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place that power in the hands of somebody to contract the credit, the party who is making the loan could very easily say to John Smith over here, “We will loan you so much money, but we won't loan it to you, because”, and in that way put out of business some cattle men and keep others in.

Mr. Woods. Would that same consideration apply to all the provisions in this present bill?

Senator WHEELER. I would not think so.
Mr. Woods. Not so much.

Senator KENDRICK. Mr. Woods, do you not think it is more than likely that the whole system would fail, at least that kind of a system would fail, on account of the uneconomic condition that you would impose on the borrower? Suppose, for instance, you take it as it is; every production unit has its line under which it may proceed in an economical way of production, and the moment you interfere with the balanced situation you throw the entire plan out of line and out of balance. You can operate a ranch, a small ranch we will say, with 100 cattle; if you reduce it to 50 or 75 it takes all the earnings of the cattle to pay the expenses, and if you place such restrictions as that upon the borrower, immediately you make his entire unit unproductive.

Mr. Woods. 1 was not thinking of it in terms of, in those terms, Senator Kendrick. In the first place, I will say that we have not gone into it in detail. It does not particularly represent the policy of the institute. It was something, it seemed to me, worth talking about, but we have not thought of it particularly as saying to the producers at all how many or how few cattle he could raise. It would necessarily point toward a production. The suggestion occurred to me in consequence of talking with one or two men in cooperative livestock organizations who are lending money in that branch of activityI do not care to identify the associations because the gentlemen did not bring his ideas forward, but I was told that a good many of the loans that had been made-I do not know whether they were seed and stock loans or some other kind of loans, and I am not criticising any individual or any agency, but a good many of the uses of credit have really been a detriment to the individuals who were persuaded thereby to expand their business at an inopportune time. And the only point I want to make on that is that in the deliberations the committee might care to consider in the new set-up that has been made, whether the centralized use of credit that has been set up could be an influence in the direction of production.

Senator WHEELER. What you want to do, what we want you to do, is to raise commodity prices. If you can raise commodity prices, it is going to be beneficial to the packers, it is going to be beneficial to the manufacturers of all classes, is it not?

Mr. Woods. I would not put it as narrow as that. Generally I agree with you. I think what you want to do is to raise the producers' total return. It would not do any good to give him $50 a bushel for wheat if he could not sell any quantity of wheat. I do not know whether I make myself clear or not. It is the entire amount he gets, rather than the amount per unit, that gives him his total income.

Senator WHEELER. Well, not entirely, in their present set-up, because of the fact that he has created-he has got this indebtedness that he has created in 1929 when commodity prices went to a very high point. The dollar had an entirely different value relative to commodities then, and no farmer can pay back a thousand dollars that he borrowed in 1929, or 1926, we will say, because that is more nearly the correct year; but if he borrowed $1,000 in 1929, when wheat was selling at a dollar a bushel, he can not possibly pay it back now, pay off that indebtedness, with wheat selling at 13 to 20 cents, can he? Mr. Woods. No, sir.

Senator WHEELER. And no business enterprise in this country, I do not care what business enterprise it is, can do it either; can it?

Mr. Woods. We have the same difficulty. I can give you a case from our own industry.

Senator WHEELER. I have no doubt but what a good many other packers are in identically the same condition. So that one of two things has got to happen in this country: Either there has got to be a general liquidation of all business enterprises wherever they are, where they are indebted or have got indebtedness, and the reorganization of all business enterprises, or else you have got to get the commodity prices up; have you not?

Mr. Woods. I think there is a good deal of validity in the point of view that those two things have got to be close together.

Senator WHEELER. One or the other.
Mr. Woods. Or both.
Senator WHEELER. They could not both happen.

Mr. Woods. I mean, your freight rates, for example, could go down and commodity prices come up.

Senator WHEELER. Yes; but I am speaking generally of the indebtedness in this country. It should be apparent to anybody that one of two things has got to come about; that all of the indebtedness that is owed, whether it is owed by farmers, by industrial corporations, or whether it is owed by individuals, it has got to be completely liquidated, and probably general bankruptcy or general reorganization, or else commodity prices have got to go up, come up, so that the farmer and the manufacturer, or whoever it is that borrowed that money, can pay that money back, pay his debts, I mean, with money that has the relative purchasing power that it did in 1926 and 1929 when he borrowed it. Is not that correct?

