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Senator NORRIS. My attention was called at a vital point. Please go over that again. Please tell me briefly why you think that the farmer must retain this export part of his product on the farm. Why cannot he go to the elevator and sell all his wheat at once and then have the elevator man and those who deal in the product segregate it?
Mr. CLAIR. For this reason, Senator, if you do not put that measure of restraint upon the farmers, they will go out and instead of raising 700,000,000 bushels that we need, they will make a bumper crop of a billion bushels or so. To what end? The following year you will have that visible supply and surplus on hand.
Senator NORRIS. As I understand, those who advocate that plan expect that to be shipped and exported as it is now and sold on the export market?
Mr. Clair. There is a question, Senator, of whether we will have an export market for wheat.
Senator NORRIS. I think the time will come when we won't have it, but we do have it now and probably will have it for some time. How would you ascertain that no advantage was taken by the producer, let us say of wheat, to illustrate?
Mr. CLAIR. You heard the Secretary the other day refer to some method or manner of cards that were suggested. The simplicity of the plan is apparent. When a farmer has his crop made he walks into a post office. You find the authority for going in the post office under your Agricultural Marketing Act. He declares, “My name is John Jones; I have sown 60 acres to wheat; I have made 16 bushels to the acre; I have 960 bushels of wheat on hand”. He makes an affidavit to that and there is a penalty attached in case he makes a false oath. The postmaster has received the broadcast from the Department of Agriculture. He has the form. The form specifies what the percentage will be and what the price is. The postmaster merely fills in that John Jones may this year ship 800 bushels of that wheat at $1.25 and puts his seal on it.
Senator NORRIS. It seems to me the difficulty would be in your plan over the Simpson plan that you would have to follow that wheat that the farmer did not sell. He would keep it on his farm?
Mr. CLAIR. Yes, sir.
Senator NORRIS. But one farmer could not export his little bit of wheat. He would have to sell it to some other man who would export it?
Mr. CLAIR. That is right.
Senator NORRIS. Why not let him bring it in at the time he brings in the other wheat and let the fellow who buys it pay whatever price is agreed upon between him and the farmer and let him ship it in export?
Mr. CLAIR. I think you would find the same problem that came up with reference to the Farm Board. If the Farm Board had not accumulated all that pile of wheat visible and hung it up over the Board, we might not have had the disaster we had.
Senator NORRIS. Perhaps not. It seems to me that it would take an army of people to see that the millions of farmers with the export part of their wheat kept it and that they didn't in one way or the other get it into the market.
Mr. Clair. I submit, Senator, that the technique has been worked out, it has been checked by agricultural experts who say a farmer couldn't pass a pig through a fence under these regulations. It consists of three slips, Senator. The first is his declaration, which is the same as he makes in an income tax return. It is incumbent upon him to get the form and fill it out. The postmaster recites thereon what proportion he may ship. The next is a blue tag, certifying the amount he may ship for domestic consumption. When he makes a sale he asks the R.F.D. carrier or postmaster, “I am selling 200 bushels of my wheat." The postmaster has nothing to do but enter the mechanical record. When he sells the 800 bushels, that slip disappears. This post-office record is a matter of public record. I had occasion to go down to Senator Capper's home county in Garnet, Kans., and 10,000 farmers certified to the fact that they themselves will look after this. If a farmer went in and certified he made 20 bushels of wheat on an acre of land, the neighbor on the north or south will know. It is a matter of public record so every farmer in the community will know whether that man stated the fact or not.
Senator NORRIS. Do you suppose those other farmers would tell on him?
Mr. Clair. Yes, sir.
Senator Norris. Wouldn't they feel, “If I let him get a little extra, then I may get a little extra myself”?
Mr. CLAIR. That would involve a 3-point conspiracy between the postmaster, the rural delivery carrier, and the farmer.
Senator NORRIS. I can't see why you wouldn't avoid all that regulation and all the necessity of looking after every individual farmer by letting him bring in anything he produced and let him sell it all and the proper proportion of it would have to be sold at the fixed price.
Mr. Clair. The following year, Senator, he would go out and plant more and increase his acreage.
Senator NORRIS. Isn't he going to do that anyway?
