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Mr. SIMPSON. Yes, sir; it does not take any army at all. We have the 1919 precedent in wheat, the year after the war, when this Government did fix the price, and all it took was just a sufficient force to license about 5,000 mills and elevators, and instruct them what they had to pay. That is all it took. Once in a while there would be an elevator that would pay less than the farmer thought he was entitled to, and the farmer would complain and the Government would send an inspector there, and if he found it true he would force them to pay the farmer the balance due him.
Senator NORRIS. Would your idea be to fix the price, say, for wheat in Oklahoma and all over the United States? Mr. SIMPSON. All over the United States the same.
Senator NORRIS. Then the person who used the wheat would have to pay in addition to that the cost of transportation ?
Mr. SIMPSON. Well, I would say that we pick certain terminals, like they did during the war, and that the price be based there, and, of course, you would have to deduct from that Chicago no. 1 or that Minneapolis no. 1 or that Kansas City no. 1, transportation.
Senator NORRIS. What I am getting at is, would the price, for instance, at Kansas City be the same as the price at Cleveland, Ohio?
Mr. SIMPSON. No; I do not think so. They did not have it the same during the war.
Senator NORRIS. You would have to come to this then: You would have one place where you fixed the price, and then vary it according to the freight transportation.
Mr. SIMPSON. Yes, sir. That is the way it was done during the war and a year after the war. Chicago was probably the high price, if I remember correctly, and then other places less, as they were distributed over the country as price-fixing bases.
Senator KENDRICK. Would your estimate of the cost vary from year to year?
Mr. SIMPSON. Oh, yes; each year would determine. The year you raise 900,000,000 bushels of wheat on 50,000,000 acres, we will say, the cost would be a little less than the year you only raised 700,000,000 bushels on 50,000,000 acres. And that happened with the 1931 crop and the 1932 crop. You had a variation of 200,000,000 bushels with a similar acreage, and that, of course, would mean a difference in cost.
The CHAIRMAN. So that this question of freight rates would be absorbed in the cost of production, so there would be no incentive to go into the question of freight rates. Mr. SIMPSON. Not a particle.
The CHAIRMAN. If the freight rates went up, that would be added to the cost of production.
Mr. SIMPSON. That is what happened with the 1918 crop The 1917 crop was set at $2.20 Chicago, no. 1, and before the next crop came on they increased freight rates to the extent of 6 cents à bushel, and so for the 1918 crop the price at Chicago was $2.26.
The CHAIRMAN. They just added the freight. Mr. SIMPSON. Yes. It is simple, requires no army. It requires no army to regulate the price of electricity that the people buy. It does not require any army to regulate the price the farmers have to pay for ginning.
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Senator NORRIS. There is quite an army regulating the price of electricity, but they are not employees of the Government.
Mr. SIMPSON. Yes, there is an army. I warrant you it will take 20 times as many to regulate farm production under this bill as it takes to regulate all the railroads of the United States in their price fixing. I think I am conservative when I say there are not over 10,000 employees under the Interstate Commerce Commission.
Senator MCGILL. Under your theory, Mr. Simpson, would you fix the price at the exact cost of production? Is that your idea ?
Mr. SIMPSON. Including interest on investment. I might say, if we had our national secretary here, who is our expert in a plan for developing costs of farm crops, it would be most interesting to hear him. He is an expert on it. We have had him in places where there would be a hundred economists, and he would present his plan and they were unable to find any holes in it.
I can just in a word tell you how we set up costs. It is very different from the way the Agriculture Department does it. Take, for instance, a wheat farmer. We find out what is the average-sized wheat farmer. We find, say, that the average wheat farmer produces 200 acres; then we find out what the average production for a wheat farmer is that has 200 acres. Say it is 3,000 bushels. We then find out what average side lines of income a wheat farmer that produces 200 acres has. He sells so many eggs; he sells so much cream; he may have a few hogs. Then that is the income of the side lines. Then we build up his budget and we build up a budget on what he is entitled to as an American citizen. He has the average of 5 children. He has 1 in the grade schools, 1 in the high school, and 1 in the university, and we put in the budget the cost of sending 3 children to those different schools. We put that in the budget. His children are entitled to dental care. You know the average white farmer-I am not talking about negroes—the average white farmer, more than half of them do not give their children dental care, so we put what an average family of 5 children should have in the way of dental care per year, and put that in the budget. - We provide that his wife can have hospital care. You know, the average farm woman never was inside of a hospital in her life. Many times she has borne a dozen children and never had a doctor at confinement times. She is entitled to hospital care, and we put what the average expense is in there. They are entitled to some recreation, and we put in that expense. When we have built up the budget, of course there is the expense of producing, but we have the expense of the family living in too.
