cally the entire world surplus, because they use up the cotton produced in other parts of the world and then come to us for 68 percent of their

cotton.

Now, here is the world situation for 1931, which was the year of the big crop. The world production of commercial cotton, exclusive of linters grown in 1931, as compiled from various sources was 26,329,000 bales. Counting America in running bales and foreign bales of 478 pounds, while the consumption of cotton exclusive of linters in the United States for the year ending July 31, 1932, was approximately 22,896,000 bales.

So you can see from that comparison that there is no big surplus of cotton in the world; in fact, I think our friends are too much afraid of what they call the "carry-over of cotton" all the time. The Russian mills last year were able to run to only 60 percent capacity because they did not have the cotton, and if we had had proper relations I think we could have sold them about 2,000,000 bales to run those mills, because they needed to run to full capacity, and they need more mills to supply their enormously increasing demand in that country. The CHAIRMAN. They were making inquiries for about a billion yards of raw cotton cloth.

Mr. BROOKHART. That is correct, Senator. A cotton manufacturer in your State, Mr. Self, of Greenwood, came to me--I had been in his home at one time and he knew I had been in Russia—and he said that he was being sounded out for a billion yards of unbleached cotton cloth. Well, that would take something like 500,000 bales to manufacture, that quantity of cloth, and I advised him to go ahead and get the contract if he could, because a similar contract was submitted to me on tractors, 5,000 tractors out in Iowa, and they took that contract 3 years ago and advised me a few months ago that every payment had been made exactly as they had agreed to make it, and they had paid for the tractors then practically in full. So there is some chance to work up a world trade on some of these things, but I think it has got to be done from now on by negotiation. I do not believe we can open up this world market very much by lowering tariff rates now. I voted against the tariff bill. I felt that these discriminations were there, and I felt it would stir up animosity all over the world. It did all that, and they put up retaliatory rates against us, and by us taking ours down they would not take theirs down. That has got to be done by negotiation in the future.

Senator NORBECK. The same people that were telling us that the debenture would bring on that trouble voted for the tariff bill and brought it on in that way.

Mr. BROOKHART. And it was a good deal more offensive than any debenture would have been.

Now let us see about some of these things. The corn surplus is less than 1 percent and has been since 1923. It is just a little bit of a job to handle that surplus of corn and fix a cost of production price and maintain it. And corn is the greatest of all the agricultural products, nearly 3,000,000,000 bushels, the greatest in value and the greatest in volume and everything else.

Senator NORRIS. You must not boast too much about corn, Senator. You will get the cottonmen mad right away.

The CHAIRMAN. They have got an avenue in prospect now for getting rid of most of the corn. They are going to liquefy corn. [Laughter.]

2

Mr. BROOKHART. Yes; I understand that, but the cottonman has no money to buy the liquor. [Laughter.]

Senator NORBECK. They cannot make beer out of corn, can they? Senator NORRIS. You might trade them liquor for cotton, and if you gave them enough liquor before you made the trade you could get a very good trade. [Laughter.]

Mr. BROOKHART. Now here are hogs. The pork products that are exportable are only 8 or 9 percent of all the products, and that is mostly lard. About 30 percent of the lard goes, and a little bit of what they call bacon, hams, shoulders, sides. So that there is no big surplus of hogs. There is no surplus, we find from the packers here today, of cattle at all, of beef cattle, and yet our prices are down on those. So the handling of the hog surplus, if it included lard and bacon, that would be enough to take care of that, and it would be a rather small proposition.

Now, sheep is in the same place as cattle.

Tobacco is about 30 percent exportable, but tobacco, of course, is a minor crop compared to these others, but here is a great crop that is entirely left out of the bill, and that is oats. Oats is the second biggest crop. It is 1,400,000,000 bushels, as against some 800,000,000 of wheat, and its surplus again is less than 1 percent, and yet it is entirely left out of this bill and out of this consideration.

Senator MURPHY. It is a very much larger crop than rice, too, Senator.

Mr. BROOKHART. Very much larger.

Senator NORBECK. What percent of oats goes into commerce, into trade at all? What percent of it leaves the farm?

Mr. BROOKHART. Well, I would have to trace that.
Senator NORBECK. A very small percent.

Mr. BROOKHART. Rather small. A large part of it goes into feed, it is true. They feed oats to hogs and calves and chickens and everything else. So, on an average, this exportable surplus is less than 10 percent, with your big percentage of cotton and all averaged in, and yet that little 10 percent is allowed to fix the price of our entire agricultural production in the United States.

