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domestic consumption. Since the farm population of the United States is roughly 30 percent of the total population, this provision will make available for the benefit of the farmer a sum equivalent to his fair share of the tariff receipts. Upon the basis of the total customs receipts during the past 3 years, it is anticipated that in the neighborhood of $100,000,000 can annually be made available for the purposes described in the bill. These purposes include, in addition to the encouragement of exportation, the retirement of submarginal agricultural and grazing lands by purchasing or leasing them on behalf of the United States, and the making of payments to farmers in connection with the acreage or production adjustment of basic agricultural commodities.

Further recognition of the desirability of stimulating the export trade in agricultural commodities is afforded by the provision authorizing the imposition of a processing tax not only in order to finance the making of rental and benefit payments to producers for engaging in adjustment programs but also for financing payments for the expansion of domestic and foreign markets. Expansion of domestic markets is in the interest of a fuller utilization of our agricultural resources. The current depression has revealed more than ever the existence of areas of substandard consumption of farm products in this country. Even in normal times, the low-income groups could consume more of farm products than has been the case in the past. An expansion of the domestic markets will serve to build up the lowconsuming areas within our own population to a level adequate for the maintenance of health, and to bring about a permanently larger volume of consumption so as to require a minimum of restriction of our agricultural resources.

ANALYSIS OF THE BILL

Section 1 (a) amends the declaration of policy in the Agricultural Adjustment Act, which has as its objective the reestablishment of prices paid to farmers at a level that will give agricultural commodities a current purchasing power equivalent to that of the base period. The amendment proposes that, in the case of all commodities for which the base period is the pre-war period (August 1909 to July 1914), such prices will also reflect current interest payments per acre on farm indebtedness secured by real estate and tax payments per acre on farm real estate as contrasted with such payments during the base period. This section is intended to give the Agricultural Adjustment Administration a somewhat more adequate standard for determining parity prices. The present method of calculation is composed of an index of prices of goods which farmers buy in relation to the pre-war level, and does not cover expenditures for taxes and for debt service. At the present time, taxes per acre and mortgage interest per acre are probably about 160 to 170 percent of the pre-war level. The combination of these two items together with the index of prices paid by farmers may be expected to give parity standards approximately 5 percent higher than at present.

Subsection (b) of section 1 makes the base period in the case of wool and mohair the post-war period (August 1919 to July 1929) instead of the pre-war period (August 1909 to July 1914).

Section 2 amends subsection (1) of section 8.

Subsection (a) of section 2 substitutes for the general power of the Secretary to provide for reduction in the acreage or production for market, or both, of any basic agricultural commodity the power to provide for adjustment in acreage or production, or both.

Subsection (b) of section 2 authorizes the Secretary to make rental or benefit payments and payments for expansion of domestic or foreign markets in quantities of one or more agricultural commodities acquired by him under the Agricultural Adjustment Act. This provision authorizes payments in kind, either in whole or in part, in lieu of payments in cash which are required under the present law. The amendment made by this subsection, together with the provisions of section 3 (b) permitting the acquisition of commodities pledged with the Federal Government, are designed to carry out the "ever normal granary" plan outlined in the previous portions of this report.

Subsection (c) of section 2 specifically gives the Secretary the power to provide for making payments for expansion of domestic or foreign markets in connection with basic agricultural commodities.

Section 3 (a) amends the provisions of section 12 (a) of the Agricultural Adjustment Act under which the $100,000,000 fund is available for certain payments. The change corresponds to that made by section 2 (a), which provides for adjustment in acreage or production instead of reduction in acreage or production and authorizes payment in connection with adjustment rather than reduction as provided under the present act.

Section 3 (b) makes important changes in section 12 (b) of the Agricultural Adjustment Act which sets forth the purposes for which the proceeds of processing taxes may be used. First, a technical amendment is made to make certain that the payments made under such section 12 (b) are for the purpose of effectuating the policy of the Agricultural Adjustment Act. Second, a clarifying change is made to make certain that the expansion of markets for which payments may be made includes both domestic and foreign markets. Third, specific authority is given to make payments for the purpose of the removal of surplus products of any agricultural commodity whether or not there is a surplus of the commodity itself. Fourth, the funds available under section 12 (b) may be used for the acquisition of any agricultural commodity pledged as security for a loan made by any Federal agency, which loan was conditioned upon the borrower agreeing to cooperate with a program of production or marketing adjustment adopted under the act. (See also section 2 (b).) Fifth, specific authority is given to make payments for expansion of domestic or foreign markets.

