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from the top and now if we are to save this Republic from a total collapse, may I say, we must reckon with the main key, which in my judgment will unlock the situation, which is agriculture.

Therefore, I want to be broad enough in my thinking to give heed and cooperate with any plan which will result in national legislation that will bring to the American farmer the cost of production. The Farmers Union has gone on record many times as favoring that type of national legislation. We feel that the farmer, if he is to survive, is entitled to cost of production, just as is the electric power company that furnishes that light, and if we are to maintain anywhere near the present standard of living, we must lift up American agriculture. Its buying power must be restored or else we will be compelled to go back to the days of wooden shoes, to the horse and mule and the single shovel and all that means.

I have been of the opinion that it is not impossible to lift up the price level of agricultural commodities to a point that we can continue to sustain somewhere near the present standard of living and be able in addition to that to pay the debts which were incurred back over the years when times were good.

I want to say that I am in favor in the main of this bill and I want to speak for just a moment or two relative to wheat. Other witnesses are giving testimony in behalf of the other commodities.

Senator NORRIS. When you say this bill, you mean the bill as it passed the House?

Mr. WARD. Yes, sir; that is what I mean, Senator. There are two things to be recognized and reckoned with if we are to maintain an artificial price and which we must provide in my judgment to take care of the overproduction. You cannot do that simply by asking the farmers to do it voluntarily. We tried that back in the early days of the Farm Board and one farmer planted less and the other planted more and the net result was that there was no reduction. So then we must have a lever or a legislative club, if you please, placed over us to bring our production in line or more nearly in line with domestic requirements until, if ever, we can reestablish world markets. I do not want to disturb the provisions of the present bill but I do want to suggest this as a suggested amendment, and that is that we establish a minimum price for these farm commodities based upon cost of production for the amount used for the domestic requirements and that we handle the surplus in the following manner:

Let us take wheat, for example: The surplus of wheat on an average of years is something like 200,000,000 bushels. We consume about 600,000,000 and we produce 800,000,000. The way the plan would work would be as follows: The farmer would bring in, we will say, a hundred bushels of wheat. He would get this cost of production for 75 bushels of it, if that was the proper ratio for domestic requirements, and he would not get anything for the 25 bushels. The point I want to make in that connection is this, that that 25 bushels could go to the credit of the Federal Treasury. You know some of the opposition to the present bill is that it will take a vast army of men and women to administer it and that it will cost a vast sum of money. Now if this 25 per cent can go to the Federal Treasury, the Federal Treasury will be reimbursed by the producer himself to the extent that at least a large percent of the administrative expenses and charges

ean he paid for from that and it is also a fundamental lever against oversrod Jetion.

There are two or three prints I want to make We do have overproduction. In the years from 1921 to 1928 the world carry-over was something like 350,000,000 bushels, extinding Russia and China, of course. At the present time I understand that our carry-over in the United States is about 350,000,000 bushels. This surplus that the Government gets in its charge might be handled in the following manner or some of the following ways: You know today there are world markets to which we could go if credit could be made available, but they are without gold today and we are not on a balanced medium of exchange and that is one of the reasons we can't go there.

The second reason and place we might go is this: I think that we can do nothing greater to reestablish international relationships and outlets for our surpluses than to practice the principle of the Golden Rule, so then we might, as I term it, make missionary sales to some of these countries like China and certain provinces in Africa or so on, or we might barter with them, exchange wheat for some of the things we need in this country.

And third, we might be able with this surplus to be in a position where we could enter into the international quota system, which we haven't been able to do in the past. Then the producing countries of the world, those which have an overproduction, could sum up this overproduction and they could take into consideration the countries that do not produce enough for themselves and they might work out an equitable quota as between nations.

I am simply offering that for what it is worth but to me the greatest possibility of it is that it does away with a large bureaucracy of hundreds and thousands of employees, necessitating a large sum of money, and that is one of the things that has drawn public disfavor. Naturally in our State legislatures as well as in the National Government, we are trying to work out a program of State and national economy with the merging together of boards and bureaus and departments, and I think it is fundamental that we recognize this fact in this time of emergency when we pass farm legislation of this kind. I just want to say this in conclusion, that the mental attitude of the farmer is strained to the breaking point. Over in my State the farm leaders have so far attempted to turn thumbs down on the national holiday movement, but I want to say that I am receiving hundreds and multiplied hundreds of letters criticizing me for that attitude. Just as sure as we are here today, my friends, unless we can relieve this situation, we will be in a worse situation not in 2 or 3 years hence but in the very near future.

