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a day, there would be 25,000 gallons a day of surplus on the Chicago market. Now, under your bill is there anything to prevent that surplus milk from coming to Washington and destroying the base market of the farmers of this area?

Mr. SCHULTE. Yes, sir; under my bill the milk cannot come in. Cream can, but not milk.

Mr. SMITH of Virginia. Well, you have changed your bill? Mr. SCHULTE. No, sir; I am restricting it to cream, not milk. Mr. SMITH of Virginia. On page 2, line 1, you refer to the shipment of milk, not cream.

Mr. SCHULTE. Then turn to page 3, Judge.

Mr. SMITH of Virginia. I am right about that, am I not?

Mr. SCHULTE. No, turn to page 3, line 1, "Provided, however, That the health officer"-that is the health officer in the District here"may accept the certification of a State or municipal health officer." Under the cream it is mandatory that he do accept. It is optional on the milk and mandatory on the cream.

Mr. SMITH of Virginia. To me it would mean milk, as the law is generally construed. But if you will notice your bill on page 2, right after that about the milk, from line 6 down through line 20 or 23, it prescribes the conditions under which milk may be shipped into Washington, and the only prohibitory conditions are that it shall be accompanied by a certificate signed by an officer of the Health Department of the District of Columbia, United States Department of Health, or some veterinarian authorized by the United States Department of Agriculture, or the Health Department of the District of Columbia, certifying that the cattle producing the milk are physically sound.

Mr. SCHULTE. Is not that only in the case of emergency?

Mr. SMITH of Virginia. Does it say so?

Mr. SCHULTE. I think so.

Mr. SMITH of Virginia. Of course, we would be governed by the language of your bill.

Mr. SCHULTE. That is right, and I am basing my argument on page 3, line 1, after the words "Provided, however, That the health officer may accept the certification of a State or municipal health officer"— on the milk.

Mr. SMITH of Virginia. There is nothing about emergency there. My opportunity to examine the bill has been very brief, but I cannot find anything that would stop anybody from shipping milk into Washington who had their cows tested for health. They could milk them in the field or anywhere else, wash the buckets or not wash the buckets, and still if they were permitted in that particular State to ship their milk in the fluid market of that State, they could ship it in the fluid market of Washington. My point, however, Mr. Schulte, was that where there was a surplus in Chicago, on the Chicago market, instead of selling their surplus there at 9 cents a gallon, as we have to do in Washington, they could ship it in here as base milk. There is nothing to prevent them from doing that, and if you had a similar law in Chicago, without local inspection, there would be nothing to prevent us in the Washington area from taking our surplus milk and shipping it on the Chicago market and selling it in competition with base milk of your producers, you see.

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Mr. SCHULTE. Is there anything in the law of Illinois that prohibits that now, that you know of?

Mr. SMITH of Virginia. I understand they have local inspection in Chicago. It is a 215-mile zone.

Mr. SCHULTE. Did you want to ask Mr. Sabine anything more, Judge?

Mr. SMITH of Virginia. No, thank you, Mr. Chairman.

Mr. SABINE. There is one more statement I would like to make. This morning over there in the other room there was a question came up about the amount of money that producers spent for clerical help and officers. I think Mr. Derrick's salary was $10,000 a year. I wish to defend that salary. It is fair. Apportioned out and figured out according to the volume of milk we sell, it amounts to one-twentyfourth of a cent per quart. If we charged it all up to the consumer, that is all it possibly could be. Our whole office expense over there is $44,000.

Now, there is another angle that has not been brought out yet, but I hope it will be. You have had your investigators out in all the different dairies-I say "you," I mean the committee-in all these different dairies, and I am reliably informed that the gentleman sitting behind you there, Mr. Gore, is getting $15,000 or more. Mr. SCHULTE. His contain expenses.

Mr. SABINE. I know; but he is getting $15,000 more from the independent dairy he works for, which is one of their large producers. I had lunch with him this morning, and he told me he figured he was paying his share for handling 5,000 gallons of milk, or, roughly speaking, that amount, and if the association spent that same amount of money on their volume, Mr. Derrick would be drawing down $150,000.

Mr. SCHULTE. Is it not true that he is buying 14,000 gallons of milk?

Mr. SABINE. Well, we will give him the benefit of the doubt. Then it is about four times the overhead of our association.

Mr. SCHULTE. But your association president is not doing bad. Our salary as Congressmen is $10,000, and we have campaign expenses to meet. Here is my friend, the judge, who will tell you what it costs to run for Congress. Ten thousand dollars is not bad, and your salary comes from the consumer, the poor son-of-a-gun that we are trying to get milk to.

