Senator GORE. That is what he undertook to claim?

Mr. HARRIS. Naturally.

Senator GORE. Now is there any reverse operation on the short side of the wheat in the same individual, that the same individual can play both ways and run it down? Now I can see how that would work.

Mr. HARRIS. I do not understand what you mean by "play both ways."

Senator GORE. I do not know that I understand either. But here was Mr. Patton. He bought the cash wheat, and he bought the futures, and he demanded delivery on the futures, and the people who sold short had to come to him to buy the cash wheat, and he had a corner and ran the price up.

Mr. HARRIS. There is no way in which anyone can sell short anything except futures. An exporter sells premiums short; that is, he sells Gulf wheat at a certain price abroad, but he must buy his cash wheat when it comes to market the same as anyone else.

Senator GORE. That is what I was wondering about, whether there are any mechanics by which you can operate on the short side, where the bears can operate in reverse, like the bulls operate when they run it up?

Mr. HARRIS. Nothing except to sell futures for delivery and buy it in.

Senator THOMAS of Idaho. Mr. Harris, you meant in your answer there that the handling was on cash grain?

Mr. HARRIS. I beg your pardon?

Senator THOMAS of Idaho. Your answer referred to cash grain rather than to futures?

Mr. HARRIS. My answer to Senator Gore's question or to your question, sir?

Senator THOMAS of Idaho. No; your answer to my previous question?

Mr. HARRIS. Yes; I was.

Senator THOMAS of Idaho. That referred to cash grain?

Mr. HARRIS. Well, naturally the Farmers National Grain Corporation would necessarily make a profit on any futures they handle for the Stabilization Corporation from the fact that the Stabilization Corporation is not a member, as I understand it, and would therefore pay a full commission. Whereas the Farmers National Grain Corporation is a member of all of the leading exchanges, and would therefore either clear its own trades and pay no commission, or would at least collect one-half of the commission. I believe the facts would show that in some markets they cleared their own trades. In Chicago they cleared through other houses until they perfected an arrangement by which they acquired a clearing member, and in that way they naturally saved themselves the cost of commissions through the acquisition of that clearing membership. In other words, I believe Mr. Stone would bear me out, that through the acquisition of the Updike Grain Corporation they saved themselves the cost of paying commission charges in the Chicago commission market. They were endeavoring to save themselves the payment of a commission which they were formerly paying to commission houses. The reason was quite obvious.

The CHAIRMAN. If there are no further questions to be asked, Mr. Harris, that will be all, Mr. Harris. Thank you, sir. The CHAIRMAN. Is Mr. McIntyre present?

STATEMENT OF F. M. MCINTYRE, PRESIDENT EASTERN FEDERATION OF FEED MERCHANTS, POTSDAM, N. Y.

The CHAIRMAN. Mr. McIntyre, you expressed a desire to be heard briefly before the committee and left with the chairman a copy of a statement on behalf of the National League of Commission Merchants. Do you want to make an oral statement in addition to filing your brief?

Mr. MCINTYRE. Mr. Chairman, I have a brief here that I would like to present regarding the commission proposition.

The CHAIRMAN. Just a moment. I think probably I connected you with the wrong institution. What is your full name?

Mr. MCINTYRE. I represent the Eastern Federation of Feed Merchants.

The CHAIRMAN. What is your full name and address, please?
Mr. MCINTYRE. F. M. McIntyre.

The CHAIRMAN. And whom do you represent?

Mr. MCINTYRE. The Eastern Federation of Feed Merchants.
The CHAIRMAN. How extensive is that organization?

Mr. MCINTYRE. Something like 1,400 members in New York, New Jersey, Pennsylvania, and part of New England States, scattered membership in the New England States.

The CHAIRMAN. Have you a written statement you want to incorporate in the record?

Mr. MCINTYRE. I have a brief and a little evidence I would like to present here regarding a loan which was made by the Federal Farm Board to an organization known as the Grange League Federation.

The CHAIRMAN. Do you want to make an oral statement?

Mr. MCINTYRE. I would like to.

The CHAIRMAN. Very well. Go forward.

