fd hy APIER Ll hy : on ‘» a a i 277 53 > Washinaon AGRICULTURAL RELIEF HEARING BEFORE THE COMMITTEE ON AGRICULTURE HOUSE OF REPRESENTATIVES SEVENTIETH CONGRESS FIRST SESSION FEBRUARY 24, 1928 Serial E—Part 10 UNITED STATES iOVERNMENT PRINTING OFFICER NASHINGTON | 3") wi COMMITTEE ON AGRICULTURE House OF REPRESENTATIVES SEVENTIETH CONGRESS, FIRST SESSION GILBERT N. HAUGEN, Iowa, Chairman FRED 8. PURNELL, Indiana. JAMES B. ASWELL, Louisiana: T. 8. WILLIAMS, Illinois. Co D. H. KINCHELOE, Kentucky. C. J. THOMPSON, Ohio. MARVIN JONES, Texas. JOHN C. KETCHAM, Michigan. F. B. SWANK, Oklahoma. THOMAS HALL, North Dakota. H. P. FULMER, South Carolina: HARCOURT J. PRATT, New York. THOMAS L. RUBEY, Missouri FRANKLIN W. FORT, New Jersey. THOMAS A. DOYLE, Illinois. FRANKLIN MENGES, Pennsylvania. JOHN McSWEENEY, Ohio. AUGUST H. ANDRESEN, Minnesota. CHARLES ADKINS, Illinois. fOHN D. CLARKE, New York. . CLIFFORD R. HOPE, Kansas. VICTOR 8. K. HOUSTON, Hawaii. L. A. DARNELL, Clerk = CONTENTS Statement of — Hon. Tom Connally______ Hon. D. H. Kincheloe. . Hon. G. N. Haugen_____ Hon. William C. Lankforc Hon. Thomas L. Rubey___ Letter from Mr. B. F. Yoakum _______. Telegram from secretary of Iowa State Senate Page 695 714 717 716 72h 727 -r SE AGRICULTURAL RELIEF House oF REPRESENTATIVES, COMMITTEE ON AGRICULTURE, . Friday, February 24, 1928. STATEMENT OF HON. TOM CONNALLY, REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS Mr. ConNaLLY. Mr. Chairman and gentlemen of the committee, [ want to thank you for the courtesy you are doing me in giving me an opportunity to discuss the farm relief bill introduced by me. (The bill referred to is as follows:) IH. R. 11358, Seventieth Congress, first session} A BILL To provide for the orderly marketing of the surplus of staple agricultural commodities through Federal agricultural export corporations and for the stabilization of the prices of such commodities through the issuance of export debentures Be it enacted by the Senate and House of Representatives of the United States of 4 merica in Congress assembled, FEDERAL FARM BOARD Section 1. (a) A Federal Farm Board is hereby created, which shall consist of the Secretary of Agriculture, who shall be a member ex officio, and twelve members, one from each of the twelve Federal land-bank districts, who shall be appointed by the President of the United States. by and with the advice and consent of the Senate. (b) The terms of office of the appointed members of the board first taking office after the approval of this act shall expire, as designated by the President at the time of nomination, four at the end of the second year, four at the end of the fourth year, and four at the end of the sixth year, after the date of the approval of this act. A successor to an appointed member of the board shall be appointed in the same manner as the original appointed members, and shall have a term of office expiring six years from tlie date of the expiration of the term for which his predecessor was appointed. . (¢) Any person appointed to fill a vacancy in the board occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term. oo ) {d) Any member of the board in office at the expiration of the term for which 1e was appointed may continue in office until his successor takes office. Co {e) Vacancies in the board shall not impair the powers of the remaining nembers to execute the functions of the board, and a majority of the appointed members in office shall constitute a quorum for the transaction of the business of the board. i. Jf) Each of the appointed members of the board shall be a citizen of the United States, shall not actively engage in any other business, vocation, or emplovment than that of serving as a member of the board, and shall receive a salary of $10,000 a year, together with necessary traveling expenses and expenses incurred for subsistence or per diem allowance in lieu thereof, within the limitations prescribed by law, while away from the principal office of the board on pusiness required by this act, or if assigned to any other office established by he board. then while away from such office on business required by this act. anag= CG AGRICULTURAL RELIEF GENERAL POWERS Sec. 2. (a) The board shall annually designate an appointed member to act as chairman of the board. (b) Shall maintain its’ principal office in the District of Columbia, and such ther offices in the United States as it deems necessary. (¢) Shall have an official seal which shall be judicially noticed. (d) Shall make an annual report to Congress. . (e) May make such regulations as are necessary to execute the functions vested in it by this act. (f) May (1) appoint and fix the salaries of a secretary and such experts and, in accordance with the classification act of 1923 and subject to the provisions of the civil service laws, such other officers and employees; and (2) make such expenditures (including expenditures for rent and personal services at the seat of government and elsewhere, for law books, periodicals, and books of reference, and for printing and binding) as may be necessary for the execution of the functions vested in the board. (2) Shall meet at the call of the chairman, or of the Secretary of Agriculture, or of a majority of its members. (h) Shall keep advised, from any available sources, of crop prices, prospects, supply, and demand at home and abroad, with special attention to the existence or the probability of the existence of a surplus of any staple agricultural commodity or any of its food products; and it may advise producers through their organizations or otherwise in matters connected with the distribution and marketing of any such commodity, in order that they may secure the maximum henefits under this act. (i) Shall advise producers through their organizations or otherwise in the development of suitable programs of planting or breeding, in order that they may secure such benefits. COMMODITY ADVISORY COUNCILS Sec. 3. (a) For each staple agricultural commodity which the board from rime to time determines may thereafter require stabilization by the board through marketing operations by an export corporation established under this act, the board is hereby authorized and directed to create an advisory council of seven members fairly representative of the producers of such commodity. Members of each commodity advisory council shall be selected annually by the board from lists submitted by cooperative associations or other organizations representative of the producers of the commodity. Members of each commodity advisory council shall serve without salary, but may be paid by the board a per diem compensation not exceeding $20 for attending neetings of the council and for time devoted to other business of the council and authorized by the board. Each council member shall be paid by the board his necessary traveling expenses to and from meetings of the council and his expenses incurred for subsistence, or per diem allowance in lieu thereof, within the limitations prescribed by law, while attending or traveling to or from such meetings. Each commodity advisory council shall be designated by the name of the commodity it represents, as, for example, ‘“ The Cotton Advisory Council.” {b) Each commodity advisory council shall meet as soon as practicable after its selection at a time and place designated by the board and select a chairman. The board may designate a secretary of the council, subject to the approval of the council. (¢) Each commodity advisory council shall meet thereafter at least twice in each year at a time and place designated by the board, or upon call of a majority of its members at a time and place designated in the call, notice of such call being sent by registered mail at least ten days before the date of the meeting. (d) Each commodity advisory council shall have power, by itself or through its officers (1) to confer directly with the board, to call for information from it, or to make oral or written representations to it, concerning matters within the jurisdiction of the board and relating to the agricultural commodity; and (2) to cooperate with the board in advising the producers through their organizations or otherwise in the development of suitable programs of planting or breeding in order to secure the maximum benefits under this act. AGRICULTURAL RELIEF 6907 LOANS Sec. 4. The board is authorized to make loans, out of the revolving fund hereinafter created, to any cooperative association, upon such terms and conditions as the board may prescribe, for the purpose of assisting the cooperative associa~ tion (1) in controlling the surplus of any staple agricultural commodity in excess of the requirements for orderly marketing; or (2) in the acquisition, by purchase, construction, or otherwise, or facilities to be used in the storage, processing, or sale or other disposition of the commodity. The board, in its discretion, may provide for the repayment of any loan to any cooperative association, which is made for the purpose of assisting such association in the acquisition of facilities, by requiring the association for whose account the loan is made to collect a charge in such amount, to be determined by the board from time to time, upon each unit of the commodity handled by the association, as will within a period of not more than twenty years repay the amount of such loan together with interest thereon. The aggregate amount of loans under this section, outstanding and unpaid at any one time, shall not exceed $400,000,000, nor shall the aggregate amount of loans under this section for the acquisition of facilities, outstanding and unpaid at any one time, exceed $25,000,000. Any loan under this section shall bear interest at the rate of 4 per centum per annum. FEDERAL AGRICULTURAL EXPORT CORPORATIONS ~ Sec. 5. (a) In order to stabilize the current of interstate and foreign commerce in the marketing of staple agricultural commodities and to prevent existing suppression of commerce with foreign nations in such commodities and unjust discrimination against and undue restraints and burdens upon such foreign commerce in favor of interstate or intrastate commerce in such commodity, the board is authorized and directed to promote the orderly marketing of staple agricultural commodities in interstate and foreign commerce. To that end the board may from time to time establish, as authorized under this act, a Federal agricultural export corporation for each staple agricultural commodity, for the purpose of providing for the control and disposition of surpluses of such commodity, of preserving advantageous domestic markets for such commodity, of preventing such surpluses from unduly depressing the prices obtained for such commodity and from causing undue and excessive fluctuations in the markets for such commodity, and of minimizing speculation and waste in marketing such commodity. «b) For the purpose of establishing any such corporation, the board shall slect five individuals as incorporators and as the original directors of the corporation. Such individuals are hereby declared to be incorporated as a Federal corporation commencing at such time as the President of the United States proclaims that the board has certified to him that the five individuals so elected have accepted office as incorporators and directors of the corporation. The corporation shall be designated by the name of the commodity which it represents, as, for example, “The Federal Cotton Export Corporation.” Any corporation established under this section is referred to in this act as a Federal agricultural export corporation. Not more than one such corporation shall be in existence at any time for each staple agricultural commodity. The making of any proclamation by the President under this section shall be conclusive evidence that the Federal agricultural export corporation has been duly established. CORPORATE DIRECTORS Sec. 6. (a) The directors of a Federal agricultural export corporation shall be the individuals certified under section 5 and their successors to be elected by the board from time to time. No member of the board shall be a director of the corporation. Any vacancy in the office of a director shall not impair the power of the remaining directors to act. Three directors of a Federal agricultural export corporation shall constitute a quorum for the transaction of business. {b) The directors shall elect from their number a chairman and the principal officers of the corporation. {c) A director, officer, or employee of a Federal export corporation shall not be held to be an officer, employee, or agent of the United States; but each such director, officer, or employee shall take the oath of office provided in section 1757 of the Revised Statutes. 698 AGRICULTURAL RELIEF (d) The board shall fix the compensation of the directors of a Federal agricultural export corporation for their services in any capacity for the corporation, to be paid from the treasury of the corporation. (e) The directors of a Federal agricultural export corporation shall direct the exercise of all powers vesfed in the corporation and the observance of all duties imposed upon it. GENERAL CORPORATE POWERS Sec. 7. A Federal agricultural export corporation— (a) Shall have succession in its corporate name during its existence. (b) May sue and be sued in its corporate name. (¢) May adopt a corporate seal, which shall be judicially noticed, and may alter it at pleasure. (d) May make contracts. (e) May purchase or lease such property as it deems necessary or convenient for the purposes of the corporation, and may dispose of any property held by it. (f) May appoint and (except in the case of officers also serving as directors) fix the compensation of such officers, employees, and agents as are necessary for the conduct of the affairs of the corporation, and may remove any officer, employee, or agent appointed by it. Each officer, employee, or agent of the corporation responsible for the handling of money or property or for the custody of a staple agricultural commodity or its food products, shall give bond in such amount with such penalties and upon such terms, as the corporation shall determine. (g) May adopt, amend, and repeal by-laws. (h) Shall have such powers not specifically denied by law as are necessary and oroper to conduct under this act the business of purchasing, handling, storing, selling, and exporting the staple agricultural commodity and food products thereof. and such further business as is necessary and incidental thereto. CAPITAL STOCK Sec. 8. (a) The original capital stock of the Federal agricultural export corporation shall be fixed by the board, and, if the board deems it necessary in order to carry out the purposes of the corporation, may from time to time be increased py the board, in amounts of $5,000,000 or multiples thereof. All the capital stock of each such corporation is hereby subscribed by the United States; except that the total unpaid subscriptions outstanding at any one time shall not exceed the amount of moneys in the revolving fund (created hereinafter in this act) at such time. The amount of such subscription shall be subject to call in amounts of $5,000,000 or multiples thereof. Payment of an amount so called shall be made by the board from the revolving fund. Upon any such payment, shares fully paid and of a par value of $100 each shall be issued to the United States and delivered to the board in the amount so paid. In fixing the amount of capital stock of a Federal agricultural export corporation the board shall have due regard to the moneys available in the revolving fund for allocation to the subscriptions to the capital stock of the Federal agricultural export corporation and other such corporations established or to be established under this act and for the making of loans under this act. No payment of any amount called under this section shall be made from any moneys other than those in the revolving fund. (b) No dividends or other distribution of assets shall be paid upon the shares of a Federal agricultural export corporation, except that the corporation may from time to time retire the whole or any part of its outstanding shares, by the payment to the board of the par value of such shares plus interest thereon at the rate of 4 per centum per annum from the date of issue to date of retirement. The amount paid upon any such retirement shall be covered by the board into the revolving fund. (c) Shares of a Federal agricultural export corporation