Mr. SABINE. And there is one more thing, too, and I am going to keep still. We have to hire men that know their business, to deal with these corporations as we do, that they have to contact, because you do not think that Bordens or National Dairies hire minor league operators to run their business. They are major leaguers, and we are not putting any minor leaguers in there to bat against them. [Laughter.]

Now, if that is all you want of me, I will quit.

Mr. SCHULTE. Is there anyone else that wants to testify at this time?

Mr. SAUNDERS. They called me in here, Mr. Chairman. If there are any questions I can answer, I will be glad to answer them.

Mr. SCHULTE. Well, I was given some names here of people that wanted to testify, Saunders, Nichols, Pancoast. Are you Frank E. Saunders?

Mr. SAUNDERS. Yes.

Mr. SCHULTE. Do you care to testify, Mr. Saunders?

Mr. SAUNDERS. Well, I will answer any question that you want to ask.

Mr. SCHULTE. After all, we have a bill here that we are discussing H. R. 6316, the so-called Schulte bill. Do you want him, Judge? Mr. SMITH of Virginia. Yes; put him on the witness stand. Let us get the facts.

Mr. SCHULTE. You do not know what side he is on? He is on the list here.

Mr. SMITH of Virginia. I assume he is a cooperator. I do not know.

Mr. SCHULTE. Well, let us not push the boys on unless they want to testify. Will you state your name and address?

STATEMENT OF FRANK E. SAUNDERS, LEESBURG, VA.

Mr. SAUNDERS. My name is Frank E. Saunders, Leesburg, Va. Mr. SCHULTE. You are a member of the Maryland-Virginia Producers' Association?

Mr. SAUNDERS. Yes, sir.

Mr. SCHULTE. Do you hold any office in it?

Mr. SAUNDERS. I do not.

Mr. SCHULTE. How much milk do you produce, Mr. Saunders, how many gallons a day?

Mr. SAUNDERS. 230 gallons.

Mr. SMITH of Virginia. Is that base?

Mr. SAUNDERS. No; he asked me how much we produce. He has not asked about the base.

Mr. SCHULTE. How much is your base?

Mr. SAUNDERS. 178 gallons.

Mr. SCHULTE. All right, Mr. Saunders, they have sent you in here to testify on H. R. 6316. This act seeks to amend the act entitled "An act to regulate within the District of Columbia, the sale of milk, cream, and ice cream, and for other purposes." Do you feel that this bill is going to be advantageous or disastrous?

Mr. SAUNDERS. I have not read the bill, Mr. Schulte. It was just handed to me a few minutes ago and I have not read it, but if that bill allows cream to come into this market it would be a bad thing for us.

Mr. SCHULTE. It would hurt your price?

Mr. SAUNDERS. It would hurt our price. When they stopped bootleg milk we got a base of 103 percent.

Mr. SMITH of Virginia. How much base were you getting before they stopped bootleg milk?

Mr. SAUNDERS. Four months ago, I believe, our base was 84 percent. Then it jumped to 92 or 94, I cannot say exactly-96. That was about the time they were beginning to work on this bootleg business. Then the next month's payment was 100 percent.

Mr. SCHULTE. You had 100-percent base?

Mr. SAUNDERS. We were 100-percent base. We were paid for 100-percent base.

Mr. SCHULTE. What month was that?

Mr. SMITH of Virginia. Will you explain that? I do not think Mr. Schulte understands what you mean by that, paying for 100percent base.

Mr. SAUNDERS. As I understand it, the amount of milk that the dealer keeps in his plant, he keeps for base, on a base price, pays a base price for it. When I got 103, he kept in there 103 percent. Do I make myself clear? And we got paid for 103. That was after this Indiana milk was stopped or Indiana cream was stopped. That was our last settlement, which was for the month of April. For the month of March we were paid for 100 percent. I think it has been 5 or 6 years since we have been paid for anything of that kind. So I think it would be a very serious thing for the cream to come in here, and if this bill allows cream to come in, I say we do not want it. Mr. SCHULTE. Would this affect your price or would it affect the price of the distributor to the consumer?

Mr. SAUNDERS. I do not believe it would. That is, it would, of course, affect our price. It always backs up on us.

Mr. SCHULTE. Could it back up on you, in view of the fact that you have this organization to protect you, and the consumer has no organization whatsover?

