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Senator FRAZIER. Either industry has got to be brought down to our level, or we have got to be brought up to meet them. Mr. CONAWAY. That is right.

Senator THOMAS of Oklahoma. But if the price the farmer has to pay was brought down to the level of his income, could he then, in your opinion, live on, with the present mountain of debt piled upon him?

Mr. CONAWAY. No. You pass laws relieving the farmer's creditor and the farmer will be all right. This whole situation is a matter as of between two individuals.

Senator THOMAS of Oklahoma. Let me ask you this question: Just supposing that all the farmer's debt was wiped out; that is, if he has a mortgage on his farm, that is canceled; if he has a mortgage on his chattels, that mortgage is canceled; if he has installment contracts or floating debts, those are canceled, but he still has his taxes to pay. Could he now, at present prices, raise enough products to live upon and sell to pay those taxes?

Mr. CONAWAY. No; but you have lost sight of the fact that Senator Frazier was speaking of establishing a parity between these, bringing the price of the stuff he has to buy down with that he has to sell. Then he could live.

Senator THOMAS of Oklahoma. That doesn't interfere with his taxes. He still has his taxes to pay, and that is a fixed charge.

Mr. CONAWAY. Senator, wouldn't that be taken care of in this parity? Wouldn't wages come down? Wouldn't the cost of government come down, and the cost of everything the farmer has to contend with come down, in this scheme of parity?

Senator THOMAS of Oklahoma. With that interpretation, of course, that is true.

Mr. CONAWAY. That is what I mean by parity.

Senator THOMAS of Oklahoma. It is my conviction that the farmers could be relieved of all their debt with the present amount of taxes still remaining and the present value of the dollar still existing, and he could not raise enough products on his farm to secure enough dollars to pay his taxes. Mr. CONAWAY. I think you are right.

Senator THOMAS of Oklahoma. In other words, if you eliminate his debt entirely, with the taxes as they are, he cannot raise enough money to pay the cost of production and live, because if I am correctly advised, he does not get the cost of production.

Mr. CONAWAY. Here is one thing I did not mention. We are also of the opinion that even if you do raise prices to the farmer or producer, wherever he may happen to be located, that unless regulatory measures are passed that will control the ambition of the manufacturer, or the man who sells his product to the purchaser it will avail nothing. The price of wheat may go up 2 cents a bushel and the price of flour may go up 10 cents a sack, or 25 cents, and unless there is some method by which you might control the amount of profit a manufacturer can levy on the public, you are availing nothing by raising the price to the producer.

Senator MURPHY. I would like to ask the witness a question. I am in agreement with your view as respects the tariff. There is no proposition before us having to do with the tariff. The farmer now is discriminated against in the things he buys. Those facts being

rectly to pay with the klahoma.'e right.

as stated, are you against an effort to lift up the agricultural industry to an approximate level with other industry? · Mr. CONAWAY. Yes; because I have the belief that it is impossible for the United States or any other nation to lift itself up to the present prices—I wouldn't know how to put that exactly—to lift the prices of agricultural products up to the price that the manufacturer or processor charges the consumer and maintain stability in the business affairs of the world for a great length of time.

In other words, I do not believe there is property enough in the United States to establish a standard of living, in the raising of prices that high, we having to deal with the rest of the world, and live alone. I think it is an impossibility. I think it would be much better, through some tariff regulation, or trade agreement with the rest of the world that would enable the American farmer to buy his products on the open market, making the manufacturer and the processor to compete with the rest of the world, than it would be to attempt to raise him up on a parity with that manufacturer or processor.

Senator MURPHY. I am in perfect agreement with you, but in the event we are not able to get that kind of legislation, this is being urged upon us as an emergency need.

Mr. CONAWAY. That is a mistaken idea that our statesmen have had in the past, that I think is the cause of this. I do not like to criticize those who have come down here and given their services to the American people and tried to do the best they could, but it appears to me that in their connections they have been very zealous in trying to protect and raise the standard of living by a protective tariff on industry. For instance, they have it to such a high point now, and the financial responsibility is so great, that we believe honestly it will be impossible to subsidize agriculture and bring it up to that point and still exist as a nation.

Senator THOMAS of Oklahoma. If you were commanded now to provide relief for agriculture, tell the committee just what you would prescribe.

