title 4 of the Sugar Act of 1937 are deductible from gross income in making returns for the purposes of federal income taxes. This is covered by sections 19.23 (c)-1 and 19.23 (c)-2 of the income tax regulations 103. The CHAIRMAN. The physical money is handed over by somebody other than the raw producer, but it comes out of his proceeds. Mr. GREENE. Through lower prices. The CHAIRMAN. Mr. Lemke wants to ask a question. Mr. LEMKE. Can you agree that the domestic market should eventually in the not too distant future accomplish that result and be given to the people of the United States, 100 percent, if that were possible, by a tariff or a quota or both combined? Mr. GREENE. I have always believed in producing what we can produce economically and advantageously for the country. There are a great many people, of course, who have certain interests, who have certain interests in foreign trade who say that if we are going to produce everything 100 percent we would have no foreign trade; but I think that there is a great deal of argument for permittting farm producers-and certainly we are farm producers in Hawaii of an essential food, who can produce it, and have produced it for years advantageously and economically-should be permitted to produce what they can. Mr. LEMKE. Let me ask you this: Forgetting about the Chase National Bank and the City National Bank for a few minutes, and thinking of the best interests of the Nation, and when I say the Nation I include its possessions, do you not think that we should produce everything we can 100 percent, and if we cannot get that wherever we can in the open market? Mr. GREENE. There is a great deal of argument for that, Congressman. I do not know that I can answer that yes or no, but it is a big question and takes in a lot of territory. I certainly believe that the American farmer should have his fair share of the American market. Mr. MURRAY. Mr. Chairman The CHAIRMAN. Mr. Murray. Mr. MURRAY. I want to say this, Mr. Chairman. I was not here this morning when the committee started. I offer my felicitations of your appointment, and I may say that last evening, coming from the floor of the House, I walked along with two members of your party, neither one of whom I have ever seen here before the committee, and one, as a matter of fact, I hardly know. Out of the spirit of gladness I had I told them that you had the appointment, and neither one seemed to be very enthusiastic, and I was just wondering how that was. And, after listening to both of them, the only sad part on their part seemed to be that you had not been appointed to a higher court, and both of them felt that if you were a member of the Supreme Court that that would be giving you no more than you deserved, and one, I know, at least, has served with you here practically all of the time you have been here. I would like to say, and I think that this is the feeling of every man who has been on this committee coming here as a green man, like I am, I can sense it-and I think that every member of this committee and everyone who has worked with you would like to see you appointed to the Supreme Court. I think everyone here would like to see that happen, because they know that the people of this country would have a man in which they have confidence, Mr. Chair man. The CHAIRMAN. I desire to thank you, Mr. Murray. May I say, for just a moment, that in looking over the list which was not complete when I was looking over it this morning, that we also have requests to hear two labor organizations, the American Federation of Labor and C. I. O. representatives. The committee will stand adjourned until 10 o'clock tomorrow morning. (Thereupon, at 12:10 p. m., the committee adjourned to meet at 10 o'clock the following morning, Thursday, April 11, 1940.) SUGAR LEGISLATION THURSDAY, APRIL 11, 1940 HOUSE OF REPRESENTATIVES, The committee met, pursuant to call, at 10 a. m., in the committee room, New House Office Building, Hon. Marvin Jones (chairman) presiding. The CHAIRMAN. The committee will please come to order. We planned to have the Louisiana group's representatives heard first this morning, but they are not quite ready with their statement, so we will have some brief statements from some one or two other groups, and I believe that Mr. Barr wanted to make some special comments in reference to the differences between the California industry and the others. Mr. Barr, we will give you 5 minutes this morning if you want to take the time this morning. STATEMENT OF R. C. BARR, WOODLAND, CALIF., REPRESENTING CENTRAL SUGAR BEET GROWERS ASSOCIATION Mr. BARR. Mr. Chairman, bringing me on the stand first out of the group here I am afraid that I will have trouble in taking care of it in 5 minutes. The CHAIRMAN. Instead of reading a paper, if you will submit such papers you have for the record, and just tell us in a direct and concise way what you have in mind, I think it would be preferable. You may file any statement that you may have. Mr. BARR. That is more what we expected to do, and bring this to your attention as quickly as we possibly could, and we are in accord with the recommendations set forth by Mr. Kearney, president of the National Beet Growers' Association. Now, we are only stressing the two points in those recommendations that materially effect California, and that is the labor-planning and soil-conservation practices under which we have to comply to get these Government payments. The diversified farming or rotation scheme in the State of California is so different than it is in most of the other Western States that to have sugar beets grown that at present complies with the form in soil conservation in the act as it is now written makes it very hard for those growers out there to comply and get these payments, and those payments are apportioned as payments as a whole. It is the cost to which is directly chargeable to operative costs in a given year. Our rotative element in California is not on a 160-acre farm where there is diversified farming and a split-up in your cropping