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was to sell us $100,000 worth of merchandise with a $20,000 duty on it, they would be given a certificate or the importer would, showing the total value of the goods and the duty paid. When an exporter exported $100,000 of wheat, he would be given a certificate, showing the value of the goods, based upon the invoice, and the country to which it went. Now, then, when they bring those two certificates together, present them to the Treasury, the duty would be remitted on the imports. That would only be on exportable surpluses, as determined by the Secretary of Agriculture. That would immediately create a demand, because those certificates would be traded in to the point where we would have no competition. That would do away with the Ottawa pact, where Australia—where Canada has a 6-cent advantage over America on wheat.
The natural tendency of people is to get together and trade. You know you heard after the war that England was not going to trade with Germany, that France would never deal with Germany, but the minute there was a chance for a dollar's profit, they came together, and you pass that law and you won't need to make any commercial treaties. The two will naturally get together. If a fellow has a $20,000 certificate, he is going to find a merchant in Liverpool or somewhere who will buy an exportable commodity, and if he can't get the $20,000 he will take $10,000, but he will see that there is an exportable commodity so that he can get that certificate and go to the Treasury and get whatever he can of his tariff remitted, and this naturally siphon out of this country your exportable surplus, because there are thousands of people in Germany and France and Switzerland and various other countries in Europe that do not have sufficient food of the quality and type that we have to export.
Senator FRAZIER. We have got several million here at home that have not got enough to eat, either.
Mr. Hart. Yes; because your agriculture prices have broken down due to tariff which you helped to inflict on the farmer.
Senator FRAZIER. Well, the prices are low enough.
Mr. Hart. Yes; but you can not ship it out when the other fellow has nothing to pay with. There are only two ways to pay for it, is gold, the other in goods. He has got no gold and you will not take goods, so he can not buy anything. You protect
You protect industry and you do not protect the farmer. I represent an agricultural district.
Now, I have sat here and listened to the testimony. Most of it has been delivered by those who have benefited by past laws of this kind and who are today representing concerns that are borrowing money from the United States Treasury. Men have come in here and testified that they would like to have a law of this kind so they could continue. Some of them have lost eighty or ninety million dollars of the Government's money. I do not consider their testimony worth very much on that basis, and I do not want them monkeying with the products that I raise. I will take care of myself. I am marketing every commodity listed in that bill, with the excep tion of rice, cotton, and tobacco.
Senator FRAZIER. Do you think you speak for the farmers of Michigan?
Mr. Hart. I speak for the farmers in the eighth district of Michigan, because they sent me here, and they know my views.
Senator THOMAS of Oklahoma. Are you getting cost of production for the things you produce?
Mr. HART. No; I am not getting cost of production on some of the things I produce. I have been losing $10,000 a year marketing farm products. I have lost it for four years straight.
Senator Thomas of Oklahoma. Do you think your prices will still remain down when the surplus is taken care of?
Mr. Hart. If you refer to the bill under consideration, that is on the assumption that when the patient is sick you might give him poison and he might get better. I do not want to take that chance. We are gradually getting better. I paid $3,000 taxes on my farm in 1930; last year I paid $900. That is some relief. And when you reduce these railroad rates, you reduce utility rates, you reduce telephone and telegraph, reduce the cost of distribution, reduce rents in the cities and cut the cost of distribution, the farmer's price will rise, but you try to jack the price up artificially and it will go down and your taxes will go up, and you will stall consumption.
I have been marketing for 30 years, as well as farming. I have got 800 acres, and I am in the same position that Mr. Jensen described his farmers are in. I have got a $40,000 mortgage on the farm. I cannot earn interest on it, but I am paying the taxes and keeping the plant up, and if my mortgagee had bank stock he would have lost the bank stock and probably be assessed 100 percent on it. Now, he has got the farm and I am keeping it in good shape and he is satisfied and so am I. But I do not want any more nostrums worked on me. I have got something at stake, and I hope to pay that mortgage out at $40,000 if I am let alone. We are not always going along in this way. Reduce your fixed charges; that is what we need. I am at the point now where in another year I will make a small profit, but if we have any more farm marketing acts, I feel that I will be sunk.
