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FARM RELIEF

TUESDAY, APRIL 26, 1932

UNITED STATES SENATE,
COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D.C. The committee met pursuant to call at 10 o'clock a. m. in room 324 Senate Office Building, Senator Charles L. McNary presiding.

Present: Senators McNary (chairman), Capper, Norbeck, Frazier, Thomas of Idaho, Hatfield, Townsend, Kendrick, Thomas of Oklahoma, McGill, Mrs. Hattie Caraway, and Shipstead.

Also present: Senators Brookhart and Nye. Others also present: Paul Bestor, farm loan commissioner from Missouri, Federal Farm Loan Bureau; John A. Simpson, president, National Farmers' Union, Oklahoma City, Okla.; A. W. Bowen, Washington representative of the National Farmers' Union; Fred Brenckman, Washington representative of the National Grange; Edward A. O'Neal, president of the American Farm Bureau Federation, Chicago, Ill. ; Charles E. Hearst, vice president, American Farm Bureau Federation.

The CHAIRMAN. The committee will come to order. There are a number of bills pending before the Senate Committee on Agriculture and Forestry touching the subject of farm relief. In some instances these bills have been referred to subcommittees and they in turn have reported to the general committee without action being taken.

It was suggested by the able senator from Oklahoma at a meeting two weeks ago that the representatives of the three major farm organizations, the Secretary of Agriculture, the chairman of the Federal Farm Board, the chairman of the Federal Farm Loan Board, and the governor of the Federal reserve system be invited to be present and discuss these various measures, and to present any proposals that these representatives of farm organizations and public officials have in mind in order that the committee may be advised respecting any legislation that may be practical for the committee to consider at this session of Congress.

Conformable with that request the chairman has requested the presence of Mr. Taber, representing the National Grange, Mr. John A. Simpson, of the Farmers' Union, and Mr. O'Neal, of the Farm Bureau Federation, the chairman of the Farm Board, the Secretary of Agriculture—the last two mentioned not being present at this time-Mr. Bestor, of the Federal Farm Loan Board, who is here, and Mr. Meyer, who said that he would come when we needed him, but would not have the time to tarry about the committee room.

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A member of this committee has suggested that the members or representatives of the farm organizations might occupy seats about the table, and if Mr. O'Neal and others will sit down at the table in order that you may take part in the discussion, we will be very glad to have you do so.

Is Mr. Taber here, Mr. O'Neal ? Mr. O'NEAL. He is not here. Mr. Brenckman is here. The CHAIRMAN. In Mr. Taber's absence, you may sit at the table, Mr. Brenckman. You gentlemen may desire to ask questions and it

may be that the committee will desire to propound questions to you.

When an invitation was issued to the various representatives of farm and public organizations, I inclosed in the letter a number of bills that were pending before the committee in order that those invited to be present might have an opportunity to study them. I selected these bills, being important measures pending before the committee: S. 123, introduced by Senator Brookhart; S. 653, introduced by Senator Byrnes; S. 1197, introduced by Senator Frazier; S. 1698, introduced by Senator Bankhead; S. 3133, introduced by Senator Thomas of Oklahoma; S. 4323, introduced by Senator Wheeler; S. 3680, introduced by Senator McNary; and S. 4427, introduced by Senator Thomas of Oklahoma, in order that those invited might have an opportunity to study these measures before they expressed their opinion to the committee.

(The Senate bills above referred to are here printed in the record in full, as follows:)

[S. 123, Seventy-second Congress, first session] A BILL To amend the agricultural marketing act, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5 of the agricultural marketing act (relating to the special powers of the Federal Farm Board) is amended by adding at the end thereof the following new paragraph:

“(6) To provide (a) for the organization of a stabilization cooperative as soon as practicable after the date of approval of this amendatory act for each of the following commodities : Corn, cotton, wheat, oats, and livestock; and (b) for the vesting in such stabilization cooperatives of the functions theretofore exercised by the corresponding stabilization corporations."

