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Mr. LINGHAM. Senator Smith, that price that I gave you would not include 10 cents a barrel profit.

Senator BANKHEAD. What is the freight.
Mr. LINGHAM. Forty-seven cents.

Senator WHEELER. You are in the milling business, Mr. Lingham; why can you not give us your costs that go to make up your price? You have given the cost of your wheat; now, what is the cost of your labor, and so forth? I think the committee ought to have that.

Mr. LINGHAM. I will be very glad to do that, Senator Wheeler, and so that you may understand it, I would like the privilege of showing it to you personally. It is a more complicated matter, to figure the price of a barrel of flour, than it might seem.

Senator THOMAS of Oklahoma. What are the byproducts in making a barrel of flour?

Mr. LINGHAM. In the first place, there is the feed, brand, and midlings; then there is

Senator WHEELER (interposing). What do you get for that?

Mr. LINGHAM. Well, on Saturday that was $20 a ton Boston, and middlings, $19.50. Then take low-grade flour, that was $2.75 delivered Boston.

Senator WHEELER. What do you mean by “low-grade flour”?

Mr. LINGHAM. That is the by product, low grade, which is taken off, what we call the "tail of the mill”, not used to any extent for human consumption. It goes into feed and is used some for mixing with rye, but you seldom use it alone for human consumption.

Senator FRAZIER. They put it up in little packages and sell it at the rate of 15 cents a pound here in the stores, these byproducts that you say are no good.

Mr. LINGHAM. I do not say they are no good.
Senator FRAZIER. Not used for human consumption.
Mr. LINGHAM. Not to any extent.

The CHAIRMAN. I want to get the picture of the miller in relation to the wheat. That is what you are interested in and what we are interested in from your standpoint. All the middlemen from you on down, that is another picture; but what I want to know is, what profit, net profit, are you making on, say, a barrel of flour, over and above all overhead?

Mr. LINGHAM. I will give you my word, Senator, that we areSenator MURPHY (interposing). And all byproducts.

Mr. LINGHAM. Yes. We always figure byproducts as coming out of the cost. We never figure any profit on byproducts.

Senator BANKHEAD. What do you get for the part of byproducts from wheat that makes a barrel of flour? Mr. LINGHAM. It would take some time to figure it.

The CHAIRMAN. Let me get that expression you use there, that you do not figure cost on byproducts, if you just break even it is all right?

Mr. LINGHAM. In other words, put it this way: The cost of flour is made up of the cost of the wheat plus cost of manufacture, less what you get for your byproducts. That is the simple formula. So we never figureno miller ever figures a profit on their feed. Now, you ask what profit we are making. I will give you my word that we are not making 10 cents a barrel net profit, and that does not include interest on investment. If we included interest on investment, we would undoubtedly be losing money. We are anyway.

The CHAIRMAN. That is a picture I wanted to get from your standpoint, from a miller's standpoint. Now, when it leaves you, there is freight and there is the local dealer, the retailer and a host between you and the ultimate consumer. But we are interested in your picture. What effect would a raise in the price of wheat have on your situation, as regards your sales?

Mr. LINGHAM. The entire tax would certainly have to be passed on to the consumer. There is no question about that whatever.

Senator FRAZIER. You say it would be about $3 a barrel?

Mr. LINGHAM. Yes; over $3 a barrel, because it varies with the grade.

Senator MURPHY. That is expressed in a cent a loaf on bread?

Mr. LINGHAM. $3 a barrel is equivalent to a cent a loaf on a pound loaf of bread.

Senator WHEELER. That is when the loaf of bread is manufactured by the baker? Mr. LINGHAM. Yes; or by the consumer, either one.

The CHAIRMAN. Now, let me get this. You are saying now that if you pay interest on investment it would be less than-you would just about break even?

Mr. LINGHAM. We would not be making—as a matter of fact, in January and February we lost money, to be exact. Last year we made a little less than 10 cents a barrel, and if we had figured interest on investment we would have lost money.

The CHAIRMAN. Therefore, according to your statement-I want to get this clear—if there was an additional rise of $3 a barrel, you would have to include that in your cost, in your selling price, so that there would be an inevitable rise of 100 percent to the consumer, whatever tax you put on it?

Senator WHEELER. No; it would not be 100 percent.