shall be without voting powers and shall be nonassessable and nontransferable. (d) The United States shall not be liable, directly or indirectly, in respect of any share or for any bonds, notes, or other evidences of indebtedness issued by a Federal agricultural export corporation, and all such bonds, notes, and other evidences of indebtedness shall so state on their face. i Be BONDS Sec. 9. A Federal agricultural export corporation may borrow money and issue its bonds or other evidences of indebtedness therefor, except that the sorporation shall not have power to issue or obligate itself in an amount of AGRICULTURAL RELIEF 699 bonds or other evidences of indebtedness outstanding at any one time in excess of ten times the amount of the par value of its outstanding shares. The rate of interest, the maturity, and other terms of the bonds or other evidences of indebtedness. and the security therefor, may be determined by the corporation. SPECIAL CORPORATE POWERS Sec. 10. The Federal agricultural export corporation is authorized at such times and to such extent as it deems advisable— (a) To purchase, store, JFrocess, export, and sell or otherwise dispose of the staple agricultural commodity in respect of which the corporation is established and the food products of such commodity; but the prices at which the corporation shall purchase such commodity and its food products shall not be less than amounts sufficient to afford producers thereof their costs of production under efficient and prudent management. (b) To construct, purchase, or lease, and to operate storage warehouses for the staple agricultural commodity and its products purchased by the corporation, facilities for transportation (otherwise than as a common carrier) in connection with the storage of such commodity and products. and facilities for processing such commodity and products. ic) If the board finds that its advice as to a program of planting or of breeding of any staple agricultural commodity, as provided in section 2 (i), has been substantially disregarded by the producers of the commodity, or that the planting or breeding of any staple agricultural commodity for any year is substantially greater than a normal increase as determined by the board over the average planting or breeding of the commodity for the preceding five years, it shall be the duty of the Federal agricultural export corporation, upon direction of the board, to refuse to commence purchasing or to cease purchasing such commodity and its food products to such extent and for such period as the board mav prescribe. DISPOSAL OF CORPORATE ASSETS SEc. 11. Upon the termination of the existence of a Federal agricultural export corporation all money of the corporation shall be covered into the Treasury of the United States to the credit of a special fund, and all unliquidated property of the corporation shall be transferred to the United States, and placed under the control and jurisdiction of the board. Such money and property shall thereafter be disposed of as the Congress may direct. CORPORATE OFFICES AND BOOKS Sec. 12. (a) Each Federal agricultural export corporation shall maintain its principal office in the District of Columbia, and may establish such agencies or branch offices at such places as it deems advisable. A Federal agricultural export corporation shall be held to be an inhabitant and resident of the District of Columbia within the meaning of the laws of the United States relating to venue of civil suits. (b) Each Federal agricultural export corporation shall keep at its principal office correct books showing the original or a transcript of the minutes of the directors’ meetings and showing the accounts of the corporation’s business transactions. The books shall be open to examination by the General Accounting Office as hereinafter provided and to inspection by the board, by any other governmental agency, or any person designated by the board, by any governmental agency authorized by concurrent resolution of Congress, and by any committee of the Senate or House of Representatives authorized by resolution of the Senate or House of Representatives, respectively. TAXATION Sec. 13. The real property and tangible personal property of a Federal agricultural export corporation situated in any State, Territory, or possession, or within the District of Columbia, shall be subject to taxation by such State, Territory, or possession, or any political subdivision thereof, or by the District »f Columbia to the same extent, according to its value, as other real and tangible personal property is taxed by such State, Territory, or possession, or political subdivision. or by the District of Columbia. The income of a Federal export 700 AGRICULTURAL RELIEF corporation and the bonds or other evidences of indebtedness of such corporation, and the income derived in respect thereof, shall not be subject to taxation by any State, Territory, or possession, or political subdivision thereof, or by the United States or the District of Columbia. PENALTIES Sec. 14. (a) All general laws relating to the embezzlement or conversion, or to the improper handling, retention, use, or disposal of public moneys of the United States shall apply to moneys of a Federal agricultural export corporation in the custody of any director, officer, employee, or agent thereof. (b) Any person who, with intent to defraud a Federal agricultural export gorporation, or any director or officer of the corporation, or any officer or employee of the United States, or any person, makes any false entry in the books of the corporation, or makes any report or statement for the corporation which is false, shall upon conviction thereof be fined not more than $10,000 or imprisoned not more than five years. or both. ANTITRUST LAWS Ske. 15. A Federal agricultural export corporation and its directors and officers shall be relieved from the operation 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,” approved October 15, 1914. EXAMINATION OF ACCOUNTS Sec. 16. Expenditures by the board from the revolving fund and expenditures by the board from the administrative appropriation under section 23 shall be allowed and paid upon the presentation of itemized vouchers therefor, approved by the chairman of the board. Expenditures by any Federal agricultural export corporation from the treasury of the corporation shall be made by the authorized officers or agents of the corporation upon receipt of itemized vouchers therefor, approved by such officers as the corporation may designate. Vouchers so made for expenditures by the board from the revolving fund or by any Federal agricultural export corporation shall be final and conclusive upon all officers and employees of the Government; except that all financial transactions of the board or of any Federal agricultural export corporation shall, subject to the above limitation, be examined by the General Accounting Office at such times and in such manner at the Comptroller General of the United States may by regulation prescribe. Such examination in respect of expenditures by the board from the revolving fund or by any Federal agricultural export corporation shall be for the sole purpose of making a report to the Congress and to the board or corporation of expenditures and contracts in violation of law, together with such recommendations as the Comptroller General deems advisable concerning the receipt, disbursement, and application of the funds administered by the board or corporation. COOPERATION WITH EXECUTIVE DEPARTMENTS Sec. 17. (a) It shall be the duty of any Government establishment in the executive branch of the Government, upon request by the board or upon Executive order, to cooperate with and render assistance to the board or to any Federal agricultural export corporation in carrying out any provision of this act. The board and each Federal agricultural export corporation shall, in cooperation with any such governmental establishment, avail itself of the services and facilities of such governmental establishment in order to avoid preventable expense Or duplication of effort.. {b) Upon request by the board the President, by Executive order (1) may transfer any officer or employee from any department or independent establishment in the executive branch of the Government, irrespective of his length of service in such department or independent establishment, to the service of the noard or any Federal agricultural export corporation, and (2) may direct any governmental establishment to furnish the board or any such corporation with such information and data pertaining to the functions of the board or corporation 3s may be contained in the records of the governmental establishment, and may grescribe such limitations as to the use of the information and data as he deems esirable. AGRICULTURAL RELIEF 701 (ec) The board or any Federal agricultural export corporation may cooperate with any State or Territory, or department, agency, or political subdivision thereof. or with anv person. EXPORT DEBENTURES Sec. 18. (a) Commencing sixty days after the approval of this act the Secretary of the Treasury, under regulations prescribed by the board, shall, subject to the limitations of this act, issue to any person, including any Federal agricultural export corporation, in respect of any quantity of any staple agricultural commodity, or of any quantity of any product of such commodity, specified in section 19, that is exported from the United States to a foreign country by such person, an export debenture in an amount computed at the debenture rate for such commodity or product effective at the time of the exportation. (b) In order to procure the issuance of an export debenture such person shall, within a reasonable time prior to the exportation, to be prescribed under regulasions of the board, (1) make application for such debenture, and (2) submit proofs satisfactory to the board either that the quantity of the staple agricultural commodity to be exported was produced in the United States and has not previously been exported therefrom, or that the staple agricultural commodity used in making the quantity of the product to be exported was produced in the United States and the staple agricultural commodity and the product have not previously heen exported therefrom. ic) Any export debenture, when presented by the bearer thereof within one year from the date of issuance of the debenture, shall be receivable at its face value by any collector of customs, or deputy collector of customs or other person authorized by law or by regulation of the Secretary of the Treasury to perform the duties of collector of customs, in payment of duties collectible against articles imported by such bearer. 'd) Title to any export debenture shall be transferable by delivery. «¢) Any export debenture held by a Federal agricultural export corporation shall be receivable, as provided in subdivision (c), in payment of duties collectible against articles imported by the corporation, or may be sold by the corporation and the proceeds of such sale placed in the revolving fund. DEBENTURE RATES Sec. 19. (a) The debenture rates shall be as follows: (1) For corn or maize, including cracked corn, 714 cents per bushel of fifty-six oounds; for corn grits, meal, and flour, and similar products, 15 cents per one hundred pounds; (2) For paddy or rough rice, 1 cent per pound; for brown rice (hulls removed), i cent per pound; for milled rice (bran removed), 2 cents per pound; for broken -ice and rice meal, flour polish, and bran, one-half of 1 cent per pound; (3) For wheat, 21 cents per bushel of sixty pounds; for wheat flour, semolina, rushed or cracked wheat, and similar wheat products not specially provided for, 52 cents per one hundred pounds; ‘4) For cottonseed, one-third of 1 cent per pound. 5 For cotton and cotton waste, 3 cents per pound; and 6) For tobacco, manufactured or unmanufactured, 3 cents per pound. ‘b) Whenever the board finds that conditions justify such action it may -educe any debenture rate prescribed in subdivision (a), and may at any time fter such reduction restore any such rate to any point not exceeding the rates set out in subdivision (a). (¢) The board, when in its judgment conditions justify such action, may provide ‘or the issuance of such debentures, in an amount not exceeding one-half the tariff hereon, on any staple agricultural commodity not listed in subdivision (a) and nay prescribe a proper debenture rate, not to exceed one-half the tariff rate ‘hereon on any manufactured product made principally from a staple agricultural :ommodity having in force a debenture rate. «d) Whenever the board finds that the acreage planted in the United States uring any year of any commodity covered by this act is materially increased yver the annual average acreage planted to such commodity, according to the sstimates of the Department of Agriculture, during the five years next preceding such increase, the debenture rates for such commodity for such year shall be reduced by the board, on a percentage basis, in the inverse ratio, as nearly as the board finds practicable, to such acreage increase. 702 AGRICULTURAL RELIEF MISCELLANEOUS DEBENTURE PROVISIONS SEc. 20. (a) The board shall prepare and issue, or cause to be prepared and ssued, all export debentures, and shall prescribe the terms and conditions in respect of export debentures. The Secretary of the Treasury, upon request of the board, is authorized to have such debentures prepared at the Bureau of Engraving and Printing. «b) Export debentures issued under authority of this act shall be obligations of the United States within the definition in section 147 of the act entitled ‘An act to codify, revise, and amend the penal laws of the United States,” approved March 4, 1909, as amended. {c) Any person who shall make any false statement for the purpose of fraudulently procuring, or shall attempt in any manner fraudulently to procure, the issuance or acceptance of any export debenture, whether for the benefit of such person or of any other person, shall be fined not more than $2,000 or imprisoned not more than one year, or both. REVOLVING FUND Ske. 21. There is hereby authorized to be appropriated, out of any money in he Treasury not otherwise appropriated, the sum of $500,000,000. Such sum shall be administered by the board and used as a revolving fund in accordance xith the provisions of this act. The Secretary of the Treasury shall deposit n the revolving fund such portions of the amounts appropriated therefor as the board from time to time deems necessary. GENERAL DEFINITIONS Sgc. 22. (a) As used in this act— } {1 The term ‘person’ means individual, partnership, corporation, or association. (2) The term “United States,” when used in a geographical sense, means sontinental United States. (b) Whenever any agricultural commodity has regional or market classifi cations or types which in the judgment of the board are so different from each ther in use or marketing methods as to require their treatment as separate commodities under the provisions, of this act, other than the debenture provisions, the board may determine upon and designate one or more such classifications or types for such treatment. ADMINISTRATIVE APPROPRIATION Sec. 23. For expenses in the administration of the functions vested in the voard by this act there is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $500,000, to be available to the board for such expenses (including salaries and expenses of the members, officers, and employees of the board and the per diem compensation and expenses of members of the commodity advisory councils) incurred prior to July 1, 1929. SEPARABILITY OF PROVISIONS Sec. 24. If any provision of this act is declared unconstitutional or the applicability thereof to any person, circumstance, commodity, 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 to other persons, circumstances, commodities. and classes of transactions shall not be affected thereby. . SHORT TITLE Smc. 25. This act may be cited as the ‘Surplus control act of 1928.” Mr. ConnaLLY. The committee is deserving of the thanks of Congress and of the farmers of the country for the attention which it is giving to agricultural problems. I think, however, that the committee ought, in view of what was said by the gentleman who just left the floor, to be more concerned about getting a bill of which there is some opportunity of passage. AGRICULTURAL RELIEF 703 I believe I have the bill that is the “white hope’ of this situation. [ believe my bill is the “white hope’ of this situation, and if Congress really wants to do something for the farmer it can pass my bill, or it can pass either one of two branches of my bill; either one of them would be helpful. My bill embodies the export corporation idea, with a Federal Farm Board of one member from each Federal land bank district with an advisory council, with power to form an export corporation for each particular agricultural product, so as to deal in that particular product without intermingling its funds and its business with the other products; for instance, one corporation for wheat, one corporation for cotton, and so on. It is to be given a revolving fund of $500,000,000, and then tied into that is the export debenture system, which would allow the corporations that export agricultural products or any private individual or any cooperative society or any other exporter to get the benefit of debenture certificates, which would be tenderable at the customhouse in the payment of tariff duties on imports. What is the matter with agriculture? Two primary things, according to all authority. One is that the farmer has a seasonal market, and he dumps all of his preducts on the market at one time. How are you going to remedy that? If a man has gallstones, the thing to do is to go in there and cut out the gallstones, not to operate on him for appendicitis or ear trouble, or cut off one of his legs. The thing to do is to go and get the gallstones. Now, what is the matter? How do I meet the seasonal process of dumping farm products on the market? I meet that seasonal dumping by setting up these export corporations for each product, with the power to go into the markets in periods of depression and buy each product in the open market at not less than the cost of efficient production. If it is worth more than that the board will pay more; and then the export corporations have power to store and carry and feed it out over the long period. That meets the seasonal proposition. What is the other trouble with the farmer? The other trouble with the farmer, and the theory upon which all of these bills are based, is that he is the victim of the tariff; that he has to buy his goods in the protected market and he has to sell his goods in Europe in the world-free market. How do I meet that? Meet the situation, and when you find the trouble cut it out. How do I meet the tariff situation? I simply say, Mr. Farmer, since you have to ship your cotton and your wheat over to Europe, you have to sell it there in competition with the world. I am going to permit you to bring back into the United States an amount fixed in this bill. I am going to allow you, Mr. Farmer, since you have got to sell your goods in that free world market, to bring back into the United States, duty free, an amount of foreign goods commensurate with the value of your product exported; and in order that you may not be required to actually bring these goods back, I am going to require the Secretary of the Treasury to execute to you a debenture certificate of 21 cents a bushel on every bushel of wheat and three cents a pound on every pount of cotton, which 1s commensurate with the tariff rates that are charged on manufactured goods which he must buy. 704 AGRICULTURAL RELIEF Why is not that giving the farmer the benefit of the tariff? Tell me any other way on earth that you can give the farmer the benefit of the tariff. A protective tariff on wheat can not do the farmer any good. And why? Because we aré now concerned with this surplus which we are exporting abroad. We do not import wheat—we import a little, but I mean on the whole we are not importers; we are exporters; and the foreign price fixes the domestic price, because if the price at home is higher than it is abroad it will not be exported; it will stay here at home; and the foreign price has always got to be higher than the domestic price or it will not go there. A tariff on cotton would not do any good because we export about two-thirds of our cotton. So the only way on earth that you can equalize the tariff burden is to give farmers who export their stuff abroad these debenture certificates, which would be tenderable at the customhouse, and which can be sold for cash. How do I pay for the losses? The McNary-Haugen bill makes the farmer pay for the losses himself. My bill would provide that the losses would be taken care of by these debenture certificates; and as it was shown here in the hearing the other day, these debenture certificates would bring a direct benefit, one that you can see, one that you can feel, one that you can put your hand on, of $200,000,000 in hereased value to the cotton farmer alone: a direct benefit of about $15 per bale on cotton. The indirect benefits would be much greater, because it would stimulate purchasing power; it would stimulate the market here at home with a Government corporation able to get into the market at any time. It would aid the farmer, furthermore, by allowing manufactured goods to come in duty free, and thereby to compete with manufactured goods here at home, and more nearly equalize the burdens of the tariff. The farmer would get more for his cotton and wheat. He could buy manufactured goods at cheaper prices. Now, gentlemen, if you do not want to adopt- both wings of this bill, it is separable; you can cut it in two, and take the export corporation idea, or you can cut the other one off and take the debenture idea. But the ideal system is to link these two plans together. And, now, let me make just one or two other observations. Mr. AsweLL. Do you have any equalization fee in your bill? Mr. ConnarLy. There is no equalization fee in my bill. It does not take something out of the farmer's pocket. It really puts money in the farmer’s pocket. The old equalization fee takes $10 to $25 out of the farmer’s pocket. The equalization fee was a holdup. Mr. AsweLL. You really give something rather than to take something away from him? Mr. ConnarLLy. My bill really gives him something. Let me show you about the old equalization fee. Now, gentlemen, some people treat the Constitution as a mere bagatelle. I believe the equalization’ fee is unconstitutional, because I would prefer the Attorney General’s opinion to that of some one who does not know. Mr. RuBgy. You need not be afraid of it. Mr. ConnaLLy. I am afraid of it. Mr. RusEey. If you believe it is unconstitutional, you can take 1t into court. Mr. ConnaLLy. Sure; but I am afraid ,just as everybody else 1s afraid, of a bill that you know is going to break the hopes of the farmer and prove ineffective in the end. AGRICULTURAL RELIEF 705 Mr Ryser. We 3 not know that. Mr. ConNALLY. I say I am afraid of it. gentlemen say that “What is the Constitution. am wd dui reliof politicians—what is the Constituti 97 on from relic Senter, on any way?” It is serious, Mr. AsweLL. If you take it into the ¢ i wo, three, or four years, what will hanpent and there is a delay of r. ConNaLLY. Of course, that is a possibili Doctor Aswell. It is taken into the courts, as the li get the equalization fee passed, some fellow will take it into court, or before you get it organized some fellow will take it into the courts and it will be declared unconstitutional and, of course, the thing would blow up. And the hopes of the farmer would also blow up Mr. KincHELOE. May I ask you a question there? = CONNALLY. Yes. Ir. KiNcHELOE. On the question of the practicabili i a bill for the farmer that will do him some 200d, I am Tt Eh ay to you I think there is a whole lot in the debenture plan. But do you think the President of the United States would sign that bill? Mr. ConnaLLy. I think he would come as near signing it as he would the Haugen bill. [Laughter.] " Mr. KincHELOE. Then your bill is not any more certain than the McNary-Haugen bill? Mr. ConnarLy. No. But I will say to the gentleman from Kentucky that when I have tried a fellow on one thing and I know what he has done on that I would a great deal rather take a chance on trying something else than to stick up the same old thing, as to which [ know what he is going to do. The President has vetoed the Haugen bill once and eve:ybody knows he will do the same thing again. You remember a tale of a certain dog that went down a certain alley, and what happened to him (he got badly licked); and the dog when invited to go down that certain alley again observed to one of his dog friends, “No; I am not ooing down that alley, I know what will happen to me if I go down that alley.” The Haugen bill has been a “Down that alley’ once. Wl KincaeLoE. Do vou think that bill would go down a similar alley? Mr. ConnaLLy. The Haugen bill has been down that alley, and you know what the President did to it, do you not? My prediction is that if it is sent down that same alley again the same thing 1s going to happen to the McNary-Haugen bill. ~ So, I would rather try a different alley. But I will say to the gentleman, as I previously said, my bill is drawn so he can cut off the debenture plan and leave the export corporation or direct appropriation from the Treasury, with the power to purchase and carry farm products just as the Haugen bill, except the fee is eliminated. The President indicated he would approve the Crisp bill, as I understand; he indicated that he would approve a bill drawn on the plan of the bill of Doctor Aswell, of Louisiana. I voted for both of those bills. C . One other thing about the equalization fee: That is why I voted against the Haugen bill. There are a lot of people in my State who are getting fat salaries from the cooperatives running around telling the folks I am not in favor of the farmer. I have got a farm of my 706 AGRICULTURAL RELIEF own; my wife has got a farm; every member of my family has got land devoted to the raising of cotton; and I would be foolish if I were not in favor of something that would really help the cotton farmers. My district is a cotton district, and I would be a much worse politician than most of you gentlemen are if T was really against something if it were helpful to the farmer. 1 want to say to those gentlemen who have been abusing me around over Texas and saying I was against the farmer because I will not swallow the little homeopath prescription they press to my lips, that I am voting for the real farmers, and not for those fellows who hold fat jobs at the farmers expense. If we pass a real farm relief bill some of the high salaried lobbyists will lose their jobs and they know it. Let me see about the equalization fee—your equalization fee: What happens when the farmer is getting along all right, when he is prosperous; you do not put any fee on him, do you? No. You are not down there operating when everything is all right. Then when the time of stress comes, when the farmer is broke, lying flat on his back in an emergency, then is the time that you come along and put the equalization fee on him and increase his misery and increase the load that is on him, and finish the operation by just about taking all that is left; that is what you do; because that is the only time you put the equalization fee on him, is when he is already flat on his back because of overproduction, getting nothing for his products, when he owes money at the bank that he can not pay; and then the Farm Board, sitting up here in Washington, drawing these big salaries, will say, “ Well, the people engaged in agriculture are in a bad fix; now go ahead and take $10 to $25 out of each bale of cotton as a tax or fee.” Mr. RuBey. That may explain why all the banks in Illinois are writing letters asking us to pass the McNary-Haugen bill? Mr. ConNaLLY. Yes. They say, ‘Agriculture is down and out, and now let us come along and put the fee on them and get some money to pull him out of the hole with.” Mr. FuLmer. How much of a fee did the cotton farmers pay when they had an 18,000,000 bale crop of cotton? Mr. ConNaLLY. Let me tell the gentleman from South Carolina that remark of his is sophistry. What kind of a fee? Let me say to the gentleman that the equalization fee would not remedy that situation but would make it worse. Last August the estimate for cotton was thirteen million six hundred and ninety thousand and odd bales, was it not? Mr. FuLMER. Yes. Mr. ConNaLLY. A month later the estimate was a million bales under that estimate, and yet, in the face—in the face of that situation of 1,000,000 bales decline, the price of cotton instead of going up on the 12,000,000 bales estimate, declined 3 cents a pound below what it was in August. So that as to the equalization fee of which the gentleman speaks—will the gentleman from South Carolina contend with me that the cause of that decline was because they did not have the McNary-Haugen bill? If the MecNary-Haugen bill had been in operation, the cotton exchanges in New York and the fictitious manipulations which brought down the price from 23 cents to 19 cents in the face of a million bales decline, those same forces would have forced cotton down just the same as it did. AGRICULTURAL RELIEF 707 Mr. FuLMeEr. May I explain to the gentleman why it would not do it? It will not take but one minute. Just merely when cotton commenced declining, and it was not warned by the board or agency that they were going to take off the market the cotton? ) Bs JoNEs. Could they not have done that under the gentlemen's plan? Mr. CoNNALLY. Absolutely. Let me say to the gentleman from South Carolina what he would have done under his Haugen plan in August, as long as the price was not under 23 cents “We will not do a thing; let it roll’; and then when a million bales fell off in October the price went down $15 a bale, “We have got to do something. These old fellows have not lost but $15 a bale. We better put $15 more on the equalization fee to take care of the situation.” That is the way it would work. Mr JoNEs. The fellow who sold futures in August would be all right! Mr. ConNaLLY. The fellow who sold futures in August instead of being ahead $13 would be ahead $30 a bale. Mr. Apkins. One of the gentlemen here expressed the fear that this bill would put the speculators out of business. Mr. ConnaLLy. I am afraid some gentlemen who are advocating this bill; if they thought that was the case, would not be for it. I am not speaking of members of the committee. Mr. Apkins. He was against it. Mr. CoNNALLY. Let me say this, furthermore— - The CrairMaN. That was the objection made to the bill, that it would put the speculators out of business. Mr. ConNaLLY. Yes; it probably would. Mr. AsweLL. I want to clear up the record in regard to that. Mr. ApkinNs. The record is already made. Mr. AswerLL. I do not remember that any witness has ever referred to the speculators in speaking about this bill. The CuairMAN. Oh, yes; they did. Mr. Jones. And he also made the statement that it would interrupt all the channels of trade. Mr. ConnaLLy. Mr. Chairman, I do not know whether it would put the speculators out of business, but I am sure it would put the cotton farmers out of business with the operation of the equalization fee on each bale of cotton from $10 to $25. The CralrRMAN. That statement was made by the opposition, 1t should be borne in mind. Mr. ConNaLLY. That is in the record. I do not believe, gentlemen—and I am serious about this—that if the fee was constitutional that it is workable. I do not believe it is practicable, that every time a fellow sells a bushel of wheat or a bale of cotton to have some fee collected. I observed that the other day, and I shall not go mto 1t ain. “But, what else is wrong with the equalization fee? One of the sroubles about legislation at Washington is that there is always some rejoicing when somebody gets a law passed to benefit them, bug they want it to operate on everybody else but themselves. The gentleman who spoke this morning, with all due respect to him, representing the dairy interests, is strong for the Haugen bill to operate on everybody R6160—28—srR E, PT 10——2 708 AGRICULTURAL RELIEF except his concern. He wants other people to pay equalization fees, but he does not want the dairymen to pay it. What else do we find here? We find that the Haugen bill is the spawn and the child of the cooperatives. My bill provides that loans shall be made to the cooperatives to carry their surpluses. But the trouble about the Haugen bill is that the equalization fee is designed to be a tax on every farmer in the United States, and then when they get the money it is turned over to the