A

быть

when

Senator CAPPER. Mr. Gray, do you think the problem of increased production is adequately covered in the event of the adoption of either or all of these plans?

Mr. GRAY. Each of them has an automatic, somewhat invisible and rather inexorable method to control production. The equalization fee will control production, because the size of the fee will increase if the quantity of production magnifies.

Senator BANKHEAD. Do you mean it is graduated?

Mr. GRAY. It is not graduated, but the Federal Farm Board, if there is a great surplus of wheat, say, will have to declare an equalization fee of greater magnitude to handle it than if it would be small. And the size of the fee automatically will control surplus and production without a definite authoritative Government mandate along that line.

The debenture plan has a surplus-control feature in it in that as the product expands the provision in the measure is that the size of the debenture shall decrease. There is a penalty there, a direct penalty in the debenture plan for overproduction.

The allotment plan has a similar automatic and somewhat invisible method of controlling production, in that when the amount is designated which can be used in home consumption and the portion which must go abroad or be withheld is all ascertained and promulgated, then the farmer who keeps on producing too much wheat or cotton or peanuts or what not, will have a lesser and lesser portion of his crop salable in the home market at the cost of production price and a greater quantity enforced for sale abroad at a lesser and lesser foreign price.

In other words, Mr. Chairman and gentlemen of the committee, the three farm organizations do not believe evidently that Government by mandate in controlling acreages and otherwise should or could control production. But there is only one thing that controls production, whether it be the production of boots and shoes or wheat, and that is price. If the farmer gets a lesser price and lesser profit, The will control production. And under the allotment plan, the debenture plan, and the equalization-fee plan, by the penalties which are in those plans he will get a lesser price if he overproduces, and price will control production where governmental mandate undoubtedly will not control production.

า

Senator THOMAS of Oklahoma. Mr. Gray, I want to ask you one or two questions. How long have you been representing farm organizations in Washington?

Mr. GRAY. Seven years, almost.

Senator THOMAS of Oklahoma. Before congressional committees ? Mr. GRAY. In my present capacity seven years, and then for three years prior on the legislative committee of the American Farm Bureau Federation.

Senator THOMAS of Oklahoma. Isn't this the first time that the three farm organizations have been here unified back of a single proposal?

Mr. GRAY. So far as the marketing act and the surplus question are concerned, yes.

Senator THOMAS of Oklahoma. And you have presented for them this claim which you are now backing?"

Mr. GRAY. Yes.

Senator THOMAS of Oklahoma. And of course later on we will have a statement from them. Now one other question. You are familiar, are you not, with the Federal Reserve Board's plan of increasing circulation throughout the country?

Mr. GRAY. Somewhat.

Senator THOMAS of Oklahoma. What do you think about that plan, just briefly? In other words, are you for it or against it? Mr. GRAY. For it.

Senator THOMAS of Oklahoma. Do you think that it has some possibilities of bringing about results?

Mr. GRAY. It has possibilities of bringing about a result in price, and that is what we are interested in.

Senator THOMAS of Oklahoma. Yes. Well, that is the whole problem before the Congress and before the country as far as agriculture is concerned; that is to get a better price for agriculture for the things that they sell.

Mr. GRAY. May I say, Senator Thomas, that if we have any criticism of this present session of Congress it is that the legislation enacted has not struck directly enough at the price which the farmers must get on their farm products.

Senator BANKHEAD. I agree with you fully on that. The whole subject has been neglected.

Mr. GRAY. Pardon me, Senator Thomas. I did not mean to divert from your questioning.

Senator THOMAS of Oklahoma. Now the second proposition. Senator McNary has a bill pending proposing to make available some funds for the particular use of financing sales of wheat and cotton abroad. Now, before I ask you about that, I want to read into the record a telegram which I just received in the last hour. This telegram is from New York, dated April 28, addressed to myself as a member of the Senate Committee on Agriculture and Forestry. The telegram is as follows [reading]:

