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Senator WHEELER. But the reason why the bakers of the country at the present time are losing money, many of them, is because of the fact that they are not having the consumption of their product, is it not?
Mr. LINGHAM. Yes; and furthermore
Senator WHEELER (interposing). So, you do not mean to say that if the price of bread was raised i cent, it would materially cut down the consumption of flour in the country-or the consumption of bread in the country, do you?
Mr. LINGHAM. Senator Wheeler, I think if general conditions change so that the price of bread went up 1 cent it would not; but what I do believe is that if you raise wheat to 90 cents and leave corn at 25 cents and oats at 18 or less, then you have established such a wide disparity of_prices that it would reduce the consumption of wheat; and also, I think you must recognize the bitter resentment that will come among the consuming public when they realize the situation, that they will not use so much bread.
Senator WHEELER. That seems to me a very far-fetched statement. In the first place, if you can raise wheat to 90 cents a bushel and 95 cents a bushel in the United States, what are you going to do with the great mass of farmers? You are going to give the farmer purchasing power so that he can come in to the manufacturing districts of this country and buy boots and shoes and clothing and automobiles and everything else under the sun that he wants. The farmer is absolutely the backbone of the purchasing power of this Nation, and if any man is so foolish as to think that you can keep the farmer of this country down to the present level and you can have prosperity in the manufacturing districts of this country it seems to me that he is pretty nearly a fit
subject for some institution. Mr. LINGHAM. Senator Wheeler, I was interested when Secretary Wallace was on the stand Saturday to have someone ask him-I think it was Senator McNary-ask him what proportion of the taxes would be used, or the bonuses—what proportion of the bonuses would be used to pay mortgages and taxes and interest, and I believe the Secretary promised to give you that information.
Now, to try to simplify it, this plan under consideration, the domestic allotment plan, would tax the people of the country something over a billion dollars, and those figures which I have put before you at different times were made from very carefully gathered statistics, official statistics. If half of that goes to pay mortgagesI do not know what would go, but if half of that goes to pay mortgages and taxes and so forth, certainly the other half cannot come back to the manufacturing employer.
Senator WHEELER. But just stop and think of it. If you raise the price--you are familiar, I assume, with the farming conditions; supposing that tomorrow you raise the price of wheat to 90 cents so that the farmer in North Dakota, Minnesota, Montana, and all these other sections of the country would have a purchasing power instead of 17 cents a bushel for their wheat, or 13 cents a bushel for their wheat-and they cannot possibly raise wheat for that, he cannot possibly pay taxes or interest or anything else. Let me just call your attention to those that are opposing this bill and say that in my humble judgment if the situation in this country continues our whole economic structure will collapse. The farmers of this country are right on the point today, the most conservative group in the whole country, and the backbone of conservatism, they are on the verge of a revolt, and the overthrowing of your institutions right now, and yet you come here and say to me that if you raise the price of farm products in this country you are not going to increase the purchasing power and you are not going to put men to work in your factories.
Mr. LINGHAM. Senator Wheeler, I have not stated for a moment that I had any objection to raising the price of farm products. The milling industry and the grain trade and everyone connected with the farm industry would be glad to see prices go up, but we believe they can only go up through natural laws.
Senator WHEELER. What natural law? Now, we have been working on the basis of natural laws, we are told—that is, we have heard in this country, as a matter of fact ever since I can remember, that "you must leave everything to natural laws”. Every banker that has come down here, every railroad president that has come down here, every miller that has come down here, has said, “You must leave this to natural laws", and we have left it to natural laws, according to their theory, until you have got a country, the richest, the most conservative country in the world, right on the verge of revolt today, and your whole economic structure is on the verge of collapse, leaving it to the natural laws that you talk about. The trouble is that you have not been leaving it to the natural laws, because of the fact that you have been passing legislation, class legislation in favor of the group here in the East, and I for one am getting entirely tired of having people come here and say, “You must leave it to the natural laws to bring the farmer back”, when the other fellow has been getting laws passed through Congress to help him put him in a favored class.
Mr. LINGHAM. Well, Senator Wheeler, I believe there is some help at least that will run parallel with natural laws. For instance, I think the railroad situation, the freight situation, is something that will help the farmer.
Senator WHEELER. That will help them to some extent. There is no question about that.
Mr. LINGHAM. Then if we can create a demand abroad for our wheat, to take wheat as an illustration, that would help.
Senator WHEELER. How are you going to create that demand abroad? Will you tell me that?