SEC. 2. The agricultural marketing act is further amended by inserting between sections 5 and 6 thereof a new section to read as follows:

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ADDITIONAL AUTHORITY OF BOARD

* SEC. 5A. The board is further authorized

“(1) To purchase and sell for cash or on credit at prices determined in accordance with the provisions of section 9A the total exportable surplus of corn, cotton, wheat, oats, and livestock through the stabilization cooperatives for such commodities ;

“(2) To provide for the transportation in interstate or foreign commerce of commodities controlled by the board or by stabilization cooperatives for such commodities;

“(3) To provide for the construction or for the acquisition by condemnation or otherwise of such storage and other facilities as the board may deem necessary for use in connection with commodities under the control of the board;

“(4) To organize, or use the facilities of, such cooperative associations as the board may deem necessary to aid in carrying out its functions ;

“(5) To borrow money for carrying out the foregoing provisions from the Treasury of the United States, or from Federal intermediate credit banks, or other institutions engaged in the business of banking, or other sources upon the security of the credit or property of the board;

“(6) To lay an embargo on imports of any agricultural commodity for such periods as the board may deem necessary.”

Sec. 3. Section 6 of such act is amended by striking out “$500,000,000 ” and inserting in lieu thereof “$1,500,000,000.”

SEC. 4. Such act is further amended by striking out the words “stabilization corporation” and “corporation ” wherever they appear therein and by inserting in lieu thereof the words stabilization cooperative and cooperative," respectively. This section shall take effect with respect to any stabilization corporation as of the date of the organization of the corresponding stabilization cooperative.

SEC. 5. Section 9 (a) (2) of such act is amended by inserting after the word territory the words “ or in accordance with the provisions of section 16 of this act."

Sec. 6. Such act is further amended by inserting between sections 9 and 10 two new sections to read as follows:

PURCHASES AND SALES OF COMMODITIES

"SEC. 9A. (a) The board shall determine for each crop year the average cost of production to farmers of corn, cotton, wheat, oats, and livestock during the preceding 5-year period and shall also determine the financial investment in such commodities, using the official census data as far as possible. The items of cost shall be estimated upon the same principles as in the manufacturing industry, and considering the individual farm as a business unit, and determined on its individual production, including a fair compensation to farm owners for management and labor of themselves and families, together with proper allowances for depreciation of soil, improvements, equipment, stockbreeding animals, work animals, and buildings. The board through the stabilization cooperative for the commodity, shall then offer to the farmers a price equal to the average cost of production so determined plus enough profit to yield 4 per cent upon the capital investment. The board shall also have the right to buy and sell agricultural food products in processed form when such processing is necessary for preservation, but only when the parties so processing them have paid to the farmers the basic price above indicated and have added thereto only enough for a net profit of 4 per cent upon their own investment. The board shall establish an efficient agency to determine compliance with this last provision.

“(b) The commodities purchased by the stabilization cooperatives as herein provided shall be held not as a menace to the world markets for such commodities but to supply the world demand therefor, and shall be sold in such quantities and at such times as the board may find to be necessary to carry out such policy, but no competing cooperative to one already existing shall be set up hereafter and any such heretofore set up shall be discontinued. The selling price of any such commodity shall not exceed by more than 5 per cent the purchase price thereof plus the expenses incurred in connection with the holding of the commodity from the date of purchase to the date of sale, and if the board has acquired more than the exportable surplus of any such commodity, it may sell the same in the domestic market at a price which will return a net profit of not to exceed 5 per cent. In the event that it becomes necessary to sell any such commodity at a price less than the purchase price plus expenses of holding the commodity, the amount of the losses sustained as a result of the sales of the commodity, together with the losses already sustained through the operation of stabilization corporations, shall be repaid to the revolving fund as hereinafter provided. For such purpose the Secretary of the Treasury shall issue each month to the board a Treasury certificate of a face value equal to the total duty that would be collectible on imports of the commodity in an amount equal to the exports thereof for such month, except that in the case of cotton the amount of the certificate shall be computed on the basis of 5 cents a pound for each pound of cotton exported during such month. The board shall be entitled to draw out of the Treasury an amount equal to the face value of each certificate so issued or so much thereof as may be necessary to meet such loss; except that if such amount is insufficient to cover the total amount of the losses sustained with respect to the commodity during such month, the balance shall be paid by the board as a loan from the revolving fund as provided in section 9 (d). When the amount of $529,000,000 shall have been paid to the board on such certificates, thereafter the losses sustained as the result of such sales shall be repaid by means of an equalization fee determined as hereinafter provided. All amounts received by the board on such certificates or from such equalization fees shall be placed in the revolving fund and become a part thereof.

