loans on reasonable terms, securable by their total assets, to enable them to make the necessary expansions of their operations by the erection, acquisition, or otherwise, of the necessary physical facilities and properties. "It is our judgment that the proper agencies to handle the loans of this character are the Federal intermediate credit banks; but as it is the manifest intention of the Congress to place the control of such loans under the proposed Federal Farm Board, we suggest that the intermediate credit banks be allowed to act as agents of the board in handling the details of loans of this character. and we suggest further, that cooperative purchasing associations be permitted to enjoy the privileges of this type of governmental assistance, since it is just as essential that farm relief be attained by collective means of cheapening the cost of farm requirements as by collective means of obtaining better prices for products of the farm. 66 'To that end, we request that all of paragraph c of section 6 of the Senate bill (S. 1) be stricken out and the following substituted in lieu thereof: '(C) The board may make loans or advances on such terms and conditions as it may deem advisable in each instance to any stabilization corporation and/or to any cooperative association which is substantially composed of and controlled by persons engaged in the production of agricultural products, which association is engaged in the handling, processing, warehousing and/or marketing of any such agricultural product and/or the purchasing of supplies and equipment for its members, and to any processing, marketing, and/or purchasing agency formed by one or more of such associations, provided that all the voting stock in such agency is held by one or more cooperative associations or its members (a) for the purpose of enabling such association to acquire by purchase, erection, or otherwise, land, buildings, equipment, and facilities for carrying on its business; (b) for the refunding of obligations incurred by cooperative associations with respect to any of the matters named in (a) of this paragraph; (c) and for working capital. All such loans shall bear a fair rate of interest and may be made for a period of not more than 20 years and may be repaid by means of a charge to be deducted from the proceeds of sale and other disposition of each unit of the agricultural commodity delivered to the cooperative association or procured by the cooperative association for its members. "Loans made hereunder shall be made subject to such conditions, having in mind the probable development of the association concerned, that during the life of the loan made any association the unpaid principal shall not exceed 80 per centum of the current value of the assets of the association, and provided further, that no loans shall be made for promotional or educational purposes. In determining the value of the assets of an association, due consideration shall be given (a) to the value of land, buildings, equipment, and other physical and/or personal properties owned by the association, (b) to its going concern or good-will value, and (c) to the value of contracts entered into by the association with its members, which contracts require the delivery of agricultural products produced by such members to the association for handling (or processing) and marketing or which require the purchase of commodities used by members of such association. The aggregate amount of loans for the purpose of this subdivision, outstanding and unpaid at any one time shall not exceed $300,000,000.' 66 Recognizing that the form of amendment offered to the Senate Committee on Agriculture might be subject on the point of order on the grounds of improper jurisdiction, we request that the committee arrange for it to be introduced on the floor of the Senate by one of its Members. 66 6 On page line after the words three hundred million dollars, insert the following: "The board is authorized to designate the Federal intermediate credit banks as its agents in the making of loans for the purpose of this subdivision." "The definition of a cooperative association in the House bill as introduced and reported is made by reference to the Capper-Volstead Act, 'An act to authorize association of producers of agricultural products,' approved February 18, 1922. The purposes of this act limit its definition to cooperative marketing associations who are engaged in interstate and foreign commerce. These comprise only a relatively small number of the 12,000 cooperative associations in the United States and excludes cooperatives of buying character. The Senate bill makes a somewhat broader definition but is not complete enough. We, therefore, suggest that the Senate bill be amended by striking out all of paragraph d of section 14, and substituting in lieu thereof the following: 666 (d) the term "cooperative association" when used in this act means an agricultural association substantially composed of and controlled by persons engaged in the production of agricultural products which association is engaged in the handling, processing, warehousing and/or marketing of any agricultural product and/or the purchasing of supplies and equipment for its members and/or any processing, marketing or purchasing agency formed by one or more of such associations provided all of the voting stock in such agency is held by a cooperative association and its members.'" "We also call attention to the apparent danger that lies in this bill because of the vast powers given by it to the stabilization corporations and clearing houses. The acts of such corporations and clearing houses may be of such a character as to involve court proceedings that may jeopardize the rights and privileges which have been conferred upon cooperative associations by the Capper-Volstead Cooperative Act. 66 To guard against such an eventuality, we suggest that the following amendment be inserted into the Senate bill: 'Nothing herein contained is intended nor shall be construed to amend or repeal any of the provisions of an act entitled "An act to authorize association of producers of agricultural products," approved February 18, 1922.' 