We hereby record our unalterable opposition to the use of any part of $100,000,000 Reconstruction Finance Corporation funds to loan foreign governments with which to purchase United States wheat, since in effect it takes another $100,000,000 of our taxpayers' money and virtually presents it to foreign governments American exporters have always sold American wheat to foreign importers and governments for cash and are still doing so daily. Chairman Stone is quoted as refusing to sell surplus to Americans for cash, but stating that our farmers' salvation lies in domestic markets. It appears inconsistent that he should refuse to sell wheat surplus to United States citizens while lauding domestic markets for farmers and yet advocate practically a gift of this surplus to foreign governments, which countries are paying cash every day for their purchases of Argentine, Australian, Russian, Danubian, and Canadian wheats. We consider the proposal a grave injustice to the American grain merchant, who is expected to pay taxes and at the same time continue to furnish employment, both clerical and manual, to a large force of United States citizens. It is our sincere belief that the selling of wheat on credit will not increase the consumption, and we emphatically challenge any statement to the effect that by the use of United States Government credits wheat may be sold for export in channels that do not interfere with the regular business of the United States grain merchant.

HERBERT L. BODMAN, President New York Produce Exchange.

Mr. Gray, I wanted you to have that telegram before you answered the question I am going to ask. Does the particular organization that you represent favor the McNary resolution of making available

some funds for the use of the Farm Board in financing exports of wheat and cotton?

Mr. GRAY. Let me answer that question, Senator Thomas, only in the name of the American Farm Bureau Federation, because I am here this morning to represent the three organizations in regard to the pending bill and the marketing act that we have presented. But in the name of the American Farm Bureau Federation I can say, and I am sure President O'Neal here will say the same thing if necessary later, that we are for the McNary resolution.

Senator THOMAS of Oklahoma. And what benefits do you think it will bring about, if any?

Mr. GRAY. It will bring about the benefit of helping to dispose of some of this surplus of wheat and cotton that has piled up in the way and is helping to hold the market price down; and it will not be a gift of wheat, as we understand it, abroad, but it will be a sale of wheat on longer terms of credit than certain foreign buyers are now privileged to offer.

And in further comment I will observe that the Congress already has done a commendable thing from many points of view in donating 49,000,000 bushels of wheat without cost to the American citizens. And this fund in the McNary resolution is not a donation abroad but a sale on credit terms.

Senator BANKHEAD. How large is the surplus of wheat now?

Mr. GRAY. I would rather some one from the Farm Board would answer that, but I imagine it is not less than 200,000,000 bushels at the present time.

Senator BANKHEAD. How much of that surplus would this appropriation at present prices remove?

Mr. GRAY. I do not know; 25,000,000 or 30,000,000 bushels.

Senator THOMAS of Oklahoma. Mr. Stone testified that if we sold 25,000,000 to 40,000,000 bushels abroad that it would have a tendency to increase the price of wheat.

Mr. GRAY. I just interpolated this thought that this amount of money might handle 25,000,000 or 30,000,000 bushels of wheat. I do not know whether Chairman Stone was asked that question when he testified this week, or, if he answered, what answer he gave. Senator THOMAS of Oklahoma. Yes; 25,000,000 to 40,000,000 bushels.

Mr. GRAY. I see.

Senator THOMAS of Oklahoma. What benefit would this proposal have in your opinion for the cotton producer, if any, and if beneficial, how?

Mr. GRAY. In the same way as for wheat, but perhaps in lesser degree. Because so far as my superficial knowledge goes there may not be as many opportunities abroad to sell cotton, raw cotton in the bale form, even with another extension of credit as there would be of wheat. But it will bring some measurable benefit to cotton and perhaps might get rid of a couple of million bales.

Senator THOMAS of Oklahoma. Then based upon your judgment and experience, and as the representative of the organization for which you speak, you want the committee to understand that you are in favor of the Federal Reserve Board's present policy of trying to make money more plentiful and thereby expand the currency and credit base first? And, second, that you approve of the pro

posal submitted adding three titles to the farm marketing act covering what might be termed the debenture plan, the equalization-fee plan, and the allotment plan? And, third, you favor the enactment of the McNary resolution making available some money and credit for use in financing surplus American products abroad?

Mr. GRAY. Yes.

Senator THOMAS of Oklahoma. Now, have the three organizations agreed on any other proposal to your knowledge that might be beneficial to the farmers?

Mr. GRAY. Yes; they have agreed on other propositions.

Senator THOMAS of Oklahoma. Would you care to name them briefly?

Mr. GRAY. I would prefer, Senator Thomas, if you please, inasmuch as I am delegated to speak for them only on the one thing, that they each speak for themselves through their authorized representatives here when they appear before this committee.

