H. R. 10517, therefore, is a consolidation of the ideas contained on the one hand, as I view it, in the bills by Congressmen Strong, Ramseyer, and Keller, and on the other hand of the former bill by Congressman Goldsborough and the one of Congressman Burtness. It is my firm conviction that both efforts should be incorporated into a composite bill; that is to say, that every authority, along with complete directions, should be given the Federal Reserve Board to use all the powers of the board in maintaining a more stable purchasing power of the dollar.

In doing this, however, it may be found indispensably necessary that the dollar in value and weight be changed from time to time. I fear that the pending bill by Congressman Goldsborough is not as explicit in either of its provisions as it should be, but it is undoubtedly the type of bill which it is our hope and desire the committee will report upon favorably in the near future.

In drafting the legislation along the line of H. R. 10517 I wish to suggest that the committee use the thoughts in the Strong, Ramseyer, and Keller bills, which will accomplish the purpose of putting a responsibility on the Federal Reserve Board to stabilize the purchasing power of the dollar. I wish to suggest, also, that when it comes to enacting legislation which will change the number of grains of gold in the dollar, such as is suggested in the last section of H. R. 10517, more specific instructions and directions are needed.

In other words, I wish to recommend to the committee in writing its soon to be reported bill a careful study of H. R. 800 by Congressman Goldsborough and H. R. 20 by Congressman Burtness. The last two measures, when incorporated into the pending legislation, will secure what some people call the commodity dollar. Others refer to it as the variable dollar. It has been for years referred to as the Fisher dollar. Whatever designation may be applied to it, the legislation when enacted will give us a standard of exchange which will not be so dominant in dictating high and low values to all other commodities, owing to its own flexibility.

In closing, I wish to recommend to the committee that the two ideas relative to the general type of legislation pending should be incorporated into one bill to be reported from this committee, and the outline presented in H. R. 10517 is a worthy one to follow, with further specifications contained in relation to the two methods of approach to the general question of stabilizing the purchasing power of money.

Now, Mr. Chairman and gentlemen, I come from a big agricultural State, and I want to give you, which perhaps is not necessary, the conditions in our State in regard to the income of the people of our State.

Mr. GCLDSBOROUGH. That will be very interesting, I am sure.

Mr. HEARST. In 1929, for all field crops-this is taken from the United States Department of Agriculture-our farmers in 1929 received a little over $500,000,000; in 1931, the decline was over one-half of what we realized on our products in 1929. We had to take a decline of 55.2 per cent in income from those field crops between 1929 and 1931.

Mr. PRALL. How does that compare with other lines of trade and business, as between 1929 and 1931?

Mr. HEARST. It falls below; the agricultural incomes fall below e other lines of trade, that is, other lines of industrial pursuits. Mr. PRALL. The percentage is greater?

Mr. HEARST. The percentage of decline is greater, although they ow a marked decline. Livestock is our chief product, and we proice between 25 and 35 per cent of all of the hogs produced in the nited States. We send to Chicago from 18 to 20 per cent of all of e cattle that go there to be slaughtered. The corn, through which › produce the livestock, also is an important industry. The value our livestock was a little over $500,000,000 on January 1, 1930, and shrunk to less than $250,000,000 by January 1, 1932, or a decline of .3 per cent. The corn, through which means we produce this liveock, had a value of $310,000,000 in 1929, and in 1931 it was $136,0,000, a decline of 56.1 per cent. So that, taking it all in all, this ing has reacted terrifically against prosperity in the agricultural ates that have to endure these kinds of losses, and it is a loss, a stinct loss.

Mr. PRALL. Did you raise as much corn, and produce as much corn, 1931, as you did in 1930?

Mr. HEARST. Yes; it varied the least little bit.

Mr. PRALL. And the price had shrunk for the same amount of oducts; that is what I am getting at.

Mr. HEARST. The production was very near the same, and the price d shrunk to the place where there is scarcely any price at all in most a year. To go a little further, when you come to this decline price, when you take a 10-cent drop per bushel in corn, you think at is all the loss there is; but if this corn is to be marketed, to go into mmerce and be sold upon the market, your 18-cent corn is just as pensive to market as 35 or 50 cent corn. Well, then, corn finally ts to the place where you can not afford to take it to the market, or ip it out, or deliver it for distribution.

Mr. GOLDSBOROUGH. Your State does not grow very much wheat, es it?

Mr. HEARST. We grow between 9,000,000 and 13,000,000 bushels, ostly in the southern part of the State.