Mr. Woods. I do not know whether I would say the same thing in those words.

Senator WHEELER. How would you say it?
Mr. Woods. It is hard to answer, that yes or no.
Senator WHEELER. You say it then.

Mr. Woods. All right, I will say it as I best understand it. I would say that the fact that the farmers, business men, and others have obligations and are paying taxes that were incurred when the dollar had a very much higher value than it has now, are very hard set and are having an awful time and may have a worse time to try to meet those obligations and those expenses with the dollar basis on the low-priced commodities we have now; and in further substantiation of what you have said and I have said, too, to the degree that we have said the same thing, I can think of a case in our industry, where packers handling almost the same tonnage but the money volume is cut almost in half, and he has that problem that you mentioned of paying those taxes and making those mortgage payments. It is a very serious situation. Now, whether I could wrap it all up in one package and say, “Everybody is going bankrupt if it isn't done,” I do not know. It seems to me different groups stand in relatively more favorable and relatively more unfavorable circumstances, as the case may be.

Senator WHEELER. I just received a letter this morning from a man in my State who told me an incident that happened just a few days ago where he said they attempted to foreclose a mortgage on a farmer over in eastern Montana; that a thousand farmers got together there to protest. The sheriff swore in a lot of extra deputies and so forth, and armed them, with the idea of going through and carrying out the forcelosure proceedings, but when they went out and saw this thousand farmers there in silent protest, they decided they had better not attempt to go through with it. That same thing has occurred, not only in Montana, but it is occurring all through the country. These people today—and this is something that you processors had better think about, and something that the people in the East had better think about, that they have not been giving sufficiently serious thought to—these men now are in silent protest but in my humble judgment if this thing goes on for six months more it will not be a silent protest, because of the determination on the part of these farmers and these people out there that I think has seldom been exhibited in the history of this Nation.

Mr. Woods. Senator, we are almost ready to join them. [Laughter.]

Senator WHEELER. I think you will be. I think you will be, if thïs thing keeps on. I do not think there is any doubt about that.

Senator KENDRICK. You had some other suggestions, did you not, that you were going to make?

Mr. Woods. As I say, this credit thing, I do not speak for my organization on that; I thought it was something that was worth thinking about, because they are new tools at hand. The other is the possibility of regulating supply and marketing, as well as production. That is, after you have got your production, after your animals are farrowed, even before they are farrowed, you are committed to a certain production. Then you have the problem of the orderly flow of that production to market, so that you have the problem of achieving in some fashion a more orderly marketing, both of the raw materials and of the products. Producers have more freedom to cooperate than we have. Perhaps if both packers and producers could cooperate more closely under some auspices it would assure adequately the safeguarding of the public interest, and a good deal of the waste, a good deal of the destructive competition, a good deal of overshipping of markets could be corrected. I do not offer that as a panacea. I think that it might be helpful.

Senator BANKHEAD. That is the rule commonly called “orderly marketing.”

Mr. Woods. Orderly marketing, but some definite provision for permitting a closer cooperation among the producers; an orderly marketing of the products as well.

And, thirdly, and the one thing I would like to suggest, with conviction and with my organization behind it, is some means that will expand foreign markets for meat and lard. We have only a very small exportable surplus in the livestock industry. It is different from some of these other commodities in that particular. I believe, I do not know much about cotton, but I believe you export a very large portion of it. There is only a little part of the meat that is exported, only a relatively small part in tonnage of pork, percentage of tonnage. If through reciprocal tariff agreements, reciprocal tariff warrants, or any other method, you could stimulate those foreign outlets, it will just about do the trick.

Senator WHEELER. Can you tell us how it can be done?

Senator KENDRICK. It is your opinion that a limited amount of the increase in consumption would very largely take care of the present situation?

Mr. Woods. In the demand, yes; in the effective demand. It would not do any good to consume a little more at destructive prices.. It would do that much good but it would not be adequate.

Senator NORRIS. Is that the last remedy you suggest, those three?