Now, they talk about price fixing. We have got plenty of pricefixing devices in this country. The tariff itself is a price-fixing institution. The Government is in this price-fixing business for other things in many different ways. I want to take just a moment of your time to show you how it has fixed the prices of railroad rates. You have had something to say about that. I would like to give you a very illuminating picture of that situation as to agricultural products. This is a report of the Interstate Commerce Commission dated in March 1932. It is for the year 1930. Here it says the total value of the freight transported by class 1 railways in 1930 is shown as $62,000,000,000. There is something in this country yet. We are not broke in the United States.

The CHAIRMAN. Did you say "we?"

Mr. BROOKHART. Well, you and I are, but some of them are not. [Laughter.]

The CHAIRMAN. I wanted to get that pronoun right. [Laughter.] Mr. BROOKHART. There are some fellows that are not. I noticed Mr. Mellon's bank declared a 200 percent dividend over in Pittsburgh.

The CHAIRMAN. Do not speak about that in this committee. [Laughter.]

Mr. BROOKHART. Now, of this, 10,000,000,000 was less-than-carload freight I will only read the billions here and 35,000,000,000 for carload manufactures and miscellaneous, leaving only 16,000,000,000 for products of agriculture, animal industry, and mines and forests. For the 45.7 billions of value in the first two items-that is your manufactured articles-1.85 billions of freight revenue was collected, while for the 16.3 billions of value-that is, your agriculture, mines, and forests-2.36 billions of freight revenue was collected. The respective percentages being, on the manufactured stuff, 4.05 percent; on agriculture, mines, and forests, 14.42 per cent.

Senator NORBECK. Is that percent of the value?

Mr. BROOKHART. That is of the value, yes; 14 percent of the value of agricultural products.

Senator NORRIS. They got something more than 2,000,000,000 on the manufactured products?

Mr. BROOKHART. Less than 2,000,000,000; 1.85 billion.

Senator NORRIS. And something more than 2,000,000,000 on agriculture?

Mr. BROOKHART. 2.36 billion.

Senator NORRIS. Then manufactured products in value, what was that as compared to agriculture?

Mr. BROOKHART. 45.7 billions as compared to 16.3 billion for agriculture, forestry, and mines. They have not separated those. The CHAIRMAN. Is not that the operation of your natural law, that everything moves along the line of least resistance?

Mr. BROOKHART. That is the operation of the natural law, commonly called the Esch-Cummins law. [Laughter.]

Of course, that means that while value is not the only element to be considered in establishing freight rates, yet it is one of the very important elements in establishing freight rates, and a discrimination like that is so gross that any fair mind will admit it as soon as these figures are seen.

Someone has said, "Where are we going to get the money to raise the price of these farm products?" One lady manufacturer here said her workers could not pay any more, and the packers come in and say the consumers cannot pay any more. Well, let us see. The National Industrial Conference Board finds that the national income in 1932 was $40,000,000,000. That is about $1,600 for each average family of five in the United States, if it were so distributed. Well, that $1,600there is a third of these families that have none of it. They are out of a job, out of an income, and even living on charity. So there are enough resources in this country and that is what I meant a moment ago by saying we were not broke if it were properly distributed, to give the farmers the cost of production for their products and to employ this unemployed labor, but there is just one authority in this country with power enough to do that thing and to mobilize these resources and take charge of them and do the job, and that is your Uncle Samuel, the Government of the United States. These other crowds do not know how to do it. I think this bunch of financiers that came before the Banking and Currency Committee was the most unenlightened set of ignoramuses that I ever saw on the witness stand. They had no adequate suggestion for anything.

Senator NORBECK. Senator Brookhart, you will recall they all admitted they did not know the depression was coming. [Laughter.] Mr. BROOKHART. Yes; I remember that.

Senator NORRIS. Most of them have found out that it has come, though.

Mr. BROOKHART. Yes; since the grand jury got after them. They are going to realize it.