I want to say something else, just a word that slipped my memory, on this idea which I have suggested. I talked it over last night with our national president, John Simpson, of my organization. He concurred in that idea, that he was perfectly willing for the surplus to be handled in that way, if on the other hand we would give the farmer cost of production for the amount needed for domestic requirements. Senator NORRIS. Wouldn't you give the farmer anything for this surplus?

Mr. WARD. Under this plan, I think I would not give him anything. I think it would be the lever that would bring the production in line with our requirements.

Senator NORRIS. How would you get it? Would you go to his farm and get it? If he wasn't going to get anything for it, he wouldn't bring it in town, would he?

Mr. WARD. Well, he would get cost of production for the pro rata. part used for home consumption.

Senator NORRIS. Why not take this surplus, as Mr. Simspon suggests, and sell it on the world market as we do now? Why not subject it to the same rules, regulations, and laws that it is subject to right now without any legislation? What is the objection to that? Mr. WARD. The surplus part?

Senator NORRIS. Yes; I am speaking of the surplus part.

Mr. WARD. Well, I am doubting if that would control your production as would the other method.

Senator NORRIS. I concede that if you take the surplus away from him and don't give him anything for it, you would certainly reduce production, but has it ever occurred to you-I don't want to mention this because it is mentioned in every bill we ever get up-that if you tried to take this surplus away from the farmer who produced it on his own land and upon which probably the bank had a mortgage that you would run up against the Constitution of the United States?

Mr. WARD. It has been suggested; yes. I have heard some attorneys say that it was not constitutional.

Senator NORRIS. I am speaking only of that part of it. I know they make the point on the whole scheme. I am referring only to this surplus that you propose to take away from the farmer and not give anything for it.

Mr. WARD. He can keep it if he wishes to on his farm.

Senator NORRIS. Then there wouldn't be any to give to China? Mr. WARD. No; not in that event.

Senator NORRIS. He would keep it if he wasn't going to get anything for it, if he had good sense. Speaking of the machinery now, that would be much less machinery than the so-called Clair bill that segregates at the farm, but there wouldn't be any difficulty in having the elevator man who bought this segregate it and pay whatever the market price was, or whatever might be agreed on with the farmer who produced it, but require him to ship that for export, keep it out of the domestic market. You would have to have machinery, however, to license all these dealers, I don't see how you can escape that?

Mr. WARD. Yes; either plan would require tremendously less machinery than it would to reckon with each individual farmer. Senator NORRIS. Oh, yes; it would be much less.

The CHAIRMAN. We will have a session this afternoon and wind up the hearings. The committee will now stand adjourned until 10 minutes after 2.

(Whereupon, at 1:10 p.m., the committee took a recess until 2:10 p.m. this day.)

AFTER RECESS

The committee reassembled at 2:15 p. m., pursuant to recess.

The CHAIRMAN. The committee will come to order. The first witness is Mr. Woods, who represents the packers. I will ask Senator Thomas to take the chair.

(Senator Thomas of Oklahoma took the chair.)

166630-33--20

Senator THOMAS of Oklahoma. Will you give your name, occupation, and place of residence, Mr. Woods?

STATEMENT OF WILLIAM WHITFIELD WOODS, PRESIDENT OF THE INSTITUTE OF AMERICAN MEAT PACKERS

Mr. WOODS. My name is William Whitfield Woods. I am president of the Institute of American Meat Packers.

Senator THOMAS of Oklahoma. Will you briefly describe that organization for the record, please?

Mr. WOODS. It is a trade research and educational organization of the packing industry. It is in very considerable part a technical association dealing with the technology of the industry. For example, we have a livestock department which cooperates with the agricultural colleges and with the producers' organizations in research, looking toward the influencing of the type of livestock produced-questions of that sort. We undertook work with Yale and Purdue in that direction, through that department.

Senator THOMAS of Oklahoma. With whom do you come in contact, in the main, in your work?

Mr. WOODS. May I just complete that little statement about the institute, unless you would rather turn to something else?

Senator THOMAS of Oklahoma. No; I was trying to bring that out a little more fully.

Mr. Woods. Our next department largely parallels the functioning divisions of the industry, our plants operating department. The director of that is a former packing-house superintendent, and we deal there with the operating literature of the industry, with the mechanical operations of the industry, and conduct experiments to try to cheapen costs, standardize equipment, develop improved types of equipment, and carry on mechanical experimentation such as experimentation on slaughtering methods, which we have been working on for some years now in an endeavor to improve those methods.