Mr. MCINTYRE. We understand there is a loan that has been made to an organization known as the Grange League Federation of Ithaca, N. Y. This loan, I understand, is to the amount of $250,000. This organization is in the business of retailing feed, seeds, grains, and fertilizers. They are doing a little marketing of farm products, very little.

On May 12, 1930, I appeared before the Federal Farm Board with a brief in opposition to this loan.

Senator NORBECK. On the ground that it was not a safe loan to make?

Mr. MCINTYRE. On the ground that this organization was not a producer-owned and producer-controlled cooperative association and did not come under the regulations of the agricultural marketing act. Senator NORBECK. What was your interest in the matter?

Mr. MCINTYRE. We are retail merchants. They come in direct competition to us.

The CHAIRMAN. Then you are opposing your competitors' application for a loan before the Federal Farm Board?

Mr. MCINTYRE. I am.

The CHAIRMAN. Was that loan made by the board?

Mr. MCINTYRE. I would like to ask Mr. Stone, Chairman Stone, if it was.

Mr. STONE. It was.

The CHAIRMAN. Go forward. I do not know what this committee has to do about transactions of that kind before the board.

Mr. MCINTYRE. Mr. Chairman McNary, I would like to present as evidence

The CHAIRMAN. All right; go ahead.

Mr. MCINTYRE. A copy of their certificate of incorporation; also a copy of our brief that we prepared and presented to the Federal Farm Board. Also I would like to present some statements made by the manager of that organization at a meeting of the vegetable growers in Syracuse, January 9, 1930. I would like to file that for the record.

There is not very much I would like to say further, Mr. Chairman. (The data referred to by Mr. McIntyre were filed with the clerk of the committee.)

The CHAIRMAN. Just let me ask you: It seems rather unusual to appear before a Senate committee studying the farm problem and attempting to arrive at some conclusion, complaining about a loan a competitor obtained from the Federal Farm Board. What is the proposition? What do you expect this committee to do?

Mr. MCINTYRE. The proposition is that we claim that this loan is contrary to the intent of the agricultural marketing act, and I am here to ask the withdrawal of that loan, or request that this committee recommend the repeal of the agricultural marketing act and the abolishment of the Federal Farm Board.

Senator NORBECK. The farmers do not cut any figure in this matter; it is just a few middlemen that ought to be looked after, is that it?

Mr. MCINTYRE. I claim that the retail feed merchants in the eastern part of this country are the best friends the farmer has.

Senator NORBECK. And the only friends he has, and you are objecting to competition?

Mr. MCINTYRE. We are not objecting to competition. We are objecting to the Government's entering into business in direct competition to private business.

Senator GORE. Do you know what interest was paid on this loan? Mr. MCINTYRE. I do not, Senator.

Senator GORE. Could you tell, Mr. Stone?

Mr. STONE. I could find out. It was based on the day that the loan was made, under the terms of the act.

Senator FRAZIER. When was this Grange League Federation organized, do you happen to know?

Mr. MCINTYR5. I think it was in 1922.

Senator FRAZIER. It was going some time before the Farm Board started in?

Mr. MCINTYRE. Yes, sir.

Senator FRAZIER. But you think they were not entitled under the law to this loan under the Farm Board?

Mr. MCINTYRE. I think they were not.

Senator GORE. They are not farmer-owned or farmer-controlled?

Mr. MCINTYRE. They are not farmer-owned or farmer-controlled, as the certificate of incorporation will show.

Senator NORBECK. Mr. Chairman, it seems to me that this is more a matter for the courts than for this committee. We are wrestling with the farm problem, and here are some merchants with private grievances that come here and take up our time.

Mr. MCINTYRE. I understood, the reason I asked to be here, that this committee was for the purpose of inquiring into the operations of the Federal Farm Board.

Senator NORBECK. With a view to doing something for agriculture. Mr. MCINTYRE. Yes, sir.

Senator NORBECK. You have not addressed yourself to that question at all.

Senator GORE. Was it your idea that the Farm Board has violated the law, that that might be of some interest to the committee? Mr. MCINTYRE. That was what I supposed the committee was for, to investigate into operations of the Federal Farm Board. If I am wrong, I am sorry.