Senator NORRIS. This wheat that he keeps and doesn't sell he is going to find some way to export. A thousand farmers in a community would sell all their export wheat to one man and he would export it for them. He would get on the export market anyway and I don't want to keep him off of it. If the one scheme is going to tend to increase production, it seems to me the other would have the same effect. I don't see any difference on that score.
Mr. Clair. It does in that it makes the man creating the surplus the punitive creator of it. The next year he will go in and declare he is going to raise 200 less.
Senator NORRIS. He is going to sell that 200 extra bushels. He is going to get it into the export market. In fact, I wouldn't pass any law or regulation to prevent him from doing it. He is going to have this export wheat and he is going to export it anyway. If the machinery of the whole scheme tends to increase production, it will increase it in either case.
Mr. Clair. There is nothing in the Clair plan that precludes him from selling that wheat.
Senator NORRIS. No; but you have a lot of machinery about looking at it.
proclaim the test, present bed cards
Mr. CLAIR. There is a third card, the red card. It is on that red card that the surplus wheat travels. When any surplus wheat travels off that man's farm, the red card accompanies it. We have 25,736 employees in our present Department of Agriculture. The plan can be put into effect, I believe, without adding a single individual to the pay roll of the United States Government. Two weeks after this thing is proclaimed, you gentlemen can have that form in the hands of every postmaster in the United States for the farmer to go in and take the benefit and advantage of.
Senator THOMAS of Oklahoma. Considering this whole plan from the standpoint of the farmer, do you agree at the present time the dollar has too high a buying power, it buys too much wheat, cotton, livestock?
Mr. CLAIR. I admit it has the highest purchasing power we have ever had in the Nation. It is the same dollar we had in 1929.
Senator THOMAS of Oklahoma. The same dollar we had in 1920, too. It is on the gold standard. Do you agree that cheapening the dollar in buying power would help the farmer?
Mr. CLAIR. There is no question but if you made money cheap, you will raise commodity prices, but I will submit, Senator, that the average farm dollar makes seven turns before it is definitely turned back into permanent improvement. If you cheapen the dollar, you will affect six-sevenths of our economic standard in order to benefit the other seventh. It will take more dollars for clothes, for the . theater, for the church, whereas if you affect the commodity price, you are going to affect only one-seventh of our standard to benefit society.
Senator Thomas of Oklahoma. Do you agree that the dollar could be cheapened?
Mr. ČLAIR. It could be, whether it will be sound to do it, Senator, I don't know. I don't think so.
Senator Thomas of Oklahoma. You don't think it would be sound to cheapen the dollar?
Mr. CLAIR. No.
Senator Thomas of Oklahoma. We have had an unsound dollar from 1920 to today?
Mr. CLAIR. I don't think the dollar is unsound.
Senator THOMAS of Oklahoma. It hasn't been the same value two days since 1920?
Mr. Clair. Value is a comparative thing. Our agricultural commodities are too low.
Senator THOMAS of Oklahoma. That is because the dollar is too high?
Mr. CLAIR. No; I don't think so. I think it is because we have protected the dispensable products of life artificially. I say we will have to break down the barrier, take away your Interstate Commerce Commission
Senator THOMAS of Oklahoma [interposing). How do you account for the proposition that is self-evident, that during the past year we have passed several bills that had the prospect of what is sometimes called inflation and expansion of currency—it happened in the moratorium, it happened in the Glass-Steagall bill, in the home-loan bank amendment, and in the passage of the money bill the other dayevery time we pass a law that has the promise of the expansion of cur
rency, the same day or the next day commodity prices have a substantial rise?
Mr. CLAIR. That is so.
Senator Thomas of Oklahoma. If Congress will provide some scheme that not only promises expansion but will carry it through, wouldn't that bring about an increase in commodity prices? Mr. CLAIR. Yes, but
Senator Thomas of Oklahoma [interposing). That cheaper dollar will pay a dollar of interest? Mr. CLAIR. Yes, sir.
Senator Thomas of Oklahoma. It will pay a dollar of everything that he has to buy; he is not buying radios and theater tickets and things of that kind.
Mr. CLAIR. We have got to get him back to buying them. I will grant you, Senator, that a cheap dollar will enable a farmer to pay his interest and his mortgage off and his taxes and his fixed charges, but it will affect the other six-sevenths.