Mr. CONAWAY. I have been trying to tell you. Probably I have not made it plain enough. In the first place I would not want that responsibility; and in the second place, and in case I accepted that I do not believe that any man alive is going to be able to work out a solution to this problem as quickly as some people feel that it ought to be worked out. They say: "If you don't do something in 2 or 3 months or 2 or 3 weeks or 2 or 3 days, agriculture is going to be snowed under.” They are now. The farmer cannot pay his bills. His creditors understand that. They know he cannot pay his bills. The whole thing is stagnated. There can be no agreement. They say there is liable to be riot and bloodshed over this thing, but I have my doubts. I have a lot more respect for the stability of the American citizenship than to believe that there will ever be any bloodshed to speak of over anything of the kind. We are not near revolution, so far as I am able to get the sentiment of this country. It will take years and years of this kind of stuff to create a revolution. A man may lose his property; still he is not in favor of going on the war path and chasing a phantom, and that is what would he be chasing if he attempted to run down the source of this trouble.

Senator FRAZIER. Is the holiday movement organized in your community?

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Mr. CONAWAY. It is. Not very strongly near my locality but throughout the State it is. Whether or not that is right in principle I am not prepared to say. Whether it is right for an American citizen or a group of American citizens to take the law in their own hands and say to the creditor of a certain individual: “You have no right to foreclose," I am not prepared to say. I believe also that it is un-American and wrong in principle; that if some law were passed to protect the creditor in his rights in the premises, there would not be nearly so many foreclosures and there would not be nearly so much of a misunderstanding as there is at the present time. It seems to me that some foreclosures have been furthered and hurried along from the mere fact that the mortgagee was not protected in his rights; that if he did not file a foreclosure at a certain time he would lose all the rights he had in the premises. If some method were devised that would enable him to extend leniency to his debtors he would probably be willing to make the whole deal over. I found that as a consensus of opinion among several of those judges in North Dakota. They seemed to feel that that would help quite a lot; that the creditor in those instances would be able to pare down his debt; that the other man would be willing to make a deal and renew the mortgage; that we feel that the situation would be eased considerably without any legislation and with a corresponding regulation which people do not like generally.

Senator Thomas of Oklahoma. As I understand your philosophy or remedy, it is to let nature take its course in working out this problem, and in that course you would extenuate, if possible, the scaling down of the indebtedness now to the American farmer; that in place of them being required to pay the present mortgages they be permitted to deal with the mortgagee and adjust the mortgage to the point where the mortgagor could probably pay out on the basis of present prices.

In that connection, we have in the United States approximately 21 billions of National debt, evidenced by some form of Government bond. Do you hold that it would be possible or advisable to scale down that indebtedness and require the holder of American bonds, United States bonds, to take a new bond in a substantially smaller amount? Would not that be in line with your theory of adjustment, that while we are scaling down we should require the holders of United States securities to come in and suffer their · part of this adjustment by taking a smaller amount of bonds?

Mr. CoNAway. It seems to me, Senator, that it will be just as reasonable to propose a deal of that kind with reference to the bondholders as it would be to bankrupt the Nation and force him to do it the other way. The chances are that if this thing was allowed to work itself out as an adjustment between creditor and debtor, and the Congress and the President doing all they could to establish friendly relations again throughout the world, opening up new markets or finding new uses for our products, it would be much more permanent than a drastic reduction in the inebtedness to one another.

The CHAIRMAN. Is there not this evidence that enters into this situation: That certain property that is real-we put that name there because it is the only property that is real, land, growing crops-the mortgagor finds that the present value of it is far below its real, intrinsic value. He knows that sometime it has got to come back or the Nation will cease to exist, and therefore for purely selfish reasons he prefers to foreclose the mortgage if he can get possession of the property, or, if he does not hold the mortgage, to have the mortgagor foreclose and he purchase the property-and that is going on around me, and therefore when the cloud lifts he will have the basis of a fortune that he bought for a mere song.

Now, while an emergency of this kind still persists there ought to be some protection thrown around those who are unfortunate, that have nothing but their property as the basis of their security on which they have given a mortgage or hypothecated, to have them protected in a time like this, until such time as normal values may come back and his earnings enable him to meet the interest and the taxes on his property. There never was a time in the history of America when those who have the money have had the opportunity, have had such an opportunity of laying the foundation of incalculable wealth. We have got that situation right now.