The CHAIRMAN. That is all, Mr. McIntyre. Thank you.
Mr. Roberts.

STATEMENT OF J. EARLE ROBERTS, MEMBER ADVISORY BOARD, NATIONAL LEAGUE OF COMMISSION MERCHANTS, PHILADELPHIA, PA.

The CHAIRMAN. What is your full name, address, and occupation, Mr. Roberts?

Mr. ROBERTS. J. Earle Roberts, Philadelphia, wholesale dealer in fresh fruits and vegetables, appearing as a member of the advisory board of the National League of Commission Merchants.

The CHAIRMAN. What is the set-up of that organization?

Mr. ROBERTS. The National League of Commission Merchants is an organization of growers, cooperatives, dealers, distributors of fresh fruits and vegetables, located principally in the eastern section of our country.

The CHAIRMAN. You say you are growers of raw material?

Mr. ROBERTS. Of fresh fruits and vegetables. Our organization includes in its membership dealers

Senator FRAZIER (interposing). Growers or wholesalers?

Mr. ROBERTS. Both. We have both in our membership.

The CHAIRMAN. In your brief here I see you represent jobbers, brokers, commission merchants, auction companies, shippers, and shipping associations. That is all right?

Mr. ROBERTS. Yes, sir.

The CHAIRMAN. Have you a written statement?

Mr. ROBERTS. I have, Mr. Chairman. With your permission I would just like to present this written statement of the position of the National League of Commission Merchants.

The CHAIRMAN. Very well.

Mr. ROBERTS (reading). On behalf of the National League of Commission Merchants we appear before this committee earnestly to urge the repeal or substantial amendment of the finance provisions of the agricultural marketing act,

The national league has been in continuous existence 39 years. Its membership includes shippers and car-lot receivers. Among these are jobbers, brokers, commission merchants, auction companies, shippers, and shipping associations.

The membership always has been restricted. To qualify for membership the applicant must be able to show at least one year of successful business operation; to enjoy an acceptable reputation for integrity within the trade, with a minimum net worth of $10,000, and at least XXX moral rating. Moral ratings in the trade range from X to XXXX. Our natural organization territory is east of the Mississippi River and in that territory we have approximately 750 members.

The league throughout its history has been active in advocacy of high business ethics and always has endeavored to eliminate from the trade the sharks and shysters, who, as in every commercial and professional activity, prey on the careless and uninformed. The league's attitude toward the abuses imposed by these irresponsible parasites was clearly demonstrated in its vigorous support of the Borah-Summers law, the perishable agricultural commodities act of 1930. This act required every handler of perishable agricultural commodities in interstate commerce to hold a Federal license and submit to the regulation of the Department of Agriculture. All our members, therefore, are licensed by the Federal Government and amenable to the rules and regulations and the Federal inspection system, administered by the Department of Agriculture. We sought this status for the mutual protection of producers, shippers, and receivers.

As an organization we made no strenuous objections to the agricultural marketing act when it was passed. We realized that the marketing of fresh fruits and vegetables was not at all comparable with the marketing of such staples as cotton and wheat. We felt sure that the complexities of producing and distributing annually more than a million carloads of some 30 different fruits and vegetables invested the marketing program incorporated in this Federal law with exceptional hazards. These are of a character that have no regard for a Government decree. It was suggested at the time this legislation was pending, that the prudent course was to omit fresh fruits and vegetables. This suggestion was met with the argument that the Federal Farm Board would have large discretionary powers and might confidently be expected to refrain from encouraging application of the act where the results would be further confusion and disruption of reasonably acceptable marketing practices. In our annual convention in Detroit in 1930 and again in Philadelphia last January, the league took a conciliatory attitude toward this legislation. The Philadelphia convention made the following formal declaration :

One of the problems now confronting our Nation is the economic equalization of agriculture with other industries. In making progress toward a solution of this problem or any other national problem, it is necessary for us as citizens, as well as an association, not only to recognize leadership and vested authority but also to render all possible needful assistance to national leadership. This leadership or authority has designated the Federal Farm Board as the agency to be charged with the determination of this particular problem, one important aspect of which pertains to the distribution and marketing of fresh fruits and vegetables. Much consideration is being given by the board to the many