The CHAIRMAN. If he is not making a dime now, and you add $3 more, then he would be lost.

Senator WHEELER. Of course, if it was not passed on to the consumer. It would not take a mathematician to figure that out, of course, it seems to me, if you had to pay it, if you did not pass it on to the consumer; but the point I want to make is that at the very most it would be a cent a loaf of bread. That is correct, is it not?

Mr. LINGHAM. A cent on a $3 rise.

Senator WHEELER. Do you suppose that there are very many people in this country that would object to a cent a loaf on bread if they felt that the farmers of this country instead of getting 13 to 20 cents for their wheat, they would be able to get 75 cents for their wheat; and if they got 75 cents for their wheat they could not only pay the interest on the money that they need, but they could pay their taxes, and they could purchase things that they need? Now, if they do not do that and they do not get this low price of wheat, there is bound to be a larger proportion of unemployment, and following that there is bound to be a lowering of wages and standards of living in this country. Is not that so?

Senator BANKHEAD. And the consumption of wheat.

Senator WHEELER. And the consumption of wheat. Does not that follow? In other words, if you know anything about the farmers of the Northwest, you know that they cannot get more than 13 cents a bushel for their wheat, to 20 cents a bushel, and at that price they cannot continue to exist on the farms; they have got to go into the cities and are bound to add to the unemployment. They cannot purchase anything else, and the factories cannot go on producing unless they can find somebody to buy the things that they produce; and the ultimate fact, and one reason why you have got unemployment in this country at the present time, why you have got 14,000,000 people walking the street today, is because of the fact that there is no purchasing power in the hands of these farmers, and the people should wake up to that, the great consumers of the manufacturing East.

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Mr. LINGHAM. But, Senator Wheeler, when you take a billion dollars from the present consuming power, you are certainly not increasing the purchasing power. Your theory is that part of it will be returned in the way of purchasing power for manufactured articles.

Senator WHEELER. Not only part of it, but I say that it will start the wheels of industry if you can get the price of wheat up, and if you cannot get the price of wheat up and you cannot get the price of cotton up, and you cannot get the price of corn up, I say to you that your whole economic structure is going to collapse, and instead of 12,000,000 people being out of employment you will have 18,000,000 to 20,000,000 people out of employment inside of 6 months' time, and this country cannot stand, nor can any other country stand, with 18,000,000 to 20,000,000 people out of employment walking the streets of the cities. Now, you just mark what I tell you, that the people have been extremely patient but they are not going to be very much longer.

Senator MURPHY. May I observe there, Senator Wheeler, that as to a very great many who are consuming bread, it is being paid for from taxes levied on the community.

Senator WHEELER. Of course..
Senator MURPHY. And contributions by private charity.
Senator WHEELER. And the Treasury of the United States.

Senator MURPHY. May I ask, with the farmer now getting this price for wheat, what your profit per barrel was on wheat when the farmer got a dollar a bushel for it? · Mr. LINGHAM. As a whole, the mills of the country were making around the same, perhaps a little more profit than today. Today the milling industry is certainly not in a prosperous condition.

Senator Murphy. They did not operate at a loss last year, did they?

Mr. LINGHAM. When you speak of the profit in the milling industry, it is almost incredible the small profits that mills are satisfied with. A mill is tickled to death with 25 cents a barrel profit. That is a big profit.

Senator Murphy. For the purpose of this record, you did not operate at a loss last year?

Mr. LINGHAM. Our own company made a little money. What the industry as a whole made I do not know.

Senator MURPHY. You are not in a position to say as to the whole industry? Mr. LINGHAM. I can say they made less than 10 cents per barrel.

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Senator Murphy. I do not know whether we have had a complete answer to the question of what the farmer made when he got a dollar a bushel for wheat.

Mr. Lingham. No; I have no figures on that. I would not want to put anything in on that.

Senator Murphy. The statement was made a few moments ago that the wheat as delivered to you in transit cost 65 cents, that you paid 65 cents a bushel for it, on the average, as I recall. Mr. LINGHAM. Yes; about that.

Senator MURPHY. Would you know how much the freight rate was, what that freight rate averaged on that wheat?

Mr. LINGHAM. Yes; on that Kansas wheat, that included a freight rate of 16.2 cents a bushel; on the Minneapolis wheat it included 13.5, although that particular wheat was bought through Buffalo, and in that case it only included about 1 cent a bushel, all based on a milling in transit proportion of the freight to final destination.