The only feature in that bill that passed the House that had any chance of success—and that is a speculation, and I voted against the bill—was the Smith speculative feature in cotton. That was a pure speculation but it dia have some chance of success, but I voted against it because I believed the Government should keep out of speculation. Mr. Roosevelt said when he landed on that platform in Chicago from a plane that any law that put the Government into speculation should be repealed, and I voted with him on that.
Senator MURPHY. Just one question, Mr. Hart. In connection with that tariff proposal of yours, your idea is to lower the tariff so that the fellow that comes here to trade
Mr. Hart (interposing). Exchange with him on an even basis.
Senator MURPHY. Give him the benefit of the tariff if he comes here to buy our goods?
Mr. HART. To buy our surplus.
Mr. Hart. Yes. And we fix in the bill what they are. It may not be necessary to cancel all the duties. You can make it flexible. "Give the President authority to raise and lower it, the same as you do under the present flexible provision of the present tariff act.
The CHAIRMAN. Is not that another way of doing what the debenture plan attempted to do?
Mr. Hart. The debenture plan did not take into consideration the tax on European goods coming into this country which were exchanged; all it did was to put an arbitrary bounty on the outgoing, but it did not take into consideration the fact that the American people must pay on imports. That is the difference between the debenture and this. It simply takes the 30 percent away from the horse and cow trade. That is all. If you find that you can put in 10 percent and get away with it, give the Secretary of Agriculture authority to do it and let him raise or lower that as imports and exports take place.
Senator MURPHY. Your proposal is to take care of this surplus by encouraging the other fellow to trade with us?
Mr. Hart. Make it attractive for him to exchange goods.
Senator BANKHEAD. You realize that we can not initiate in here any bill seeking to raise revenue, do you not? ?
Mr. Hart. It originated in the House. It has been introduced in the House. But I will tell you from my experience that you will never get a farm organization to back that up, because it does not create any jobs, you see. [Laughter.] It does not put one other man on the pay roll, and that is the objection to it. It is too simple.
The CHAIRMAN. We are much obliged to you, Mr. Hart. We will now hear Mr. Taber, of the National Grange.
STATEMENT OF L. J. TABER, COLUMBUS, OHIO, MASTER OF
THE NATIONAL GRANGE
Mr. TABER. I want to say for the speaker that just preceded me that the Grange has been advocating before this committee and before other committees for almost a quarter of a century legislation of that type. The export debenture is after all a plan to enable us to sell abroad and to use the debenture for the payment of import duties.
Mr. Chairman, I want very briefly to state that the Grange favors this legislation. We hope that it will be enacted by this session of Congress at the earliest consistent date.
We do not consider this perfect legislation. We do consider it, however, legislation fitting into a most critical period in the Nation's history. This committee is considering America's oldest unanswered problem. The oldest unanswered problem is equality for the farmer. It was raised in the first Congress. "Congress has attempted to find a solution, but that solution has not yet been found. This bill is a step in the right direction, recognizing the emergency. It is a step in the right direction because it gives to the Secretary more than one method of approach. It is a step in the right direction because it gives to the administration something upon which to act and makes it possible to place the responsibility.
Personally, I believe that this administration is entitled to the type of machinery it wants to do a tremendously important job; therefore, speaking for an organization representing 800,000 dues-paying members, a farmer all my life, representing farmers in 35 States, I simply want to emphasize the belief that the Senate would act with wisdom if it adopted this legislation in approximately the form in which you find it. I am not saying it is perfect, but I am saying that it does the three things that it seems to me ought to be done and done immediately.
That is all I care to say, Mr. Chairman. Thank you very much. The CHAIRMAN. Now, we have one more for 5 minutes, Mr. Iverson, who wanted to be heard for a few minutes. Is Mr. Iverson present? [No response.]
Senator McGILL. Do you want to hear from Senator Brookhart?
The CHAIRMAN. Senator Brookhart; yes. I beg pardon, Senator. Senator Brookhart wants to be heard. I had overlooked that.
STATEMENT OF HON. SMITH W. BROOKHART, OF IOWA
Mr. BROOKHART. Mr. Chairman, I have an amendment that I desire to suggest to the bill, and in view of the late hour I believe I will
go directly to that amendment. This amendment does not interfere with the functioning of any other provisions of the bill, but it adds to the powers of the President very much.
I do not think any consideration of this question as an emergency or final solution is going to take care of the situation unless this exportable surplus is sufficiently handled in some way. In Iowa, we produce 20 percent of all the hogs in the whole United States, 20 percent, one fifth of them. We produce one sixth of the corn. Those pigs are already farrowed; they cannot come into this bill this year.