66 POWER TO TRANSFER BRANCHES OF GOVERNMENT We find in the House bill one provision that we believe should have no place in a farm aid bill. This is the provision found in section 9 which in substance gives the President power to divert or shift any bureaus or divisions to the Farm Board and thereafter to make further shifts and changes. During the past eight years both of the men who have acted as Secretary of Agriculture have been diligent in assisting the farmers. The work of the Bureau of Agricultural Economics is of increasing value, while the work of the Division of Cooperative Marketing has already been of such service as to justify its creation and to afford a promise of greater usefulness. 66 Conceding that there is duplication of effort in some of the various governmental departments as they are now functioning, we believe that any plan for reorganization should be included in a separate bill, but above all, it should not be attempted, even in a small way, in a farm aid bill. We, and we believe all farmers, will view with great unrest, not unmixed with resentment, any law that would make it possible for the Bureau of Agricultural Economics or the Division of Cooperative Marketing to be transferred to any other department or board. The provisions of the present bill make the Farm Board a conduit through which these bureaus and divisions may be transferred to other departments of the Government. "The Farm Board shall have the power to request the assistance of every governmental division, bureau, or agency. This authority is sufficiently given in the Senate bill which should be followed. The provision mentioned in the House bill should be stricken out. IMPORTANCE OF THE TARIFF AS FARM RELIEF "To this point we have discussed these farm aid bills without emphasis upon tariff, yet we believe that the basis of all legislation designed to assist agriculture through price increase or stabilization, is adequate tariff protection against the imports of agricultural products. We have presented to the Ways and Means Committee of the House our requests for new duties upon dairy products, and upon animal, marine, and vegetable oils and fats. These duties are sought not as the result of guesswork. They reflect a long and careful investigation by this federation. They are not offered with the expectation that our requests will be reduced. They are the minimum rates that should be considered. We believe that other agricultural products should receive like consideration. And we are convinced that no permanent farm relief can be secured and maintained without such import duties as will reserve the domestic market for our agricultural producers." The attention of the committee is called to the last paragraph of the St. Louis resolution which commends the work of the Federal Farm Board with respect to its assistance to dairy cooperatives of the United States. This assistance has been of a 2-fold character: (1) Loans to finance the acquisition of facilities, and loans of a merchandising character; and (2) business services on the part of the cooperative marketing division, and the dairy organization work on the part of the same division. With respect to the first character of service, the board has made approximately 27 loans and actually advanced about $15,000,000. We believe that nearly all of these loans are safe loans. They have been of real service to the dairy cooperatives, owning and operating plant facilities, and to the one or two bargaining associations in the process of formation, to help them get on an operating basis. Not only have the loans themselves been of a direct benefit by, in some instances, enabling the operating associations to obtain money somewhat cheaper than they could under existing rates, but in some instances local banking institutions would not have been able to finance loans so large. The work of the cooperative marketing division in its relation to the dairy cooperatives is particularly to be commended, as experts from the division have been available many times to make surveys and to give advice. The board also has been of valuable assistance to some of the dairy cooperatives in assisting them to set up larger-scale regional marketing organizations. At the request of the Oregon Cooperative Council (a federation of agencies devoted to the development of cooperative marketing in the State of Oregon), I submit the following statement for the record: Senator CHAS, L. MONARY, OREGON COOPERATIVE COUNCIL, Hood River, Oreg., November 6, 1931. Senate Office Building, Washington, D. C. DEAR SENATOR MONARY: No doubt you are aware of the action taken by the Oregon Cooperative Council at a meeting on the 16th of October. A statement of its position in regard to the proven principles of cooperative marketing and in regard to the administration of the agricultural marketing act was prepared at that time and was given considerable publicity. It may interest you to know that the council has received letters from all over the United States commending its action, indorsing its position, etc. Numerous organizations in different States are preparing to take similar action. These letters are a revelation of the real sentiment of many farmers, real cooperatives, agricultural leaders, legislators, etc. The Oregon Council is