cooperatives to handle. You can not dodge that. You can look off at the window when I am saying that, if you want to, and twirl a pencil and scratch your head and smooth your hair. But that is a fact, that the Haugen bill is designed to tax every farmer in the United States, and take the money after it is collected and turn it over to a little group representing 7 or 8 per cent of the farmers to buy and hold and speculate on agricultural products. That group has got lobbyists here in Washington and have had them; and it is all right for them to have them. But somebody has got to represent the 92 per cent of the unorganized farmers in this country, and I, for one, am not going to place an illegal, unconstitutional tax of $10 to $25 a bale on every cotton farmer in Texas and turn the money over to 7 or 8 per cent of the farmers who are directly and personally interested in a particular bill, the Haugen bill. Now, what is there about the McNary-Haugen bill? What is there, gentlemen of the committee, I pray you? What is there that has suddenly made that bill so perfect until it is the only bill that has the benediction of certain authorities and certain interests? Three times we have had it, three editions of it; and each time we have been told that “you must not lay unholy hands upon it. You must not amend it; it is perfect.” And yet each time they bring in a new Haugen bill and we are urged to observe that it is finally, in its essence, absolutely perfect. I do not see anything about the Haugen bill that requires me to approach it with bared head and naked feet because the ground is holy. And yet they tell us it is sacred, sanctified ground. “When you come into the presence of the Haugen bill, pull off your shoes, and pull off your hat, because it must not be touched; it must not be amended. This is the only bill that has received the approval of the farmers; and we are the farmers. We know it is the right bill because it is the farmers’ bill, and we are the only ones of the farmers who have been consulted.” What is there about that bill—what is there about the substance of it that makes it so sublimated? What is there in the tecture of the paper upon which it is written that makes it so superior to every form of agricultural legislation? What is there about the brains that fabricated it that makes it superior and better than anything else? I would like to know gentlemen. The CuamMAN. I will tell you about it. You have asked a question, and I will give the answer. “Mr. ConnaLLy. The gentleman got my point, because I said “What about the brains.”” I knew that shot would get a rise. The CHAIRMAN. Are you ready to answer a question? Mr. CoNNALLY. Yes, SII. The CrarMaN. Had the bill been in operation during 1925 and the total domestic production of wheat for 1925 been marketed. and AGRICULTURAL RELIEF 700 the’equalization’plan applied as provided in the bill, the total amount of equalization fees would have been $131,750,000, and the net gain to the producers would have been $318,750,000— Mr. AsweLL. How do you know that? The CuairmaN. If the gentleman will permit, I would like to proceed without interruption. I am perfectly willing for you to take all afternoon, but I would like to have about two minutes in which to answer that question. On butter the equalization fee would have been $74,000, and the net profit to the producer would have been $123,925,910. On corn the equalization fee would have been $872,500, and the net gain to the producer would have been $522,627,500; on lard the equalization fee would have been $21,446,700, and the net gain to the producer would have been $44,883,300; on beef the equalization fee would have been $925,200, and the net gain to the producer would have been $332,078,400. The aim was to give the producers the benefit of it. The total benefits under the bill for that year on the commodities mentioned would have been $1,342,265.110. Let me call your attention—— Mr. ConnarLLy. I am looking at you. The CuaarrMaN. A like gain for 11 years would have enabled the farmer to pay off every dollar he owed—mortgages, accounts. and hills payable. Mr. ConnaLLy. I am glad to have the gentleman's reply. The ventleman reminds me very much of some gentlemen down in Florida about two years ago who figured out on paper how you could buy a lot and make a million dollars on that lot, but they did not realize the profit; they did not get the money. Instead of that, they wound up with a lot of mortgages on their property and “busted” bank accounts. The Cuarrman. That is the trouble. Some people have a way of handling figures and ascertaining facts; others have not. Mr. AsweLL. Can you not see why this bill is holy? Does not that make the holiness. based upon an assertion without any facts ya behind CONNALLY. I must not argue with the chairman. He has been so courteous that his gallantry and chivalry are only exceeded by the vain hopes which political ambition ever stirs within his breast. The gentleman from Iowa is one of the outstanding examples of t he refutation of that old Biblical quotation that Prophets are no without honor save in their own country.” The gentleman 1s g e outstandine contradiction of prophets being without honor in t cir own country because he has made that speech in his distpios out t Li iy often that if they would pass the McNary-Haugen bi | t og Ww 0 : be a billion and a half value added to the agricultura pirat ue s © the United States annually. He has mado it so often ; 3 o has hour his own voies, which is extremely pleasing fo hin 1 Les 1 the promptings of that brain which he a } oo i on hy probill, so much that he has become self-hypnotize - 2 oS thing tized himself into the real belief that this bill vou % he ple for the farmer. And I do not challenge his Snears y- i8 Wp cause the chairman is laboring under such a delusion tha ne to the committee to save him from following dreams and 710 AGRICULTURAL RELIEF visions and ignis fatuus and get down to facts and pass a bill that somebody is going to sign and that somebody will make a law. The CuairMAN. There are millions of others who agree with the chairman. So we will let it go at that. Mr. ConnaLLy. That is so, a million out of one hundred and ten million—about the percentage of about one hundred and ten million people in the United States and probably a million of them are really following the gentleman from Iowa. Mr. HorLingsworTH. That is about the percentage that is generally right. [Laughter.] : Mr. CoNNALLY, We have heard from another outstanding ‘agricultural promoter, and he agrees with the gentleman from Iowa. [ am about through, Mr. Chairman. I want to know just”one other thing. What sort of a mercurial or other bath has the Haugen bill had to make it absolutely without sin, without fault, absolutely impeccable. They contend, generally, that the bill is dead. You may not know it. The bill is dead, and you are going to have to embalm it; because the Haugen bill is dead, and everybody but you, the chairman, seems to know it is dead. Everybody in this room who believes the President is geing to approve that bill when it reaches him, like the chairman does, hold up your hands; and 1 want the newspaper reporters to note who hold up their hands. One word to this gentleman who said he is in favor of the chairman’s—— The CuairMAN. Here is what the President said about subsidy—— Mr. ConnaLLy. Go ahead. You are irrepressible. The CruarrmMAN. And Government price fixing. Mr. ConnaLLY. Let me ask the chairman this: You admit that the farmer does not get the benefit under the tariff, do you not? The CuArrMAN. In the case of livestock he gets it; on wheat,-of which there is a large exportable surplus, he does not. Mr. ConNaLLY. I am not talking about livestock. I answered the gentleman’s question, and he ought to be fair enough to answer my question. Let me ask you this question: Do you believe the agricultural products are getting the benefits of the tariff to-day? The CARMAN. Not in the case of commodities of which there is a large exportable surplus, but he gets it on commodities of which there is no exportable surplus. Mr. ConnaLLy. Will you answer another question? The CuaIRMAN. Let me ask you a question. Mr. ConNALLY. I am not gomg to yield for a speech. The CuamrMAN. If you do not care to answer—— Mr. CoxNaLLy. All right, go ahead. The CHAIRMAN. Where there is a large exportable surplus, in the absence of pooling the whole production, the farmer or anybody else is not getting the full benefit. Here are the dairy people—had this bill been in operation during 1925 they would have received a net gain in price of $123,925,910. Mr. ConNALLY. 1 am not asking about the dairy people; they are out of it. ‘They are the fellows who came in here and demanded a tariff, and they got it. They are perfectly willing to take the bounty of the tariff and put it in their pocket. But when the other fellows come up and say, ‘“ We are exporters; we are not importers; we want to ship our goods abroad. and then bring other free goods back in,” AGRICULTURAL RELIEF 711 the dairymen, already enriched by the tariff, want the other farmers to pay their losses out of their pockets through an equalization fee but they do not want the equalization fee put on their own backs. Let me ask the chairman this question. He admits that agriculture 1s not getting its deserved fair treatment under the tariff? The CuairmaN. Like others, in the case of large exportable surplus, but that is not the question. Mr. ConnaLLy. All right; if you will let me ask—— The CuairmMaN. The large exportable surplus—— Mr. CoNNALLY. Answer me this question: When you do export agricultural products abroad, are you opposed to letting those farmers bring back free foreign goods in exchange for agricultural products? The CuairMaN. I believe in dealing—— gir CoNNALLY. Answer that question. Are you willing to do that? The CrairMAN. What? Mr. ConNaLLY. You heard my question. The CaairMAN. Bring about—— Mr. ConnNaLLY. Bring back free foreign goods in exchange for agricultural products. Are you in favor of that? The CHAIRMAN. They are not doing—— Mr. ConNaLLy. I am not asking what they are doing; I am asking what they are going to do. Are you in favor of that? The CuairMaN. Certainly not. I prefer the equalization plan, which will give the producers the greater benefit rather than a raid on the Treasury. Mr. ConnaLLy. Then the gentleman is for my bill. Now, gentlemen, I want to thank you. I hope the chairman and the others will not think because of my zeal that I was discourteous. I did not not mean to be. You have been very generous to me. Let me say this is passing: It is all right to theorize; it is a beautiful thing to get a sheet of paper and sit down and figure out that if we put on an equalization fee of a half cent a pound on cotton we will et $15 profit on a bale. It is a beautiful theory to say if you put 2 cents a bushel on wheat through the equalization fee you make 45 cents a bushel profit. That is all mighty pretty. But you are up against a condition and not a theory. Do you really want a farm relief bill or do you simply want to pass something up to the Preosident and have hii veto it, and then go back down here and demagogue all around over your district and tell what you propose to do for the farmer? Which do you want to do? There are two roadways open to this committee, and I want the gentleman from Illinois, Mr. Adkins, to turn around and look at me. He may be talking about my speech. I can not talk to his back. “Mr. Apkins. The gentleman is looking pretty. Mr. ConnaLLy. Here are two pathways open to this committee: One of them is to pass the best bill you can get by the White House Apxkins. Can you get by the White House with a subsidy? Mr. ConnaLLy. Oh, well y this is not a subsidy. It just allows you : ing in free foreign goods. 0 bring In Tree A rose Eells just as sweet by another name. 712 AGRICULTURAL RELIEF Mr. ConNaLLY. It will get by a great deal better than the McNary-Haugen bill. You know that will not get by. Mr. Apkins. I have ever confidence that others will not get by. Mr. ConNaLLY. No; you have not seen it. Here are two pathways open. One pathway to pass some sort of a bill that has a chance to get by the White House. Mr. Apkins. We have eliminated about 10 objectionable features in the bill. Mr. ConNALLY. If you do that you will do some good to agriculture. You may not do all the good that ought to be done, but you will do some good. The other course is to walk up here and hypocritically embrace the Haugen bill again, with the equalization fee, and walk down to the White House with it, when you know that death awaits it. Mr. Apkins. How do you know? Mr. ConNALLY. I know, if the gentleman does not know it. Mr. Apkins. If the equalization fee is unconstitutional, as it is. contended, and the Supreme Court knocks out that feature, automatically I think you would go to operating just as the President's. crowd suggests. Every other objection is eliminated from the bill. Why would we not have a reasonable right to expect him to sign it under those conditions? [Laughter.] . Mr. ConnNaLLY. He had the same chance to sign it, let me say to the gentleman from Illinois, last year; and hie did not sign it. Mpr. Apkins. He had a lot of other objectionable things then; for instance, we told him to appoint one out of three men we suggested, and he would not stand for that. Mr. ConnaLny. Everybody knows the President’s real objection to this bill was the equalization fee. He stated so to everybody. He said that that bill with that fee in it is not going to get by. I contend that any man who votes for that bill and sends 1t over tothe White House when he knows it is not going to get by is trying to: bunco the American farmer and trying to fool the American farmer. Mr. Rusey. How many departments of the Government have we? Mr. ConnaLLy. We have three. : Mr. Rury. We are going to let him attend to his part of it and weare going to attend to ours. Mr. Apkins. If this is the remedy and the farmers still insist upon it they will just have to vote for a man who will meet their wishes. Mr. ConnarLy. The gentlemen from Illinois talks that way here and he talks that way to his farmers out there; and yet when the roll is called in the hard-boiled Republican ranks—when the roll is called on the tariff and when the roll is called in the caucus for the President and everything else, Uncle Charley's name, like Abou Ben Adhem’s, will “Lead all the rest.” Mr. Apkins. You.say, “I do not like Al, but 1 will vote for him.” The CuarrMaN. Would you have us believe that the President would rather sign the bill giving the operators on the exchanges the right of way to continue those practices pointed out in the Federal Trade Commission Report and in the deals between Armour, Rosenbaum and the others? Mr. ConnarLy. The trouble about the gentleman is that when he asks a question—— AGRICULTURAL RELIEF 713 T . . AR Guamuay, How are you taking care of that——. Co : NALLY. You do not know how man i s wi be. The gentleman has asked me six lr in) o A iors bil rhe Cr any ous of them until he asks another hee will not. let, e CHAIRMAN. A representative of the millers who ar fay ators on the exchanges told us the other day Hogs silo uy big operaway with the operation on the exchanges | nyizg to do r. CoNNALLY. I wi with what omabody des oy to the gentleman ¢ Rat 1 am po troubled . : 0 ; 1 gentleman has any question to propound I will ; dons and if the him. But I t . endeavor to answer a i 1 am not responsible for Mr. Sydney Anderson AN. You asked n i an Jou answor mine. 1e a question and I would like to have a nisin Habody knows what it is. e CHAIRMAN. Would you have us believe that th i N. YO e President ou prefer a bill giving the operators on the exchanges the right of Mr. ConnarrLy. I will sa . y to the gentleman from Iow refuse to try to prophesy what is in the mind of the President, boat og he belongs to the gentleman’s party and the gentleman belongs to him. So I am not going to try to invade the privacy of their counsel over these critical matters, because the gentleman from Iowa is going to do just what the President would like him to do, and that is to give the President another opportunity to veto his vicious, unconstibutlonal bill, and therefore make him stronger before the country; ant the gentleman is going to try to help him by passing this other The CuairMan. That is a serious indictment against the President. Mr. ConnaLLy. The gentleman does not mean by linking the name of the gentleman from Iowa with that of the President that I am drawing an indictment against the President, does he? Mr. ULMER. I notice under section 4 that the association or board is to collect the charge to be determined by them in connection with the commodity handled. What is the difference between that? Mr. ConnaLry. The gentleman is wrong about that. Mr. FruMmer. Here it 1s right there in your bill. Mr. CoxnarLLy. The gentleman does not understand the bills. Let me say to the gentleman, to show him that he is not accurate on that, these are the loans that are made to the cooperatives to finance their own operations and to build warehouses and things of that kind, and it says the board has the right to require cooperatives to assess and charge against their own members to take care of the sinking fund to pay these loans. Of course, you have got to collect. That is up to the cooperatives. It is not a tax in any sense of the term. The Government does not undertake to levy an equalization fee, but it is simply a requirement that if this cooperative is going to borrow money ‘from the Government it must obligate itself to form a retiring fund to pay the loans when due. Mr. FrLmer. Under that section you are supposed to make it amply sufficient to pay the loans? Mr. ConnaLLy. The board has discretion. Mr. FuLmer. Every cooperative that has come before this committee has said they could borrow all the money they wanted. Mr. CoNNALLY. You have no objection to that? Mr FuiLmer. None in the world. 