Mr. GOLDSBOROUGH. Now, what I had in mind was this: When ur wheat falls from $1 to 40 cents a bushel, does the individual who s to eat bread in Chicago and New York, and any other center of pulation, get any benefit, any appreciable benefit from that loss in ce which the farmers secure for their wheat?

Mr. HEARST. A few years ago I made a study of wheat and pork; e pork I produced on my own farm, and the wheat some of my ghbors produced. I found that in a 12-month period most of my ing, or my food, dropped 100 per cent, or in other words, I got e-half for the amount of pork that I grew. I have relatives and ends in Chicago who pay practically the same retail price as they re paying before. I think that was in 1924, along in there. I took other 6-month period for wheat, and exactly the same thing preled, with the exception that bread did come down a little bit. Mr. PRALL. Who made that profit on your pork?

Mr. HEARST. I would like to find that out myself, sir. I would e to know all of the entities that dealt in it.

Mr. PRALL. You do not know?

Mr. HEARST. No; and I would like to know that right now. The first carload of hogs that I sold off of my farm this winter brought $3.65 in Chicago, and they were the best you could raise, 225 to 240 pound Hampshire hogs, and when the check got back home it brought a little over $3 a hundred pounds. The spread between what I received and what the consumer paid was greater than the spread on my pork that I sold some years ago for three times that price, or two and one-half times that price.

Mr. PRALL. Was it equally divided among those who handled it, after it left you?

Mr. HEARST. We are not able to tell in this type of market, because of the means people have of covering up costs, and so on.

Mr. BUSBY. Let me suggest this, for your thought: Trade, of course, is represented by the velocity that credit moves and that, while a drop of one-half in the velocity of credit, or in the amount of trade, so to speak,would not be continuous, fixed overhead or business. tend to absorb considerable profit that there appears to be in the difference between the former sale price of your wheat and $1, and the low point of the sale of wheat and 50 cents? In other words, if there is a thinning out of business, and a continuous overhead, would not business trail, to some extent? I am not offering that

Mr. EWING. We realized there are fixed charges all along the line. The farmer has fixed charges that he can not shirk.

Mr. BUSBY. He goes under?

Mr. EWING. They are in his costs, whether he wishes them or not. His costs of distribution are in there, and what it costs to make the crop, plant it and gather it. They have that overhead; it is there. They can not dodge it; and then they have an investment, which is an overhead. So that, all along the line, there is a fixed overhead. Mr. BUSBY. In slowing down the trade of the world, the overhead gets out of proportion to what it used to be, when they had more volume and more trade, to some extent.

Mr. HEARST. This appears to be a fact: The retailer takes advan tage of the low prices for his commodities at the time, and there is the desire to build up at that time against the time when the commodity prices may cost him a good deal more. We feel they are laying up against too many rainy days.

Mr. PRALL. You mean the packers are realizing a greater profit now than they were in 1919, for instance?

Mr. HEARST. I think the packers are doing right well now. I just noticed the other day reports coming in, and they have raised prices to the retail trade 3 per cent.

Mr. PRALL. While your price is going down?

Mr. HEARST. No; our price just took a slight increase about 10 days ago, as a result of which the packers, I am told, have advanced their prices three-tenths of 1 per cent. We have had an advance on hogs of about 70 cents a hundred in the past 10 days.

Now, Mr. Chairman, I do not want to go further with this situstion; we do not know where it will lead next week, or next month. Some of these reasons, I think, are the reasons our farmers have taken this decided stand on this money question, and we realize it is a difficult road. The handling of our finances is a difficult thing in this deflation, and affects us more than any one particular thing. We can not understand why a commodity should be taken as a

sure of the value of all other commodities when this commodity If has a fluctuating value of its own. If you had a token or symbol ome kind to measure the commodity value, such as labor, interest s and all of those things, that were stable and did not fluctuate, stayed put, then there might be some chance of going forward; with a commodity which, itself, has a fluctuating value, as we e realized in the last two years, with which to measure all of these er services and values, we just feel that something must be done to assure any prosperity to this Nation.

We are not talking from the farmers' standpoint alone, because we realize that, if this farmer buying power can be restored, that the mployed men in the State of Iowa-and we have a lot of induss there, after all-can be put to work to-morrow; because I need ny farm, and my neighbor farmers in that State need, an adequate ply of materials on our farms, which we have not been able to chase. Give us the buying power and those men in Iowa, and se men in Chicago, and elsewhere, will be put to work. Here is situation, and I have taken only a few of our commodities that stable: When our income has been cut down over 50 per cent we Mr. Busby, have our fixed overhead there, so that really any ering of our income runs into 75 or 80 or 90 per cent, when you down and figure it in toto.