Mr. LINGHAM. I have not studied that in detail, Senator Wheeler, but some believe that there can be reciprocal arrangements made with foreign governments that will help to take some of our surplus from this country. I could not give you the details because I have not studied it.
Senator WHEELER. Have you got one constructive idea that you can say that you have got, some substitute for this bill that will help the wheat growers of this country or raise the commodity price level of the farmers of this country?
Mr. LINGHAM. I believe the freight situation would help more than anything else; on the other hand, I believe that this proposal would hurt the wheat farmer very decidedly because I do believe that he would lose his customers, and many of them permanently.
Senator WHEELER. What customers is he going to lose?
Senator WHEELER. He is going to lose the consumer?
Mr. LINGHAM. Yes; that is, a proportion of them. I do not mean lose them all, and I was considering wheat flour.
Senator WHEELER. I have heard you talk about losing his customers. What customers is he going to lose? If you raise the price of wheat to 90 cents, what customers is he going to lose? On the contrary, is he not going to gain customers because of the fact that it is going to put men back to work in the factories and raise wages and keep them up?
Mr. LINGHAM. Of course, Senator, I think we entirely disagree as to what that will do. In other words, I cannot see how we can tax 10,000,000 people out of work to give to the farmer with the possibility that half of that money will come back to the unemployed.
Senator WHEELER. Why talk about taxing them? The trouble is you are going on the wrong theory. You are talking about taxing them, but suppose you actually fixed the price-supposing that tomorrow you could fix the price of wheat at $1 a bushel in this country
Mr. LINGHAM (interposing). And leave corn and oats and potatoes unchanged?
Senator WHEELER. There is nothing said about that. No; that is not the purpose of the bill to do that. It is not the purpose of the bill to leave corn and oats unchanged; the purpose of the hill is to do something to help corn, oats and wheat and cotton. Now, there is not any scheme here to leave corn and oats and barley and these other things without any assistance whatsoever.
Senator CAPPER. You speak of relief through reduction in freight rates. Now, the rate on wheat from the Kansas wheat belt to Chicago is about 20 cents a bushel. Suppose we cut that in two, which we could hardly hope for, yet it ought to be done, it would mean only 10 cents a bushel more to the farmer who is producing wheat. Now, I wonder if you remember the results of the investigation we had here about a year ago when we tried to find out whether, under the working of natural laws, the law of supply and demand, when wheat went down from $1.50 a bushel to about 50 cents a bushel, taking the figures of the Bureau of Labor Statistics and the Government statistics, the price of bread remained practically the same? The reduction in the price of the farmer's wheat was not reflected to any noticeable extent, so far as we were able to learn, in the price to the consumers following that reduction.
The CHAIRMAN. Before he answers that question, there has been a call for the Senate. I do not know what is to be discussed on the floor of the Senate, and I would like for the committee to go on with the hearing, and if it is agreeable to the committee we will continue the hearing, and any members of the committee here who wish to may send their names in, as we usually do. We will continue, unless there is an imperative need for our presence. You may proceed, Mr. Lingham.
Mr. LINGHAM. I have before me the figures from the Bureau of Labor Statistics of the United States Department of Labor. The price of bread throughout the country that they used as their base July 15, 1930, was 8.8 per pound; July 15, 1932, it was 6.8. In other words, the price, according to the Bureau of Labor Statistics, declined 2 cents.
Senator WHEELER. How much did wheat decline?
Mr. LINGHAM. I do not have that figure. I happen to have flour here. Flour declined 1.85 per barrel.
Senator WHEELER. But your price of wheat today, the highest grade wheat in Montana, the farmers are getting 20 cents a bushel, and for the ordinary grade of wheat he is getting 13 cents. Now, what was the price of wheat in 1930? Do you know?
Mr. LINGHAM. I may have that here. No; I do not have it.
Senator NORRIS. You gave the price of wheat. What was that date you gave the price of wheat for?
Mr. LINGHAM. No; I did not give the price of wheat.
The CHAIRMAN. Let me call your attention to this fact. The great proportion of the flour consumed is consumed in the home; that is, they buy the flour and make their own bread, so that if the flour declines the housewife gets cheaper bread. The loaf of bread that we are speaking about is the bread which is ordinarily bought by the urban class. Have you any figures there showing what proportion of the output of the mills is sold throughout the country to be consumed by the housewife and what proportion goes into your bakeries?
