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Mr. SIMPSON. I have heard it estimated, Senator, that there are 30,000,000 acres of land now that has gone out of production, has not been ploughed in the last 2 years, that if this bill goes through they are going to be out there getting it turned over by the time the agent for the Government comes along to rent it-30,000,000 acres that will be back in production ready to lease to you by the time your agent gets there. Some of the insurance companies have 100,000 acres, 200,000 acres-three fourths of the land has not been in cultivation in the last 2 years—and they would be glad to get it back to where it at least would be rented by the Government and get some returns from it.
Senator WHEELER. They would be glad to rent it for enough to pay the taxes.
Mr. SIMPSON. You can have it for paying the taxes.
Senator CAPPER. Referring to your statement that you are against the reduction of production, do you oppose a section like this, this leasing section?
Mr. SIMPSON. Oh, yes; that will be a scandal. The Secretary of Agriculture can be the most honest man in the United States, he is going to have a thousand employees under him, and there will be 90 per cent of them that will not be as honest, and so it will be a scandal. It will wreck the Democratic Party. [Laughter.]
Senator McGILL. I do not know whether these gentlemen over here will object to that or not. [Laughter.]
Senator WHEELER. All these Republicans will vote for it then. [Laughter.]
Mr. SIMPSON. And when I say that I will not have to come back here and apologize to you a year from now. I said some things here a year ago, and I do not have to apologize for them now. They came true. All this legislation will be of as little value toward bringing prosperity back to this country as the things you were doing a year ago in the way of moratorium and reconstruction finance and homeloan legislation.
Senator McGILL. You object generally to the proposal in the bill seeking to control acreage?
Mr. SIMPSON. Yes, sir. Never try to regulate the farmer. Get the farmer a price for what the home folks use, just like you get a price for the producers of this electricity for what the home folks use.
Senator KENDRICK. Do you think it would be as difficult to regulate the farmer as it has been to relieve him? [Laughter.]
Mr. SIMPSON. No; it will be much more difficult to regulate him than it has been to take it off of him.
Now, on page 8 there is another experiment. In all other pricefixing legislation they never went way down the line and taxed some person who processed or did something and then bring it back and hope and pray that a portion of it will get to the producer. They just fixed the price that the consumer must pay when he used it. That has been the history of price-fixing legislation; but they experiment when they come to fix prices to the farmer, and they say: We will tax the processors." Here is the little elevator, here is the big elevator, and here is a grain firm on the Chicago market that has handled it and handled it and handled it, and finally it gets to the processor, and then you tax the processor, and you hope and pray that a part of it at least will get way back to the farmer.
Senator KENDRICK. Is it your idea, Mr. Simpson, that it would be more satisfactory to make direct appropriations and give to the farmer this amount instead of passing it along the line!
Mr. SIMPSON. I am not advocating that, but there would be a lot more sense to it, Senator [Laughter.] I am advocating that you do not have to have an experiment if you want to price fix for farm products. Do exactly what they do for railroad companies, what they do for electric-light companies, what they do for gas companies, what they do for telephone companies, and a hundred other things through different divisions of the Government.
Senator CAPPER. You would just arbitrarily set a price for farm products ?
Mr. SIMPSON. Yes; and you can go to legislation on that subject and you will find precedents even in agriculture.
Senator WHEELER. That is what they did during the war.
Mr. SIMPSON. During the war they set an arbitrary price on wheat. As far as regulation goes, it worked 100 percent, and the only thing that was wrong about it was that they set it below cost of production. The wheat farmers of this Nation fed the Nation and fed the Allies at less than cost of production right during the war. That is shown by the figures of the Department of Agriculture. Doctor Spillman was in charge of the cost accounting department. The next year after the war Congress passed a bill that provided for a minimum guaranteed price for the 1919 crop of wheat of $2.26 per bushel for no. 1, Chicago base.
During the war, with the set price, the grain exchanges had to close. You cannot gamble on stamps, because the stamp is one price. When wheat was just one price in Chicago the speculative market had to close, but when the new bill passed in March 1919 guaranteeing the farmers $2.26 minimum price, when that law went into effect the 1st of May of that year, 1919, the grain exchanges opened up on wheat, and in less than 30 days they had wheat $3 a bushel on the Chicago market, and it remained at about that price, sometimes little under and sometimes a little above, for a year-as long as that law lasted.