units. It is one unit or 160-acre units operated as 160 acres or more for the simple reason that the type of farming that we have in most of the beet-growing area in California is such that the tillage methods require equipment, and where you require heavy equipment you have an overhead imposed, overhead cost in equipment there whereby it has to be balanced out in acres of land farmed. Where you balance that out, you have what most people back here would term as a large beet grower and one that possibly should be eliminated; but our economics and our agricultural scheme in the beet industry out there has to be balanced off in such a way that we can carry this overhead. When you do that and you have got a man with 160 acres in sugar beets, it is entirely sugar beets, and it is rotated over a period of years rather than rotated in that part of the year or part in each of these crops, consequently he has to expend money out of pocket in each year to make compliance out there. This is a handicap, and one if you ever write the act so as to cover California and make it on a par with the other States, then there will be no need for penalties; they will need nothing for any of the rest of them. Now, we do not want this thing to become a racket, and it can become a racket by leaving the penalties in it. Consequently, we desire that the Soil Conservation Act be handled as soil conservation, that the Sugar Act be handled entirely on sugar, or eliminate those clauses out and leave the Sugar Act on sugar alone. On the labor, we have paid high-wage rates since the industry has been in the State of California. We have always paid the highest. The diversified farming area there where we do not have a legume, a grain crop, and beet crop for our cash crops, such as they do in Colorado and a lot of the other areas-we have beans, rice, and specialty crops all over the State. Where you have a wage rate set on one crop, it puts a focal point on that to the hindrance of all of these other crops, and then they have to compete with whatever is put on, any set rate, in any commodity. By citing that, we have opposition in labor in all parts of California from these other crops, and it works a hardship on a number of them and as long as the crops that were in the Agricultural Adjustment Act have no rate set for them, no compliance and that the Sugar Act or sugar program is self-supporting, it is not a drain on the Public Treasury as some of these other payments are, and we feel it should be eliminated entirely from those kinds of things. The CHAIRMAN. We desire to thank you, Mr. Barr. Mr. HOPE. I would like to ask Mr. Barr one question. Mr. HOPE. The objection which you make with reference to the requirements as to soil-conservation practices is not an objection to anything that is in the sugar bill, but it is with regard to the requirements under the soil-conservation program, since you must come under the soil-conservation program in order to get your payments? Mr. BARR. That is right. Mr. HOPE. If the Department of Agriculture would modify its soil-conservation program for your area so as to fit in with your farming practices, that would solve your problem, would it not? Mr. BARR. We are in sympathy and are very strong for soil conservation as soil conservation. We live under it. We try to work with it, and we are trying to build our soil up, are very strongly trying to build our soils up under the Conservation Act. We want to be under the Soil Conservation Act, and we want beets under the Soil Conservation Act, but we do not want the beets under the penalty to the Soil Conservation Act by having to comply with the Soil Conservation Act to get a payment. As we stand now we make compliance, and it automatically eliminates a large number of beet growers out of the soil conservation, because of that fact. Mr. HOPE. But, there could be a soil-conservation program worked out that would fit in with your program, could there not? Mr. BARR. We want a soil-conservation program, yes, sir; but we just want to sever the one from the other. Beets in that area are a depleting crop, in the soil-conservation program, and let us have that. That is what we want. Mr. HOPE. But if they would work out a soil-conservation program down here in the Department that would fit in with your farming practices, it would not be any handicap, would it? Mr. BARR. No. I will answer that in this way. If you worked out a soil-conservation program so that it fits our beet area in California and try to leave the beet program inside the soil-conservation program on a penalty basis, it will stimulate what we determine as a racket in soil conservation, and that is, if you have got a penalty in there to get a portion of your pay for your crop, there is going to be work to get around that and get the payments. We do not want to get around our soil-conservation requirements and do our soilconservation work cheaply, or get around it by subterfuge. We want to carry it, and carry it on the basis of good soil-conservation practices. Mr. HOPE. That is all. The CHAIRMAN. We desire to thank you, Mr. Barr. We will next hear the representatives of Puerto Rico. I believe that they want to divide the time by allowing Mr. Pagán time for a very brief statement, for 5 minutes. You have 5 minutes, Mr. Pagán. Mr. PAGÁN. Yes, sir. STATEMENT OF HON. BOLÍVAR PAGÁN, RESIDENT COMMISSIONER FROM PUERTO RICO Mr. PAGÁN. Mr. Chairman and fellow members of the Committee on Agriculture, may I, as Resident Commissioner from Puerto Rico, ask your attention for some minutes to bring briefly before you the sugar situation in Puerto Rico as is affected by legislation in force, and as may be affected by proposed legislation under our study and consideration. I will go into the field making only general remarks about the sugar problem as a whole. Someone else will go into the details and discuss the technical questions about the industry. I, myself, am not a sugar man, nor am I connected at all in any way with the industry and business. I am spokesman for the whole |