Senator MURPHY. And the farmer got for that wheat with the 16 cents a bushel freight charge, he got 49 cents a bushel for his wheat?

Mr. Lingham. Of course, I do not know what the farmer got.

Senator BANKHEAD. Whom did you buy it from, from the Kansas farmers?

Mr. LINGHAM. The wheat was bought from a Kansas City concern. I do not imagine they made a cent a bushel, though.

Senator MURPHY. But there was another freight charge before it came in there. Mr. LINGHAM. Oh, yes.

Senator MURPHY. You made another statement-I think Senator Norris was working along that line in his investigation, I think you remarked that a 10-cent reduction in freight rate would open up foreign markets for your flour?

Mr. Lingham. No; for wheat. Of course, that would help flour too, naturally.

Senator MURPHY. Between what points did you say this 10-cent reduction should be made; as between what points? Any points?

Mr. LINGHAM. Yes; to the seaboard.

Senator MURPHY. To any seaboard point, if he had a 10-cent rate reduction?

Mr. Lingham. To be exact, it would be 10 or 12 cents per bushel. We are about 10 or 12 cents above the export level.

Senator MURPHY. That would open up foreign markets that are now closed?

Mr. LINGHAM. Yes.

Senator MURPHY. And you have not been in these foreign markets in how long? _Mr. LINGHAM. Well, we personally do not do any export business. There has been a little odd wheat going out, but very little for export.

Senator MURPHY. Of course the trade has been in the export business?

Mr. LINGHAM. Yes; to a very small extent and only on special grades.

Senator WHEELER. What foreign markets would it open up.to you? Mr. Lingham. The world markets.

Senator WHEELER. Would you think if you got a 10-cent reduction in freight rates—what world markets do you think it would open up at the present time?

Mr. LINGHAM. I am not in position to answer that without knowing the definite markets at the markets.

Senator WHEELER. It would not open up the Chinese market to you, would it? Mr. LINGHAM. I do not know.

Senator WHEELER. It would not-how would it work, for instance, in the case of Argentina, that has a depreciated currency of 40 percent? It would not work there, would it?.

Mr. LINGHAM. Senator Wheeler, when you get into the matter of exchange I am lost.

Senator WHEELER. But you are saying it will open up foreign markets to you. Now, if you have got a depreciated currencyArgentina competes with the United States in the sale of wheat, does it not? So does Australia. Is not that correct? Mr. LINGHAM. Yes. Senator WHEELER. So does Russia. Mr. LINGHAM. Of course, the theory is that when they depreciate their currency their prices will go up.

Senator WHEELER. That has been the theory of some of these economists, but in practical effect it has not worked out, has it? Prices have not gone up in England, have they?

Mr. LINGHAM. I raised that very question with an economist, and he said his reply was that if they had not depreciated their currency the prices would have gone down further. That was his answer.

Senator WHEELER. But the truth about it is every economist has said, practically all of these so-called college professors and economists have said that the prices would automatically go up the minute you did that, but England depreciated her currency about 30 percent and the prices have not gone up in England anywhere near 30 percent, if they have gone up at all. Is not that correct?

Mr. LINGHAM. I understand that is the case.

Senator WHEELER. You say it would open up the world markets if you reduce the freight rates 10 cents, and I think we should have that 10-cent reduction in freight rates, because the farmer out in my State cannot compete with the Canadian, because the Canadian gets about that 10 or 12 cents, does he not, in freight rates?

Mr. LINGHAM. I do not know the actual difference.

Senator WHEELER. It is about 10 or 12 cents. But you have got Argentina with a depreciated currency of about 40 percent. Assuming that the price of wheat was 50 cents gold in Liverpool, England; when it came back to the United States the farmer in the United States would get 50 cents gold, less cost of transportation and handling charges, would he not?

Mr. LINGHAM. Senator Wheeler, I have listended with a great deal of interest to your discussions in the various hearings on this, and I would like very much to have the time to study the whole world economic situation, but I have not, and it is a study in itself that you have given it.

Senator WHEELER. Let me say this to you: I am not one of those who predicts that this will raise the price of farm commodities. I am going to vote for it because of the fact that it is the only alternative

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