Senator THOMAS of Oklahoma. That is all.

Senator BANKHEAD. Let me ask you another question: It appears that for the first time the three organizations have been together. Will you explain what differences they have had heretofore, and what they have come together on?

Mr. GRAY. Yes; I will explain that, Senator Bankhead, in relation to the project we are discussing this morning. I touched upon it a while ago. At the first when the grange began to sponsor the debenture plan, and at first when the American Farm Bureau Federation began to sponsor the equalization plan, and more recently when the union began to sponsor the allotment plan, each became so enthusiastic about its own plan that each, as I said a while ago, concluded the one plan would be all sufficient. As years have gone by we have come to the conclusion that they are all necessary.

Senator BANKHEAD. Did each oppose the other's plans?
Mr. GRAY. No; that never has happened.

Senator BANKHEAD. None of the organizations ever opposed any of the plans proposed by the other?

Mr. GRAY. You are exactly right. That never has happened.
Senator BANKHEAD. Simply did not emphasize it?

Mr. GRAY. We have advocated our own plan and let the other organization advocate its own plan, and this is the first time with a definite, concrete bill that the three organizations have ever come before any committee advocating a unification of plan.

Senator BANKHEAD. Then there has been no yielding of views by any particular organization?

Mr. GRAY. No. There has been a consolidation of views, but not yielding of views.

Senator CAPPER. I think it is very encouraging that these three organizations should come here and take that stand for a definite program. It ought to be very helpful.

Senator BULow. Have they not got the three plans embodied in this so that they are all satisfied?

Senator CAPPER. Yes.

The CHAIRMAN. I might say this, having been a member of this committee as long as anyone present. Way back in 1922, when the first bill was introduced carrying an equalization fee, which in part bore my name, the American Farm Bureau Federation, the Farmers'

Union, and an organization called the-what was that organization that Mr. Peck was a member of?

Mr. GRAY. The Corn Belt Federation.

The CHAIRMAN. They all advocated the equalization fee but the grange. The grange had no aggressive plan; continued rather negative in so far as a plan was concerned, but never opposed equalization until after it was first vetoed by President Coolidge in 1925. I introduced the bill, made some changes hoping to conform to President Coolidge's objection. A professor came before the committee on the bill introduced by Senator McKinley, a professor of economics of the University of Illinois, whose name eludes me now, and brought forward this debenture plan in 1926; in the spring of 1926. The grange later got back of that plan. There was never any opposition to one plan or the other by any of the organizations. The grange favored the debenture and the Farmers' Union at that time and the Farm Bureau Federation favored the equalization fee plan.

Things went along, and I think we have all discussed it with these leaders that it was essential before Congress would take action to come before the Congress with some aggressive plan and support one measure. Out of the equalization plan, through the influence of Mr. Simpson, developed the so-called allotment plan.

Now, these farm gentlemen have come together, each clinging to his own view, and yet seeing virtue in his neighbor's view, and have brought to us to-day the equalization fee, the debenture, and the allotment plan as optional schemes to strengthen the Federal marketing act, and that is how they are appearing here in that particular line, and I think in a brief word that is an outgrowth of these theories and finally an amalgamation of the three ideas into one plan presented by Mr. Gray this morning representing the various organizations.

Mr. GRAY. You have stated it very accurately.

The CHAIRMAN. Well, I have been here and listened to this story. a long while.

Senator BANKHEAD. I am glad to have that statement, because as a new member I am trying to know the history and the background of it all.

The CHAIRMAN. That is the reason I made the statement, Senator. Senator BANKHEAD. Thank you.

Mr. GRAY. If there is no further questioning, I am through. The CHAIRMAN. We thank you. Now, Mr. Simpson and Mr. O'Neal and Mr. Brenckman, how have you gentlemen arranged the presentation of your statements?

Mr. O'NEAL. Senator, Mr. Simpson says he wants to go. He would like to make a statement.

The CHAIRMAN. All right, let Mr. Simpson take the stand.

STATEMENT OF JOHN A. SIMPSON, PRESIDENT OF THE NATIONAL FARMERS' UNION, OKLAHOMA CITY, OKLA.

Mr. SIMPSON. My name is John A. Simpson. President of the National Farmers' Union.

Mr. Gray has made the general statement that represents the wishes and desires of all three organizations. So mine will be very brief.