanN. Without objection 1t 1s so ordered. (The additional statement submitted by Mr. Hare 1s as follows:) The purpose and provisions of the bill 1 50 Shing your committee to consider 7 as : reitraatld Pot unlike A hor farm relief bills it provides for an administrative voard consisting of one member from each of the Federal land-bank districts. [t will be the duty of this board to determine when there is a surplus 2 ay non perishable farm crop. If a surplus of any such crop 1s found to ex af an ay approved organized group of farmers request it the board is required to ar 818 AGRICULTURAL RELIEF with the Federal-reserve banks, the intermediate credit banks, or any other available source for financing the holding of the entire surplus of that crop until it can be fed into the market without loss to the producer or the Government, the difference between the amount advanced and that received, less the cost for storage, handling, etc., to be returned through the association to the producer. The board is permitted to advance the market price of the crop prevailing at the time it is removed from the channels of trade. The bill does not provide for any tax, fee, or charge of any kind against the producer. ‘ in short, the purpose of the bill is to provide a connecting link between the existing financial agencies of the Government and the warehousing systems of the Federal and State Governments whereby the farmer himself will, through his farm organizations or cooperative associations, be able to control the surplus of a nonperishable crop and market the remainder in a systematic and orderly manner. It is not subject to the criticism that it is an effort on the part of the Government to fix prices, because it makes no reference whatever to prices, and it does not set up cumbersome and unlimited governmental agencies to be sup- ported and maintained at the expense of the producer, but attempts to utilize existing governmental agencies so as to enable farmers themselves to handle and control their surplus crops. Probably the most significant feature of the bill is that provision which attempts to regulate acreages, for, in my opinion, no surplus control legislation will be effec- tive that does not regulate the acreage and thereby, to some extent, control production. In other words, if you remove the surplus and stimulate prices increased acreage and probable increased production will certainly follow, and any surplus control legislation that does not provide in some way for the control or regulation of acreages will in the end prove to be expensive and useless. Iknow that production in any one year is not determined solely by acreage, but increased acreage over a period of years, other things being equal, will mean an increased production and possibly an increased surplus. The provision of the bill which attempts to take care of this feature of the surplus control problem is as follows: “That no advance or advances under the provisions of this act shall be made to any person, organization or association whatsoever when the ensuing produc- tion of such crop or commodity shows an increase in planting or breeding according to the estimates of the United States Department of Agriculture over and above the five-year average immediately prior thereto.” I have no disposition whatever to offer criticisms of other plans for handling the surplus of our various agricultural crops, and I am not disposed to be particu- larly critical of some other proposed legislation with this end in view, but I do want to emphasize the fact that this bill has a peculiar advantage over other bills in that instead of setting up new bureaus or governmental agencies it por- poses to utilize and link together three great outstanding governmental agencies already in existence, and have them perform the same functions as the proposed new agencies provided for in a number of these other bills. In other words, in this bill, we take the Federal reserve banks and the intermediate credit banks and finance the business; then we use the Federal warehouse system and the State warehouse systems for storing the surplus; and then ‘we use the Cooperative Marketing Division, provided for in the Department of Agriculture two years ago, at the initial cost of $225,000 per annum, for perfecting cooperative arrange- ments among producers, and link them all together under the operations of this bill to take care of the surplus and control production. } } The principle involved is politically sound because it is in keeping with out- standing existing legislative policies of our Government. It iseconomically sound because it is the embodiment of cooperation in that it provides for the united and combined effort of the Government’s financing agency, its warehousing sys- tem, and its marketing system, all cooperating with the united effort of the pro- ducers of any particular nonperishable farm crop in controlling production thereof, taking care of the surplus, and marketing the remainder in an orderly manner. Mr. FuLmer. I would like to say to the committee that this bill is worthy of their serious consideration, because I have worked along with the gentleman of South Carolina and I know he has got a number of good ideas in the bill. Mr. Hare. I want to say I appreciate the support that has been given by Mr. Fulmer in the preparation of this bill, because he has been very helpful. AGRICULTURAL RELIEF Mr. Fort. I agree with what Mr. Fulmer has said. I think the bill is worthy of every consideration. Mr. Hare. I thank you. Mr. Fort. It seems to me it would be possible to enact it into law. Mr. FuLmer. With the agencies we have at present, as stated by Mr. Hare, I can not understand how we could not coordinate them and have a simple piece of legislation that would do what we are trying to accomplish under very complicated bills. The CuairMAN. Thank you very much, Mr. Hare. Without objection, the committee will stand adjourned until to-morrow morning at 10 o’clock. (Thereupon, at 12 o’clock m. the committee adjourned to meet to-morrow, Thursday, February 16, 1928, at 10 o’clock a. m.) 619 House oF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, Saturday, February 25, 1928. The committee met, pursuant to adjournment, at 10 o’clock a. m., Hon. Gilbert N. Haugen (chairman) presiding. Present: Representatives Haugen (chairman), Purnell, Williams, Thompson, Ketcham, Hall, Fort, Menges, Andresen, Adkins, Clarke, Aswell, Kincheloe, Jones, Swank, Fulmer, Rubey, and McSweeney. The CrairMAN. Mr. Crisp, the committee will be glad to hear you. STATEMENT OF HON. CHARLES E CRISP REPRESENTATIVE IN CONGRESS FRO} ™m™ Ner™mR ( » GF '™° Mr. Crise. Mr. Chairman and gentlemen of the committee, I shall take up but a very few moments of your time. I am intensely inter- ested in a practical farm relief measure, for no one realizes more than [ the distress in agriculture. I have no pride of authorship. I am not wedded to any bill, but I am anxious for farm relief legislation that in my judgment stands a chance of being held constitutional and a chance of being enacted into law. The last Congress I introduced a farm relief bill and you accorded me the privilege of discussing it in detail with you for one and a half hours. I can add nothing to what I said at that time. I have rein- troduced the bill in this Congress, and it is known as bill 65, and it is identical with the bill I introduced in the last Congress. [ am not going to consume your time by repeating what I said then. [ believe the bill to be a good bill. I reintroduced it in this Con- gress so believing, and I did not do it purfunctorily or for politics, but hoping it might be the basis upon which this committee could work out a bill, should the committee in its wisdom decide not to report the McNary-Haugen bill. I appear before you to simply call your attention to that bill and to urge that you give 1t such consid- eration as you think it entitled to. ] Now, I realize the bill is not perfect. I am sure the superior wisdom of this committee can amend it and improve it. I find myself in a position where I can not support the Haugen- McNary bill. 26160—28—SER E, PT 8—3 620 AGRICULTURAL RELIEF 1 have no criticism of those gentlemen who support it, for I know they are sincere in their advocacy of it. But I am so constituted that I can not support a bill which IT believe unconstitutional. I know people differ as to that, but I believe the equalization tax is unconstitutional, and I go further—I think any farm legislation is of necessity experimental. You are embarking in a new field; you do not know how it is going to turn out, and in view of what the Government has done for industry, for the railroads, for labor organizations, I think the Government should bear the expense of this experiment and I do not think the Government should put the burden upon the farmers in the shape of an equalization fee or tax to carry out the experiment. [ ‘went all over my district this summer and fall discussing this matter. My district understands thoroughly my attitude. 1 told them I could not and would not vote for the Haugen-McNary bill with an equalization fee in it, and I am satisfied the overwhelming majority of the farmers in my district approve of my attitude. Now, as a practical proposition, Mr. Chairman, I want legislation. I do not want politics in this great issue. I have never played politics in it and will not play politics in it now. But, as a practical man, I do not see any possibility whatever of the McNary-Haugen bill becoming a law during this administration. And why do I say that? The President, for whom I have a personal regard and admiration, is a man of courage, he is a man that 1 think was sincere in his con- sideration of this legislation. The President vetoed the Haugen- McNary bill, and one of the grounds of his veto was that the equaliza- tion fee was unconstitutional. In his veto message he included an opinion of the Attorney General of the United States in which the Attorney General held it was unconstitutional. The President has the same Attorney General and if this same bill goes to him the President, in my judgment, will be compelled to take the same course and veto it, for the President is sworn to observe the Constitution and the President could not sign a bill that he and his legal adviser has said is unconstitutional. Therefore, I think if that bill is sub- mitted to him it will be vetoed, and I am absolutely certain in my own mind that Congress will sustain his veto, because you can not get a two-thirds vote to override it. That is all I have to say. I am prepared to support Doctor Aswell’s bill; I am prepared to support the McNary-Haugen bill if the equalization fee is left out; I am prepared to support any bill that in my judgment is constitutional that this committee reports to the House for the relief of agriculture. I thank you. } Mr. Apgins. Your present bill is the same as the one you intro- duced last year? Mr. Crisp. Exactly. I stated to the committee before I knew it was not perfect. I simply took it as a basis of compromise, and it 1s identical. I followed the same course as the advocates of the MecNary-Haugen bill by introducing the same bill, except, of course, you have to change it as to the nominating of the farm board, and making it applicable to all farm products. Mr. AsweLL. Mr. Crisp, you are very considerate of this com- mittee in not repeating all you said last time. Mr. Crisp. Well, I think a lot of this committee. AGRICULTURAL RELIEF The CrarrmMaN. Mr. Hollingsworth, I believe you have a few words. 