Mr. SAUNDERS. I am not prepared to really answer that question, but I do believe

Mr. SCHULTE (interposing). You see what I mean, do you not? Mr. SAUNDERS. I do not know as I just exactly understand you.

Mr. SCHULTE. You see, you have an organization. The point that I am trying to make is this: You have an organization that protects you in your price, but the consumer has none whatsoever. He has the privilege, I appreciate, and the right of boycotting the dairies that he feels will not cooperate. He has that right, and he has a very powerful weapon if he will ever use it in combination or with an organization, but they never do that. But the point I am trying to make is this: Do you not feel that cream coming in here would not materially affect you, but it would have a tendency to reduce the profits of the distributor and lower the price to the consumer? Mr. SAUNDERS. No, sir.

Mr. SCHULTE. You do not feel that way?

Mr. SAUNDERS. It would reduce the price to the producer, and I believe that the distributor would profit by it.

Mr. SCHULTE. In what way?

Mr. SAUNDERS. He would get the stuff cheaper, and just the way in which it has been proven here the last month or two, converting the cream into fluid channels. It is to the advantage of the dealer to have it come in here.

Mr. SCHULTE. How do you feel about this eliminating of the surplus and just using a base price?

Mr. SAUNDERS. I see no practical way to do that.

Mr. SCHULTE. You are afraid that the other fellows would not live up to it and will keep on manufacturing surplus? Mr. SAUNDERS. You cannot control the cow.

the weather. Have you ever handled a herd?

You cannot control

Mr. SCHULTE. No; I have not. What would prevent you, Mr. Saunders, from taking the surplus that you have and keeping it on the farm and diverting it into some other channels, so as to protect you and hold your base price?

Mr. SAUNDERS. The only chance I could see in it would be sour cream, which I could not possibly produce milk to go into sourcream channels. I could not afford to do it.

Mr. SCHULTE. Now, you say you cannot regulate the cow and you are just a bit apprehensive because of the fact that Indiana, Illinois, and Wisconsin cream might come in here. Will it not have the same tendency if we eliminate some of the terrifically strict regulations that they have, that some of your poorer-class farmers out in the adjacent territory here will go into the production of it, and they will come in, and will they not demoralize your market?

Mr. SAUNDERS. The more you have on here, the more demoralization you have, because we have got plenty of milk here to supply all our demands at all times. I want to say that you always have got to have some surplus milk. There are a great many people that come into Washington unexpectedly, and there are times that the dealer has more calls for milk, more sales for milk than others, and you have got to have a certain amount of surplus to take care of those conditions. Weather affects consumption. So you have to have around, just roughly, say, about a 10-percent surplus, and we can produce all the milk, and more, too, that we consume and use on the Washington market. We do not need another drop in here, and any bill that would bring more in here would be detrimental to the producer. That is the way I feel about it.

Mr. SCHULTE. You have got a 230-gallon production?

Mr. SAUNDERS. It is around 230 gallons.

Mr. SCHULTE. What do you get for your milk?

Mr. SAUNDERS. We had 42 percent last month. The barn score is 98. The inspector came along there and caught a heifer just turned in, and that cut our herd score from 99 to 98. That takes a cent a gallon off. We did not have time to separate her. She was just fresh and was driven into the herd, and she stepped in at the wrong time. It just so happened, and that was the fihst time we have been cut down to 98 in a good many years. Now that cut our price of milk down, you see.

Mr. SCHULTE. That is what I was trying to get at. That cut your price of milk a cent a gallon.

Mr. SAUNDERS. Yes, sir.

Mr. SCHULTE. So that mistake cost you $2.30 a day?

Mr. SAUNDERS. Yes, sir.

Mr. SMITH of Virginia. That was on the base only, was it not? Mr. SAUNDERS. Just on the base; yes.

Mr. SMITH of Virginia. That would be $1.80 a day.

Mr. SAUNDERS. $1.80 a day; yes, sir.

Mr. SCHULTE. That is what that mistake cost you. Who profits by that? That same milk that you are having to sell for $1.80 a day less, or 1 cent a gallon less

Mr. SAUNDERS (interposing). No; it is half a cent a gallon. Now, you are asking me what our milk sold for. I will have to give you the scores before I can tell you what I got for my milk.

Mr. SCHULTE. The point that I am trying to make is this, that because of the fact that you were punished this half a cent a gallon, but that same milk that you had to sell at half a cent a gallon less was sold on the markets in Washington for 14 cents a quart? Is that right?

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