714 AGRICULTURAL RELIEF Mr. Connarry. Thank you, Mr. Chairman, The CaaRMAN. Thank you very much. STATEMENT OF HON. DAVID H. KINCHELOE, REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY Mr. KinceeELoE. Mr. Chairman, before these hearings close, I want to put a statement in the record. Mr. Ketcham yesterday on the floor—TI believe it was yesterday or Thursday—made a speech and put in the record how much the tariff had benefited the agricultural products of this country and undertook to give indexed figures to show what a wonderful benefit it has been. Mr. Ketcham tells 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. Thave 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 49 cents a bushel—that the last 12 months’ statistics will show that it has been selling higher in Winnipeg, Canada, than in Minneapolis most of this time. So I have had the Tariff Commission to make a statement I wanted to show you just the great ‘benefit’ the tariff of 42 cents is for the American growers of wheat since 1922—six years. 1 am going to put this in the record; I do not want to read it all. But last year 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. The big millers who have brought it in for blending purposes and in order to export it and its by-products they brought in 11,152,699 bushels of wheat. They should have paid on that, in all justice, the rate of 42 cents a bushel, and they should have paid $4,684,133. But do you know how much they really did pay under this Fordney-McCumber tariff bill, when they get 99 cents back on the dollar of every dollar of tariff they paid when manufactured and exported? They only paid $46,840 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 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 process 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 $23,726,794, 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 AGRICULTURAL RELIEF 715 [ cent tariff, and the American farmer or the little fellow who brings 1t 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 to Canada and buying 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. I want to put these in the record. The CrairMAN. Have you stated from what source the statistics come Mr. KiNncHELOE. This is a statement prepared by the United States Tariff Commission, statistical division. The CuairMAN. And it gives the percentage of mixtures? Mr. KiNcHELOE. Oh, no; the law gives that. The CrairmaN. To what extent was it mixed with domestic wheat? I believe vou said 30 per cent. I am interested in those figures. Mr. KiNncHELOE. I am giving the total number of bushels of wheat imported into this country since 1922, by years. The CrairMAN. I understood you to say it was mixed with domestic wheat and exported. Mr. KincHELOE. I will state this, under the 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 into flour and its by-products and exports it, 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. Mr. KincueLoE. No, they do not propose to correct that. I want to insert this to show the falacy of the emergency tariff and the Fordney-McCumber tariff bills helping the wheat farmers. It helps the millers and not the wheat farmers. (The statements submitted by Mr. Kincheloe are as follows:) Imports of wheat into the United States [Act of 1022] Duty-paid wheat (mported free in bond for milling and export as flour Calendar year mmm hod ~on Juantity Bushels 165, 026 929, 749 204, 625 208, 399 51,029 zl. 299 Duties paidl $949, 508 2, 678, 925 2, 149, 887 549, 528 189, 432 3 946 Quantity Rushels }, 998, 888 J O88, 592 4, 479, 819 10, 439, 714 15, 429, 102 "1. 152. 699 99 per cent of estimated duties ! $1, 187, 669 2 966, 612 3. 578, 335 1, 340, 833 8, 415, 421 t 637. 293 . Equivalent to drawback under other tariff acts. ' Act of 1922, September 22-December 31, 1922, dutiable at 30 cents per bushel. i By presidential proclamation, dutiable at 42 cents per bushel, effective April 6, 1924 Jonree: Foreign Commerce and Navigation of the United States 716 AGRICULTURAL RELIEF Mr. ANDRESEN. 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. KincaeELOE. 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. KincaELOE. 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 debenture bill. Mr. KinceeLoE. They are satisfied with the tariff on wheat. The CuarrMAN. 1 think we all agree that it ought to be amended. Mr. KiNcEELOE. I am trying to show what a great ‘benefit’ this has been to the American farmer of having a tariff of 42 cents on wheat. The CuAIRMAN. 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. Lankrorp. Mr. Chairman and gentlemen of the committee, [ 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 Comgress, some future Congress, or left unsolved. [ sympathize with the farmer. 1 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. CLarkE. On Sunday? Mr. LANKFORD. 1 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 AGRICULTURAL RELIEF 717 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 observance, 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; [ 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 zinned, go to market, and heard him ask the merchant “How much will you give me for it?” 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. Mr.” KincueLok. What is your theory on the McNary-Haugen bill? Mr. KixcHELOE. I am trying to show what a great ‘‘benefit” it has been to the American farmer to have a tariff of 42 cent on wheat. In observing the above table you will see that there were 20,770,127 bushels of wheat shipped into this country from 1922 to 1927, inclusive, upon which the whole duty of 30 cents and 42 cents, respectively, was paid, amounting to $6,526,226, which was pai! into the Treasury by the small millers who brought the wheat from Canada and ground it into flour and by-products and sold it for domestic purposes. Now, let us see the contrast as it pertains to the big millers. The big millers from 1922 to 1927, inclusive, imported into this country from Canada 60,488,814 bushels of wheat, which they mixed with 30 per cent of American wheat and then ground it into flour and by-products and exported it. If these big millers had paid their 30 cents and 42 cent tariff as the small millers did on the amount above set out, then the Federal Government would have collected $23,726,794.28; while as a matter of fact they paid to the Government only $237,267. I mention this to show how much the tariff on wheat helps the big miller instead of the farmer. STATEMENT OF HON. G. N. HAUGEN Mr. Haugen. For information I desire at this time to invite attention to certain tables furnished by the Department of Agriculture, indicating the production and net exports of wheat, corn, beef (slaughtered), lard, butter, and tables indicating the world price and domestic price, the tariff, and the net profit to the producers had the proposed McNary-Haugen bill been in operation for the years 1924, 1925, 1926, and 1927, also tables showing domestic and world production of wheat, corn, cotton, rice, tobacco. lard, beef and veal, 718 AGRICULTURAL RELIEF butter, and cattle. The net profit to the producers has been calcu--lated on the assumption of the whole crop being marketed, no allowances having been made for seed, food, and carry-over. (For instance, the net profit to the producers of wheat for the crop year 1926-27 has been calculated to be $266,737,446, assuming that the entire crop of 871,691,000 bushels had been marketed. If, say 100,000,000 bushels are used for seed, food, and carry-over, the equalization fee would be $0.1066 instead of $0.94, and the net profit would be $226,614,139, instead of $266,737,446.) For the purpose of comparison, I am also showing certain tables prepared, indicating the gain in prices to producers and cost to the ig Treasury under the debenture plan that has been discussed ately. Wheat [From Department of Agriculture] Crop year Production Net exports 1923-24 1924-25 1925-26 1926-27. _ Bushels 191, 797, 381 362, 627, 000 R32, 305, 000 371, 691, 000 Bushels 128, 473, 000 251, 915, 000 92, 371, 000 205. 944, 000 Prices, No. 1 dark northern at Minneapolis and No. 1 northern at Winnipeg— Profits under the equalization plan ( McN ary-Haugen bill) i mp aT Minne- | wyippi. apolis per Tariff i Freight y Net Equalize-: profit per! tion fee | *y chel Total profit 1023-24. . 1924-25. . - 1925-26. . - - 1926-27 _ . T 00 $0. 47 + $0.03 03 LOC or 30. 034 . 154 . 034 004 30.171 . 376 .276 . 306 $140, 148, 364 394, 347, 752 929, 716, 180 266, 737, 446 960. 949. 742 Tolal.coswsn ~wmmuns Profits under the debenlure plan 1923-7 1924: 1925-%. 1096-27 _ _ . fear Production (bushels) | 791, 797, 381 362, 627, 000 332, 305, 00C 271 691. 000 Exports (bushels) 128, 413, 000 251, 915, 000 92, 371, 000 905. 744. ONO Gain of 21 cents per bushel on whole production 166, 277, 45( 150 £7 4, 784, 051 an (AR O° Cost to Government, | 21 cents on exports 126, 979, 330 2, 902, 150 .9, 397, 910 a ONR 240 49 484 630 Net gain $139, 208, 120 128, 249, 520 155, 386, 140 129 R48, 870 £62 783. 650 Assuming that the tariff is made effective, and the price brought up to the level of the tariff wall, if the McNary-Haugen bill had been in operation and the whole crop marketed during the crop year of 1923-24, the wheat grower would have received the Winnipeg price of $1 plus the tariff of 42 cents and transportation charges of 3 cents, or a total of $1.45, instead of the Minneapolis price of $1.24, a gain of 21 cents per bushel, minus the equalization fee to cover the lower AGRICULTURAL RELIEF 719 price of 21 cents per bushel on the 128,473,000 bus 526,979,830, bo be distributed over 791,797,381 bushels. ho erat zation tee oO . , 8 net profit per profit of $140,145, 304 P per bushel of $0.177, and a total nder the debenture plan, if in operation for the same peri assuming that the price of the whole production is avament Se to the 21 cents debenture, then the producer would have received a gain in price on the whole production of only $166,277,450, at a cost to the Government of 21 cents per bushel in debenture, or a total of $26,979,330 on the quantity exported, or a net gain in the operation minus the cost to the Government, of only $139,298,120. ’ If the McNary-Haugen bill had been in operation and the whole crop marketed during the crop year 1924-25, the wheat grower would have received the Winnipeg price of $1.66, plus the tariff of 42 cents and transportation charges of 3 cents, or a total of $2.11, instead of the Minneapolis price of $1.58, a gain of 53 cents per bushel, minus the equalization fee to cover the lower price of 53 cents per bushel on the 251,715,000 bushels exported, or $132,514,950, to be distributed over 862,627,000 bushels, or an equalization fee of $0.155, a net profit per bushel of 37.6 cents, and a total profit of $324,347,752. Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the 21 cents debenture, then the producer would have received a gain in price on the whole production of only $181,151,670, at a cost to the Government of 21 cents per bushel in debenture, or a total of $52,902,150 on the quantity exported, or a net gain in the operation minus the cost to the Government of only $128,249,520. The wheat crop for the crop year 1925-26 has been estimated at 832,305,000 bushels and the exports to May 1, 70,000,000 bushels. The wheat grower would receive, if the McNary-Haugen bill were in operation, the Winnipeg price of $1.51 plus the {ariff of 42 cents and the transportation charges of approximately 3 cents, or a total of $1.96, instead of the Minneapolis price of $1.65, a gain of 31 cents per bushel, minus the equalization fee to cover the lower price of 31 cents per bushel on the 92,371,000 exported, or $28,635,000, to be distributed over 832,305,000 bushels, or an equalization fee of 4 cents, a net profit of $0.276 per bushel, and a total profit of $229,716,180. Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the 21 cents debenture, then the producers would have received a gain in price on the whole production of only $174,784,050, at a cost to the Government of 21 cents per bushel in debenture, or a total of $19,397,910 on the quantity exported, or a net gain in the operation minus the cost to the Government of only $155,386,140. The wheat crop for the crop year 1926-27 has been estimated at 871,691,000 bushels, and the exports at 205,944,000 bushels. Assuming that the whole crop had been marketed, the wheat grower would receive, if the McNary-Haugen bill were in operation, the Winnipeg price of $1.46 plus the tariff of 42 cents and transporestiod charges 3 approximately 3 cents, or a total of $1.91, instead of the Minneapo 18 price of $1.51, a gain of 40 cents per bushel, minus the equalization fee to cover the lower price of 40 cents per bushel on the 205,944,000 bushels exported, or $82,377,600, to be distributed over 871,691,000 720 AGRICULTURAL RELIEF bushels, or an equalization fee of $0.094, a net profit of $0.306 per bushel, and a total profit of $266,737,446. Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is-advanced equal to the 21 cents debenture, then the producers would have received a gain in price on the whole production of only $183,055,110, at a cost. fo the Government of 21 cents per bushel in debenture, or a total of $43,206,240 on the quantity exported, or a net gain in the operation minus the cost to the Government of only $139,848,870. For the four years’ operation under the equalization plan the wheat growers would have received, after deduction of the equalization fee a net gain of $960,949,742, within expense to the Government. Under the debenture plan, for the same four years, the wheat growers would have received a net gain of $705,268,280, at a cost to the Government or the Federal Treasury of $142,484,630, or a net gain after deducting the debentures of only $562,783,650, in contrast with the $960,949,742 under the equalization plan. Corn Production. _. Exports, 1924 Exports, 1925 Exports, 1926 Exports, 1927__ 3, Bushels 000, 000, 000 23, 000, 000 5, 000, 000 ro, 819, 000 3, 721, 000 Prices of corn—Profils under the equalization plan [Chicago prices by Department of Labor, and Buenos Aires prices by Department of Agriculture] pm—ies—reeerea iii Year Chicago | price Buenos Aires nrice Export tax . Ocean Tariff | freight Equalization fea | Net | profit per] Total profit bushel 1924 ee 1925 — ena 1926. oo 1927 i Zeer 30. 972 1.038 . 759 0 BR1 $0.83 $0.01 Tee, Lo L67 S01 tert Lol $0. 1. . 15 .15 .15 $0. 1.34; 31.10% $0.001 $0.129 1ikgl 1.21%] .0003 . 1742 Jl Lea] 0017 . 1818 1 .9414l .o0076 ' .1115 $387, 000, 000 522, 627, 500 480, 861, 009 208. 551. 533 17 anuary-November, 1927. Profits under the debenture plan aar 1€24 imeem ma—————-I mm memes SRR ot mm 1926 _ oo. ee emmam——an 10927 ee emmmmceoam matal eo Production Bushels ,300,414,000 916,961,000 2,692,217,000 D TRAE.2R8.000 Exports Bushels 23, 000, 000 5, 000, 000 19, 819, 000 18. 