6521 STATEMENT OF W. F. HOLLINGSWORTH, SEATTLE, WASH. Mr. KincHELOE. Mr. Chairman, I do not know whether I am going to be able to stay here during these hearings or not. My under- standing is that they will close to-day. The CuatrmaN. That will be for the committee to determine. How many are there who desire to be heard? (After informal discussion.) Mr. HoLuiNgsworTH. In 1914 I was called by my uncle as trustee of the Hollingsworth estate to Europe. During that trip I found that the Netherlands and other countries were buying material from the United States and putting it into finished products and disposing of it in our New York and other markets at a profit. Being a 100 per cent what they call “Missourian,” they have to show me why a foreigner can outdo an American, and I said “I am coming home and use my brains a little bit as well as use my hands as a plasterer.” I am a common plasterer, but I farmed a thousand-acre wheat ranch in the Indian Territory 40 years ago. And I began to figure the proposition out, and I evolved the Hollingsworth Civic Center Town- ship Association, which has been on record here with your copyright office since 1922. It will be the largest farm organization in the world, with more members than any other organization, and can do more effectual good for the American farmer than any other farm organization. These gentlemen are talking about the equalization fee being unconstitutional. What was our Constitution founded on, if it was not founded on equalization; and if you can not institute a law in these United States that can equalize a man’s efforts in these United States civilization has failed to function and we had better stop. This is one of the bills—the outstanding bills that the American people have got to support. If they do not support it Europe will take the ascendancy and our march of western civilization will stop its functioning. We have had the experience of other countries; we have had the benefits of the efforts of other countries. We have seen their failures; and if we, one of the amalgamation races of all Europe, haven’t got the brains to conquer this situation we had better step down and out. } I am going to give you a few points at issue here, gentlemen, that will meet this contingency completely, and you can judge for your- selves and you can ask all the questions you want in one minute. and I{will answer them all at once, if you want me to. The CaairMaN. Very well. Mr. HorringsworTH. Here is the point at issue: The corn farmer was stimulated during the war to a production of 3,000,000,000 bushels for about four years continuous production. They have depleted our soil condition to the point that to-day the corn hyn are exacting a toll of $10,000,000 appropriation to oligriste a suffering. That is a foregone conclusion that it will be one. soll Mr. KincHELOE. Do you think the corn borer is the result ol soi depletion? 822 AGRICULTURAL RELIEF Mr. HoLLiNgsworTH. Yes. I can show you why excess nitrogen causes all insects; and when you take 240 pounds per acre of minerals out of the soil whenever you produce a crop of grain you are inviting your insects. As well as being a plasterer, I am a chemist and an engineer. Mr. CLARKE. And geologist? Mr. HOLLINGSWORTH. Yes, geologist and biologist; and I walked across the United States in 51 days and discovered 300 different forms of granite in the United States, and I have got the samples to prove it. Gentlemen, I am going to give you a little revelation. 1 am the man who was put in the feeble-minded asylum in 1877 under a German gardener, and there is where I got my rudiments of soil conditions—>51 years ago. I am going to give you a little something to think about. You have been listening to a lot of technical stuff; I will give you a little physical example of human endeavor. My mother was born in Lancaster, Ohio, and my father was born in Monticello, Ill., and I got my soil education in Lincoln, Ill., at the feeble-minded asylum where my grandmother put me to get, rid of me. I am going to give you a nice little interesting story. I learned my trade at Plymouth, Ill, in 1881, and I have had the experience of farming in the Indian Territory, right next to Robert L. Owen’s ranch—I ran that 1,000-acre wheat farm in the nineties right next to Robert L. Owen’s 3,000-acre wheat ranch; and I plastered and built more houses than any other man in the United States, at that. Mr. ApkiNs. You were born in my district. I was wondering how you got out of the feeble-minded stitution? Mr. HouuiNgswortH. How did I? Do you know the reason? There were more feeble-minded people there than I was; that is the reason. [Laughter] I answer them just like that. [Renewed laughter. Gentlemen, let me admit that yesterday I was out of place when I called Mr. Connally down ; but it came in so good I could not refrain; and you know sometimes a man has to use his privilege when it is out of place. But we are now going on about our farming centers and how the farming center can function to help us out of our dilemma. Mr. ADKINS. One minute. You said you had the largest farm organization in the world. How many members do you have? Mr. HoruingswortH. I said we would have. I said it would be the largest farm organization in the world. We have only 123,000 members now, but it will be the largest farm organization in the world. Why? Because the Hollingsworth Civic Center Township Association does this one thing: It eliminates waste; it functions in bringing about an equilization in all farm products. That is one of the things I started to do when I came back from Europe. How does it do it? This is the organization that this committee has been looking for, I know that. But it takes time to get here and explain the proposition to you people. This is the way it is done. Mr. Jones. Excuse me just a moment. The gentleman said he was only going to take five minutes. The CuaRMAN. Mr. Hollingsworth, you have the privilege of extending your remarks, if you so desire. | Mr. HorrinaswortH. All right; thank you very much. The CHAIRMAN. We will now hear you, Mr. McKeown. 623 STATEMENT OF HON. TOM D. McKEOWN, REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA AGRICULTURAL RELIEF Mr. McKeown. Mr. Chairman and gentlemen of the committee, [ am not in very much shape to discuss this legislation this morning. Mr. AswieLL. What is the matter? Mr. McKeown. My seed loan bill did not pass the Budget. ‘Laughter.] Gentlemen, I want to congratulate this committee on the pains- taking and the careful manner in which you have studied this farm question for the last four years. At the last Congress you passed the McNary-Haugen bill. It was vetoed. Now you have the question back here again. I think that the fact that I voted for the McNary-Haugen bill every time would at least class me as a man who is favorable to farm legislation. I just do not like the idea of carrying water up the hill and then carrying it back down the hill. I do not mind carrying water up the hill, but I do not care about bringing it back down the hill and spilling it. I thought I was right when I voted for the McNary-Haugen bill with the equalization fee in it. But here is a situation: The farmers in some other parts of the country may be in a situation where they can wait until we thresh out all the niceties about this bill and settle all the constitutional questions, but my famers in my country are not in that condition. It will not make any difference to them after two years when you get the constitutional question threshed out whether you do anything or not, because they will be all wiped off of the earth if things go like they have in the past. I have had some telegrams from one farm organization saying they wanted the MeNary-Haugen bill or nothing. Well, I am sure if you pass this bill with the equalization fee and constitutional objections in it they are going to get nothing and they will get what they asked for. But that is not my idea of settling these propositions. I have thought all the time that it would not be a bad idea to take the Haugen bill, because I think it has been carefully drawn and considered, eliminate the unconstitutional features and pass that bill, for the reason that Congress is not going to adjourn this session of Congress for all time to come. And if it 1s a subsidy of $400,000,000 it lacks $200,000,000 yet of being the amount the farmers lost on wheat during the war. So, if you give this $400,000,000 as a clear subsidy it would still not be doing more than you have done for some other people. But here is the main consideration: Suppose we say we are not roing to surrender our principles. That is just like a lot of fellows who are standing on their rights on automobile right of way. There are a lot of fellows in the graveyard who stood on their rights as to automobile right of way, and there are going to be a lot of fel OWS smashed up in this thing if we are standing on our principles and our rights. Co . ir einles and Of course, I do not believe in Congress giving up its princip its convictions, because they are the Tawmaking body of bis Sula g. But you have got to be practical, men, as you go don egies on d is the result of different opinions of men, out of which grows so 1c lezislation. 