You do not have to have an experiment. You can go back and do what the Congress did in 1919. If it worked on wheat in 1919, it could have worked on wheat every year since. If it will work on wheat, it can work on any of the basic farm commodities.
Senator CAPPER. How would you determine what a fair price would be ?
Mr. SIMPSON. The Department of Agriculture spends about $2,000,000 a year, has been doing it for 20 years, to arrive every year at what was the cost of an average bushel of wheat during the year. When they said the average was $2.48, the wheat farmers out there in Kansas and Oklahoma and Nebraska got about $1.85, 63 cents a bushel less than cost. In 1931 the Department's figures showed about $1.10 a bushel cost and about $1.05 for last year. That is already determined by the Department. You have a Department that does that every year, and no use is made of the figures.
Senator CAPPER. What profit in addition to cost of production woud you add ?
Mr. SIMPSON. Just interest on the investment included in those costs. That is the profit.
Senator BONE. Would you fix a figure at which the wheat should be sold, or the minimum price?
Mr. SIMPSON. We farmers, of course, would like to have it fixed at the minimum price. We think that the speculators would go. above it. They did in 1919 on the whole crop, and we believe that on the domestic consumption part of the crop they would speculate above the minimum if it was made a minimum.
Senator NORRIS. Mr. Simpson, I do not want to be understood as contradicting you, but your statement about what happened with that minimum price does not agree with my recollection. Of course, I am only speaking now from recollection, and my recollection may be wrong, but as I remember it, when Congress fixed the minimum price it was the intention, without any doubt on the part of Congress, that it should be really a minimum price.
Mr. SIMPSON. You mean for the two years of the war?
Senator NORRIS. Yes. But what happened was, that when they attempted to carry out the plan-and Hoover was the man that carried it out—that minimum price became the maximum price.
Senator FRAZIER. During war time? Senator Norris. Yes; that is what I am speaking of. Mr. SIMPSON. You are right except in just this little bit: Mr. Hoover was food administrator; Julius H. Barnes was in charge. of the United States Grain Purchasing Corporation up in New York City. We farmers still have the receipts where we complained to a mill in our State that they were not paying as much for wheat as they ought to, and the miller said: "Why, I can't pay more. They won't allow me to.". Well, we wired to Mr. Hoover, food administrator, asking whether this price was a minimum or maximum price, and Mr. Hoover wired back: “It is a minimum price." Then the next day a load of wheat was presented to that mill and we showed them the telegram and the miller paid us 25 cents a bushel more than he had the day before, and he said: “I will report this to Mr. Barnes, under whom I am licensed," and the wire came back from Mr. Barnes: “A second offense and your license will be canceled.”
The CHAIRMAN. That oecurred in this way: In the drafting of that bill it was understood that that $2 was to be the minimum and the blue sky the limit above it, but there was a paragraph further on in that food-control bill which provided that whoever had charge of any of the commodities under that bill should fix a maximum beyond which if anyone went he would lose his license and be liable to whatever penalty the bill provided, and immediately after the promulgation of that law the food administrator fixed the minimum as the maximum. That is what occurred. That provision in the bill provided that the food administrator, the one having the matter in charge, should fix a maximum beyond which it would be considered profiteering to go, and he was authorized to state that maximum and to enforce penalties on those who went beyond it.
Senator Nelson, at the time the bill was passed, said that he believed this amount of $2, or whatever it was it was the minimum would be found to be the maximum, and I remember that I considered there was no joker in the bill, and I said I did not see how he could read that into it, when the law expressly provided that
the $2 was the minimum, and whatever else beyond that he might get, he could get it, but further on, away toward the last of the bill-as I remember it, it was quite a lengthy bill—there was that proviso that the food-control agency would have the power to fix a maximum beyond which if anyone having a license went, he would be penalized, and they fixed the minimum as the maximum. That is what occurred. Senator NORRIS. Let me say, again I may
because I am .speaking only from recollection, but I was there, and I have a pretty definite recollection, because I think I voted against the provision and I did it on the ground, and said so, that the minimum price fixed in the bill was going to be the maximum in actual application, and it turned out afterwards to be that way, but my understanding is that it became the maximum because there was only one person in the United States who could buy wheat either for ourselves or for our Allies; it put us all in the hands of this National Grain Corporation, and they would not pay any more than the minimum, and that is the way I think it came out.
The CHAIRMAN. No; I think it was by regulation. I think you are mistaken, Senator.
