EXHIBIT 4 A FARM PRICE OF BEEF CATTLE AND RETAIL VALUE OF EQUIVALENT AMOUNT OF BEEF CUTS, AND MARGIN BETWEEN PRICE AND VALUE, 1910 TO DATE increase in that margin, and it has been maintained at a very constant level from there to about 1930 or 1931, and then dropped down, and has since come up a little bit. The purpose of this chart is to show that the value of beef cattle in the final analysis is determined by what producers will pay for beef or do pay for beef. Senator AUSTIN. You mean producers or consumers? Mr. HARLAN. I mean consumers. The amount the consumer will pay for beef includes a profit to the distributor and to the processor, and the balance represents pretty much what the producer will get for his cattle. The wider these margins are the larger the deduction is from the retail value and the relatively smaller proportion that the producer will get. I think that covers all the points I had in mind to talk on, unless there are some further questions. Senator O'MAHONEY. What are your conclusions, Mr. Harlan, from this survey of statistics and charts? Mr. HARLAN. My conclusion would be with regard to the livestock industry that livestock is produced very generally over the United States, but is produced in surplus quantities in certain areas, especially in the western half of the country; that the livestock then has to be moved to market and has to be converted into meat, and the meat has to be ditsributed through various channels to the consumers in the areas where there is a deficiency of production; that as a result of that a very large proportion of the livestock produced moves interstate; that a large part of the meat that is produced from that livestock moves interstate; that the proportion of the total production of livestock and meat that moves interstate is relatively large; that to a considerable extent there is a relatively large proportion of that, as far as the processing and distribution of meat is concerned, which is handled by four or five large corporations or packers. I might say that there are two types of packers usually recognized. One is what they call the local packers, which are mostly confined to the packing plants that operate in one locality or one city, although there are one or two small packers that have plants located in two or three cities. Senator O'MAHONEY. Would you say it is a justificable conclusion that the production, processing, and distribution of livestock and meat products really is a single industry, all parts of which are dependent upon one another? Mr. HARLAN. Oh, yes. You cannot separate them. They comprise an integral industry. Senator O'MAHONEY. I have before me a copy of the yearbook of Swift & Co. for 1936. I find on page 2 a color print entitled "Agriculture," in connection with which appears the following statement: The earth is the mother of all wealth. Without livestock, raw foods, and fibers which modern man produces from the soil, manufacturing and distribution would cease to function, and consumers would be deprived of the neces sities of life. Without markets, each producer would revert to self-sufficiency and the low living standards that prevailed in centuries gone by. I find on page 11 another color print showing a mechanic at a bench. He is apparently not sitting down. That is entitled “Manufacture." It is accompanied by the following statement: Were it not for those who work with their hands, for the capital which provides machines and raw materials, and for the direction and coordination furnished by management, modern civilization would droop and soon die. Without mill and factory, there would be only limited markets for crops, and distribution would be at a standstill. Consumers, rich and poor, would lack even the meager necessities of life. On page 14 I find another color print, representing a man moving around a few packages, apparently loaded with meat products, entitled "Distribution," and accompanied by the following statement: Without the whirling wheels of transportation and the services of distribution, machines would no longer throb in mill and factory, the outlets for agricultural products would be greatly restricted, and hunger and want would descend upon the land. Distribution enables each group of producers to obtain, through exchange, the products of other groups. That is the basis of all prosperity. Would you say those three statements from Swift & Co. represent a fairly accurate picture of the unity of this business, as also developed by the study of the Bureau of Agricultural Economics? Mr. HARLAN. I think so. Senator O'MAHONEY. Are there any further questions? Senator O'MAHONEY. Thank you very much, Mr. Harlan. STATEMENT OF LAWRENCE MYERS, CHIEF, MARKETING SECTION, Senator O'MAHONEY. Will you please state your name? Senator O'MAHONEY. What is your position? Mr. MYERS. Chief of the marketing section of the Agricultural Adjustment Administration. Until last June the section was concerned only with cotton and was called the cotton marketing section. Senator O'MAHONEY. How long have you held that position? Mr. MYERS. I have held that position since January 1934. However, I have been in the Department of Agriculture since July 1, 1927, nearly 10 years. Senator O'MAHONEY. Are you a civil-service employee? Mr. MYERS. Yes, sir. Senator O'MAHONEY. Did you enter the Department by examination? Mr. MYERS. Yes, sir. Senator O'MAHONEY. And appointment through