We deduct what is received for his eggs and his cream, and so forth, from the budget. Then his 3,000 bushels of wheat must bring a price that will equal that budget. That is the way we arrive at it, and in arriving at our basis of figuring we come out a little higher in what the estimated cost of an average bushel of wheat and the average pound of cotton is than the Department over here does. If we would ever get a law that allows us cost of production, we would be there when they are making up the figures, showing them where we are entitled to more. As long as the figures are just matters of record, of course we do not go over and go to the expense of showing them that they are not including all the things they should.
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Senator NORRIS. · Can you give us the deductions, the conclusions, that you have reached in the average cost of wheat for different years on the plan you have outlined ?
Mr. SIMPSON. In recent years our average cost of wheat will run up around $1.50 a bushel; and corn will run
Senator McGILL (interposing). Is that based on the Chicago market?
Mr. SIMPSON. On the Chicago market. Corn will run about 90 cents. Cotton will run about 20 cents. The Department's figures over here for the last few years will show cotton about 17 and wheat, if you take in the last 5 or 6 years, wheat $1.25, and so on. We are higher than they are because we are demanding a standard of living for farmers that is equal to what other people have, and we are entitled to that, we feel.
Senator NORRIS. I would like to ask you another question there : Has there been a bill introduced in either House that meets with the approval of your organization?
* Mr. SIMPSON. The Swank bill in the House, which is before the House Committee on Agriculture now, is satisfactory to us. I cannot give you the number.
Senator NORRIS. The Swank bill? That is sufficient. Mr. SIMPSON. And Senator Thomas introduced more than a year ago a bill, S. 3133–
Senator FRAZIER (interposing). That was the last session?
Senator THOMAS. That bill was incorporated in the bill reported by the committee through the then chairman, Mr. McNary.
Mr. Simpson. That bill you will find in title 3 of Senator McNary's bill.
Senator CAPPER. That was to be operated through the Secretary of Agriculture?
Mr. SIMPSON. Yes; in the Thomas bill it was put under the Secretary of Agriculture; in the McNary bill it was left with the Farm Board, but that is immaterial.
Senator POPE. Do you have the number of the McNary bill?
Senator McNARY. That is a 3-way plan bill that I introduced at the request of these major organizations, farm organizations. It was reported to the Senate, passed, and recalled by motion. That was Senate No. 5023, Seventy-second Congress, second session, and the report that I submitted as chairman of the committee is report no. 732, Seventy-second Congress, first session.
Senator CAPPER. That had the same fate as Senator Frazier's bill on refinancing, and several other bills reported out by this committee, which never got any further than to be presented to the Senate, and the Senate turned them down. Now, the Senate committee is here trying to work out some kind of program for agriculture.
Senator NORRIS. I want to ask this question for my information particularly, but I want to get it into the record so that any student of this subject that wants to look it up can get the bills that have been introduced. I wanted it in the record, which is the reason that I brought it out.
Mr. SIMPSON. And I want to say that Senator McNary's bill was the only bill ever introduced for agriculture here, a farm marketing bill, that the three farm organizations, the Grange, the Farm Bureau, and the Farmers' Union, were for 100 percent. That is the only bill that has ever been introduced that we all agreed on, on marketing.
Senator CAPPER. That did not seem to make any impression on the Senate, I am sorry to say.
Mr. SIMPSON. Well, maybe the Senate will be more impressionable now.
Senator NORRIS. There were many Members of the Senate involved there that were not members of this committee.
The CHAIRMAN. Has there been any bill introduced this session along the lines indicated by you?