Mr. LINGHAM. As I remember, the latest and best figures that we can get are that about 40 percent goes to the family trade, 40 percent to the bakery trade, and about 20 percent to the restaurants and hotels
The CHAIRMAN. Now, if you have got the 40 percent going to the home and if you reduce the price of flour $1.85 a barrel, you have lessened the cost of that home to that extent.
Mr. LINGHAM. Yes, sir.
The CHAIRMAN. We talk about the loaf of bread. We are here dealing with the farmer. He rarely ever buys bread in that formnot in my section; he buys the flour and he cooks his own bread
Senator NORRIS (interposing). Bakes, Senator. (Laughter.]
The CHAIRMAN. I am talking about the language of the man in in the field now. I am a farmer myself.
Senator NORRIS. I thought you were a farmer. That is the reason I corrected you. [Laughter.]
The CHAIRMAN. Well, he cooks it. [Laughter.] It is very essential in discussing this question to know what percent of the manufacture of the mill grades of flour is consumed by those who really do their own cooking.
Senator WHEELER. Let me ask you this question. In June 1930 the price of wheat in Minneapolis was $1.25. I am not sure what the freight rate is on that wheat from Montana points, but I think it is in the neighborhood of 20 to 25 cents, if my recollection is correct; so, to bring the price of wheat to the farmer, say in Montana, at a minimum at that time of around 90 cents to a dollar a bushel, how many bushels of wheat go to make up a barrel of flour?
Mr. LINGHAM. Generally speaking, 4.6—all the way up to 6 or 7 bushels.
The CHAIRMAN. It varies according to the grade.
Senator WHEELER. I mean Montana wheat, high protein wheat. That is the highest class flour you have, is it not, the highest class wheat you have, that high protein wheat, dark northern?
Mr. LINGHAM. That is very good wheat, and it averages 4.6 a bushel, including low grades which are byproducts.
Senator WHEELER. Supposing that you take 44 bushels, or take, say, 5 bushels of wheat at the present time at 20 cents, and that is the very highest price that the highest grade of wheat is bringing in Montana, that would be $1 for his barrel of flour. Now, what is flour selling for out there at the present time?
Mr. LINGHAM. I have no idea..
Senator WHEELER. But that seems to me extremely pertinent in this situation. The farmer at the present time for the very highest grade wheat is getting $1 for enough wheat to make a barrel of flour, and the average, out there, the other grades of wheat without the high protein content, are bringing about 13 cents. In other words, the farmer at the very highest is getting about 55 cents, or from 50 to 59 cents for enough wheat to make a barrel of flour,
Senator FRAZIER. I might say I had a letter from a man in far western North Dakota the other day who said flour was $2.70 for 98 pounds. That would be $5.40 a barrel.
Senator WHEELER. $5.40 a barrel for flour. Then you talk about if we raised the price of wheat that we are going to cut off the consumers, the farmer's market for his wheat. It seems to me that it is perfectly asinine for anybody to come here and present a view of that kind to this committee, or to anybody who has given any thought, any serious thought to the wheat problem.
Mr. LINGHAM. Well, Senator Wheeler, I have given thought to the wheat problem for a great many years.
Senator WHEELER. So have I.
Mr. LINGHAM. And I have had experience in the distributing end, and I cannot help believing that the imposition of a tax of $3 a barrel may have a very serious effect on the consumption of flour. I realize that any estimate that is made is only a guess; we have no data on which to base the figures.
Senator NORRIS. On what data do you base that? Mr. LINGHAM. I say there is no data. Senator NORRIS. How do you estimate then $3 a barrel? Mr. LINGHAM. I just believe that the psychology of the country will be such, of the consumer of flour, when he learns he is being taxed, that the resentment will be such that he will not only not buy so much bread but
Senator NORRIS (interposing). I do not think you understand my question. Where do you get your information that there is going to be a tax of $3 a barrel?
Mr. LINGHAM. Under this proposed bill the tax might be over $3 per barrel, under the domestic allotment bill. The average would be over $3 a barrel, Senator Norris.
Senator FRAZIER. At 60 cents a bushel, or 59.6 cents a bushel, practically 60 cents, for 44 bushels that would be $2.70.
Mr. LINGHAM. Senator Frazier, when I gave the figure of 46, that included the low grade. As a matter of fact, for the family trade it takes on an average perhaps 574 bushels to make a barrel. You understand that in making a barrel of flour you make what is called a straight grade, just the same as a quart of straight grade milk; then you divide that into different grades; you take off
, say, 5 percent for low grade, which goes largely for cattle feed, and that would compete