Mr. Woods. The last one that has anything affirmative in it. Of course, we do feel that a reduction in taxes is highly important. My only reason for not urging that more strongly is because it would just be wearying. It has already been brought up before this committee..

Senator BANKHEAD. You do not know any way that a Congressman could reduce his expenses any further, do you, since we have gotten through the last operation? [Laughter.] Mr. Woods. No, sir; I do not.

Senator NORRIS. I am assuming that you have the same interest, we have. I want to commend you before I ask you the few questions that I want to ask you for what seems to me to be your fairness in approaching these subjects, and I am assuming you are just as conscientious in your ideas as I am in mine, and you may be entirely right and I may be entirely wrong.

Mr. Woods. May I say just one word, just to complete that. picture, also of the same character as reduction in interest in freight rates we put reduction of taxes, reduction in interest rates and the possibility of reduction in freight rates.

Senator NORRIS. We all recognize the terrible dilemma in which we are placed. I assume that not only for selfish reasons of your own business but as a citizen, as a fair-minded man as you seem to be, you are interested in the prosperity of the farmer.

Mr. Woods. We are.

Senator NORRIS. Realizing that after all he is at the bottom of the pyramid, and if he does not prosper we cannot have permanent prosperity. I take it you are opposed to the bill?

Mr. WOODS. We have given our views as clearly as we can out of our experience.

Senator NORRIS. I draw that conclusion, that you are not freindly to this legislation. Mr. Woods. We are not urging its passage. (Laughter.]

Senator NORRIS. You would rather it would not be passed? Now, I have respect for that opinion, but you realize probably, as we all do, that to quite an extent at least it is an experiment. To be fair about it, agreeing that we all are of the same opinion about wanting to do something, we ought to either say, “It seems to me the question can not be solved and we should do nothing”—I concede that a man who honestly believes that, could be perfectly consistent in saying so; or if there is any chance of solving a desperate situation, we are justified in resorting to desperate methods, even though we are not sure just how we are coming out; and the man who says, “There is some solution for it but this is not the one,” to be fair ought to give his solution of it. Now, your solution, as I understand it, is involved under three heads. One is credit. Loan more money at cheaper rates.

Mr. Woods. No, sir.
Senator NORRIS. It is not?

Mr. Woods. Credit as a means of control. You might lend less; you might lend more. May I just elaborate?

Senator NORRIS. I want to get from you, if I can, your idea as to how we are going to solve this thing. What should we do? If there is anything we can do, and this is not right, what should we do that will bring relief to the farmer? I understood your first one was the extension of credit.

Mr. Woods. No.
Senator NORRIS. We will eliminate that, then.
Mr. Woods. I would not eliminate it; I would restate it.

Senator NORRIS. If you do not eliminate it, you still have it. Then you believe in it, more credit? Mr. Woods. No, sir.

Senator NORRIS. Then you do not want any more credit extended? You do not think credit would solve the question?

Mr. Woods. Not put in terms of just lending more money at lower interest rates. I think maybe some harm in some particular instances has been done in that way already.

Senator NORRIS. But do you think that by any system of credit now that you have in mind it would bring relief to agriculture?

Mr. Woods. I think the use of credit might be a convenient tool in connection with efforts to control production. If you will just let me elaborate that a little bit, I think I can make the proposal clearer.

First, in the livestock and meat industry, you have a product that is always eaten at some price. You never have the problem of a surplus in the sense that you have got more than you can sell. A surplus is registered by the losses that you have incurred, rather than by the fact that you cannot sell all of it.

Secondly, you have only a small exportable surplus. Your domestic consumption uses up most of it. So that the problem does not bulk as large as it might at first seem. Nearly everybody has agreed that if in some way you could adjust production more intelligently to demand it would solve the situation and if we did not produce 50,000,000 hogs, for example, when only 45,000,000 were needed, that that would settle the trouble.

Senator NORRIS. Now, if you think that is the right thing, we can do that.

Mr. Woods. That is just the point. Everybody says that. Unfortunately, your hogs are produced a year or more ahead of the time when the meat is going to be consumed. So that, first, it is very difficult when your breeding operations are conducted which determines the size of your production-it is very difficult to anticipate what the demand will be when those hogs subsequently are born and then subsequently after that come to market and are turned into meat.

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