EQUALIZATION FEE

“ SEO. 9B. (a) In order to carry out the surplus-control operations in corn, cotton, wheat, oats, and livestock contemplated by this act without loss to the revolving fund, each marketed unit of the agricultural commodity produced in the United States and covered by such operation shall, throughout any marketing period in respect of such commodity, contribute ratably its equitable share of the losses arising out of such operations. Such contributions shall be made by means of an equalization fee apportioned and paid as a regulation of interstate and foreign commerce in the commodity. It shall be the duty of the board to apportion and collect such fee in respect of such commodity as hereinafter provided.

“(b) Prior to the commencement of any marketing period in respect of the agricultural commodity, and thereafter from time to time during such marketing period, the board shall estimate the probable losses with respect to such commodity to be paid by the board by means of the equalization fee as provided in section 9A. Upon the basis of such estimates the board shall from time to time determine and publish the amount of the equalization fee (if any is required under such estimates) for each unit of weight, measure, or value designated by the board, to be collected upon such unit of such agricultural commodity during any part of the marketing period for the commodity. Such amount is referred to in this act as the equalization fee.' At the time of determining and publishing any equalization fee the board shall specify the time during which the particular fee shall remain in effect and the place and manner of its payment and collection.

"(c) Under such regulations as the board may prescribe any equalization fee determined upon by the board shall be paid, in respect of each marketed unit of such commodity, upon one of the following: The transportation, processing, or sale of such unit. The equalization fee shall not be collected more than once in respect of any unit. The board shall determine, in the case of each class of transactions in the commodity, whether the equalization fee shall be paid upon transportation, processing, or sale. The board shall make such determination upon the basis of the most effective and economical means of collecting the fee with respect to each unit of the commodity marketed during the marketing period.

“(a) When any equalization fee is collected with respect to cattle or swine, an equalization fee equivalent in amount, as nearly as may be, shall be collected, under such regulations as the board may prescribe, upon the first sale or other disposition of any food product derived in whole or in part from cattle or swine, respectively, if the food product was on hand and owned at the time of the commencement of the marketing period : Provided, That any food product owned in good faith by retail dealers at the time of the commencement of the marketing period shall be exempt from the operations of this subdivision.

“(e) Under such regulations as the board may prescribe the equalization fee determined under this section for any agricultural commodity produced in the United States shall in addition be collected upon the importation of each designated unit of the agricultural commodity imported into the United States for consumption therein, and an equalization fee, in an amount equivalent as nearly as may be, shall be collected upon the importation of any food product derived in whole or in part from the agricultural commodity and imported into the United States for consumption therein.

“ (f) The board may by regulation require any person engaged in the transportation, processing, or acquisition by purchase of any agricultural commodity produced in the United States, or in the in tation of any agricultural commodity or food product thereof

" (1) To file returns under oath and to report, in respect of his transportation, processing, or acquisition of such commodity produced in the United States or in respect of his importation of the commodity, or food product thereof, the amount of equalization fees payable thereon and such other facts as may be necessary for their payment or collection.

“ (2) To collect the equalization fee as directed by the board and to account therefor.

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