Mr. SIMPSON. Not in the Senate, but in the House there has been. As far as I am concerned, I am still of the opinion that there never was a better bill than Senator McNary's bill that the Senate Committee on Agriculture reported out. There is not a thing wrong with it. It first makes mandatory that the Government get cost of production to the farmers for that portion of their product consumed in this country. That is the part that is mandatory. There is nothing wrong in giving them three ways or any combination of those three ways to get it. Maybe on one crop the debenture would be the better way; maybe on another crop the licensing of the buyers and fixing the price of the portion needed for domestic consumption would be the better way. They do not have to use anything that does not work; all they have to do is use what will work out of these three ways or any combination of them. I can see on cotton, Senator, that you could use two. For what the home folks consume, we can have that price fixed at cost of production, and we can put an export debenture on the other and help the cotton farmer. · Senator CAPPER. Do you think your organization would be satisfied if Congress passed the McNary 3-way bill?
Mr. SIMPSON. We would fall down on our knees and give thanks to the Almighty. We would be happy to have that bill; yes, sir; and I am sure the Grange and the Farm Bureau would be happy to have it. We all three agreed on it 100 percent. I am not speaking for them but I am just saying that I am sure they would not tell you that they would not like to have that bill.
Senator WHEELER. Let me ask you this: You have given some study and some thought to this allotment plan; do you think the allotment plan can work out?
Mr. SIMPSON. Well, it depends on what allotment plan. The original allotment plan is found there in title 3 of the McNary bill and was the Farmers Union allotment plan. We are for that, 100 percent, but I do not think much of this counterfeit that was built up on our plan, known as the domestic allotment.
Senator CAPPER. How did yours differ from this? Mr. SIMPSON. Well, the very first vital thing is, the domestic allotment plan does not provide for cost of production. It says half of the cost is enough for a farmer. That is enough to condemn it.
Senator KENDRICK. It might be enough to get started with until we got used to it.
Mr. SIMPSON. A farmer that is to start now needs about twice the cost of production. He is so far behind with his payments on his mortgage and interest and taxes that you cannot start him on less
than cost of production. He ought to have more. After a year or two you might have him down to a little less, but for a starter he certainly needs cost of production or a little more.
The CHAIRMAN. The difference, then, between the bill before us and the bill that you propose is that this provides a parity which may not even approximate the cost of production? Mr. SIMPSON. Yes.
The CHAIRMAN. Yours has no reference to parity at all, and simply confines itself to the cost of production plus?
Mr. SIMPSON. Yes. Of course, cost of production absolutely brings you to a parity, because the things you are buying determine what cost of production is, and you have got to have your cost up to where it equals what you have to buy and what you have to pay, interest and and taves, and so forth.
Senator WHEELER. If that was the case, would not bringing it up to parity give the farmer cost of production?
Mr. SIMPSON. Not when the parity that you bring it up to was half of cost. You are bringing it up to the parity of 1909 to 1914; we were not getting cost then.
Senator WHEELER. It depends, I mean, on whether you bring it up to 1914-I mean it would be possible under such circumstances to have more than cost of production, or you might have less than cost of production, depending upon what that price was at the time.
Mr. SIMPSON. Senator, we found that it is not half the cost.
Senator WHEELER. You found that it was not half the cost at the present time, or was not half the cost then?
Mr. SIMPSON. Well, it was not half the cost then, nor is it half the cost now.
Senator WHEELER. The point that I wanted to make is this: Your cost of production differs at different times, of course?
Mr. SIMPSON. Yes.
Senator WHEELER. Depending upon labor and depending upon price of farm machinery, and depending upon many things? Mr. SIMPSON. Yes.
Senator WHEELER. Now, I think anybody that has given any thought to the subject at all would feel that any farmer, of course, ought to have cost of production. It seems to me that no farmer can operate on any other basis except to have cost of production, and any idea of not giving him cost of production is certainly ridiculous, because he can not stay in business and he can not operate unless he does get cost of production; and if he does not get cost of production, it is only going to put him further and further in the hole. Mr. SIMPSON. Yes, sir.
Senator WHEELER. But I would assume that under the operation of this bill surely the Department of Agriculture would not think of giving the farmer less than cost of production. This is for the purpose of rehabilitating the farmer.
Mr. SIMPSON. This bill prevents them from giving cost of production. It says you cannot give higher than that parity back there, which we know in the case of wheat-90 cents in Chicagois not cost of production. The Department of Agriculture will tell you that.