Senator Thomas of Oklahoma. Don't you agree that the first thing that should be done is for the Government to decide how valuable our dollars should be to serve the bests interests of the farmer, the laboring man, the banker, and everybody, and then, if and when it decides what that dollar should be in buying power, then drive the dollar to that point and keep it there?
Mr. Clair. I do not agree, sir. I respectfully disagree. I submit this thought, that we have a fixed value in the dollar now.
Senator Thomas of Oklahoma. Measured by what? Mr. CLAIR. By the same standard we had when we knew our Nation to be normally prosperous.
Senator Thomas of Oklahoma. Just measured on so many grains of gold, and that is all.
Mr. Clair. I will grant that. But so far as the standard itself is concerned, we don't have to have tons of gold to measure it as long as we keep one piece to measure it. It is the intrinsic value. I do submit this; if you get our agricultural commodities back to normal, that the tax problem will take care of itself.
Senator THOMAS of Oklahoma. How do you get them back to normal value, if the prices change every day? Suppose you were buying cloth, and I was selling cloth, and you had a yardstick that everybody bought by, 36 inches today, and tomorrow it would be 42 inches, wouldn't you have the advantage in buying cloth from me when you had the power to change that yardstick and make it longer or make it shorter as you saw fit? Mr. CLAIR. I will grant you that.
Senator THOMAS of Oklahoma. That is the exact condition we have today with the dollar. Mr. CLAIR. I wouldn't say so.
Senator Thomas of Oklahoma. Based on the Commodity Index the dollar today is worth almost three times what it was in 1920.
Mr. CLAIR. I will grant that, as compared with the Commodity Index.
Senator Thomas of Oklahoma. That means the yardstick today would be three times 36 inches, as we have it now. Down in the Bureau of Standards they have a piece of metal that is supposed to be the most nonsusceptible to heat. That piece of metal is 36 inches long. It is kept in a room where the temperature never varies; it is kept in containers, and nobody ever touches it. That is how carefully the Government guards that yardstick. That yardstick, of course, measures cloth and things of that character. When it comes to the dollar that measures the things people work for and produce, it is within the control of a few bankers, and they can make it worth 3 times as much, or can make it worth one third as much at will. It is my contention that until the Government decides the point at which they want to put the dollar in buying power, and keep it there Great Britain is doing it. They stabilize their pound around $3.40. It fluctuates a few cents one way or the other, but they have the power to keep that pound at a buying power of approximately $3.40. They could have put it at $2.50, $2, or $10, just as they saw proper. We have the same power here, but the Government does not have the control of the fixing of the buying power of the dollar today. It is done by a few folks who profit by it, as they see fit, from day to day. That is my conception of it. Mr. CLAIR. We have a fixed value now.
Senator Bulow. Do you think your plan would apply to the present cotton situation.
Mr. CLAIR. Yes, sir.
Senator Bulow. Now, let us say the consumption of American cotton is between eleven and twelve million bales, the world consumption. We raise normally about 14,000,000 bales. At this time we have a carry-over of American cotton of 13,000,000 bales. Nine and one-half million bales are in the United States. We consume in the United States, or did consume in the United States last year 5,000,000 bales. We have got 9,000,000 bales in the cotton mill warehouses and other warehouses in this country, or off the farms. How is the farmer going to sell any cotton next year under your plan when there is a two years' supply in the mills in this country, now in this country, off the farms.
Mr. CLAIR. The plan provides that each holder of cotton shall come in and declare his particular holdings. We have the cotton cooperatives possessed of several million bales, and the plan provides that they shall sell that cotton at the stabilized price.
Senator Bulow. How is he going to do it when they have already got two years' supply in this country without paying the additional price for it? Mr. CLAIR. It is now in the hands of the cooperatives. Senator Bulow. No sir; that is where you are mistaken. Mr. Clair. A million and a half bales.
Senator Bulow. A million and a half bales don't mean much, but it is in this country, and they can't sell it. There is practically two years American consumption now in the warehouses. It will take two years under your plan before the farmer would find a market for any of his cotton at that increased price.
Mr. CLAIR. No, sir.
Senator Bulow. How could he sell any until the present supply was completely exhausted?
Mr. Clain. By having the present holder of that cotton come in and declare their present holdings and pro rate them with the farmers.
Senator BULOW. Give them the benefit of the price?
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