Ir. BUSBY. In cutting off this difference in price that you receive he present time, you cut off not only part of the profit, but all of profits, in your operation, in many instances, do you not?

Ir. HEARST. We have dug into our capital investment until the tal investment is gone in many, many instances; and I told some ur people that, if we can not stop the downward trend of commodity e levels, "The closer you are to the edge now the better off you because the fellow that is in fairly good shape now will have his y prolonged for three or four years longer, and then he will go." lly, the fundamental difficulty lies in using an unmeasured comlity for the measure of value.

ist another thought, and I am not going to take any more of r time: I had a very close friend, and a dear friend, on the Federal erve Board, who passed away a year ago, and I talked with him n in regard to this matter, and I found, I would say, that he was king against a great many odds, but that he was very careful not isclose any confidences. I agree with Congressman Strong and e of the other men here yesterday, when they suggested that a ge in policy should become public before it took effect, rather a change of policy being put across and the public waking up and ing that a change of policy had been effective some time previous hat time, and only a few insiders knew it earlier. But I want to if we put into the hands of the Federal Reserve Board the option o certain things, that is not enough, to my mind; there should be direction there, the direction that the Wall Street bankers, these financial institutions, can not go to their friends on the Federal erve Board and say to them, "You can't, or you must do this and ." I would like to have some definite direction to them so ext, so definite, that, when you finally adopt a policy in Congress, group must be forced to do as the legislation specifies; and ld further like to suggest, as I did before, that the board be com

posed of not banking interests alone, but of agriculture and all other interests, and that it be a friendly group.

Mr. Chairman, that is all I have to say.

Mr. GOLDSBOROUGH. We thank you, Mr. Hearst.

Now, just one minute, to discuss the phases of the situation that you have in your department. The country is now in the midst of a desperate emergency, I mean a deadly emergency. Are you familiar with this legislation known as the Glass-Steagall bill?

Mr. HEARST. I have tried to familiarize myself with it, without giving the study I wish. I could not be here when the hearings were held.

Mr. GOLDSBOROUGH. Is it your impression that the purpose of. Congress in passing that legislation was easily understood and comprehended the implied direction to the Federal Reserve Board to raise the price level, and the statement to them, legislatively, that we are furnishing the tools for them to do it with?

Mr. HEARST. That was my understanding.

Mr. GOLDSBOROUGH. As far as you know, was not that the understanding of the farm people everywhere with whom you discussed it? Mr. HEARST. May I go back just a little for a moment? Mr. GOLDSBOROUGH. Yes; you may.

Mr. HEARST. Last fall the bankers organized what they called the National Credit Corporation, and the word went out throughout the country that this was going to save the situation. As a matter of fact, there was a group of bankers, who were all supposed to contribute to the common pot, to help each other; and immediately, prices on the stock market took a decided spurt, and then went down like a shot. The last condition was worse than the first. People lost confidence in that endeavor; and then the Reconstruction Finance Corporation came into being. We are favorable to it; we feel that it might be a good idea; but we realized then, and realize now, that any aid to agriculture would have to come trickling down through other sources. In other words, that it was an aid to the bankers and the railroads and the insurance companies. Then the Glass-Steagall bill came on, and we hoped that it was directed to the right thing, in a way that will help to cure these things; but we do not believe the Glass-Steagall bill will do the thing at all until this dollar is managed.

Mr. GOLDSBOROUGH. Why will not the Glass-Steagall bill be effective, in your judgment?

Mr. HEARST. My judgment is that the Federal reserve system will take the powers they have-and they have had a lot of powers before and have not used them-and they will use that power as, in their judgment, they will see fit. I hope I am wrong, but unless it has enough direction in it, so they must do it

Mr. GOLDSBOROUGH. I am going to ask this question, and I want to preface it with this statement: During the passage of the GlassSteagall bill through Congress, it was said in the Senate, may times, and broadcast throughout the country-it was never said in the House, to my knowledge-that the measure was, in no sense, an inflationary measure. That was not the purpose of it, at all. Is it your impression that statements of that kind, and the feeling which the public then took that it was to be used for the purpose of raising prices, has had a very detrimental effect on the efficacy of the bill?