In addition we maintain extremely technical departments-I mean the laboratory kind of work as distinguished from the mechanical experiments. We have in charge of that department Dr. N. Lee Lewis, who was former chairman of the Department of Chemistry at Northwestern University, and there we deal with the curing processes of the industry and the formulas and the efforts to conserve the meat. We have a research laboratory out at the University of Chicago and an analytical laboratory down at 9 South Clinton Street. We also have a department of nutrition that attempts to keep abreast of the current nutritional studies regarding meats and their uses. In that department we have financed research in that field. So, too, we run through the other departments of the industry.

We come into contact very generally with packers and with those from whom we buy and with those to whom we sell.

We have about 200 members. I should guess that our membership produces from 80 to 90 percent of the commercial production. I except from that the farm slaughter and the slaughter done by the very small retailers or butchers, the general stuff that moves in the ordinary channels of trade as distinguished from stuff that sells in the very immediate vicinity and very small towns and on the farms.

Senator THOMAS of Oklahoma. I suggest now that you proceed in your own way to discuss this bill.

Mr. Woods. Well, I have noticed that the other witnesses all say they would like to make a statement, and I do not want to break any precedents, so I have got one here that is about 10 minutes long that I would like to read, if I may. It clarifies our views. [Reads:]

The Institute of American Meat Packers is fully conscious of the disastrous conditions confronting the producers of livestock. It is in cordial sympathy with the desire of the President to improve the condition of the farmer and to raise the prices which the farmer can receive for his products.

The Institute feels a sense of obligation to cooperate with the President to the utmost in the national emergency. It also owes a duty to help conserve the interests of livestock producers, meat retailers, and the great consuming public, as well as of its own processing members.

The Institute is impressed with the statement of the President in his message recommending the passage of the bill, that the procedure proposed by the bill is along a new and untrod path".

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Encouraged by that reservation of the President, the Institute feels that it would be lacking in frankness and that it would also fail to discharge its obligation to place the experience of its members at the disposal of the Congress and the country, to whom the President has presented the matter, if it did not point out some of the problems which will be met in the administration of the proposed bill, insofar as it concerns meat products.

The first point we would like to call attention to is the increased burden upon the consumer, if this tax, as is argued, can be collected from the consumer-just making that assumption.

Under the terms of the bill, the Secretary of Agriculture is authorized to levy taxes on the processing, among other commodities, of hogs, cattle, and sheep, so as to bring about a gradual increase in their prices and thus recover the relative distance between existing prices and 1909 to 1914 prices. The tax is to be paid by the processors and collected, if this were possible, by the processors from the

consumers.

The total retail meat bill of the Nation for 1932 is estimated at $2,200,000,000. The total retail food bill of the Nation is estimated at $9,500,000,000. Based on total meat production for resale in the year 1932 but eliminating slaughter for home consumption—and we eliminated that on the theory that perhaps some of it would not be taxed-the application of a tax as permitted in the bill that would be necessary to increase today's prices to their pre-war parity, would mean a levy which would be equal to 5 cents a pound on dressed meat and might amount to a total tax of $760,000,000.

In addition, the bill provides for a floor tax of approximately $30,000,000 on depot stocks, making a possible grand total tax on this basis of figuring of $790,000,000. Now, if you will take the figures in the House committee's report, which show a larger maximum tax than we figured here, the amount would be very much larger indeed. I think the principal discrepancy between our figures and the House committee's figures on what the tax would be in order to raise current prices in the local markets to parity prices grows out of the fact that they were figuring from February 15 and we brought our figures to date, and we probably also tried to be conservative on it.

It will be readily seen, therefore, that the possible tax on the three meat items alone-cattle, hogs, and sheep-amounting to $790,000,000, supposes an addition of 36 percent to the consumers' retail meat bill, and 8% percent to the consumers' entire food bill. Admittedly these are maximum figures allowable under the bill, for under it the legislative decision as to the actual amount of the tax is left to the decision of the Secretary of Agriculture. In establishing this tax he will naturally want to consider the degree to which a specific tax will be collectible. He would also have due regard for the effect that uncertainty as to his possible action would have upon the industry.

The figuring of those factors is not any highly intricate process, and if the committee is interested further, when we get through with this statement it will be very easy to figure out together from the House committee's report and from the slaughter reports last year what the tax would be, approximately, if you applied those rates to that slaughter. The questions that are not pegged, of course, definitely, are what your slaughter would be, whether the bill would operate to reduce production some, and also what kind of tax would be imposed. These were maximum figures.

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