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you mention, this area of production, exactly what every State of this Union has done for the electric light and power companies?

Mr. SIMPSON. Yes; and the telephone companies.
Senator BONE. Only in a somewhat more simple form.

Senator BONE. In other words, they fix the price, as we are doing in the State of Washington and every other State in the Union, at which electric energy shall be sold, and the public pays that price or goes without?

Mr. SIMPSON. Yes, sir; that is right.

Senator BONE. We have done that for the telephone companies, too.

Mr. SIMPSON. Yes; we would just like to have the principles of the interstate commerce law applied to agriculture.

Senator CAPPER. Mr. Simpson, I remember 2 years ago when ou were before the committee you were advocating this arbitrary pricefixing plan and citing that it had been successfully used during the war, and I remember there was a board-of-trade man here at that time before the committee and he was asked what he thought about it, and he said that that was all right, that it could be done in war time but that it could not be done now, raising the question of constitutionality. I wonder if you have ever looked into that phase of it.

Mr. SIMPSON. This phase of the constitutionality, and it is the only one that I know that needs to be looked into, and that is whether or not agricultural products are interstate-commerce business, and you have a case from North Dakota that is straight in line in which the Supreme Court of the United States held that the ·minute a load of wheat leaves the farm it is interstate-commerce business, because you cannot distinguish between the part of that load of wheat that will go out of the State and the part that will be consumed in the State, and therefore it is interstate-commerce business. If that is true of wheat, it is doubly true of cotton, it is doubly true of pork and beef and wool.

Senator WHEELER. Of course, you have some constitutional questions in this particular bill.

Mr. SIMPSON. Plenty of them.

Senator FRAZIER. I do not think there is any question but what. Congress could declare an emergency and say that an emergency exists at the present time.


The CHAIRMAN. There is a question now to be decided by the committee. The impression was that Secretary Wallace, who appears in the morning at 10 o'clock, was to appear in executive session, and was so informed, that it would be an executive session. Now, is it the desire of the committee to have open sessions for the Secretary, or an executive session?

Senator CAPPER. By all means it ought to be an open session.

Senator KENDRICK. After we have invited him and told him that it was to be an executive session, I think we should follow that until he has finished his statement.

Senator McGILL. Either that, or if he has no objection, it can be an open session.

Senator KENDRICK. I do not mean to deny the request that he testify, but just concur in his wishes.

The CHAIRMAN. Then if it meets with the approval of the committee we will have the Secretary here in the morning, and as soon as we are through with him we will have open sessions and continue the hearings.

I want to call Mr. Simpson's attention to the fact that I have a very eloquent plea from a gentleman that peanuts be added to the bill.

(Whereupon, at 5:10 p.m., the committee adjourned until 10 a.m. Saturday, March 25, 1933.)





Washington, D.C. The committee met, pursuant to adjournment, at 10 a.m., in its committee room in the Senate Office Building, Senator Ellison D. Smith presiding

Present: Senators Smith (chairman), Kendrick, Wheeler, Thomas of Oklahoma, McGill, Bankhead, Caraway, Murphy, Pope, Norris, McNary, Capper, and Frazier.

The CHAIRMAN. The committee will be in order. Inasmuch as the Secretary cannot get here right away, and as Mr. Simpson is here, we will ask him to go on, if he is ready, and complete his testimony.



page 12.

Mr. SIMPSON. In my statement yesterday I had gotten down to Senator McGILL. That is the House bill?

Mr. SIMPSON. Of the House bill. Section 11 gives the basic products and says that they are to be regulated. I have made a careful estimate and I believe with field men to regulate 61,2 million farmers, with 9 basic crops, it will take 100,000 employees, and when I use that number that permits one employee to each farmer; and, as I said, if you carry on this rental business in a fair way you have got to contact every farmer and give him an opportunity to rent his share. No one man can supervise more than 65 farmers. That is about half a township. I figure that for the regulation of the handlers of the commodities and the processors of the commodities and the clerical forces and experts and all that it will take another 100,000. That is 200,000. As a job crop producer it will be a

The 200,000 will not average less than $3,000 expense, each one of them, to the Government in salary and expenses. Many of these positions will entail considerable expense every day. That would mean it will cost the Government to administer this not less than $600,000,000 a year. It is utterly impossible. Some forecasters have said that you do not expect to produce more than $800,000,000 from the taxes.

Senator McGILL. You mean $600,000,000 in addition to the rentals paid?



Mr. SIMPSON. Yes, sir; I am not talking about the rent.

That might bring it up to very close to the expected income of $800,000,000.

Senator KENDRICK. Under such circumstances would you not consider it more economical and satisfactory to the producers of livestock and grain and other commodities for the Government to pay the premium direct to them rather than the deferred plan of attempting to compel the consumer to pay it?