But now, if the situation should remain as it is now; if we should raise these farm prices and unemployment go on just as it does now, then the lady from Kansas City is correct, her people could not afford to pay these advances at all. But something else is going to happen. Supposing that this amendment I have suggested were adopted, and supposing the President would then set up a board, and they would raise the price of corn to 90 cents a bushel, cotton to 18 cents a pound, wheat to $1.15 or $1.20, and these other products like that, and those prices were fixed so that the country knows, the bankers know and the farmers know and everybody knows that they are going to receive those prices for 90 percent, on an average, of these farm products, immediately when that would happen, the farmer would have some credit again-he cannot borrow anything now-you talk about all these lending agencies, they have not loaned anything to farmers; they loaned to financial organizations of one kind and another the farmer's buying power would come back at once as soon as that is known-and he has not bought anything for 10 years. That is one thing about this situation that is overlooked all the time. These other representatives of other institutions come in and tell you "we are in just as bad shape as the farmer," but they were not in as bad shape 10 years ago when the deflation started late in 1920. It hit agriculture much harder than anybody else, and through all of those years since 1920 the agriculture dollar has been down below the other dollars. At the present time, one witness said today that manufacturing was getting about $1.06 and I believe he said that agriculture was getting 46 cents. I think it ought to have been 56, maybe.

Senator NORRIS. I think it was 59, as I remember it, Senator.

Mr. BROOKHART. Whatever it was at any rate those figures illustrate, and they are right, the discrimination or discrepancy between the value of the farmer's dollar and the other dollars.

That brings up the question of regulating the money proposition. Supposing we do increase the currency; supposing we take the commodity index as the basis-and it is a scientific basis-we can issue Treasury notes; we do not need to bother with silver or gold either; we are off the gold standard now, you can not get a dollar of gold— you will get in jail if you take it home with you-we have been off the gold standard ever since the Federal Reserve System was established, in fact; we have been on a managed standard ever since, and the objection I have is to the management. It has not been managed right. Suppose now we expand this currency. Suppose we issue enough Treasury notes to balance the Budget, and that would raise the price level some, still would not bring it to the general 1926 level. Suppose we should issue enough then to handle this exportable surplus of agriculture, and you could buy it for about a billion dollars, well that I do not think would raise the price of things up to the 1926 level. Suppose we should issue enough to pay the soldier bonus, I

still do not believe that would raise it up to the 1926 level, but as we put in these issues we should watch that index, which since 1902 has been a sensitive and reliable guide for the money value, and if it did raise the level up above normal or to normal, then we can stop those issues and control them at that point.

Nobody believes in an unlimited money issue. That is what they throw at you all the time, that if you start this thing there is no stopping. It is just as easy to stop as it is to start.

Senator NORBECK. Would it not be much easier?

Mr. BROOKHART. Yes; the Federal Reserve knows how to do that. They know how to deflate.

The CHAIRMAN. The appearance of the country indicates that they have been very successful in stopping it. [Laughter.]

Mr. BROOKHART. Yes; they have. There is no doubt of that. Now then, suppose we would do that and we would remonetize silver. I voted for that over there just before I went out, although I think a Treasury note issue would be a more scientific and reliable waysuppose we should raise it then to the normal level, where would agriculture be still? It would still be in that proportion of your 56 or 59 to 106 toward the other matters.

So, the money question alone will not solve this proposition. Here is what it will do, so far as the debts of agriculture are concerned. It will give them a chance to pay those debts-and that is a tremendous big help, all right-it will give everybody that same chance, and debts in the United States, the last check I made, were $203,000,000,000 and at that time the national wealth, as I checked it, was estimated at $260,000,000,000.

I expect that at the present moment the debt, because that was some time ago, I expect the debts are equal to the entire national wealth now. I expect that is probably true. That means a universal state of bankruptcy, excepting the fellow whose wealth is in the bonds and mortgages and things that foreclose. They are the only people that have any property left when this nature takes its course and winds this thing up.

Senator NORRIS. What would their property be worth? Nobody could say, if they had it all.

Mr. BROOKHART. You can take the honest insurance company now that just wants to do an honest business, and it has had enough defaults and losses that it would be better for it to take a reduction in the value of its bonds and stocks than to go through the present situation. Of course, if it wants to take the land away from the farmer and organize corporation farms and put on a Wall Street boom then to sell corporation stock in the future, and work that kind of a deal--if it is in that kind of a dishonest mood, then the Senator's observation would be correct.

The CHAIRMAN. Mr. Simpson here wants to make a statement before we close so that he will have the record made straight as to a certain article he has.

Mr. BROOKHART. I am glad to yield to John Simpson any time. Mr. SIMPSON. The other day I said there had been a Supreme Court decision that declared wheat interstate commerce the minute it left the farm. I have the citation here. The title of the case is Bowers, Manager, Embden, Elevator Co. v. Lempke, a North Dakota case, and it is 258 U.S. 50.