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REIMBURSE COTTON COOPERATIVE ASSOCIATIONS FOR LOSSES OCCASIONED BY STABILIZATION OPERATIONS

MONDAY, MARCH 18, 1940

COMMITTEE ON AGRICULTURE,
HOUSE OF REPRESENTATIVES,

Washington, D. C.

The subcommittee met at 3 p.m., Hon. Wall Doxey (chairman) presiding. Mr. DOXEY. The committee will be in order.

STATEMENT OF WILLIAM B. WHITTINGTON, REPRESENTATIVE IN CONGRESS FROM MISSISSIPPI, THIRD DISTRICT

Mr. WHITTINGTON. I represent, as you know, one of the largest cotton districts in the United States and have been a Member of Congress for some years and am familiar with the Farm Board and the legislation at the time it was established and its operation and legislation since it was established. As I understand, these hearings are on H. R. 6749, which is the same as S. 2585.

Mr. DOXEY. We have both bills before us.

Mr. WHITTINGTON. Yes. As I recall, the similar Senate bill has been reported with an amendment and is now pending in the Senate and it was further understood that there would be offered an amendment that Senator Bankhead really overlooked when the bill was being reported by Senator Thomas on behalf of the Staple Cotton Cooperative Association of Mississippi. As you know, Mr. Chairman, the Staple Cotton Cooperative Association is certainly the oldest of all cooperatives in Mississippi. And while others have been reorganized and coordinated, the Staple Cotton Cooperative has rendered a service to my constituents and the people and to other people in Mississippi, Louisiana, and Arkansas for some 20 years now.

In the stabilization program, according to my general recollection, there were advances made to other cooperatives of around 16 cents. The Staple Cotton Cooperative Association has made an advance of 12-I have forgotten the exact amount-or some 3 or 32 cents per pound less than was made to others. I understand this bill has to be amended so that there is to be a credit or there is an appropriation for the carrying charges. And I have been in communication with you, Mr. Chairman, and with Mr. Jones, and among other correspondence that I have there is some correspondence with this committee dated June 27, 1939, being addressed to its chairman, and a letter to you of the same date, and a letter to the committee on June 29, to the chairman of the committee. The claim of the Staple Cotton

Cooperative Association has been audited. It is not as large as others, for the reason mentioned, among others, but in amounts to $93,317.15.

My information is that while it was not included in the bill as reported to the Senate, it was really an oversight, and Senator Bankhead of the committee over there agreed to accept an amendment which was to be reported by the Senator from Mississippi. And I understand you have been advised, and I now here state, I understand that the statement as to these carrying charges aggregating the amount mentioned have been checked. I took it up with the Farm Credit Administration, Mr. Lyon, I believe, was the gentleman's name, and what I say is this, Mr. Chairman: That in the bill that is reported by this committee I think it would be fair to include a provision for this association which did more on less Federal money, if you will permit my comparison, than other associations, who ought to be congratulated on stabilizing the program in the Farm Board operations because, as a matter of fact, we got a small advance. I am not complaining. My folks probably got a larger advance than other associations. But it strikes me in all the circumstances their request is in order and as I understand the sponsors of the legislation have no objection.

Unless you have some questions, Mr. Chairman, I have no further statement to make.

Mr. LEMKE. Of course, after this amendment is accepted, you want the bill passed out, is that right? That is, after the amendment is accepted, you are for the bill, as a whole.

Mr. WHITTINGTON. I may say I think there is merit in it, because when the Government started out to stabilize the market I think it should see it through.

Mr. LEMKE. We had the same trouble with wheat. They pegged it, and, when they quit pegging, the prices went to pieces. I presume you had the same results with cotton.

Mr. WHITTINGTON. We did not have anything else but trouble. I do not know so much about wheat.

Mr. LEMKE. I will say this, I believe the Government ought to be as fair with the people it deals with as it expects them to be with it. That being the case, I think your bill is all right.

Mr. WHITTINGTON. I just know that the Government wants to be as honest with my association as it is with the other associations, and I am here to see that it does not overlook my association, as much as is humanly possible.

Unless there be some other question, that is the only statement I care to make.