721, 000 Gain of 7% nents bushel on whole production $173, 206, 050 218, 172, 075 201, 916, 275 Mme Q71 ANT R02. REG. + Cost to Government of $0.075 on exports 81, 725, 000 375, 000 , 486, 425 404. 075 rt ROO Gain 3171, 481, 050 218, 397, 075 200, 429, 850 27. 567, 525 na7 876. 500 — If the McNary-Haugen bill had been in force in 1924 the corn crower would have received the Argentine price of 83 cents, plus the tariff of 15 cents, plus the export tax, which was 1.54 cents in February, 1926, 1.03 cents in March, and 0.46 cent in April, or say 1 cent, and the ocean freight to Baltimore or New York, say 1114 cents, the AGRICULTURAL RELIEF 721 5197.2 cons,» gan of spprovimatdoia mead of the Chicago price “ UO : per bushel, minus the equalization fee to cover the lower price of 13 cents on 23.000 000 bushels to be distributed over a total production of 3,000 000 000 assuming that the total production had been marketed. If so. an aqualization fee of $0.001 per bushel, a net gain of $0.129 per bushel or a total profit of $387,000,000. ’ Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the $0.075 debenture, then the producer would have received a gain in price on the whole production of only $173,206,050, at a cost to the Government of 71% cents per bushel in debenture, or a total of $1,725,000 on the quantity exported, or a net gain in the operation minus the cost to the Government of only $171,481,050. If the McNary-Haugen bill had been in force in 1925 the corn grower would have received the Argentine price of 94 cents, plus the tariff of 15 cents, plus the export tax of 1 cent, and the ocean freight of 1114 cents, or a total of $1.2114, instead of the Chicago price of $1.038 (see ratio table furnished by Department of Labor), a gain of 17.45 cents per bushel, minus the equalization fee of 17.45 cents on 5,000,000 bushels to be distributed over a total production of 3,000,000,000, assuming that the total production had been marketed, or an equalization fee of $0.0003 per bushel, a net gain of $0.1742, a total profit of $522,627,500. Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the $0.075 debenture, then the producer would have received a gain in price on the whole production of only $218,772,075, at a cost to the Government of $0.075 per bushel in debenture, or a total of $375,000, on the quantity exported, or a net gain in the operation minus the cost to the Government of only $218,39¢,075. If the McNary-Haugen bill had been in force in 1926 the corn grower would have received the Buenos Aires price of 67 cents, plus the tariff of 15 cents, plus the export tax of 1 cent, and the ocean freight of 1114 cents, or a total of $0.94}, instead of the average Chicago price of 75.9 cents, a gain of 18.35 cents per bushel, minus the equalization fee to cover the lower price of 18.35 cents on 24,783,000 bushels, to be distributed over a total production of 2,645,000,000 bushels, assuming that the total production had been marketed, or an equalization fee of $0.0017 per bushel, a net gain of 0.1818, or a total profit of $480,861,000. } Under the debenture plan, if in operation for the same period and assuming that the price of the whole production 1s advanced equal to the $0.075 debenture, then the producer would have received a zain in price on the whole production of only $201,916,275, at a cost to the Government of $0.075 per bushel in debenture, or a total of $1,486,425 on the quantity exported, or a net gain in the operation, minus the cost to the Government of only $200,429,850. If the McNary-Haugen bill had been in force in 1927 the corn srower would have received the Argentina price of $0.67, plus the tariff of 15 cents, plus the export tax of 1 cent, and the ocean freight of, say, $0.1125, or a total of $0.9425, instead of the Chicago price of $0.881, a gain of $0.1115 per bushel, minus the gualingiion Se to cover the lower price of $0.1115 per bushel on 18,721,000 bushels, 722 AGRICULTURAL RELIEF to be distributed over the total production of 2,786,288,000 bushels, assuming that the total production had been marketed, or an equalization fee of $0.00076 per bushel, a net gain of $0.11074 per bushel, or a total gain of $308,551,533. Under the debentufe plan if in operation for the same period and assuming that the price of the whole production is advanced equal to the $0.075 debenture, then the producer would have received a gain in price on the whole production of only $208,971,600, at a cost to the Government of $0.075 per bushel in debenture, or a total of $1,404,075, on the quantity exported, or a net gain in the operation, minus the cost to the Government of only $207,567,525. For the four years 1924-1927 operation in corn, under the equalization plan the producers would have received after deduction of the equalization fee, a net gain of $1,699,046,033, without expense to the Government. Under the debenture plan, for the same four years, the corn producers would have received a net gain of $802,866,000, at 8 cost to the Government of the Federal Treasury of $4,990,500, or a net grain after deducting the debentures of only $797,875,500, in contrast to the $1,699,046,033 under the equalization plan. In other words, less than one half as much. Beef slaughtered ! 1926 1927 1925 | 1924 Production. Exports__-. [mports....._.. Net exports... 8, 418, 000, 000 | "25, 000, 000 20, 000, 000 5. 000, 000 7, 146. 000, 000 39, 000, 000 17, 000, 000 29’ 000, 000 7, 065, 000, 000 40, 000, 000 21, 000, 000 19. 000, 000 :. — a 1 Not available. Profits under the equalization plan; prices on English beef sides, average top price London, and on choice western dressed at New York From Department of Agriculturel ssa . \ 1024 _ _ 1025... . 1926 meme mes lannarv—November. 1927 New - York 30. 1840 ‘9: ¥7$ London | 794 Taritl 20.03 .03 .03 03 Transporta- $0.015 .015 L015 Equalization fep $0. 00010 . 00014 00002 Net orofit per nound $0. 0400 . 0465 . 0560 Total profit $284, 658, 400 332, 078, 400 471. 408, 000 LE otal for three years, $1,088.144,800. Profits under debenture plan [I — ee Co Te ‘ Year Production Exports Gain of 114 rents pound on whole oroduction Cost to (Government of 134 cents “pound on exports Net gain ————————— 10 teem ET — Ie 5 sme b era eb mam dma 1926 oom mmm 1927. _ tm Total for 3 VOArS. .coooo--1 Not available. Bushels Bushels 065,000,000 40, 000, 000 /~ 146, 000, 000 39, 000, 000 3, 418, 000, 600 | 25, 000, one J mmm ——— ii ——y——— 3105, 975, 000 107, 190, 000 126. 270. 0ON 339. 435, 000 $600, 000 585, 000 375, ON $105, 375, 000 106, 605, 000 195 R95. 000 LL ——— 1.560.000 ' 337, 875, 000 yd bh AGRICULTURAL RELIEF 723 If the McNary-Haugen bill had been in operation in 1924 the producer would have received the Lonodn price of $0.1794 plus the tariff of $0.03 and the transportation charges of approximately $0.015, or a total of $0.2244, instead of the New York price of $0.184, a gain of $0.0404, minus the equalization fee, on 19,000,000 pounds, to be distributed over the total production, which wotld be but a small fraction of a cent, or $0.0001. That is, the producer would have received a profit of approximately $0.04 a pound, or a total profit of approximately $284,658,400. Under the debenture plan if in operation for the same period and assuming that the price of the whole production is advanced equal to the 114-cent debenture, then the producer would have received a gain In price on the whole production of only $105,975,000, at a cost to the Government of 114 cents per pound, or a total of $600,000 on the quantity exported, or a net gain of on'v $105,375,000 on the yperation, If the McNary-Haugen bill had been in operation in 1925 the producer would have received the London price of $0.1937 plus the tariff of 3 cents and the transportation charges of approximately $0.015, or a total of $0.02387, instead of the average New York price of $0.1921, a gain of $0.0466, minus the equalization fee, on 22,000,000 pounds, to be distributed over the total production, which would be but a small fraction of a cent, or $0.00014. That is, the producer would have received a profit of approximately $0.0465 a pound, or a total profit of approximately $332,078,400. Under the debenture plan if in operation for the same period and assuming that the price of the whole production is advanced equal to the 114-cent debenture, then the producer would have received a gain in price on the whole production of only $107,190,000, at a cost to the Government of 114 cents per pound, or a total of $585,000 on the quantity exported, or a net gain in the operation, minus the cost to the Government of only $106,605,000. If the McNary-Haugen bill had been in operation in 1926, the producer would have received the London price of $0.1871 plus the jariff of 3 cents and transportation charges of approximately $0.015 or a total of $0.2321, instead of the average New York price of $0.1760, a gain of $0.0561, minus the equalization fee on 5,000,000 pounds, to be distributed over the total production, which would be but a small fraction of a cent, or $0.00003. That is, the producer would have received a profit of approximately $0.056 per pound, or a total of $471,408,000. : Under the debenture plan if in operation for the same period and assuming that the price of the whole production is advanced squal to the 114 cent debenture, then the producer would have reseived a gain in price on the whole production of only $126,270,000, 1t a cost to the Government of 114 cents per pound, or a total of $375,000 on the quantity exported, or a net gain 1n the operation, minus the cost to the Government of only $125,895,000. For the three years 1924 to 1926, inclusive, operation in beef, inder the equalization plan the producers would have received after feduction of the equalization fee, a net gain of $1,088,144,800, without cost to the Government. Under the debenture plan for the same three years the producers would have received a net gain of 0160—28—SFR E. PT 10——2R2 724 AGRICULTURAL RELIEF $339,435,000, at a cost to the Government of $1,560,000, or a net gain after deducting the debentures of only $337,875,000, in contrast to the $1,088,144,800 under the equalization plan. - In other words; under the debenture plan the producers would have received less than one-third as much as under the equalization plan. Butter from Department of Agriculture, year ended June 30 POUNDS 5 %5. me 2 Production | 2, 000, 000, 000 2, 000, 000, 000 2 066, 766, 000 Exports! 425, C00 -, 384, 000 3, 180, 000 = 046. 000 Imports! 29, 466, 000 7,189, 000 6, 440, 000 10, 710, 000 Net Net imports exports 24,041,000 1ocooemno----271,195,000 1,160,000 --cveeenennn 5. 664,000 oo meeeo-Profits under the equalization plan PRICES a... i, 927 __ 1927 Total for vears..... New York no London Danish) ($0. “17 (41 34 202 Copenhagen BO. £07 42° . 36 26H Tarift 0. 06 .0€ 12 Freight $0. 01 01 01 Minus aqualization fee J. 000037 "00016 Net profit per pound 30. 061 , 061963 052 Total profit 122, 000, 000 123, 925, 910 107. 471. 832 253. 397, 742 1 Not available. Assuming that a debentured rate on butter were in force under the debenture plan equal to one-half the tariff the net gain or profits under the debenture plan would be as follows: Y ear BB em—————E— 1997 ee mmm————— Production Pounds 2, 000, 000, 000 2, 0600, 000, 000 2, 066, 766, 000 Exports Pounds 3, 425, 000 * 384, 000 5, 280, 000 a 046. GON Jain of one-1alf of tariff on whole sroduction $80, 000, 000 80, 000, 000 24. 005. 960 284. 005. 960 Cost to Yovernment in jebentures on exports 5217, 000 415, 460 216. |&0N 949. 260 Net gain $79, 783, 000 79, 584, 540 192 2R9. 1A0 929 756. 700 Total for three vears._._._.--. a —————————— 1 Not available. If the McNary-Haugen bill had been in operation in 1924, the butter producer would have received the Copenhagen price of $0.397 plus the tariff of 8 cents and transportation charges of approximately 1 cent, or a total of $0.487, instead of the New York price of $0.426, a gain of $0.061 per pound, or a total profit of $122,000,000. Imports were in excess of exports for the year 1924, hence no equalization fee. All that would have been necessary to insure the advance would have heen to reculate the importations as provided in the bill. AGRICULTURAL RELIEF 725 Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the the debenture, and assuming the debenture rate to be one-half of the tariff, then the producer would have received a gain in price on the whole production of only $80,000,000, at a cost to the Government of 4 cents per pound or a total of $217,000 on the quantity exported, or a net gain in the operation minus the cost to the Government of $79,783,000. If the McNary-Haugen bill had been in operation in 1925, the putter producer would have received the Copenhagen price of 80.425 plus the tariff of 8 cents and transportation of 1 cent, or a total of 80.515, instead of the New York price of $0.453, a gain of $0.062 minus the equalization fee on 1,195,000 pounds to be distributed over the total production of 2,000,000,000 pounds, which would be less than four-thousandths of 1 cent per pound. That 1s, the producer would have received a profit of $0.062 a pound on 2,000,000,000 pounds, or $124,000,000, less $0.062 on the 1,195,000 pounds exported —3$74,090—or a net profit of $123,925,910. Under the debenture plan, if in operation for the same period and assuming that the price of the whole production is advanced equal to the debenture, and assuming the debenture rate to be one-half of the tariff, then the producer would have received a gain in price on the whole production of only $80,000,000, at a cost to the Government of % cents per pound or a total of $415,460 on the quantity exported, or R net gain in the operation minus the cost to the Government of only 879,584,540. If the McNary-Haugen bill had been in operation in 1926, the butter producer would have received the Copenhagen price of $0.365 plus the tariff of 12 cents and transportation charges of approximately i cent, or a total of $0.495, instead of the New York price of $0.443, a gain of $0.052 per pound or a total profit of $107,471,832. Imports were in excess of exports for the year, hence no equalization fee. If the McNary-Haugen bill had been in operation in March, 1926, the butter producer would have received the Copenhagen price of $0.365 plus the tariff of 12 cents and transportation charges of approximately 1 cent, or a total of $0.495, instead of the New York price of $0.443, a gain of 5.2 cents per pound minus the equalization fee on 298,317 pounds to be distributed over the total production of 133,992,000, which would be approximately $0.0001 a pound. That is, the producer would have received a profit of $0.052 a pound on 133,992,000 pounds, or $6,367,584, minus $0.052 on the 298,317 »ounds exported—$815,512—or a net profit of $12,022,432. Under the debenture plan, if in operation for the same period and issuming that the price of the whole production is advanced equal to he debenture, and assuming the debenture rate to be one-half of the ariff, then the producer would have received a gain in price on the whole production of only $124,005,960, at a cost to the Government of 6 cents per pound, or a total of $316,800 on the quantity exported, Or a net gain in the operation minus the cost to the Government o SL ce vears 1924 to 1926, inclusive, operation in butter, mder the equalization plan, the producers would have received 1fter deduction of the equalization fee, a net gain of $353,397,742, vithout cost to the Government. Under the debenture plan, for 796 AGRICULTURAL RELIEF the same three years, the producers would have received a net gain of $284,005,960 at a cost to the Government of $949,260, or a net gain after deducting the debentures of only $282,756,700, in contrast to the $353,397,742 under the equalization plan. In other words, under the equalization plan the producers would have received $70,641,042 more than under the debenture plan. Summary Commodity Wheat... ---COIN ccccmean Total... Beef... cecn---Butter-.--—-.--, Total. cou: |--Grand total.,-. Years : years, 1924-1927 { years, 1924-1927. 3 years, 1924-1926 3 years, 1924-1926 Debenture plan 1 Rqualization plan; net gain after deducting aqualization fens Gain in price’ of whole production Cost to Federal Treasury Net gain after deducting cost to Government 5705, 268, 2808142, 484, 630| 802, 866,000] 4.990, 500 $562, 783,650 $960, 949, 742! 