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46 or 47 exporting agencies competing with each other in selling cotton in the world market. The result is that the world market is constantly a bidder's market. It is fixed on the other side and we have no voice in it at all. If this is turned over to the Government and one agency is created so strong and so powerful that it does not have to sell cotton, it can hold and ask a price. It will have some voice then in the world market and I believe will considerably improve world prices.
Senator NORRIS. Now, Senator, that is true of cotton, I think, because we could really, if we would, control our cotton, and we could then control the world price for cotton, because the world can not get along without our cotton, but that is not true of wheat.
Mr. BROOKHART. Let us see about wheat, now. There is less than about 20 percent of our wheat production that goes abroad, and it is not so big a percentage in the world demand for wheat. But there was a world conference called, and the Australians and the Canadians and the Argentineans, and even the Russians, all of them, wanted to establish a quota system for the wheat-producing countries of the world, and there are only 5 or 6 of them, so it is not a large number. Then one agent could handle the sale of that wheat in England, for instance, for all those countries, or in each other country. Have one agent for all of them, and in that way they could get a similar control of the wheat matter compared to the cotton situation that I have just described. But it was a distinguished citizen from Nebraska that upset that on the Farm Board.
Senator NORRIS. Yes. Well, if you would know that distinguished citizen and know what kind of man he was, you would not be surprised at his doing that.
Mr. BROOKHART. Well, I voted against his confirmation on the record. I anticipated him all right.
Now then, President Roosevelt, as the newspaper accounts state, is going to revive this national conference on the wheat question, and if it succeeds, and I think it will be comparatively easy to do, then I think the wheat proposition will be quite as well controlled as the cotton proposition would be if we had it handled as I describe.
Senator NORRIS. Senator, we cannot afford to put into this law something that is based entirely on anticipation of something that does not exist yet. That may come out just that way. I would be glad if it would, but maybe it will not. It seems to me we ought to take conditions as they are. Why can they not export this surplus wheat, if the law compels the licencee to segregate, just the same as they do now? Why not let it be subject to the same influences that control it now?
Mr. BROOKHART. It can be done that way, and I would not particularly object to that, but it is nothing like as efficient as if we had one agency doing it. Then if we carried out the world arrangement I would like to have the foundation laid for that.
Senator NORRIS. You know the condition that we would be up against if we tried to have the Government do that. There will be a lot of opposition to it anyway, but the great opposition at once that would spring up, not only in Congress but everywhere else, would be that you are putting the Government into business on this proposition, and we can just as well avoid that criticism if we let it go and take its own course.
Mr. BROOKHART. Yes, but so far as I am concerned, that criticism does not impress me at all.
Senator NORRIS. Well, it is a criticism that as a legislator you have got to take into consideration if you want to pass a law of that kind.
Mr. BROOKHART. I realize you have to consider it, but under the present desperate condition of agriculture, with actual rebellion against the courts and States, I think the time is here when something should be done.
Senator NORRIS. But you have got a proposition, Senator, that I doubt whether it can pass anywhere-and I am going to vote for that kind of an amendment myself. I think it is a good solution of the question. I am not speaking of it as an enemy, but why borrow a whole lot of trouble when you can avoid it?
Mr. BROOKHART. Well, I am perfectly willing to accept that suggestion so far as I am concerned, but I would prefer to present the proposition on its full merits at least.
Senator NORRIS. I would like to have—I have not prepared the amendment, but I would like to have the amendment presented in the Senate or before this committee when we get into executive session, that would carry out that idea.
Mr. BROOKHART. Well, the Senator can use this suggestion here then and prepare it in detail.
Senator NORRIS. I think you would come nearer getting down to a concrete proposition than anybody that has proposed it yet, but I point out that difficulty, not because I am necessarily opposed to it, but because I think as a matter of strategy it would be a serious mistake if we borrowed that trouble that I think we can get along and avoid.
Mr. BROOKHART. It would be a very great advantage to do it as the Senator suggests, over the other plan, as I see it, and I would not have the slightest objection to it, although, of course, I feel that one agency would be more efficient in handling either of these propositions.
Senator NORRIS. Wheat is exported now. The man way out in the country, the country elevator, buys wheat, and some of that wheat perhaps all of that, is exported, gets into some foreign country. Now, it would not add anything to the machinery, it would not change any of the machinery; in fact, it would not change the amount as I see it, that would be exported under that proposition that is exported now.
Mr. BROOKHART. I think that is all very true.
Senator NORRIS. The surplus is exported anyway. The only thing is that when it got into the elevator it would be segregated.
Mr. BROOKHART. The particular lot of wheat need not be segregated. The elevator could keep its count when it sold it.
Senator NORRIS. If he shipped a thousand bushels of wheat, he would not need to segregate every man's wheat in there, but he could segregate it in bulk.
Mr. BROOKHART. Now I want to call attention a little to the world situation on cotton. I have the Department of Commerce statement here of March 14 of this year, and I find that there are in consuming establishments 1,441,000 and odd bales of cotton, and there are in public storage at compresses 9,379,000 bales. That makes the total cotton in the United States about 11,000,000 bales. That is practically 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.]
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.
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. Weil, 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 $1,600 there 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.