1f everybody agreed to everything that came up 624 AGRICULTURAL RELIEF Congress ‘we would have a mollycoddle mess of laws and legislation here that would not be in keeping with the great country we represent. For my part, I do not propose to come here and argue with you gentlemen about the Haugen bill you are going to report out. You have heard all this testimony. It has not been my pleasure to be here. But the thing I want to impress upon you is this: To pass legislation that will bé enacted into law at this session. If you find you have made mistakes, and you are bound to find some mistakes in any of this legislation, then you can correct them later. If I was an opponent of the equalization fee—and I believed that the legislation with the equalization fee could be passed immediately and approved, although I was an opponent to the equalization fee 1 would vote for it in order to get the legislation. That is my stand here; and that is just exactly how I feel about it, because if the equalization fee did not prove satisfactory we could repeal it and, on the other hand, if we passed it without the equalization fee and found it does not work you can put the equalization fee into legislation. I have just this suggestion to make: If you do not take the deben- ture plan—and I always favored the Haugen bill; I still favor the Haugen bill—instead of making a direct appropriation of $400,000,000 in this bill, it would be my judgment to authorize the Secretary of the Treasury to issue his certificates to get whatever money the board might require when operating upon any particular nonperishable product—when it comes to nonperishable products; and then when the board has taken this surplus off and held it until the market shall have consumed it, they can return to the Treasury the money used, and thereby you do not have to come to Congress every time to get an appropriation; you do not have to come to Congress every time to have a bill passed. You have a permanent and working scheme that has already been put into law; and that is the objection, as I understand, to the proposition of leaving out the equalization fee; that you get the board, you get your money and then after a while you have to come back to Congress again. But if you will put an automatic, workable provision in there that the Secreatry of the Treasury, upon the call of the board, may issue his certificates and furnish the money required in that particular emergency, to be repaid on nonperishable articles as secured in the market and returned to the Treasury, it seems to me, gentlemen, that then you have set up a permanent arrangement. You can go ahead, report the bill out with the equalization fee; and then, they argue, if you do that, why, then Congress can run in here and pass another bill. Why, gentlemen, you see how long it has taken you now to get this bill out. Then where is the argument? If you adjourn anywhere in June, do you think you will be able to get in and pass another bill? And what kind of shape is the fellow going to be in who votes for a bill to be vetoed. In my own Demo- cratic country where I come from there are hundreds of Democrats down there who still think that the President may be right about the proposition, and they differed with me when I said it was con- stitutional—if you have to go in a Democratic country, what will it do in a country of the Congressman’s own political persuasion as to the question of the constitutionality of this bill? _ If you are going to pass the bill, and should the President approve it, then you have got to have two years’ litigation in the courts to AGRICULTURAL RELIEF 025 determine the constitutionality of the equalization fee. If you pass the bill with the equalization fee in it and the President should for any reason change his mind and approve it, you are going to have litigation then for two years, and what good is it going to be to the country during the two years? If they go off the farms at the same rate they have gone off the last two years, there will not be anybody out there to work. I thank you, gentlemen. That is just my sincere idea about it, and I am just as sincere in my endeavor to get some farm legislation as any representative of any farm bureau or any farmers in this country. Mr. WiLLiams. I take it you are aware of what every farm Mem- ber of Congress is aware, that there are powerful influences operating here in Washington that would prefer a veto to the passage of a farm relief measure. They are looking for a veto; they want it. Mr. McKeown. Mr. Willisms, as sincere as I am about the legis- lation, I can not comprehend that viewpoint. I can not agree with that viewpoint at all. Mr. WiLLiams. I know we do not agree. But I say we have those influences here; they are obvious. Mr. AswieLL. The committee has been told that a dozen times. Mr. McKeown. I am just giving you the viewpoint of a man who wants to do just the best he can, and just can not understand why they prefer none at all. If it were a surrender of principle, I can see why men would contend and stand out for the principle. But we are confronted here with the proposition of either doing something or nothing, and I would not be willing, as earnestly as I am for legis- lation, to stand up and vote for legislation when I know it would be a mere mockery. That is just the situation as I see it. Mr. AsweLL. I will say further that I think at least a hundred Members of Congress who voted for the McNary-Haugen bill with the equalization fee, on both sides of the House, who have talked to me and other members of this committee, and expressed their views that the committee at this time should report out the bill without the equalization fee, and that is the position of a large number of Members of Congress who have sincerely and earnestly supported this legisla- tion. But it is not going to be done. Mr. McKeowx. I have no criticism for those who honestly differ with me. I have no criticism of these representatives of the Farm Bureau who are honestly and sincerely standing up for the interests they represent. But I am talking to you now as a practical proposi- tion of a man who wants to do something for the farmers of this country, and I am just as sure as the chairman of this committee, and the chairman of this committee is just as conscientious in this matter as the rest of us. But you have a condition confronting you now and not a theory, and who can sav which of these methods 1s the best for agriculture? The CrAIRMAN. The committee for four years worked as we have on this bill in an effort to pass the oleomargarine bill. We were told then it was unconstitutional. We said, “Never mind, we will pass it and try it out.” The courts held the oleomargarine bill con- itutional. . hon we took up the packers and stockyards act, our hearings ran through two sessions, and the hearing in one session covere 626 AGRICULTURAL RELIEF 10,000 pages. We sat here months and much of the time, worked night and day and of course we were told that was not constitutional. Mr. WiLLiams. I do not think it was unconstitutional. The CHAIRMAN. Just a minute. It was said to be unconstitu- tional; it conferred more power on the Secretary of Agriculture than was ever conferred upon any one man. It was held to be unconstitutional by many. Of course, there is always an oppor- tunity for an honest difference of opinion. But ex-President Taft, who rendered the opinion, held it constitutional. Now, there is a difference of opinion in this respect, but we have worked about four years on this bill. If we think we are right, I doubt the propriety of sliding back down the hill. The bill has been thrashed out by the members here and the members of the farm organizations. We started at the beginning establishing the ratio with the equalization fee in it and every bill that has been suggested by the farm organizations, or the majority of them, has carried the equaliza- tion fee. They rebelled against being placed in the attitude of asking for a subsidy or charity. They have said, “We will pay our own bills, providing we may receive our share of the profits.” I can not conceive that any Members of Congress can fail to see the difference between a tax and the paying for a service to take care of the sur- plus. Mr. McKeown. I do not want the chairman to forget this, 1 have never taken the position that the equalization fee was uncon- stitutional, because if I had I never would have voted for the bill. I contend to-day, personally, in my opinion, that it is constitutional; and if you could give me any assurance that that bill would pass and be approved, I would be willing to let it go to the courts to be deter- mined. That is not my position here. I have taken the position it is constitutional; I still have that opinion. But if you had any assurance the President would approve this bill with the equalization fee, I dare say that every man who takes my position would be sup- porting the bill wholeheartedly. The CHAIRMAN. We have respect for the President and everybody else. I have never questioned the motive of anybody who disagrees with me. I want to give everybody credit for being sincere in their advocacy of the principles and policies they advocate. If we feel we are right and I think you will find a large majority of the consti- tutional lawyers hold it constitutional—we have a drafting service and we have its opinion. If there is any question about it we believe it should be passed up to the courts and let the courts determine 1t. It has never been made clear by the statements filed by the repre- sentatives of grain exchanges and representatives of the miller that the issue now 1s not only this equalization fee but they say ‘““you are going to disorganize the marketing facilities.” It will do away with violent speculation, if it is a menace, why not? That is one of the things we are interested in, and the representatives of the specula- tors admit that this equalization fee will eliminate the violent specu- lation described in the Interstate Commerce reports and also in press reports in respect to the deals in Chicago of Armour, Rosenbaum, and others. I believe the manipulation of prices and doctoring the grades is a menace and that is what we are trying to regulate. We did pass a bill two or three years ago which in a degree regu- AGRICULTURAL RELIEF 627 lates speculation. But we now find it ineffective, and we propose to go one step further. Mr. AsweLL. May I say something to interru ? Mr. McKrowy. Yes. ® pt you Mr. AsweLL. In response to the chairman’s statement that the argument