797, 875, 500 1, 690, 046, 032 , o=hT eT ey ju - 2, 131, 575, Z3u 149. Ox4, 9, 10 a: 644. Dad Difference in favor of aqualization plan $398, 166, 092 892, 170, 533 0, 336, 625 ), 269, 800 1.341, 042 20, 610, 842 ), 110, 947, 467 In summing up, it will be noted that the benefits to the producers of wheat and corn, for the four years 1924 to 1927, and beef and butter for the three years 1924 to 1926, under the debenture plan, would have been $2,131,575,240 at a cost to the Government in debentures of $149,984,390, and the net gain under this plan after deducting the cost to the Government would have been $1,981,590,850; whereas, the benefits under the equalization plan for the same products and for the same years would have been $4,091,642,317, without cost to the Government or $2.110.947,467 more than under the debenture plan. STATEMENT BY HON. THOMAS L. RUBEY, REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSOURI Mr. RuBey. Mr. Chairman and members of the committee. In the Farm Club News, published in Springfield, Mo., there appeared on February 23 a letter from our chairman, Mr. Haugen, in reply to a telegram received by him, calling his attention to the fact that in the latter part of January, farm delegates representing 16 counties and 18,000 producer-contract signers, met in convention at Springfield, and unanimously went on record as favoring the McNary-Haugen bill with the equalization fee. This communication was signed by L. W. Costello, and represents the sentiment of that section of Missouri. This telegram comes from Springfield, and while I do not live in Greene County in which Springfield is located, the farmers at this meeting come in the main part from the counties I represent, and their sentiment is mine. I ask unanimous consent that this telegram and Chairman Haugen’s reply to the same be included in our hearings. AGRICULTURAL RELIEF 727 The following is the telegram sent by L. W. Costello the secretary of the farmers’ meeting, and Chairman Haugen’s reply thereto: JANUARY 31. 1928. G. N. Haugey, Chairman House Committee on Agriculture, Washington, D. C.: ~ Farmer delegates representing 16 counties and 18,000 producer-contract signers met in convention Monday and unanimously went on record favoring the McNary-Haugen bill with equalization fee and voted to wire vou to notify our Representatives from this section and request their best efforts in the passage of this bill. L. W. CosTELLO, vecrelary Greene County Farmers’ Association. Dear MR. CosteLLo: I am in receipt of vour telegram of the 31st ultimo, advising of the action of your association in going on record favoring the McNary-Haugen bill with the equalization fee, and wish to express mv appreciation for the timely action of vour association. With the continued economic depression, which seems to be generally acknowledged, and the urgent demand made by many for real farm-relief legislation it would seem that we should have no difficulty in speedily enacting a measure that would give material relief to the producers of agricultural commodities. As usual we are met with strenuous opposition, especially in respect to the equalization fee. As you know, many of us who have given the matter thought and study, believe that the equalization fee is the all essential feature of the bill. Just why anybody should object to the producers marketing their commodities in their own way and paying their expense, and receiving the profits therefrom in proportionate share has not yet been satisfactorily explained. True, a number have suggested appropriating large sums of money as a gratuity, but all seem to agree that the making of a large sum of money available, without setting up the required machinery, would be of no avail. Besides, with one exception the farmers and representatives of farm groups have objected to a subsidy or being placed in a position of asking for charity. Others have suggested large loans. But, just now, what is most needed is the establishment of a price for the products of the farm that will enable the farmer to pay his debts, rather than to run him deeper in debt. I need not say that it is pleasing and gratifying to receive letters and telegrams »f encouragement and to have with us the numerous farmers and representatives of farm groups, fighting with their backs to the wall, in their efforts to enact real farm-relief legislation and especially for the retention of the equalization fee. With the general backing of the measure, I trust that we may succeed. G. N. Hauge. NMarcH 1, 1928. Mrs. L. A. DarNELL, Clerk Committee on Agriculture, House of Representatives, Washington, D. C. Dear Mrs. DarNELL: My remarks before the House Committee on Agriculture on February 15, regarding farm commodity marketing under Federal charters, were based upon my letter of February 8. to President Coolidge, a copy of which is inclosed. The President naturally referred that letter to the Secretary of Agriculture for an expression of his views on the plan proposed. As it relates closely to the subject discussed )efore your committee, I am inclosing copy of a letter I have written to the President calling attention to some of the comments made by the Secretarv of Agriculture. Verv sincerely yours. B. F. YoakUM. FEBRUARY 29, 1928. Dear Mg. PresipeENT: I received through Secretary Sanders a copy of Secre tary of Agriculture Jardine’s letter to vou dated Februarv 14. 728 AGRICULTURAL RELIEF While the Secretary of Agriculture agrees partly with my views concerning farm marketing, he expresses himself as not favoring certain suggestions contained in my letter of February 8 to you, which objections I desire briefly to explain. I appreciate his commendation of its purpose and objective, but apparently Mr. Jardine did not give my plan the full consideration to which it is entitled. Regarding my estimate.that $7,350,000,000, approximately one-half the price spread between farmers and consumers, represents “unjustifiable and unnecessary commissions, profits, rake-offs, etc.” he says: “This department is not acquainted with the basis for these figures. He (Yoakum) has no doubt, compiled his data with great care, but our research bas thus far failed to reveal such unjustifiable profits in distribution.” My data was carefully compiled. Tor more than 20 years (and intensely so for the past 7 years) I have concentrated my attention on farm marketing, spending time and money unstintingly in investigating the spread between the farmer and consumer. The Government, so far as I have been able to learn, has given but little attention to that phase of the problem. Thereofre, I wish to reaffirm that my figures are dependable. “The cost of processing (Mr. Jardine said) must also be taken into account.” All but two of the 17 standard farm products I cited (sold to consumers for $22,500,000,000, of which the farmers received only $7,500,000,000) go direct from the farmer to consumer. Processing, therefore, does not enter into the guestion. Senator Capper, in his speech a few days ago, at a dinner held under the auspices of Columbia University and the American Country Life Association in New York City, President Nicholas Murray Butler presiding, declared that last year from farm products farmers received $10,000,000,000 while consumers paid $30,000,000,000, the rest going to middlemen. In this the Senator included all products, while I confine myself to 17 standard food products. In paragraph 4 Mr. Jardine says: «More and better statistical information would help to bring about a reduction in the cost of middlemen services, to the benefit of both producer and consumer;”’ and that he is “strongly of the opinion that provision should be made for an adequate census of distribution, recommended by Secretary Hoover.” Such a census might be of some value. But it would cause long and useless delay. Why complicate the situation and becloud the issues? When the farmer are calling for action, why feed them statistics? Mr. Jardine believes with me that “mass marketing by strong business organizations of producers would reduce cost of markefing, give farmers greater bargaining power, and help stablize farm prices and adjust production to demand, and that ‘‘these associations should be organized along commodity lines.” He says: “However, the enabling legislation proposed by Mr. Yoakum would not be necessary, since farmers already have broad authority under the Capper-Volstead Act to form cooperative marketing associations.” This is partly true, but misses the main point. The Capper-Volstead Act does not enable farmers to control and distribute their products and stabilize prices through a ‘Marketing board of control” consisting of farmers. It does not permit them to direct interstate and foreign shipments, or give them the authority to make a uniform nation-wide marketing system effective. If that act had given authority to stabilize profitable prices the farmers would not now be on the brink of bankruptcy, with farm values reduced from $79,000,000,000 to $56,000,000,000 in seven years. There isn’t a farmer or business man in the land who does not know that further legislation is necessary, and that it must be upon broader and more practical lines. ‘“ Mr. Yoakum’s proposal for a Federal loan for organization purposes should receive a great deal of support, especially among professional promoters.” (P. 2, par. 3, of Mr. Jardine’s letter.) . What does Mr. Jardine mean by that? My plan calls for the least expenditure, a very small loan not-exceeding $1,000,000 to any one commodity marketing organization, and that for organization expenses only, to be reimbursed from the first crop. (Fourth paragraph, p. 8, my statement before the Committee on Agriculture of the House of Representatives, February 15.) Its very basis 1s to take this matter out of the hands of promoters and politicians and place it under control of the farmers. The farmers are not promoters, professional or otherwise. In honesty and integrity they stand at the head of our citizenship. In business they are as capable as those engaged in any other lines of industry. Can’t they be trusted to care for their own interests and fulfill their obligations to the Government? I am sure thev can. AGRICULTURAL RELIEF 720 The farmers only stand in need of a simple act of Congress that will give them authority to organize under Federal charters, control distribution of interstate and foreign shipments of their commodities, stabilize prices. and establish a practical, effective nation-wide marketing svstem. I agree with Mr. Jardine that, “successful cooperation can not be built on the extravagant assertions of professional promoters.” Neither can it be built on the extravagant claims of politicians or under professional or political control. It must be kept out of the hands of promoters or politicians, must be controlled py the farmers themselves, operated bv them in their interest. That is the very heart of my plan. I entertain the highest opinion of Mr. Jardine. We are both striving to bring about a better system of farm marketing. We may differ as to methods. 1 understand Mr. Jardine is favorable to Federal control, on which I strongly disagree. Marketing products of any character is a business proposition and should be operated by those who understand the business. Certainly no one understands the farming business and its requirements as well as the farmers. Therefore, if the marketing of farm products is taken from under the control of the farmers, the marketing of farm products can not be made successful. Having sincerely the same objects in view, Secretary Jardine and myself should De able to find a common ground upon which we can work in harmony in seeking a solution of this perplexing problem. Thanking you, Mr. President, for your consideraticn of this matter, Very sincerely vours, B. F. YoAKUM. Hon. Carvin CooLIDGE, The White House, Washington. CoMMoDITY MARKETING UNDER FEDERAL CHARTERS NEw York City, February 8, 1928. ny Hon. Carvin CooOLIDGE, The White House, Washington, D. C. DEAR MR. PrEsIDENT: Farmers and business men alike have watched and noped for some substantial relief in the farming situation. No one, I feel sure, realizes this more keenly than vourself or would more cordially welcome a pracsical solution, which would be welcomed, we may be confident, by the thinking men of both parties. Rafts of bills have been introduced, there have been miles of speeches. but no zonstructive action. Why? Economists and agricultural authorities, even farm organization leaders, earnest and sincere as they are, have missed the main point. That is that the farmers are not getting their share of what consumers pay for food products, and can not zet it until we create a nation-wide marketing system that will control distribution and establish and maintain profitable prices. } Agriculture can not prosper permanently until it is, so far as marketing and financing are concerned, placed, on the same high level as manufacturing. How can this be done? By placing farmers in a position where they can direct the distribution of their products and stabilize prices, as other industries do, at production cost plus a fair profit. Dealers now fix prices to both farmers and consumers. The consumer has no sontrol over what he pays or the farmer over what he sells. oo This condition has continued so long that there are now in the United States 19,000,000 “‘food-dealer population’ as compared with 32,000,000 farm popuation—nearly two-thirds as many dealers and dependents as there are farm ‘amilies—an immense unproductive army, far larger than necessary, living off of 1norganized farmers. - . For 17 standard food products the farmers receive only $7,500,000,000 while :onsumers pay $22,500,000,000. All the rest—3815,000,000,000-—goes for disribution and marketing. Isn’t this a terrific price to pay for handling and selling ‘00d? Seven billion six hundred and fifty millions dollars would be a liberal illowance for this service, including ample profits to distributors. (See Exhibit A) ; a f cers could get the $7,350,000,000 more than a fair charge which oe prod it would nally double the farmers’ income. If they could ret even half of it, agriculture would prosper 730 AGRICULTURAL RELIEF How can the farmer get a larger share of this tremendous spread between farm and kitchen? Not by enormous Government appropriations; they would be a constant drain on the Treasury. Not by so-called ‘equalization’ fees enforced by Federal agents. The farmer will not submit to force and resents political control. State agencies and organizations can not do it, for -80 per cent of many products move from one*State to another. Federal sanction and authority are required, but not Federal dictation; farm organizations national in scope and conducted along trade, not political lines. The farmers themselves should control and direct their own marketing as other industries do. There is one way, and only one way, in which this can be done, and that is by— COMMODITY MARKETING UNDER FEDERAL CHARTERS Give the farmers authority to establish national boards of control to manage and direct the distribution of their products and establish and maintain fair prices; give them a nation-wide marketing system and they will work out their own salvation. Control of shipments is the most vital element in maintaining prices, next to production. A national marketing board, with authority to direct shipments, could regulate the flow so as to prevent an oversupply in one market and scarcity in another, the conditions that favor the speculator and leave the farmer at his mercy. Give the farmers authority to organize commodity marketing associations, controlling their products, and these associations on business lines can obtain all the credit that is necessary to move crops and maintain prices. : I am not contending for any national organization that would unite all the farm population in one combine or raise the cry that they were constituting a “food trust.” No danger of that. The farming interests in various sections of the country are so diverse, their “money crops’ so varied, that the most effective method would be to bring together the producers of each important commodity in their own distinctive organization. A farm commodity act passed by Congress would authorize all organized standard products to be operated under separate charters. MARKETING WHEAT UNDER FEDERAL CHARTER To illustrate the practicability of marketing under Federal charters, I will use wheat. At present our surplus wheat which must be exported to find a market is the farm commodity that is giving most anxiety to economists, political and farm leaders. The average wheat production