Section 4 of the bill strikes out the provision of the Agricultural Adjustment Act which authorizes the Secretary to license processors, associations of producers, and others handling agricultural commodities and products thereof, and substitutes therefor a new subsection dealing with licensing.

The proposed provisions differ from the present law in several respects and add several new powers and limitations. A comparison of the proposed provisions and the present law and a detailed discussion of the proposed provisions are set forth in the numbered paragraphs below:

First. Specific provision is made that there must be due notice and opportunity for hearing prior to the issuance of a license. No such requirement is stated in the present law.

Second. The definition of those whole dealings may be licensed because such dealings relate to interstate or foreign commerce has been broadened to include not only those engaged in handling agricultural commodities and products thereof in the current of interstate or foreign commerce but also those whose dealings are in competition with or burden, obstruct, or in any way affect such commerce. It is, of course, not intended to authorize the licensing of persons handling goods only in intrastate commerce except where such handling burdens, obstructs, or affects interstate commerce. The language contained in the amendments will, however, make it clear that the full extent of the Federal power over interstate commerce is intended to be vested in the Secretary in connection with the issuance of licenses to processors, associations of producers, and handlers.

Third. The provision of the present law authorizing licenses to eliminate unfair practices and charges is retained, subject to the provisions applicable to all licenses set forth hereinafter. These licenses are called "clause (1) licenses" herein. These licenses may be issued without regard to the provisions which are applicable solely to other licenses, such as the provision requiring a signed marketing agreement in the case of clause (2) licenses and the provision requiring farmer approval in the case of clause (3) licenses.

Fourth. The new provision adds to the present law a new class of licenses, herein called "clause (2) licenses." These licenses are to be issued to make effective a marketing plan set forth in a marketing agreement which relates to any agricultural commodity or product thereof and which is signed by the handlers of 50 percent or more of the volume of business done by the respective classes of business or industrial activity specified in the license.

Fifth. The new provision adds to the present law a second new class of licenses herein called "clause (3) licenses." These licenses may be issued only to make effective a marketing plan set forth in a proposed marketing agreement on which a hearing has been held. They cannot apply to any basic agricultural commodity (or its products), as now defined, except that they can apply to milk and its products, tobacco, and sugar beets and sugarcane. They may be issued only after certain determinations are made by the Secretary with the approval of the President. There must be a determination that the failure or refusal to sign of persons handling more than 50 percent of the volume of business specified in the agreement tends to prevent the effectuation of the declared policy of the act. It must be found that the issuance of such a license is the only practical means of advancing the interests of the farmers producing the commodity. Finally, it must be found that two-thirds of the farmers producing the commodity for market, or the farmers producing for marketing two-thirds of the volume of the commodity, approve or favor the license. Provision is made under which regional licenses will be issued instead of national licenses, so far as practicable, and under which licenses will give due recognition to differences in production and marketing, or both, in different cases. No such clause (3) license can be applicable to a retailer in his capacity as retailer.

Sixth. No license issued under the title (clause (1), clause (2), and clause (3) licenses) can be applicable to a producer in his capacity as producer.

Seventh. The penalty for violation of a license has been changed from a requirement that the license be suspended or revoked to a fine of not less than $50 nor more than $500 for each violation, and each day is to be a separate offense.

Eighth. Specific provision is made for review of licenses. No similar provision is contained in the present act. It is provided that any licensee may file a petition with the Secretary of Agriculture alleging that any provision of a license or any obligation imposed in connection with the license is not in accordance with law. After holding a hearing upon the petition, the Secretary is to make an order with reference to the validity or invalidity of the license in its application to the petitioner, which shall be final if in accordance with law. The petitioner may then, if he desires, file a bill in equity in the Federal courts in order to obtain a review of the Secretary's order, and, if the courts finally determine that the order is not in accordance with law, the proceedings are to be remanded to the Secretary with directions to enter such order or take such further proceedings as, in the opinion of the court, are required by law. During the period while any such petition is pending before the Secretary and for 5 days thereafter, the penalties imposed by the act for violation of the license cannot be imposed upon the petitioner, but the Secretary may, nevertheless, during this period proceed to obtain an injunction against the petitioner pursuant to section 8a (6) of the Agricultural Adjustment Act. It is thought that these provisions establish an equitable and expeditious procedure for testing the validity of licenses, without hampering the Government's power to enforce compliance with their terms.