not fighting the agricultural marketing act or the Farm Board, but is fighting for the best interests of the cooperative movement and for the recognized principles which are being disregarded. In this connection we are being advised that certain Members of Congress in other States are concurring in our position. A copy of our council's statement is inclosed. It will be considered a favor if you will read this carefully and write us your attitude and position. It is extremely important that we know whether or not the Oregon Council has the support of Oregon's congressional delegation. Frankly, we are being asked this question and would like to be able to answer it on the basis of your own statement. It is our hope, of course, that you will concur in our position and lend your aid in making it effective. Assuring you of our high esteem, we are, yours very truly, OREGON COOPERATIVE COUNCIL, STATEMENT OF THE POSITION OF THE OREGON COOPERATIVE COUNCIL IN REGARD то THE AGRICULTURAL MARKETING ACT, THE FEDERAL FARM BOARD, AND COOPERATIVE MARKETING At a meeting of the Oregon Cooperative Council, October 16, 1931, consideration was given to the impending fight in Congress over the agricultural marketing act and the Federal Farm Board. Inasmuch as the position of the Oregon Cooperative Council regarding existing and proposed legislation has been the subject of some inquiry and also of some misinterpretation, the council deems it advisable to make the following statement: 1. Organized efforts are being made by trade interests to attack the Federal Farm Board and bring about the repeal of the agricultural marketing act. Also, organized efforts are being made by many cooperative associations to uphold the act and defend its administration by the board. In this difference of opinion between private and cooperative interests there is danger that issues may become confused to the detriment of the cooperative movement. The Oregon Cooperative Council, which is not controlled by or indebted to any outside organization, proposes to support what it considers for the best interests of farmers' associations that are truly cooperative and proposes to oppose what it considers inimical to the interests of such associations. 2. In regard to the farm-marketing system that is being developed under the act, the Oregon Cooperative Council reiterates and emphasizes a position that it has maintained for 10 years, namely, that cooperative associations should be built from the bottom up and not from the top down. Its position in this regard was stated at a meeting at Hood River, in November, 1930, in these words: "It is the sense of the Oregon Cooperative Council that locals, or centrals directly composed of producers as members, should be set up first, followed next by the organization of regionals, and later, if feasible, by federating these associations into national organizations, all steps to be worked out when and if they can be developed on a sound basis that will assure thorough understanding, capable leadership, efficient operation, and ownership and control by the producers in fact as well as in name." The council favors large-scale organization, but can not support any national organization plan or procedure that violates what it considers fundamental principles in cooperative organization. 3. The development of national cooperative associations that have in them the elements that make for stability and success, involves a long-time program. As early as 1921, the council warned against mushroom growth, ill-advised and underfinanced cooperative undertakings, and the dangers of high-pressure promotion. In June, 1929, it issued similar advice. Among other things it said: "While we recognize the benefits that should ultimately accrue to the cooperative movement (from the passage of the act), we are likewise fully cognizant of the dangers of overstimulation and unduly rapid expansion. The cooperative movement has only recently recovered from such a period of overstimulation that had its inception from 10 to 15 years ago. The cooperative self-help move among farmers, without the use of forced methods of governmental pressure, is making steady headway in a sound basis." Being later assured by Farm Board members that they recognized the situation, that they would not undertake to force a program on any group, that they would move only as fast as the farmers and cooperatives were able and willing to accept this program, that they would not countenance high-pressure promotion, and that they considered their program to be a long-time program to help farmers' organizations to help themselves, the Oregon Cooperative Council went on record in support of the board and pledged its cooperation. The practices of the Farm Board, however, have not squared with its early statements of policy. The Oregon Cooperative Council is not favorable to such rapid organization and promotional methods as have been used in establishing Government sponsored national organizations, and can not support the continuation of such a program and procedure. 4. The Oregon Cooperative Council views with alarm the fact that the Farm Board does not acknowledge and correct fundamental mistakes in the national organizations it has sponsored. Its attitude, on the contrary, seems to be to pyramid mistakes by carrying centralization to even further extremes. Any Government sponsored or approved plan that works to take control from local farmers' associations and place it in one central corporation, making a farce of the principle of farmer ownership and control; that permits the scrapping of local or regional cooperatives to make way for branches of the central corporation; that permits a central corporation to take over local facilities and functions that are the very foundation of farmer cooperation; is looked upon by the council as a menace to the very life of the cooperative movement. 