If there are no further questions of this witness, Mr. Loomis has asked for 5 minutes, and if he is present we will hear him for 5 minutes or a little longer; then we will take a recess until tomorrow.

STATEMENT OF A. M. LOOMIS, SECRETARY NATIONAL DAIRY

UNION, WASHINGTON, D.C. Mr. Loomis. Mr. Chairman and members of the committee, I am here on a mere detail of the language of the bill which is before you, having to do with compensating taxes, starting at the bottom of page 15, and I am making this very brief statement on the assumption that a bill something of this character will be passed and that thereby we will have certain increases in the price of the basic agricultural commodities which are named in the bill.

Paragraph (d) of section 15, page 15, starting on line 16 of the . House bill, the bill before you, provides that the Secretary of Agriculture shall ascertain from time to time whether the payment of the processing tax on any basic agricultural commodity is causing or will cause to the processors thereof disadvantages in competition from competing agricultural commodities by reason of excessive shifts in consumption, and so forth. Then it goes on to provide if this is found that under certain conditions additional processing taxes may be applied to other commodities.

I am calling the committee's attention to the situation with reference to butter and lard. Assuming that this will bring about an increase in the price of butter and lard, we immediately find ourselves in competition with all other edible fats. There are a little over 2,000,000,000 pounds of butter in the markets, a little over 2,000,000,000 of lard in the markets, and in competition with those for sale to the consuming public we have along in the neighborhood of 2,000,000,000 pounds of lard compounds, made chiefly of cottonseed oil; also a few hundred million pounds of oleomargarine; and then a widely assorted group of oils and fats products known as “salad dressings and salad oils,” and so forth, which occupy, with some exceptions which we claim for butter, the same place in the human diet.

. I do not believe that the language of the rest of this particular taxation paragraph is written with sufficient broadness to cover these products; that is, it says:

Thereafter there shall be levied, assessed and collected upon the first domestic processing of such competing agricultural commodity a tax, to be paid by the processor.

Now, perhaps if that were left alone and there were no definition following that, it would do

Such competing agricultural commodity a tax, to be paid by the processor.

But now the last four lines of the paragraph define “competing agricultural commodity” and says this shall include among others rayon, silk, linen, oleomargarine, and any basic agricultural commodity as to which a tax is not in effect. Under the old rule of interpretation this will be interpreted strictly, and the courts would be inclined to say that it included only those commodities which are there named.

With oleomargarine we are perfectly content that takes care of the immediate butter interests, but I am also speaking now for the commodities made from cottonseed oil, coconut oil, whale oil, and so forth, and I want to say that I do not believe, and they do not believe that this language here will include lard compounds. A lard compound, of course, is the main competing product with lard, and without a processing tax on lard compound we do not see how it is possible to maintain a higher level for lard prices.

My suggestion would be to exclude, to strike out the word “basic" in line 16, page 16, so that this definition will read :

The term "competing agricultural commodity" shall include among others rayon, silk, linen, and oleomargarine, and any agricultural commodity as to which a tax is not in effect under section 9.

I want to say before leaving the subject that we believe this affects • and brings into the picture in this bill a tremendously important

industry which is not otherwise fully considered in the bill, and that is the cottonseed oil industry and its relationship to the lard industry.

That is all, Mr. Chairman. .

The CHAIRMAN. Thank you; Mr. Loomis. I want to state to the committee that Senator Kendrick asked me to place in the record a telegram which I will ask the reporter to incorporate.

(The telegram referred to appears hereafter.) Now, I want to state for the benefit of those who are here that I asked for the official figures as to the value of farm products, farm crops, in 1929, 1930, 1931, and 1932. In 1929 the value, in round numbers, was $8,900,000,000; in 1930 it was $6,400,000,000; in 1931, $4,500,000,000; and, these figures are not yet entirely complete, in 1932 about $3,400,000,000. That is cash return or the value of agricultural products of this country for the four years that I have mentioned.

The committee will now stand adjourned until 10:00 o'clock tomorrow morning, at which time we will try to finish the hearing. . (The telegram submittd by Senator Kendrick is in words and figures as follows:)

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