the Civil Service Commission? Mr. MYERS. Yes, sir. I have been under civil service throughout my career with the Government. Senator O'MAHONEY. What is your training? Mr. MYERS. I am a graduate in agricultural economics of the University of Minnesota. I took one year of post graduate work in agricultural economics at Iowa State College, and 2 years additional post graduate work at Minnesota. I was then on the teaching and research staff in agricultural economics at the University of Minnesota for 2 years before coming with the Government. Senator O'MAHONEY. Have you been devoting considerable time. to the study of the production and movement of cotton? Mr. MYERS. Yes, sir. Senator O'MAHONEY. Can you testify with respect to the interstate character of the production and distribution of these products? Mr. MYERS. Yes, sir. Senator O'MAHONEY. You may proceed. Mr. MYERS. I think perhaps a few general points will summarize the situation rather effectively, but at the outset I would like to point out that for cotton we have a somewhat different situation from that in the case of of livestock. In cotton we also have a large interstate movement, but the movement is handled by many separate firms. One group of firms handles the marketing of the cotton, another the spinning and weaving, a third the finishing, and a fourth group the garment making. I will also testify briefly on cottonseed, because there we have again a different situation. Cotton is produced in 19 of our Southern States, practically all the Southern States, extending from Virginia to California. It enters ultimately into consump tion throughout the United States and in most of the civilized world. Normally over 50 percent of our cotton is exported in the unmanufactured state, so the foreign trade is large. Of the cotton consumed domestically a large part moves across State lines in reaching the mills. On the whole, it is estimated that at least 80 percent of our American cotton enters interstate or foreign commerce in the raw state. I have some exhibits I should like to submit. I have some of the smaller-sized maps. The first map, exhibit 5, shows in the crosshatch bar the production of cotton by States. The solid bar represents the consumption by States. You will see the great surplusproducing area from the Mississippi Valley west through Texas. Then in the Southeastern States you will see both consumption and production becoming larger. The trend is for consumption to exceed production. Then for the New England States you observe a large consumption and no production. Senator O'MAHONEY. As I look at that map, it would seem to indicate that in Texas the production exceeds the consumption. Mr. MYERS. That is right. In that particular State almost 5 million bales are produced and only 100,000 are consumed. Senator O'MAHONY. That is true in Oklahoma, Missouri, Arkansas, Louisiana, and Mississippi; and is true to a lesser degree in Tennessee and Alabama; but in Georgia it would appear that the consumption exceeds the production by a small amount, and that in North and South Carolina the same is true. Mr. MYERS. That is correct. I would like to point out, in addition to those observations as to the total production and consumption by States, that there is a large interstate movement of cotton even in the Southeast, where production comes more nearly approximating consumption. Senator O'MAHONEY. Do I interpret this map correctly as showing a movement of manufactured cotton into these Southeastern States? That is a large consumer area, is it not? Mr. MYERS. Approximately 40 percent of our cotton is used for clothing, about 20 percent for household uses, and about 40 percent for industrial uses. Senator O'MAHONEY. I mean that the map indicates that consumption includes manufactured products rather than raw materials. Mr. MYERS. That is correct. The purpose of the chart is to demonstrate the obvious interstate movement of cotton from the point where it is produced to the point where it enters the mill. In addition, I would like to qualify the chart by saying there is a larger interstate movement than is apparent from this chart, because even though production and consumption seem to be pretty well balanced for the Southeastern States, there is still cotton produced in those States, exported or moved to other States, while the mills in those States may obtain cotton produced in still other States. In other words, in the Southeast, using this chart for the purpose of illustrating the geography, we have a large volume of production and consumption, but much of that cotton is exported from those States. Some of it moves into other States for mill consumption, and the mills in these southeastern. cotton-growing States in numerous instances will go to the Mississippi Valley or Texas to obtain their raw supply. I wish to submit two tables, entitled "Table I" and "Table II", giving the statistical material to support my statement that 80 percent of our cotton enters interstate or foreign trade. I do not believe it is worth while to read these figures to you or take your time for that purpose, but I would like to have them in the record to show how I arrived at the statement that 80 percent of the cotton enters interstate or foreign commerce in the raw state. Senator O'MAHONEY. Without objection, it will be handled in that way. (The tables referred to are here set forth in full, as follows:) |