for the five years 1921-1926 was 807,000,000 bushels, for which farmers received an average price of $1.10, allowing the same for seed wheat. Approximately 23 bushels out of each 100 bushels of the farmers’ wheat is dumped into foreign markets and sold for less than production cost in competition with wheat.exported from other countries. Wheat constitutes about one-half of our export food products. Estimates on cost of producing wheat vary from $1.45 to $1.75 per bushel. The United States Tariff Commission, in its report to the President on March 4, 1924, estimated the cost of production and marketing at $1.59. Adding 10 per cent profit (or say, 16 cents a bushel) would make a production and marketing cost, including a fair profit, of $1.75 a bushel. Eighty per cent of any raw or finished product under organized control can and does control the market. Eighty per cent of our wheat is produced in 14 States, therefore could easily be placed under an organized Federal charter marketing control. WHEAT MARKETING AT HOME AND ABROAD How can an American wheat-marketing plan be put into operation under a Federal charter system? The first step necessary would be for Congress to create authority to grant Federal charters to market farm commodities when organized in compliance with the provisions and conditions of such charters. : The next step would be for wheat associations to apply for such a charter and consolidate their marketing under an AGRICULTURAL RELIEF 731 AMERICAN WHEAT MARKETING BOARD OF CONTROL with authority to organize State boards of control, under such charter, when and where deemed advisable. ’ Without threatening to penalize farmers for violation of governmental marxeting decrees, without the menace of “forcible control” veiled with threats of Federal court proceedings in the conduct of their business, quicker and more satisfactory results could be had through an “educational persuasive control,” vet positive in its power in controlling the distribution and marketing of interstate and foreign wheat shipments. Such a board of control, acting under a Federal charter, clothed with power to direct the distribution of wheat, both interstate and foreign consignments, with the responsibility of established rules for inspection, grading, classification, and packing, as well as directing shipments, could successfully stabilize and maintain a fair standard price for wheat. The board of control, acting in conjunction with State boards and in constant touch with the producers, could be the most effective force in controlling wheat acreage and preventing overproduction, the greatest (difficulty in maintaining stabilized prices. The membership to be based on “acreage planted,” by estimating in advance the acreage required to produce sufficient wheat for normal requirements, and the fair proportion in each State, the board could go a long vay in systematizing production as well as marketing. The dollars-and-cents argument would count more with farmers who know they are not getting a fair deal than all the talk and speeches that could be made. Once the farmers realize that they will get more for their wheat; that prices will be maintained and stabilized from one crop to another; once they realize that the boards of control are working in their interest for better pay for their wheat there will be little difficulty in controlling distribution. Everv farmer will be zlad to take advantage of this, his own ageney. THE SAME APPLIES TO OTHER COMMODITIES Marketing of other commodities could be provided for by the same system, rach major product being covered by a separate Federal charter. The authority bo inspect, classify, and direct interstate shipments, preventing gluts in large markets, shipping where the products are in demand, and avoiding cut prices ind consequent losses would prevent farmers from remaining outside of coopera-‘ive organizations and as nonmembers taking advantage of organized prices for ndividual gain, It would prevent dealers from buying from nonmembers and overstocking market centers in order to break prices. {ft would so regulate distribution that consignments of food products could be made in an orderly manner to supply the demand at stabilized prices and at ess cost to consumers. MUST BE ORGANIZED ON A LARGE SCALE Farm commodity marketing.to be effective must be organized on the same vast scale as other industries. This is the tendency in other countries, as witness he recent Argentine beef cattle agreement which ended an international “meat var” between American and British interests. Recently the Cuban export sugar interests organized to control their industry hrough the formation of an ‘International Export Sugar Commission,” now 1aving in their organization five-sixths of the exported sugar of the world. They oldly but justly state that— “It is the purpose of the ‘International Export Sugar Commission’ to clearly ind definitely control world production and eonsumption of sugar.” Scientific discoveries and engineering developments have brought the business vorld within speaking distance. Trans-Atlantic mail service within another vear will be reduced to 30 hours’ time. Combinations and financial transactions involving any amount can be as readily ransacted between New York, London, and other foreign countries as they can se between New York, Chicago, and other business centers. } If provision is not made so that American farmers can organize comprehensively, hey will in a few years be at even greater disadvantage in the markets of the vorld than thev are to-dav. 732 AGRICULTURAL RELIEF THE GREATEST SERVICE THAT CAN BE RENDERED The two outstanding acts of Congress in our time have been those creating the Interstate Commerce Commission and the Federal reserve banking system. An act permitting farme?s to creaie a nation-wide marketing system will be of equal importance. Give to farmers a broad, constructive enabling law under which farm products can be marketed by commodity units under a farmer-controlled management, and they can finance their own requirements through their own credit. Organization and marketing in this, as in any other business, will require financing. But this can be done for a fraction of what other plans proposed would cost. In organizing big industries the usual expense is from 10 to 15 per cent. The total value of wheat, based on the average for the past five years, is approximately $1,000,000,000. If carried through by the usual process, to establish an effective wheat marketing system would cost $100,000,000. Under the plan I propose, in the case of wheat $1,000,000 for organization purposes would be sufficient—and this is the fourth largest commodity to be considered. The smaller ones would require less. The total for the 17 major food commodities would hardly be a drop in the bucket compared with the amounts asked of the Government under the other plans proposed. If Congress be unwilling to do this by direct appropriation—and I am no advocate of appropriations, lavish or otherwise—it could make small loans, for organization expenses only, to these commodity marketing organizations, to be repaid with 1 per cent interest. So the establishment of this great Federal charter marketing system, of infinite value not only to the farmers but to the entire country, could be accomplished without costing the Government 1 cent, and avoid all political complications. There is one thing, however, that the Government should do to facilitate a nation-wide marketing system. That is to see that farmers and farm products and properties are accorded the same credit standing and privileges which the Federal reserve member banks accord to other businesses. This is something to which agriculture, still the biggest business in the Nation, is justly entitled. Two cents a bushel on the 800,000,000 bushels of wheat produced annually would, as a basis for a marketing pool, yield $16,000,000. With the millions that would come from stabilized prices, :the farmers would reap a rich return, running into hundreds of millions of dollars. And, under the plan proposed, avery dollar of the profit, except the necessary expenses for maintaining the organization, directing shipments, and stabilizing prices, would belong to the farmer. Hoping that this suggestion may be of some aid in solving one of the most pressing problems of our time, I am, Verv truly vours, B. F. YoAKUM. EXHIBITS ATTACHED Exhibit A attached must be convincing to any one studying the perplexing problem of better pay to the farmer without increased cost to consumer. Exhibit B discloses the average export wheat from all wheat-exporting countries. It will be noted that the United States and Canada contribute 472,000,000 of the total of 699,000,000 exported bushels of wheat, or approximatelv 68 per cent of the wheat exportation. Exhibit C is an analysis of sugar exportations, an example of how prices can be established and maintained through control of a large proportion of a food product. AGRICULTURAL RELIEF 733 ExHIBIT A What consumers pay and farmers receive for 17 standard food products ior 17 standard products (Department of Farmers receives Agriculture). me For the same food products consumers paid. $7, 500, 000, 000 22 500. 000. 000 Cost of distributing the above $7,500,000,000 of food product: For transportation of this foodstuff for which consumers paid the above enormous cost, the railroads received 1 per cent of total cost to consumers, or_______________. \fter the products were delivered at destination terminals, liberally estimated, the cost of trucking from terminals to warehouses, cold storage and expressage, 10 per cent of total cost to consumers, or_________._ eee ee em Allowing liberal profits and commissions to distributors who turn their business at least once a month, this being equal to 20 per cent of total cost to consumers. or. 900, 000, 000 2, 250, 000, 000 4. 500. 000. 000 A legitimate distribution cost aside from transportation between producer and consumer, amounting to__ ___ Added to this the amount received bv farmers wea 7, 650, 000, 000 7 500. 000 000 Total amount received by farmers and a legitimate cost for distribution__________.___ pememe—ee—=-- 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 bv Total of these amounts... 22, 500, 000, 000 Amount received by farmers for 17 standard food products is actual (Department of Agriculture report). Item No. 1 is actual (Interstate Commerce Commission report). Items Nos. 2 and 3 are results of close and careful investigation. xX HIB 1 World's exportation -t wheat "This statement discloses the wheat-exporting countries and their annual average wheat exportation during 1922-1925, according to latest figures available] Bushels "nited States wheat exportation (largelv to Great Britain) averaged 23 per cent of its production, or__ - 187, 000, 000 Canada wheat exportation (to ‘Great Britain) avers of its production, or______. -. 285, 000, 000 \rgentine wheat exportation (to Germany, s.. Britain) averaged 69 per cent of its production, o 3, 000, 000 Australia wheat exportation (to Great Britain ana aged 66 per cent of its production, or. 000, 000 399, 000, 000 (Canada. using it to - Total exported.. _. Great Britain takes all surplus wheat of the N~minion make prices from other exporting countries 734 AGRICULTURAL RELIEF Exmsir C Sugar exports and world’s sugar production The analysis of sugar exports shows: Cuba (1924-25 crop) ow occ meee South America. Africa o.___ Netherlands. __ Australia___. Belgium _ _ [ndia_______ Germany -. Java________ Czechoslovakia. Hungary __._.. Poland ____________. Central America_ .__._____. Dominican Republic. _ Tons 5, 532, 000 340, 000 60, 000 417, 000 103, 000 230, 000 150, 000 125, 000 2, 250, 000 915, 000 93, 000 216, 000 80, 000 332, 000 Total. ________ mee .- 10, 843, 000 The above exportation of sugar is out of a world’s crop of approximately 27,000,000 tons. Assuming that through the “International Export Sugar Commission’ there is an advance price of 1 cent a pound, or $20 a ton, it would increase the revenue to the sugar growers $216,686,000. The organization of this great export sugar combine discloses the practicability and simplicity of pooling North American wheat exportations. ——— — Des MoiNEs., Iowa, March 15. 1928. Hon. GILBERT N. HAUGEN, Chairman of Agricultural Committee, House of Representatives, Washington, D. C. Senate Concurrent Resolution No. 9 Be it resolved by the General Assembly of the State of Iowa, section 1, That the Senate of the Forty-second General Assembly of Iowa, convened in extra session (the House concurring), hereby memorialize the Congress of the United States to pass at this session effective agricultural surplus-control legislation as embodied in the McNary bill in the Senate and the Haugen bill in the House, each containing the equalization fee. Sec. 2. That a copy of this resolution shall be transmitted by wire to the President of the United States Senate and to the Speaker of the House of Representatives of the United States and to the chairman of the Agricultural Committees of each House of Congress. } Foregoing resolution adopted by the General Assembly of Iowa in special session March 14, 1928, Warter H. BeaM, Secretary of Senate. (After informal discussion.) The CuarrmMaN. Without objection, the committee will stand at recess until to-morrow morning at 10 o’clock. (Thereupon, at 12.05 o’clock p. m., the committee adjourned to meet to-morrow. Saturday, February 25, 1928. at 10 o’clock a. m.) 2 a AGRICULTURAL RELIEF 705 Mr. RuBey. We do not know that. Mr. ConnNaLLy. I say I am afraid of it. But, anyway, some gentlemen say that ‘What is the Constitution among farm relief politicians—what is the Constitution any way?” It is serious gentlemen. Mr. AsweLL. If you take it into the courts and there is a delay of two, three, or four years, what will happen? Mr. ConNaLLY. Of course, that is a possibility as suggested by Doctor Aswell. It is taken into the courts. About the time you get the equalization fee passed, some fellow will take it into court, or before you get it organized some fellow will take it into the courts and it will be declared unconstitutional and, of course, the thing would blow up. And the hopes of the farmer would also blow up. Mr. KiNncHELOE. May I ask you a question there? Mr. ConnaLLy. Yes. Mr. KincHELOE. On the question of the practicability of getting a bill for the farmer that will do him some good, I am frank to say to you I think there is a whole lot in the debenture plan. But do you think the President of the United States would sign that bill? Mr. ConnaLLy. I think he would come as near signing it as he would the Haugen bill. [Laughter.] Mr. KincaELoE. Then your bill 1s not any more certain than the McNary-Haugen bill? Mr. ConnNaLLy. No. But I will say to the gentleman from Kentucky that when I have tried a fellow on one thing and I know what he has done on that I would a great deal rather take a chance on trying something else than to stick up the same old thing, as to which I know what he is going to do. The President has vetoed the Haugen bill once and eve.ybody knows he will do the same thing again. You remember a tale of a certain dog that went down a certain alley, and what happened to him (he got badly licked); and the dog when invited to go down that certain alley again observed to one of his dog friends, “No; I am not going down that alley, I know what will happen to me if I go down that alley.” The Haugen bill has been a “Down that alley’ once. oo Mr. KincHELOE. Do vou think that bill would go down a similar alley? Mr. ConnarLy. The Haugen bill has been down that alley, and you know what the President did to it, do you not? My prediction 's that if it is sent down that same alley again the same thing 1s going to happen to the McNary-Haugen bill. So, I would rather try a different alley. But I will say to the gentleman, as I previously said, my bill is drawn so he can cut off the debenture plan and leave the export corporation or direct appropriation from the Treasury, with the power to purchase and carry farm products just as the Haugen bill, except the fee is eliminated. The President indicated he would approve the Crisp bill, as I understand; he indicated that he would approve a bill drawn on the plan of the bill of Doctor Aswell, of Louisiana. I voted for both of those bills. } Poe other thing about the equalization fee: That is why I voted acainst the Haugen bill. 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