Mr. SIMPson. If you were going to use $800,000,000 and pay it direct, there would at least be a much higher percentage of it get to the farmer than will be the case under this system.

Senator KENDRICK. To the producers?

to the producers. Senator McNARY. Before you leave that section, Mr. Simpson, do you think the bill would be simpler of administration and less expensive, probably more practical, if the basic commodities which you find here were limited to wheat and cotton ?

Mr. SIMPSON. Yes; I am sure of it. They are the easiest to operate.

Senator McNary. Do you see any difficulty in including livestock, sheep, and hogs?

Mr. SIMPSON. It would be more complicated.

Senator NORRIS. Right on that point let me ask you, approaching the subject now from the viewpoint of one who wants to get the right kind of a bill, would there be any danger if everything were eliminated except wheat and cotton? Would there be any hardship on anyone, any person who would otherwise get relief from this bill?

Mr. SIMPSON. No, sir.

Senator NORRIS. Would it be a practical proposition to confine the activities of this bill to wheat and cotton ?

Mr. SIMPSON. If you were to confine it to wheat and cotton, I do not think it would work a hardship on anybody else, but there would be—it will be “ be damned if you do " and " be damned if you don't.” You will be damned for including other stuff, and you will be damned if you do not include it. There will be lots of criticism back home saying “ they didn't treat us hog farmers right.”

Senator KENDRICK. Mr. Simpson, in that connection I want to ask you if you know of any sentiment on the part of the sheepmen or the cattlemen of the West to have their commodities included in this bill?

Mr. SIMPSON. No, sir, I do not; not in this kind of a bill. The facts are that in the West I do not know of very much sentiment in favor of the bill at all.

Senator KENDRICK. Yes; but my question is, Do you know of any sentiment on the part of the sheep or cattle men for the inclusion of their commodities in this bill?

Mr. SIMPSON. No, sir; I do not believe I do.

On page 13, section 13, we find that this bill not only starts as an experiment but it is only temporary. These farmers do not want temporary relief; they want permanent relief. These farmers want the same kind of permanent relief that the railroads received 26 years ago. That was not a temporary bill that was passed by Congress 26 years ago—the interstate commerce law—and, so far as I have been able to find, no Member of the House or Senate has ever offered a bill to repeal the interstate commerce law. It seems to be satisfactory and it is permanent. The railroads can depend on this Government seeing that they are given rates that will equal cost of production. The farmers want a permanent remedy. We want a bill that will be here in 26 years. We want a bill that we who have farms now will know that next year we are going to get cost of production for that part of our products that the home folks consume, and that next year we are going to do it; that five years from now we are going to do it, so that we can, as accurately as it is possible for a farmer to figure, know just what bills we can meet, know what expenses we can incur, and that we will be able to pay them. We want it so that our sons can purchase and make a payment on 40 acres or 80 acres or 160 acres, and that they can figure that in just so many years on the average crop they will be able to pay it out. We want it so that our grandsons can figure on being farmers and know that they are going to get the same treatment that other groups get from the Government.

Senator KENDRICK, Mr. Simpson, may I ask, in the consideration of the resolution that you passed in your organization-the Farmers' Union, is it?

Mr. SIMPSON. The Farmers' Union and the National Farmers' Holiday Association.

Senator KENDRICK. Have you considered any plan under which there might be a restriction of production

Mr. SIMPSON. We do not want the farmer restricted in any way but we do want the home folks to pay us cost of production for what they use. Then it is up to us to take care of the surplus.

Senator KENDRICK. Then you would limit this arbitrary price of farm products to those consumed in a domestic way?

Mr. SIMPSON. Yes, sir. So far as the farmer is concerned in my organization we do not want to burn a ton of coal at a less price than it costs the producers to produce it; we do not want any lumber at less than it costs the producers to produce it, and we do not want American citizens to wear our cotton and woolen clothes, to eat our bread and butter at less than it costs us to produce it.

The CHAIRMAN. Your idea then would be that from year to year this cost of production would be a sliding scale; that if the things that you consume increase in cost of production, in like manner you would raise the price of commodities to the farmer!

Mr. SIMPSON. Yes, sir.

The CHAIRMAN. And if the things that they consume began to go down, farm products would go down?

Mr. SIMPSON. Yes, sir; that is the way all price-fixed products are regulated. They do not maintain the one price throughout eternity. As the cost changes, the price that the consumer has to pay changes. In

my State cotton gins are regulated by our corporation commission. They fix the price every year that the farmers must pay for gin service; they fix the price the farmers must pay for bagging and ties; and it all depends on the difference in cost of fuel to run their plants, the difference in cost of repairs, and it may go up or down-the difference in the cost of labor. Each year there is a price set that those farmers must pay the gin.

Senator KENDRICK. Has your organization worked out plans through which such legislation could be enforced without an army of Federal employees?

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