Senator Norris. It might have been fixed by regulation, but I do not think that was the law.
The CHAIRMAN. Yes; it was the law.
Senator NORRIS. But it was because they would not pay any more than the minimum.
Mr. SIMPSON. Anyway, it operated in that way.
Senator MCGILL. Is it your idea, Mr. Simpson, to fix a minimum price on that portion of the commodity domestically consumed ?
Mr. SIMPSON. Yes.
Senator McGILL. And the surplus, if there be a surplus, that could be sold on the world market?
Mr. SIMPSON. That could be sold on the world market, at whatever the world market price was.
Senator FRAZIER. Or kept off the market ?
Mr. SIMPSON. Yes. I would prefer that legislation—that you would provide for settlement on each load. The mill or elevator that the farmer takes his load of wheat to is licensed by the Secretary of Agriculture and has been told that the cost was $1.10 a bushel, we will say, and suppose that six sevenths of the crop is needed for home consumption, and suppose we raised, in round numbers 700,000,000 bushels, and 600,000,000 is needed for domestic consumption and 100 is the exportable surplus, and suppose that that licensed elevator had been told that “For every load of wheat that comes in you must settle on the basis of giving them $1.10
Senator MCGILL (interposing). Not less than $1.10?
Mr. SIMPSON. Not less than $1.10 a bushel for six sevenths of the load, and for one seventh they would pay the farmer whatever the world price was. If a 70-bushel load of wheat came out to your home town, Senator McGill, the elevator would for 60 bushels pay $1.10, or $66, and for the 10 bushels that is the part of the exportable surplus they would pay the average world price, 30 cents we will say, which is $3. That is $69 that the farmer would have for his load of
wheat instead of 30 cents for the whole business, $21 he did not receive.
The CHAIRMAN. Why would it not be feasible to add the two together on the basis of percentages? Ascertain what the world price is likely to control for a season, and the domestic price, add them together on the basis of percentage and fix that minimum so you would not have that confusion in mechanics of so much at one price and so much at another price?
Mr. SIMPSON. That would be all right, Senator.
Senator McGill. That world price would not stay the same all the time.
Senator NORRIS. In that case you would give the farmer a certificate
Mr. SIMPSON. No; you would not give him a certificate; the buyer just pays him 30 cents for one seventh of the load and $1.10 for six sevenths. You do not regulate the farmer at all. You just regulate a few thousand elevators and mills. That is the way they did it during the war and the year after the war.
Senator CAPPER. Mr. Simpson, is there a bill before Congress that carries your plan for fixing prices on farm products ?
Mr. ŠIMPSON. Yes; there is. Congressman Swank has introduced in this session such a bill. Senator Thomas, a year ago, introduced such a bill and it finally was incorporated in the bill that Senator McNary introduced in both the session a year ago and the short session. A mighty good bill.
Senator MONARY. That was the bill carrying the three plans?
Mr. SIMPSON. Yes. That bill made it mandatory to get the cost of production to the farmers, then gave them three ways of getting it, equalization fee, debenture, and our farmers' union allotment.
The CHAIRMAN. And leaves it to the farmer to regulate whether he is going to produce an excess above domestic consumption or not?
Mr. SIMPSON. Yes; turn him loose. If he is fond of work he will have a big excess that he does not get much for; but what the home folks use he will sure get paid for it. And I want to tell you something-it was a question here a while ago—no person is extra fond of work, and the farmer is no exception.
The CHAIRMAN. United States Senators are. [Laughter.]
Mr. SIMPSON. And the farmer, if you gave him 40 cents a pound for cotton and $3 a bushel for wheat, in 2 or 3 years he will be raising less wheat and less cotton than he raises when it is 6 cents a pound—when cotton is 6 cents a pound and wheat is 30 cents a bushel. It is the old story: he has to balance the budget. You can take the average farmer right now, he does not go to town once a week, hardly. Back there when cotton and wheat were a good price, he used to go three or four times a week. The farmer does not take a vacation in the winter any more, or in the summer when the work is done. He cannot. The farmer today has either got his car in the garage, not using it at all, has not taken out a license; or, if he has, he just uses it for necessities, not for pleasure. You give him a price for his products and you will be complaining about the old fellow being shiftless and not working enough. I was before some members of the Federal Reserve Board back there in January 1920, and one of the reasons given for the bringing down of prices was, they said, “the farmers are growing so prosperous