should be made to the President, as I understood the gentleman addressing the committee, he is not arguing one way or the other about the constitutionality. He has merely said that we can not get legislation on account of the President. All the argu- ment the chairman has made should be made to the White House and not to the witness. You have just stated what all of us know to be a fact. Mr. McKeown. I just want to drop this suggestion to the com- mittee: If no legislation is obtained at this session of Congress, there is 2 movement on among the Southern States, so far as cotton is concerned, to regulate their production of cotton independently of any national legislation. Now, it is my judgment—I may be wrong about it—that if the Congress at this session does not give some legislation then this unanimity of interest between the South and the West will fall down, if the South is able to go ahead and finance and take care of its own production. Mr. KincaeLoE. Mr. Chairman, before these hearings close, 1 want to put a statement in the record. Mr. Ketcham vesterday on the floor—I believe it was yesterday or Thursday—made a speech and put in the record how much the tariff had benefited the agricul- tural products of this country, and undertook to give indexed figures to show what a wonderful benefit it had been. I was talking to Mr. Ketcham—he gets on the floor on the political side of it, telling what a wonderful benefit it has been, but he is over here trying to get the debenture bill passed, for the reason that that is the only thing that is really going to make the legislation effective. I have always said the tariff on wheat did not benefit the American farmer at all. Ihave said further that the tariff on wheat was the millers’ tariff; I have said that the millers get the benefit out of it and the American farmer does not. I have said further that notwithstanding the tariff when it first started, 30 cents a bushel, and under the flexible provision of the Fordney-McCumber bill the President raised it to 12 cents a bushel—that the last twelve months’ statistics will show that at that time it has been selling higher in Winnipeg, Canada, than in Minnesota. 30 I have had the Tariff Commission to make a statement I wanted to show you just the great benefit the tariff of 42 cents 1s for the American growers of wheat since 1922—six years. I am going to put this in the record; I do not want to read it all. But last year, let us take 1927, there were imported into this country by the little fellow who did not process that wheat for export, the magnificent sum of 21,299 bushels of wheat, and he paid the tariff —because he had to pay his 42 cents—$8,946. oo 3 The big millers who have brought it in for blending purposes an . in order to export it and its by-products they brought 1n 11,152, 2 bushels of wheat. They should have paid on that, In all justice, the rate of 42 cents a bushel, and they should have paid $4,637,293. But do vou know how much they really did pay under this F rdney McCumber tariff bill, when they get 99 cents back on the dollar o 628 AGRICULTURAL RELIEF every dollar’s of tariff they paid when manufactured and exported? They only paid $46,841.33 to the Treasury. I would like for some of you fellows who are great advocates of the tariff on wheat to tell me why the big millers of this country should only pay 1 cent a bushel tariff for the wheat that is brought into this country from Canada, when they bring it in and mix it with 30 per cent American wheat and export it, and yet the little miller or any other American citizen who wants that wheat must pay 42 cents a bushel on it. Since 1922, the six years under this Fordney-McCumber tariff bill, with that tariff on wheat—first 30 cents and then 42 cents— with the big miller having the valuable privilege of drawing down 99 cents on the dollar of every dollar of tariff they pay after they pro- cess and export it, whereas they should have paid if they had paid like the little fellow who imports his wheat, to the Federal Treasury in the last six years of $23,126,163, when, as a matter of fact, he did not pay but 1 per cent of it. As I say, it is alarming when you see the advantages they have, and the principal importers of wheat are the big millers who pay 1 cent tariff, and the American farmer or the little fellow who brings it in for domestic consumption pays 42 cents tariff. Yet there are a few fellows running over the country and trying to tell the farmers that the tariff on wheat is for the benefit of the American farmer. If those fellows did not have that privilege, instead of going out and paying 42 cents a bushel on 11,000,000 bushels of wheat, as they did last year, they would take 11,000,000 bushels of wheat from the American farmer. That is what would benefit them. But be- cause they pay only 1 cent a bushel tariff and get 11,000,000 bushels of wheat from the Canadian farmer; and then we are trying to get ——— of the surplus. I want to put these in the record. The CrAIRMAN. Have vou stated from what source the statistics come? Mr. KincaerLoe. This is a statement prepared by the United States Tariff Commission, statistical division. The CuairMaN. And it gives the percentage of mixtures? Mr. KincaeELOE. Oh, no; the law gives that. The CuarrMAN. To what extent was it mixed with domestic wheat? 1 believe you said 30 per cent. I am interested in those figures. “Mr. KincaLoe. I am giving the total number of bushels of wheat imported into this country since 1922, by years. The CuareMaN. I understood you to say it was mixed with domes- tic wheat and exported. Mr. KincarLoE. I will state this, under the flexible provision of the tariff on wheat of the Fordney-McCumber tariff law, the American miller, as I say, who imports wheat into this country and mixes as much as 30 per cent of American wheat with it, grinds it inte flour and its by-products and exports under that law, that miller has the right to go back to the customhouse and draw back 99 cents out of every dollar of tariff paid. So this gives the number of bushels of wheat and this gives what he should have paid to the Federal Treasury if he had paid like the little fellow; and this is what he did not pay. Mr. AsweLL. How are you going to correct it? I was wondering if the Haugen bill would correct that. AGRICULTURAL RELIEF 629 Mr. KincuELOE. No. They do not propose to correct that; and those who opposed the emergency tariff bill for the farmers and those who voted for the Fordney-McCumber tariff bill proposed to help the big millers, which is what 1t does do—what I wanted to put it in for was to show it is not so the American farmer would get the difference between 30 cents and 42 cents on wheat; it was not for the farmer: it was for the big miller, and the statistics show it. (The statements submitted by Mr. Kincheloe are as follows:) Imports of wheat into the United States [Act of 1922] Duty-paid wheat [mported free in bond for milling and export as flour Calendar vear 19222___. nem cmememceeccc—ma- 1923___. ce 0243 oo mmm Dc rg ST DOB RS ER 927... mm Quantity Duties paid Bushels 3, 165, 026 3, 929, 749 3, 804, 625 i, 308, 399 151, 029 21. 299 $949, 508 2, 678, 925 2, 149, 887 540, 528 189, 432 8 046 Quantity bushels 3, 998, 888 9, 988, 592 9, 479, 819 10, 439, 714 15, 429, 102 11. 152. 699 99 per cent of estimated duties! $1, 187, 669 2, 966, 612 3, 578, 335 4, 340, 833 6, 415, 421 4.637. 293 - Equivalent to drawback under other tariff acts. 2 Act of 1922, Sept. 22-Dec. 31, 1922, dutiable at 30 cents per bushel. ' By presidential proclamation, dutiable at 42 cents per bushel, etfective Apr. 6, 1924. Source: Foreign Commerce and Navigation of the United States. Mr. AnpreseEN. Would not the answer to your statement be that we must go ahead and repeal the tariff law permitting wheat to be imported in bond? Mr. KincHELOE. Absolutely so; if you want to help the farmer and make that big miller use American wheat. The only reason we go and import wheat from Canada is that it is hard wheat. We can grow enough hard wheat in the United States to meet that demand, but instead of doing it you relieve the miller from paying into the Treasury the tariff of 42 cents, getting the 11,000,000 bushels of wheat last year that they ought to have got from the American farmer. Mr. ANDRESEN. It is much more for other years. Mr. KincHELOE. Sure; I have got it from 1922. Mr. Swank. I want to ask Mr. Kincheloe a question. He showed that the millers get nearly all the benefit of this tariff on wheat. The representative of the millers appeared here for three days, 1 think, in opposition to the Haugen bill— Mr. ANDRESEN. Is not that correct? Mr. AsweLL. Yes. Mr. Swank. He is representing the millers Mr. AsweLL. He was against the Haugen bill. Mr. Swank. I say, against the Haugen bill and against the deben- ture bill. } i } Mr. KincHELOE. They are satisfied with the tariff on wheat. The CuAlRMAN. I think we all agree that it ought to be amended. 