Section 5 adds to the present law a new subsection enabling the Secretary to secure information with respect to the operation of marketing agreements and licenses. Parties to marketing agreements and licenses are required, on request of the Secretary, to furnish him with information he finds necessary to determine the extent to which the agreement or license has been carried out or has effectuated the policy of the act and with information to enable him to determine if there has been abuse of the privilege of antitrust exemptions. To ascertain the correctness of a report furnished, or to secure the information when not furnished, the Secretary may examine books, records, etc., which he deems relevant. He may examine such data if it is within the control of the person from whom requested or within the control of any person having actual or legal control of the person from whom requested, or any subsidiary of any person from whom requested, or of any subsidiary of the person controlling the person from whom the information is requested. The information secured is required to be kept confidential by persons in the Department of Agriculture. So much of it as the Secretary deems relevant may be disclosed in a suit or administrative hearing to which the Secretary is a party if the suit or hearing involves the agreement or license with respect to which the information was furnished or acquired. General statements may be issued which do not identify the information furnished by any person and, by direction of the Secretary, the name of any person violating an agreement or license together with the provision violated may be issued. Officers or employees of the Department violating the subsection are subject to fine and imprisonment and removal from office.

Section 6 adds a new subsection (6) to sectior 8 of the Agricultural Adjustment Act which relates to the termination of licenses, and marketing agreements. Whenever the Secretary determines that a license or any provision thereof obstructs or does not tend to effectuate the declared policy, he is to terminate or suspend such license or provision. The Secretary is required to terminate a marketing agreement or license whenever he finds that a majority of the farmers producing the commodity during a representative period determined by him who, during such period, have produced for market more than 50 percent of the volume of the commodity favor its termination. In the latter case the termination is effective at the end of the current marketing period fixed in the agreement or license. To be effective, however, such termination must be announced on or before an announcement date fixed in the agreement or license.

Section 6 also adds a new subsection (7) to section 8 of the Agricultural Adjustment Act. The new subsection authorizes the Secretary to use as a base period, for the purposes of any marketing agreement or license, the post-war period (August 1919 to July 1929) or all that portion thereof for which the Secretary can satisfactorily determine the purchasing power of a commodity from available statistics of the Department if he finds and proclaims that as to that commodity the purchasing power during the prewar period cannot be satisfactorily determined from available statistics of the Department. Section 7 specifically authorizes the Secretary, or an officer of the Department designated by him, to institute an investigation and to conduct a hearing in order to determine the facts with respect to a violation of a license for the purpose of referring the matter to the Attorney General. By the force of section 10 (h) the Secretary can, in connection with such investigation and hearing, exercise the same powers subject to the same limitations as in the case of similar proceedings before the Federal Trade Commission. Notice is required to be given the licensee prior to the hearing.

Section 8 (a) amends the section of the Agricultural Adjustment Act (sec. 9) which provides that when the Secretary determines that rental or benefit payments are to be made a processing tax is imposed. This amendment provides that when the Secretary determines that payments for expansion of domestic or foreign markets of a basic agricultural commodity are to be made, a processing tax shall be in effect with respect to such commodity from the beginning of the marketing year next following the proclamation. The effect of the amendment is to add the expansion of domestic and foreign markets as a purpose for which a processing tax may be levied and also to authorize the imposition of a processing tax to enable the making of both rental or benefit payments and payments for expansion of markets.

Section 8 (b) amends section 9 (a) of the Agricultural Adjustment Act so as to terminate the processing tax levied to make payments for the expansion of markets at the end of the marketing year current at the time of the proclamation that such payments are to be terminated. The subsection also provides that if both rental and benefit payments and payments for expansion of markets are in effect the tax terminates at the end of the marketing year only if the Secretary proclaims that both such payments are to be discontinued. The amendments made by this subsection have no effect on the present

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