We produce more calves than any State in the Union except Texas, which is five times as large as Iowa, and we feed nearly all of these range cattle, coming from Wyoming and Colorado and even Oklahoma, and a lot of them from Texas and some even from Canada and, of course, a restriction of the livestock, of the cattle production, is out of the question for the coming year.
Corn could come into the bill, but since these farmers have their stock they will want the corn to feed the stock, and it will be difficult to get them to sign contracts for a reduction of acreage. So I have offered this alternative: On page 7, between lines 18 and 19, insert subsection (5) as follows:
Whenever the President shall determine that the exercise of the powers herein otherwise granted will not successfully restore the relation of prices of agricultural poducts to other commodities as herein contemplated, the following additional powers are herein granted and provided:
(a) Through the Agricultural Department or such other agencies as the President may determine or set up the percentage of each basic agricultural commodity or export shall be estimated and determinedin advance and conversely the percentage for domestic consumption.
(b) The President is then authorized to direct all processors and purchasers of these commodities, except such as are used upon the farms, to turn over to such governmental agencies as the President may direct the percentage determined for export and Government warehouse receipts shall be issued therefor. This exportable surplus shall be disposed of in foreign markets by the governmental agencies in charge thereof at the best time and under the best conditions to obtain the best prices in the world market as the President may determine. The warehouse receipts shall then be redeemed at the price realized for the sale of such surpluses, less the expense and storage in marketing the same.
(c) The President is further authorized through the Agricultural Department or such other agency as he may set up or determine to fix a cost-of-production price, including a reasonable profit on capital investment, for the percentage of all such commodities to be consumed in the United States, and all buyers, processors, and agencies purchasing such commodities from farmers are required to pay for such percentage the price so fixed and determined.
Then the penalties for violation.
Senator NORRIS. Senator, I wish you would read that, too, the penalties. Read the balance of your proposed amendment.
Mr. BROOKHART (reading):
Each and every violation of this subsection shall be punished by fine of not more than $1,000 or imprisonment in jail not exceeding 1 year, or both.
Senator NORRIS. That contemplates the licensing, of course, of dealers?
Mr. BROOKHART. Yes.
Mr. BROOKHART. I have set no details, but I think the power is broad enough, Senator, that they can license them or set up any agency.
Senator NORRIS. I was wondering—the question that entered my mind at once was whether you could provide a criminal penalty there for something that is not set up itself in the law. Now, you have not set forth even the framework of the method by which the law would be violated.
Mr. BROOKHART. Yes; I think I have. That is, I have set up the specific things that are to be done here, and for violation of those things the penalty is imposed.
Senator Norris. I think you ought to modify that a little. The violation of those things that you have set up—the thing set up is that the President has authority to establish the machinery by which this is to be carried into effect.
Mr. BROOKHART. Yes.
Senator NORRIS. Now, in doing that he will have to license a lot of people. Suppose one of these licencees does not follow out that instruction there in the segregation of the exportable surplus; it seems to me that in order to enforce it you must, of course, have some criminal statute. In order to have a criminal statute, I should think that the provision for the criminal punishment part of it ought to refer to something that is more definite than you have got there.
Mr. BROOKHART. I would be glad to have the Senator incorporate that in the amendment, so far as that is concerned, and perhaps the Senator is right.
Senator NORRIS. Let me ask you another thing. That is very similar, too, and fundamentally it is the same as Mr. Simpson's method and Mr. Clair's method; but I am wondering why you provide for the turning over of that exportable surplus to the Government.
Mr. BROOKHART. Yes.
Senator NORRIS. Why not, if you are going to license these dealers like an elevator man, provide that they shall export that, and that it shall not be used in domestic consumption?
Mr. BROOKHART. Well, there is this reason: They are not organized to export it; at present there is no efficient agency.
It is a matter of competition.
Let us take cotton. Here is about 55 percent of the cotton that is produced in the United States is exported, on my check-Senator Smith claims a little higher percentage, I believe.
That 55 percent, if that be correct, is about 68 percent of the world demand for cotton. In other words, the world gets about 68 percent of its cotton from the United States. Now, at present, in the first place the farmers are forced to sell their cotton here in the domestic market and flood the market with all this 55 percent. In the next place, there are about