530 AGRICULTURAL RELIEF Mr. KincHELOE. I am trying to understand what a great benefit this has been to the American farmer of having a tariff of 42 cents on wheat. The CrAamrMAN. Mr. Lankford, the committee will be glad to hear vou. STATEMENT OF HON. WILLIAM C. LANKFORD, REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA Mr. LankrForp. Mr. Chairman and gentlemen of the committee, I have attended all these hearings before this committee, which have lasted for six weeks or longer, and wish to state that I have enjoyed them very much. I have received much very valuable information from the various witnesses who have appeared here, and from the suggestions and questions of members of the committee. I have ascertained the slant of various people on this great problem of farm legislation. There is one thing, though, that I knew before I came to these hearings, and my information has not been strengthened in that respect; that is, that the American farmer really needs some helpful legislation. There is a real farm problem to be solved by this Congress, some future Congress, or left unsolved. I sympathize with the farmer. I was born on a farm, and can truthfully say I was born “way down South in Dixie,” “way down upon the Suwanee River,” in a country log house, in a Georgia cotton field, at “home, sweet home.” Mr. CrArkE. On Sunday? Mr. Lankrorp. I am not sure whether I was born on Sunday or not. But I was born on the 7th day of the month, 1877, and seven has been a lucky number with me from that day to this. I will say furthermore that a man who was born out in the country on the farm and worked six days does not worry about resting on the seventh day. He is perfectly willing that there be enacted a law providing for one day of rest in seven. I wish to say this, that I have introduced a bill for Sunday observ- ance, but I am not here to push that bill at present. I have asked that no hearings be held now on that bill simply because I want to give all of my time to an effort to work out something worth while for the American farmer. I have that at heart, because I was born and raised on the farm. I helped plant cotton when I was a boy; I crawled on my hands and knees and thinned that cotton until I felt like my back would break; I plowed it day after day until I could hardly get one foot ahead of the other; then I picked it until my back was almost blistered in the sun where my waist and trousers did not happen to come together; and then I saw my father, with that cotton sinned, go to market, and heard him ask the merchant “How much will you give me for 1t?”’ saw him sell it, and then walk in the store and say “How much will I have to give you, Mr. Merchant, for the coffee pot, for the potash, for the Arm & Hammer brand of soda,’’ and for the various ‘articles that my father bought and carried back home. I did not believe it was fair for a man who was buying that cotton we had grown to name the price and also to name the price at which my father bought the stuff we needed at the home. hr KincueLoE. What is your theory on the McNary-Haugen AGRICULTURAL RELIEF 631 Mr. LANkFoRrD. I voted for the Haugen bil i about that a little later. gon bill befors, snd L wil tal The real question before this Congress is to work out some plan to help the farmer get a better price for his products. Let me say just here that I voted for the McNary-Haugen bill every time; I voted for the McNary-Haugen bill, Mr. Kincheloe, when I was the only member of the delegation from Georgia to vote for it. I voted for it later when some other Members from Georgia joined me. Mr. AsweLL. Are you for it now with the equalization fee in it? Mr. LankForp. I would probably vote for it with the equalization fee in there, although I am not an enthusiastic supporter of the equalization-fee idea. I wish to say, I think it would be better for this committee to report the McNary-Haugen bill out without the equalization fee if it is re- ported at all. I would much prefer for the committee to do that. I have never been a strong advocate for the equalization fee. It was suggested a little while ago that the equalization fee is not a tax. That is true. It may not be a tax in the accepted term. But, regard- less of whether a tax or not, the farmer, when he pays it, will think it is a tax. He will feel it is a tax, and not only will he feel it is a tax, but he will resent it being left in the bill. Mr. AswerL. Do you think you ought to vote your conviction whether you get a law or not? Mr. LaNnkForD. I am in favor of so amending the bill as to secure the passage of a good law at this time, if possible. I would not be in favor, let me say, of so amending this bill as to make it objection- able simply because we want to secure a law. There is danger always in legislation, as I see it, that goes just far enough to amount to an excuse of a bill, and yet not do what it ought to do for the farmer; and then the American farmer would feel like we had passed some- thing for him, later on become dissatisfied with it and disheartened and not be willing even to have a stronger and better bill passed; and those who oppose real farm relief would later on say, “You have done this. You have passed a bill for the farmer. It is a failure. Why take up more time with farm relief?” I'do favor the passage of a bill which will be real farm relief. 1 would not favor a bill which I thought would not help the farmer, but which might wreck his hopes for a measure in the future. Mr. KincHELOE. Mr. Lankford, is the McNary-Haugen bill as it is drawn and pending before the committee, with the equalization fee eliminated, your choice of the bills so far pending before the committee? Mr. Laxkrorp. No; I would prefer the bill I introduced, Mr. Kincheloe. But of the bills other than mine to which the committee has given consideration and upon which you had hearings before you came to my bill, I would prefer the McNary-Haugen bill with the equalization fee eliminated—T would prefer that to the Crisp- Curtis bill. Mr. KincaELOE. Or the debenture plan? Mr. Lankrorp. I think the debenture plan could be passed along with the McNary-Haugen bill; as they are not inconsistent. You might pass the debenture plan and raise money for the farmer in that way through the sale of debentures, and still pass the MeN ary- Haugen bill. They are not inconsistent at all, as I see it; they could be worked in harmony: they could be worked both at the same 632 AGRICULTURAL RELIEF time. - I do not see that the passing of the debenture plan would prevent the passage of the McNary-Haugen bill. I think you could pass the McNary-Haugen bill with the equalization fee or without it, and also pass the debenture plan, if you wished. I like the debenture plan; I think the debenture plan would help the American farmer. I believe it would cause him to get more for his products. = I do believe that the debenture plan falls down on one proposition. I do not believe the debenture plan solves sufficiently the question of overproduction, and I think that is the greatest problem of all.. The one problem which must be solved eventually is the control of production and marketing in behalf of the farmer. Mr. KiNcHELOE. Do you think the McNarv-Haugen bill would do it with the equalization fee eliminated? That is the question which has been bothering my mind a long time. Mr. Lankrorp. Of course, it would enable the board to take cotton off the market, as has been explained here. I have never been very strong for the McNary-Haugen bill. © I voted for it, however, as the best bill in sight. Mr. KincHELOE. I mean overproduction. You take the Curtis- Crisp bill and these other bills—and I am not saying that in a criticiz- ing way. I know it is as fundamentally sound as anything in the world that whenever you increase the price of agricultural products in this country—that is, if the seasons are favorable—you are going to increase production. Mr. Lankrorp. You are going to increase production. Mr. KincHELOE. Absolutely. Mr. Lankrorp. And you wreck the very machinery by which you propose helping the American farmer. So the greatest problem is the control of overproduction or the problem of marketing what has been produced. It would be all right for the American farmer to produce an abundance if he was able to keep it off the market. If he is able to look the world in the face and say, “It does not make any difference what I produce, I am not offering it for sale at all, and you can not get it.” | Mr. PurNELL. What, in substance, is your plan? Mr. Lankrorp. I intend to get to that. Mr. PurNELL. I want you to present a skeleton at least of your plan you have in mind. Mr. Lankrorp. I would be very glad to do that, as fully as possible before time of adjournment this morning. Mr. PurneLL. I think you had better go right to it. Mr. Lankrorp. The bill I introduced is H. R. 77, patterned along the line of the war finance corporation act. I used the war finance corporation act as a basis for my bill. I used the first six or seven sections of that act, simply changing the name of the agency to the farmers finance corporation. Mr. PurnNELL. How much of an appropriation would be involved in your bill? Mr. Laxkrorp. I think I mentioned $500,000,000. That would be ‘a matter for the committee to figure out, provided my plan is worthy of acceptance. That is a mere matter of detail. I provide in section 8—if I may have the attention of the gentleman from New Jersey, Mr. Fort and others—— Mr. Fort. I was just asking what had been going on before I arrived, Mr. Lankford? AGRICULTURAL RELIEF 633 Mr. LANKFORD. Section 8 provides— that the corporation shall be empowered and authorized to make advances on farm products as collateral security to any bank, banker, trust company or farm organization in the United States which has rendered financial assistance to any farmer, group of farmers or farm organizations. And this plan is a little different from the plan of ordinary bills, and I want to get it thoroughly before this committee. Let me go over that again. The bill provides for the advance of money to certain banks, provided those banks have made advances to individual farmers of money. Provided— now, here is the milk of the coconut and the gist and heart of the bill, if it has anv- these advances are made through the banks only to the individual farmer: And provided, The farmers receiving such financial assistance shall have entered into contract with the corporation, as set out in section 11 of this act, and shall have kept and abided bv all contracts so made. Now, this contract, which is set out in the bill is a rough, crude contract drawn by me—which could be amended by the committee— provides that these farmers shall control their production as dictated and as determined by the cotton advisory council or the wheat advisory council, or other commodity advisory council. It provides further that not only shall these farmers control the acreage which they plant each year, but they agree and obligate themselves not to sell any cotton whatever after they begin obtaining these loans, unless the cotton advisory council determines that a sale shall be made. Mr. PurNELL. In other words, they borrow money on their crop and hold it on their own farms? Mr. Lankrorp. On their own farms, or in warehouses, or in what- ever way is necessary, so as to make the cotton to be produced actually for the debt. The plan is simply this, stated in other words, that we will create the farmers finance corporation, which will loan money through the banks, to the individual farmers, to enable them to hold their cotton, provided the planters of 75 per cent of the acreage of cotton in the United States shall have signed the contracts agreeing to the control of their acreage planting, and agreeing to a control of the marketing. Mr. PurneLL. What percentage of the value of the crop held by each individual farmer would you permit him to draw a loan upon? Mr. Lankrorp. The bill provides for loans to