5. The council has witnessed two "boom" periods in cooperative organization, and one crash. It does not want to see the same process duplicated. However, the methods used in the past two years and the philosophy that appears to be back of the present centralization program, so resemble the methods and philosophy connected with the first crash, that the council looks askance at present "collective " marketing developments. The "commodity marketing" philosophy preached a decade ago by Aaron Sapiro has been so thoroughly discredited that it seems incredible that a governmental agency, formed to help cooperative marketing, would ignore the debacle that occurred some years ago and attempt to put the same ideas and practices into effect 90613-31-28 on a greater scale. Efforts have been made by Oregon organizations to guard local and regional associations against the possibility of a second crash, and while the Farm Board has readily agreed to some of the plans presented to it, the fact remains that again its practices have not been in accord with its assurances. 6. The Oregon Cooperative Council has, in the past, looked with favor on the general policy of the board to require borrowing cooperatives to affiliate with other recognized" associations. This support was given with the understanding that the Farm Board would exercise enough control over the " recognized" associations, either regional or national, to assure square dealing, capable management, and reasonably efficient operation. Inasmuch as this control has not been exercised effectively, the council can not give this policy of the board, which is not a mandate of the act, further support until the board or Congress protects the borrowing associations from possible damaging effects of affiliations which the board compels such associations to make. 7. The Oregon Cooperative Council recognizes the difficult position in which the board was placed, and the stupendous task given it by Congress. As for complaints against the board regarding its propaganda activities, its policy of secrecy, its lack of interest in any brand of cooperation except its own, and other criticisms, just or unjust, this statement leaves largely untouched in order to stress the more fundamental questions. The board has, in many ways, operated to create its troubles and also to antagonize cooperating agencies that were not forced to agree with the board because of a creditor-debtor relationship. The Oregon Cooperative Council is disappointed in the administration of the act, and takes the position that the board should change its attitude and methods before it is too late. The council desires to support the board, which is an agency with tremendous possibilities for good, but the welfare of the cooperative movement comes first. 8. In regard to the act itself, rather than its administration, the council can not by any process of thinking blind itself to the fact that the act is not a perfect piece of legislation and not altogether advantageous to cooperative marketing. It may be recalled that when this act was proposed and passed, it did not have the general support of the cooperatives, including that of this council. Given no opportunity to be heard before the committees of either the House or Senate to protest certain provisions, many of the leading cooperatives filed written protests with every Member of Congress. The main objections were to provisions for stabilization corporations, price insurance, clearing houses, and educational loans. Many leading associations opposed the act in its present form, as did some of the men who were later selected as board members. Many cooperatives desired only facility and commodity loans, the first to be long-time loans at low interest, and the second to be under provisions whereby cooperatives could obtain a larger percentage of the value of their products and under more flexible conditions. The 12 Federal intermediate credit banks, divorced from the Federal land banks, were the agencies most frequently advocated to administer loan provisions. It was felt that these banks had the facilities, experience, and close contact with local conditions that would be necessary to successful and businesslike administration. Further development of the division of cooperative marketing, with representatives in each State was recommended as the agency to carry on educational and service work. The plan for stabilization operations was almost unanimously condemned by cooperatives. The Oregon Cooperative Council took some part in these protests and recommendations, but like other agricultural organizations, after the act was signed, offered to do its best to help make it work out satisfactorily. That it has not worked out satisfactorily, as administered, is common knowledge. The objections raised originally to protect cooperative associations are as sound to-day as they were then. In view of the circumstances as outlined, the Oregon Cooperative Council takes the position that the act can be amended in the interests of cooperative marketing. 9. The principal objection to the agricultural marketing act, strenuously made prior to its passage, was the provision regarding stabilization corporations. It was pointed out that this hook up of stabilization with cooperative marketing would mean that the failure of stabilization would be considered as the failure of cooperation. Objection was made that there were no provisions to take care of stabilization losses, except from future profits that could hardly be realized without damage to farmers. It was freely predicted that |