I am going to ask, in all probability later on, to make the communications that I have had with you, after I have talked with you further, and the communications I have had with the chairman of the committee, a part of my statement. I may say, Mr. Chairman, I am very appreciative of this opportunity to appear before the committee. I should have been here this morning but for the fact, as has been advertised now, there is a hearing for 3 weeks by the Flood Control Committee, which began at 10 o'clock this morning.

Thank you very much.

Mr. DoXEY. I appreciate that, and would like to make this further observation, I mentioned the fact this morning of your interest, and

we all know it and appreciate it. You know, and I am sure are familiar with this report and the Senate amended bill. They received a second latter dated July 7, 1939, received by Governor Hill, in which it says that the revised table which we are attaching does not include any figures involving the Staple Cotton Cooperative Association. That is the one you are interested in?

Mr. WHITTINGTON. Yes.

Mr. DOXEY. Of course, you have given the figures to us here, and your plea is, if and when we report this bill out, to include that along with the other?

Mr. WHITTINGTON. Yes; I think it is fair to say then that neither the sponsors of the legislation nor the Senator who introduced the bill had my statement at the time he introduced it. I do not think, according to my recollection, I appeared before the Senate committee about the same time Mr. Creekmore appeared, and I do not think I had the report of the Farm Credit Administration at the time.

Mr. DoXEY. Thank you very much. You have permission now to file with your statement any correspondence you so desire.

Mr. WHITTINGTON. I will get in touch with you, Mr. Chairman. STATEMENT OF N. C. WILLIAMSON, LAKE PROVIDENCE, LA.* Mr. DOXEY. You may may make any statement you desire to make. Mr. WILLIAMSON. I am from Lake Providence, La., and am a cotton farmer. Am president of the Louisiana Cotton Cooperative Association and also president of the American Cotton Cooperative.

Mr. Chairman, I have no written statement, but I want to get into the record a little more of the background of this movement prior to the time Mr. Creekmore's statement started with the 16-cent loan in 1929.

For the committee's information, I will say I am a cotton farmer and have been all my life. I was born on a small hill farm in Mississippi and I know all the troubles a small cotton farmer has and has had. I have done everything on a farm that anybody else ever did, not because I liked it, but because I had to do it. I went to your State college, Mr. Chairman, and graduated there by working my way through. Ever since I was a boy and big enough to ride a farm wagon into town after I made a bale of cotton and had some supply merchant or some street buyer cut a hole in it and take out a handful and look at it and tell me what it was worth, or what he would give for it, I had an idea there was some need on the part of the farmers to find out something about the value of their cotton before they sold it. We would never ask anything about what it was worth. They said we will give you 9, 7, or 8 cents, as the case may be.

Mr. LEMKE. You usually went to them and asked, "What will you give me for this?" And when you bought something you asked, "How much is it?"

Mr. WILLIAMSON. Exactly right, Congressman. So after I became grown and finished college I moved to Louisiana and started to farming again. Soon after that, or several years after that, the cooperative movement started in some of the States in other commodities than cotton. In 1921, I believe the first cotton cooperative organization was started. I believe the staple growers in Mississippi and the State of Texas started the same year. We did not have any expe

rience. We did not have any money. We did not have any A. A. A. or Farm Security or general welfare legislation. We did not have any R. F. C. or any of the other alphabetical agencies to go to for

money.

These farmers, of whom I was one, had the idea that we would set up our own marketing organizations. Some farmers that I know actually mortgaged their farms to raise money to help finance the organizations, hoping that they would get their money back, and they did. I signed notes myself with other farmers with our local banks to borrow money to perfect our organization in Louisiana.

We notified the farmers when we started that they would have to pay for this organization expense out of the cotton delivered. They did that. We struggled along for a period of 10 years with more or less success with opposition from the cotton trade and ridicule largely on the part of those who were experienced in marketing the farmers' cotton. They said we were a bunch of farmers and that we would soon fail, that we did not know what was going on and that they would soon put us out of business. We had a loosely set-up overhead organization. After we had perfected organizations in. the various cotton-growing States, I believe not every cottongrowing State, but at least every principal cotton growing State, we formed what was called the American Cotton Growers' Exchange, through which most of the States marketed their cotton. This was a sales agency, the overhead organization was, with no capital stock. The States had no capital, but they just budgeted so much per year to the sales organization for the purpose of marketing the cotton. And we handled some years more than 1,500,000 bales of cotton. And over that period, 9 or 10 years, we had accumulated, as Mr. Creekmore stated this morning, the various State associations had accumulated, by deductions from their members' cotton, 1 percent usually, set off in reserves of more than $2,500,000, or $2,600,000 and some odd dollars.