the full value of the commodities. I say in the bill that he shall be authorized to borrow the average price at which that cotton has sold, for the last 10 years. Mr. AsweLL. Do you think you could get 75 per cent of the plant- ers to sign that? } } Mr. Lankrorp. I do not know; I believe we could. I believe you would be offering the farmers so much under this bill that they would sign up. I have great faith in the American farmer signing up con- tracts if you once offer him something to sign for. Mr. PurNeLL. In other words, you give him a loan on the basis +f the full market value at the time the loan is made? 634 AGRICULTURAL RELIEF Mr. Lankrorp. No; I would go further the bill provides for the full market average value for which the commodity sold for the preceding 10 years, which might be higher than the value at time of the loan. I realize this, Mr. Purnell, that if you loan the farmer the average price at which cotton has sold for the last 10 years or the average price at which wheat has sold for the last 10 years; and cotton is selling at 4 or 5 cents below that, or wheat is selling at several cents below that price, it would be a foolish thing for the Government’s agency to make that kind of a loan without additional safeguards. Mr. PurneLL. Suppose the market price is below that average and a loss is sustained.” Who is to pay that? Mr. Lankrorp. That is a proper question and I am glad to answer it. If 75 per cent of the producers of a commodity sign contracts that they will control their production, and, furthermore, that not only will they control their production, but that they will not offer for sale a single bushel of wheat of a single pound of cotton when the operation begins, but that they will hold it; if they need money they will borrow 1t from the bank and only sell for a fair price there will be no loss. The price can not drop below that average price at which they can borrow money. Why? Because the farmer will not sell below a price at which he can borrow money under the provisions of this bill. I provide in the bill that the commodity itself shall be the sole and only collateral for the debt, and that no judgment can be taken against the individual farmer for any loss. Mr. Apkins. Will you yield for a question? - Mr. Lankrorp. Yes; I will be glad to, Mr. Adkins. Mr. Apkins. In my own country where they have only 5 per cent of the storage facilities for wheat and oats, do you think you can get them to go into a contract of that kind? Mr. LankrForp. I am not so sure about that in the wheat section Of course, if they could get them to go into it I believe it would work. You know more about the wheat proposition than I do. I provide in the bill that there shall be such storage as shall be necessary, and I provide further in the bill that if possible and practical and feasible that the farmer be allowed to keep his com- modity and store it himself, by properly insuring it, and making him responsible for it. Mr. Apkins. The point I had in mind is that practically all of them have practically no storage facilities for that, whether they would go into a contract of that kind or not and then have to build storage bins. Mr. Lankrorp. I believe it can be worked out. It can be worked out for them to hold it separately or that wheat to be stored in bins and shipped to places where it could be held, but for the farmer still to retain his title in so many bushels of wheat of a certain grade, stored for his use. He could hold the receipt instead of holding the actual wheat. Mr. Swank. Do you make any provision for the acquisition of warehouses? Mr. Lankrorp. I left that as a matter of detail to be worked out later. If the committee should decide that my bill embodies a oood idea, that is properly a matter than can be worked out later. AGRICULTURAL RELIEF 635 1 provide, if possible, that you would let the individual farmer hold his own commodity. He might conceivably ship it off, but it would be a crime, and I believe the average farmer can be trusted to hold it: and the loans being made through the banks, and the banks, knowing that that commodity is put up as collateral, would keep in touch with the collateral. Mr. Jones. Just a question there: If you put that plan into oper- ation and had your 75 per cent to sign, what would there be to pre- vent the other 25 per cent from increasing their acreage or making their sales any time they wanted to and taking advantage and pPOs- sibly getting a higher price than those who had signed? Mr. LankForp. The bill would prevent that. Mr. Jones. What would there be to prevent new acreage by people who had not theretofore been in business? Mr. LaNkrForDp. The question of new acreage would be solved under provisions in the bill. I provide this, however, that these loans shall only be made when planters of 75 per cent of the acreage for the ensuing year have signed the contract, to control the produc- tion and marketing. The bill provides that 10 per cent more must sign within 12 months from the time operations begin, and therefore 85 per cent must come in within 12 months after operation. Then I provide, further, that 10 per cent more must come in within the next year; and then that 7 per cent more shall come in within the next year, running it up to 97 per cent of the planters. If the bill does work, if the plan is a good one, and if the American farmer finds he can borrow at the average price of his commodity and that there has been an organization perfected which enables him to control his production, which enables him to control the price, and name his price within reason, they will sign up 10 per cent more each year until they have 97 per cent in. The other fellows will be forced in just like labor unions force them in when they cry “scab,” “not friends,” ‘“‘not in sympathy with the laboring man,” “not deal- ing fair,” etc. In other words, I believe they will sign up these contracts. If they do sign up these contracts, then it would solve the overproduction problem and marketing problem, and would enable the farmer to do exactly what I said that my father could not do in the way of naming the price of his cotton. It would enable the farmers by this organization to get together and simply say, “We will not sell cotton or wheat except at a certain price. We produced this year an alleged overproduction, but that overproduc- tion does not hurt you; it. 1s not for sale.” Or “We have for sale as much wheat as you need at a reasonably fair price. We have only as much cotton for sale as you are willing to pay us a fair price for.” The farmer for once in the history of the world by this organiza- tion could look the rest of the world in the face and say, “Cotton 1s so much a pound; how much do you want?” Or ‘ Wheat 1s so much a bushel; how much do you want?” He could not do that to an unreasonable extent; he could not name a price of 35 a bushel for wheat; he could not name a price of a dollar a pound for cotton. But he could name a price for his commodity within reason, just like the producers of steel and the producers of shoes and the pro- ducers of hats and clothing name the price of the articles which they produce, within reason. RE160—28— SER E. PT 8— 6536 AGRICULTURAL RELIEF Mr. Jones. Unfortunately, he could do that, if he could get any- thing like approximately a hundred per cent, law or no law. If you got 97 per cent in you would not need any law. | Mr. Lankrorp. This is true, that if it worked at all the Govern- ment could not lose any money on it and then, again, in a little while the farmer would be absolutely independent; he would be absolutely master of his own fate and his own destiny. The bill has another idea, Mr. Jones, and I will come to you, Mr. Menges, later; I see your hand up for a question. 5 There is another feature of the bill which I think is really worth while, and that is this: It has a complete referendum in it. If you pass the McNary-Haugen bill the farmer may say he does not want it. If you pass my bill it enables 75 per cent of the producers of commodities to sign contracts and organize. Suppose they do not do it? No harm has been done. Suppose they sign up 75 per cent, and then decide they do not want it next year; it goes out of force and out of effect; they determine whether the bill shall go into operation; they determine whether 75 per cent under the bill shall begin operations as to any particular commodity. They might decide they want to operate as to cotton and let the McNary-Haugen bill apply as to wheat and other commodities. If they liked it they would get the additional signers; if they did not like it they would not get new signers and they would repeal the bill. That is a most perfect referendum, not to the voters of the country, but to the producers themselves; not to a majority, but to three-fourths of them. If the bill is not good it would not go into effect; if it is good and they keep it in effect it provides for the control of production and marketing, not by force, not by low prices, not by an equaliza- tion fee, not by anything else, but by a contract entered into mutually for the farmers themselves. All right, Mr. Menges I will be glad to yield to you. Mr. MENGEs. Your bill would not go into operation then until 75 per cent of the farmers had signed your contract? Mr. LankrorD. It would not. Let me say here, gentlemen of the committee, I have done this: Not only have I introduced this bill with this contract idea in it, but I have modified and reintroduced some of the other bills. I took the McNary-Haugen bill and I made it “Title I”; I took my bill and made it “Title IL"; reintroduced the two fastened together as one bill. This committee can pass the two— the McNary-Haugen bill as Title I and my bill as Title II. Let them go into effect as far as being the law of the land is concerned. But suppose the cotton growers in Gerogia and in Texas, in the district of Mr. Jones and in the district I represent—— Mr. Jones. Why did you not introduce the debenture bill as “Title I117°? Mr. Lankrorp. Iam getting to that a little later. I will take care of your bill also just as much as I did the others. Suppose the two pass; suppose that the cotton growers in Georgia say, ‘‘ We will sign up; we will take the provisions of bill 77,” and they sign up and begin to operate under that. They would not need the terms of the McNary- Haugen bill. Suppose the people out West and the farmers there decide they want to have the McNary-Haugen bill and they do not care to AGRICULTURAL RELIEF 6537 operate under my plan. Then you could let them operate under the McNary-Haugen bill. They are not at all inconsistent. Now, Mr. Jones, I will say that I did not introduce the debenture plan along with the other bills, but I thought of doing that. I have not done it. I will tell you what you can do, I believe, and I will submit it to the committee after consideration to say whether or not I am right: The McNary-Haugen bill could be put in the bill as Title I, or put yours in as Title I, if you had rather have yours first; the debenture plan as Title IT, and put my plan as Title III. Wherein are the three inconsistent? The farmers would be getting their help ander the debenture plan. They might not need the provisions of the McNary-Haugen bill. It might not be necessary to declare the operating period if the debenture plan was in effect. It would not be inconsistent with the McNary-Haugen bill. You could use my plan and work it with either one. So, as I say, the three plans are not at all inconsistent. If one part does not work you have got the other part to fall back on and vice versa. I think that may be a pretty good idea. B Mr. Apkins. Your contract idea is all very good, Mr. Lankford, but haven't we got a law to do all that. The Supreme Court has recently ruled favorably on the validity of these contracts; and yet the farmers wherever they have tried that have fallen down under it antil they do not proceed to operate. Do you think they would operate any better by providing that authority for them? Mr. Lankrorp. This would be true in reference to the contract: The bill provides that 75 per cent of the farmers must have signed these contracts and be living up to them. Suppose one man did not sign up the contract. You get another man in his stead. Mr. Apkins. I understand that. We already have authority of law to do that. The contracts have been tried out by the courts and found to be constitutional. Do you think that passing another bill is going to be a greater inducement for the farmer to do that? Mr. LankrForDp. Mr. Adkins, that is a very proper question, and I am glad you asked it. This is true: The farmers say, perhaps, if they sign up contracts they have no knowledge the other fellow will sign. A man signs a contract and he will say, “I am no better off than I was before. I am reducing acreage and the other man is not reduc- ing acreage. I do not know whether my commodity is going to be any higher in price because of the fact I signed the contract.” He has no reason to sign a contract. i Under my plan he signs the contract. He says: “Now, this con- tract is not binding on me because it is so provided in the bond that unless 75 per cent of the producers for the particular year sign, this contract is not binding on me, and if enough sign it, my price will be stabilized at the average price.” And he says: “ Furthermore this contract is not binding on me unless enough people sign it to enable the farmers to be masters of their own fortune and control the market, naming their prices within reason and thereby naming their profits within reason.” } Mr. Apkins. You did not quite get my question. Mr. Lankrorp. All right. Mr. Apkins. The point is, they do not operate under your system now, when they have a right to do it. Do you think there 1s any- AGRICULTURAL RELIEF thing in your bill that would make it an inducement for them to operate? Mr. LankrorD. Absolutely. Mr. Apxkins. They have a right to go into all that stuff-—and sign contracts to limit production and marketing now. Mr. LankrForp. They have a right to that now. Mr. Apxkins. And they do not operate under it? Mr. Lankrorp. That is right. Mr. Apkins. They have tried it and fallen down. The point 1 have in mind is whether simply passing this bill of yours would induce them to do it. Mr. Liankrorp. Simply because with my bill there would be ma- chinery set up to establish borrowing powers at the average price at which a commodity had been sold for last 10 years. Therefore their price would be stabilized at a very satisfactory amount to them, and there would be all kinds of reasons for them to sign the contract. Mr. Apkins. Do you think the additional borrowing power would be an inducement? i Mr. Lankrorp. Absolutely. The great trouble with the farmer to-day is that he can not control his sales. He can not control the time when he is going to sell his commodity. Why? Because his taxes are due, his Interest is due, or because his bank note is due. He must sell his cotton. But cotton is down in price. He can not wait for it to go up. But if my bill goes into effect he can borrow the average price at which the cotton has been selling for the past 10 years and put his cotton up as the sale security. My bill would stabilize the price at the figure at which he could borrow. He would sign the contract because he would know that unless enough signed it to make it effective, the contract would not go into effect, and he would know that whenever enough signed it to carry it into effect then the price would be stabilized. So I think that the plan is really worth while, and I submit it to the committee for their careful consideration. Let me say this—I presume the committee is anxious to adjourn, and I will hasten to a conclusion. Let me say just this much on the McNary-Haugen bill before 1 resume my seat. I feel that a man has a right to criticize his own self, and I think a man who votes for the bill should be permitted to criticize that bill, especially when he may vote for it again. 1 started to say a little while ago, and some one interjected a question and changed my line of thought, that the equalization fee was danger- ous for political reasons; and then I said we should not be controlled by that to a great extent, and yet we are all more or less selfish, some more so than others. But let us get away from the political side of it. Here is another danger in the equalization fee: If the McNary- Haugen bill passes it will either make the cooperatives of the country or break them. They will have had their opportunity. People will say: “The cooperatives got the law they wanted and it failed to work.” It will either mean their destruction or their salvation. All right. Now, will the equalization fee be popular with the American farmer? Will the American farmer want to pay it! Will it force the American farmers to go into the cooperatives, or will he feel like he is being mistreated? Will he feel like he is having to carry a burden he does not want to carry; will he feel like unjust 638 AGRICULTURAL KELIEF 639 pressure has been put on him; will he feel that it is not a square deal and that you are trying to force him to do something he does not want to do and therefore say “I will not join.” He will pay the fee under protest, I fear, and even through the bill works well, will it not be more or less unpopular and hard on the cooperative associations? Then, there is another objection I have to the McNary-Haugen bill, which I hope this committee will remedy, if possible before they vote the bill out, either with the equalization fee or without it I am concerned about the individual American farmer. I am concerned about the farmer who carries his cotton to market, as my father did, and sells one bale or two bales. Now, the McNary-Haugen bill would provide for taking a certain amount of the commodity off the market. The organization would buy that commodity from the poor fellow who has to sell. That commodity passes out of his hands; it passes into the control of the cooperative association. They may hold it off the market; they may dispose of it as they please. Prices may he boosted by operations, but the poor fellow has already sold out. He has lost. And he has lost because his cotton was sold too low. Cotton may go up. People may say, ‘‘Oh, well, the South is getting a good price for its cotton. Cotton is bringing a better price,” but the poor man who sold it lost. He is out. That is the objection I have to the export plan. That, is the objection I have to the plan of my good friend from Georgia Mr. Crisp. That is the objection I have to nearly all these plans that do not take care of the poor fellow who planted and made the cotton where you boost the price after it is too late for him. Now, if you can work out some plan in the McNary-Haugen bill through the drafting service or through members of the committee, providing that when cotton is bought from a fellow who does not belong to the cooperatives, and later on the cotton goes up that in some way you will take care of him so he will not lose, you will thereby improve the bill very much. It will be a wonderful help to the bill if you can work that out and put it in the bill. I am for the plan I suggest here in my bill because I have drawn that plan in the interest of the individual. He holds his own cotton. He may borrow money on it, and manipulate any way he pleases. But he does not sell it at a sacrifice; he holds it and when cotton goes up he gets the benefit of the increase. } I have another suggestion which I wish to make to the committee. [ took the McNary-Haugen bill and performed a simple, painless, bloodless operation by trimming out of that bill the equalization-fee provisions and inserting in lieu thereof the debenture plan in a modi- fied form. I provided that the debentures be issued not to the ex- porters but that the proceeds go into the stabilization fund of the McNary-Haugen bill so as to make unnecessary the equalization fee and yet give the farmers the benefit of the other provisions of the McNary-Haugen bill. I believe this plan is preferable to the present plan of an equalization fee. I know that I like the idea much better. I also took my contract, production and marketing, control plan and grafted it into the McNary-Haugen bill and reintroduced it as an independent bill as a suggestion, but I am free to confess that I think my original plan is much better for many reasons, which 1 shall be glad to explain to this committee should the committee ever wish to take up the idea of comparison of the two plans. 6540 AGRICULTURAL RELIEF In fact, Mr. Chairman, my faith in my farmers’ finance corpora- tion plan with its production and marketing control by contract features, has been very much strengthened from day to day as I have attended these hearings. 