In 1923, I believe it was, an act was passed, you can correct me, Mr. Chairman, if I am not correct, I believe it was 1923, which gave some encouragement to us and gave some recognition to the cooperative marketing movement. In 1926, I believe, the Cooperative Marketing Act was passed, which gave certain privileges, I believe, and exemptions from income tax and certain other exemptions favorable to the various cooperative organizations. Then, in 1929, the Agricultural Marketing Act was passed creating the Federal Farm Board, stating specifically one of the purposes of the act was to promote and assist in the development of sound cooperative marketing arrangements under and controlled by the farmer. That was the first real national recognition we had as a policy of the Government. In other words, there was a mandate from Congress to the Federal Farm Board to help develop these cooperative marketing associations. Naturally, we were very pleased and encouraged. The Farm Board, in its policy of operations, followed that mandate from Congress in recognizing the cooperatives when they announced the 16-cent-cotton loan. They said the only agencies that we have are the organized groups of cotton farmers. Therefore, we will make the loans to all cotton farmers through the cooperative associations, which they did. And that brings us to the beginning of the operation under the 16-cent loan.

The question has been asked, when this 16-cent loan was announced, if there was any question of who was going to pay the bill. Why, certainly there was no doubt in the minds of the cooperatives. I was, at that time, the president of the Louisiana Cotton Association. I was on the board of directors of the old American Cotton Growers Exchange when this question of the loan was announced and certainly if we had been notified we would be responsible in any way for this money that the Government was going to pay out, we could not have afforded to have gone into that kind of gamble. The farm board acted in perfect good faith with us all the way through. While we had no contract to begin with, as I recall, as to who would pay the bills, why certainly there was no thought on the part of the Farm Board or the cooperatives that anybody would bear the cost of the operation but the United States Government.

Mr. LEMKE. In other words, you had made up your mind and had really an understanding, both of you, that the United States Government would take care of that bill?

Mr. WILLIAMSON. There was no other thought, Congressman.

Mr. LEMKE. And if I interpret Mr. Stone's statement correctly, then, the only thing you can say is they exceeded their authority in assuming authority to do something that Congress had not given them complete power to do.

Mr. WILLIAMSON. They agreed to settle. The Attorney General was notified they could not carry it out. In other words, they said, "You cannot waive or annul or cancel a debt owing to the United States Government." That was the substance of it.

Mr. LEMKE. Then they had the right, following this to a conclusion, you acted in good faith and if the Government wants to act in good faith it has time now to correct this mistake?

Mr. WILLIAMSON. That is exactly what we are here for, Congressman Lemke, and that is the sum and substance of the whole thing. The Attorney General said, "You cannot cancel a debt owing to the United States Government. You hold notes of these cooperatives for a certain amount of money and the collateral, which is the cotton, is not worth that money. Now, they will have to pay you up to the extent of their ability. At least, see if they have money or assets of any kind. You will have to collect from them." And in doing that, we did not have enough.

Mr. DOXEY. There is a point right there. The atmosphere was so saturated at that time with this fever or this program of the Government doing something for the farmer, as they were trying to do and as they had never done anything before, you and I and most everybody else thought when they appropriated $500,000,000, that was enough money to do everything and it was a step in the right direction and you did not stop to analyze the situation at all.

Mr. WILLIAMSON. Not at all. We did not think we could ever spend that much money.

Mr. DOXEY. That is the point I was trying to get at. We were just out on a limb and did not know it.

Mr. LEMKE. You are graduated from that.

Mr. WILLIAMSON. We found out.

Mr. COFFEE. Did not the Government relieve you of the cotton? You were not called upon to assume any losses by virtue of that 16cent loan, were you?

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