1 am sure that real farm relief can only come with a proper control of production and marketing and that there can only be established proper control by contracts enteres into by the farmers with all concerned under an enabling act of Congress such as my bill provides. All the other bills introduced by other members fail in this most essential respect. Proper control of production and marketing means control of prices by the farmers themselves and hence the naming by them of their own profits in reasonable bounds. I have studied this problem for years and for the last six weeks I have attended hearings of this committee for two hours each day and worked until midnight each night reading bills and speeches, drawing bills and collecting data on this matter, and my very best judgment is that we must work a plan to enable the farmer to name within reason the price of the commodities which he sels as other businesses and enterprises do, or else we must leave this problem unsolved for the present.. Another most important feature of my bill is that it provides for the selection of the various commodity councils by the governors of the commodity growing States at first, until the farmers become properly organized and then by the farmers themselves. Some may suggest that these must be appointed by the President. It will be seen though that these councils are in no sense composed of Federal officials but only a part and parcel of an organization the functioning of which is recognized by the bill under its contract features. These officials are no more Federal officials than are the road officials of a State Federal officials, because they and their works are recognized by the contract or law whereby the Federal Government matches State road funds in the construction of good roads in the country. This feature of the bill safeguards the rights of the afrmer and makes sure the selection of his friends for the administration of the farmer’s most important affairs under this bill. Some may suggest that my bill provides for price fixing and 1s therefore objectionable. Let me say I think that it is clearly price fixing in its nature and provisions and that is just the reason I am so much in favor of it. Congress has passed laws to help everybody else fix prices of what they sell. Why not extend this privilege to the farmer? 1 have no patience with any plan: of so-called farm relief which attempts to help the farmers without helping them get a better price for their products. Too many farm relief bills attempt to please the farmer without giving him any real relief. They attempt to work out a plan satis- factory to the farmer and yet leave him to be preyed upon by those who speculate on his products. They propose to help the farmer and yet leave him at the mercy of the middlemen. Real relief can not be secured in this way. Again, many of the bills seek to help some one help the farmer indirectly and charge too much for the service, or help the farmer by handling his commodities at an exorbitant charge for the service. All this is wrong. Again, Mr. Chairman, many object to all bills which vote any financial assistance to the farmer on the idea that the farmer should AGRICULTURAL RELIEF 641 not receive a subsidy from the Treasury. Subsidies have been from time to time granted to other folks. Why not grant a subsidy to the farmers? The farmers will never, by any scheme we may pass, get back one-tenth of what has been unjustly taken from them by dis- criminatory legislation. But, Mr. Chairman, my bill does not pro- vide for a plan that will lose the Government any amount. It only provides for the elimination of unnecessary profits of certain middle- men who are unnecessary and really amount to parasites living on what they do not at all produce. ° [ have taken many of the bills which have been introduced by others and amended them so as to make them much more effective in the way of helping the farmer. I reintroduced them in their modi- fied form to get before this committee and the country just how simple is the remedy of real farm relief if we will only determine to pass such a» measure. 1 hope this committee will bring out the very best possible bill. . I have been glad in the past to suggest and help secure many splendid changes in the McNary-Haugen bill and know the bill 1s very much improved over its original form, but it is yet far, far from a perfect bill. I believe that it can only be made perfect by giving the farmers complete control of their products and the sale of the same. I have been glad to attend all the hearings of this committee at this Congress and am glad now on the last day of these hearings to submit my conclusions on this great question. I realize that my plan may not be accepted just now but I hope for it to be eventually written into law. I have submitted my bill to many farmers, farm organizations, Members of Congress, Senators, and Cabinet members and have yet to find the first man to say it will not work if the farmers want it and sign up the contracts. I am offering it because I feel it will work and that the farmers will approve it and sign the contracts. The farmers will organize if we will make organization really worth while to them. They are a little shy of organizations because too often they are led into organizations by those who wish to exploit and to plunder them. My bill provides for the most effective farm relief ever offered, provided the farmers themselves will approve the plan and put it into effect. So the only question in doubt is, will the farmers sign the contracts suggested by my bill. The farmers organized. and won our independence more than a century ago. They have organized and given their country assistance n every war. They helped to put over the Liberty loan drive during the last war and sent their sons across the seas to fight at the call of their country. So, Mr. Chairman, I am sure they will enter into a plan with their neighbors to win for them and their children a new freedom of naming within reason the price of the products of their own toil. Let us do our part and knowing the farmers as I do, I vouch for their faithful discharge of their duty in full, as they have ever done. } } Mr. Chairman, I wish to thank you and this committee for the ~ourtesies shown me and for your most attentive attention to my presentation of this matter, in which we are all so much interested. 642 AGRICULTURAL RELIEF The CuairMaN. Thank you, Mr. Lankford, your statement 1s greatly appreciated. (After informal discussion among members of the committee.) , The CHAIRMAN. Without objection, the hearings will be considered closed. Mr. HoLLingsworTH. I would like to make a little statement, and that is this: I will file a brief with you showing that the only solution to the farm problem is this equalization fee clause. That is the strong factor in this bill, and from my experience—may 1 say I bought from the chairman’s State, Sioux City, Iowa, hundreds of carloads of corn from them during the war time; in 1918 IT was vice president of the Dewey Milling & Grain Co. I bought the largest consignment of flour ever bought in the United States from the Lariebee Milling Co.; and I am qualified to make statements on the economic side of this that you gentlemen can not help considering, My remarks will be in concise form and no religious ceremony. (Thereupon, at 12.25 o'clock p. m., the hearings on the above- entitled matter were closed.) AGRICULTURAL RELIEF 615 organization and the producers. My idea is to eliminate a dozen or more managing heads, have only one with subsidiary organizations if necessary and eliminate much of the overhead expense and have unity of action and effort. Mr. FuLmer. Under the present system they may work in com- petition to each other instead of working along the same line? Mr. Hark. Absolutely; for instance, the South Carolina associa- tion may sell its cotton in competition with the Oklahoma coopera- tive organization under existing arrangements. . Mr. ApxinNs. Your idea is to coordinate them? Mr. Hare. Exactly. Mr. CLArRkE. And confederate them? ~ Mr. Hare. That is right. I say that this idea is politically sound, for the reason that it is absolutely in harmony and absolutely in keeping with the legislative enactments already provided for. I say that it 1s economically sound because it is the embodiment of cooperation. It is cooperation between and among the govern- mental agencies themselves, coupled with the cooperative and united effort of the producers themselves, and therefore the embodiment of cooperation throughout; and to my mind the production problem, the surplus control problem, will be controlled in no other wav than by cooperation. Mr. Fort. Mr. Hare, I notice at the top of page 6 vou provide that the advances to be made would be on the basis of the market value of such crop. Do vou mean thev are to make a 100 per cent loan? ~ Mr. Hare. That is right. If you are going to begin to loperate when your commodity is down at the cost of production or below cost of production, to insure the cooperation of the producers them- selves provision must be made for them to obtain the market value of the crop at that time. } Mr. Fort. Mr. Hare, that is just what I was coming to. You have no limitation, that I have found in looking through this bill, on the point of marketing value at which the loans could be made. Mr. Hare. That is true, but I take this position, that if you would give a man an umbrella, a sensible and intelligent man, he will know when to put it up and when to take it down. I think if vou put the operation of this bill in the hands of intelligent men they will not use the Government as an instrumentality to work an injury to the people they are supposed to represent, nor will they attempt to work an injury to the Government they are representing. Mr. Fort. No; but it would be possible under your bill to make loans at the market value, for instance, we will say last year, of 23 or 24 cents on cotton? } Mr. Hare. That is true, and it is possible for the Federal reserve bank to-day to go broke in 6 months; it 1s also possible for the inter- mediate credit banks to lose millions of dollars in the next 12 months; and some of them have lost money; but in every public undertaking some one must be trusted to do the right thing. Mr. Fort. But they are now limited by law to a percentage o oN Hage. Yes; they have limitations r. HARE. Yes; they have limi . } Mr. Fort. And you are proposing that they should be allow ed 3 loan 100 per cent. 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