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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;
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.
Senator NORRIS. What .page?
The CHAIRMAN. I want to state to the committee that this ends the hearings. The committee will meet in executive session in the morning at 10 o'clock and proceed to the consideration of such bill as it will report out.
Kit Carson, Colo., March 27, 1933. Senator John B. KENDRICK,
Senate Office Building, Washington, D.C. Please lay this message before Senate Agricultural Committee as my protest against agricultural refief bill that is now before committee. Evidently the intent of this bill is to legislate value into commodities. If such a thing is possible then the economical problems of the world will have been solved. If it is possible to accomplish this desire by legislation it seems strange that through all the world's history that such a simple remedy has never heretofore been successfully accomplished. It is impossible and in the end will do more harm than good. What agriculture needs most is a good rest from agitation. The remedy lies in cheapening of the currency, lowering of taxes, railroad rates, and marketing expenses; lowering the cost of all governmental units, clear down to the local schools, and scaling down overcapitalization of all industries. If we must try out this wild experiment please leave livestock out for at least a year.
Chas. E. COLLINS.
WATERTOWN, S.DAK., March 28, 1933. Hon. PETER NORBECK,
United States Senate, Washington, D.C.: Our board of directors in session assembled urge you to use every possible effort to have the farm bill passed as reported from the House because every day's delay tends to undermine confidence recently created by passage of other major legislation. Delay in the passage of this farm bill at this seeding season is practically equivalent to a year's delay which will prove ruinous to agriculture and business.
WATERTOWN CHAMBER OF COMMERCE,
J. W. GRIEST, Secretary.
GRAIN COMMITTEE ON NATIONAL AFFAIRS,
Washington, D.C., March 29, 1933. Hon. Ellison D. SMITH, Chairman Committee on Agriculture and Forestry,
United States Senate, Washington, D.C. DEAR SENATOR SMITH: Will you kindly have the record of hearings on H.R. 3835 show that I, as chairman of the grain committee on national affairs, requested to be heard and was given time on the schedule, but later my name was stricken from the list.
Having been denied a hearing in open session, I desire to transmit to you herewith certain suggested changes in the bill and request that you bring them to the attention of the committee for consideration.
First, strike out paragraphs 2, 3, and 4 of section 8. This proposed governmental control over the marketing of farm products in the stream of interstate and foreign commerce will serve to narrow the market for farm products at a time when wider markets are absolutely essential to the restoration of agriculture.
Second, if the committee feels that paragraph 2 of section 8 is necessary to the proper carrying out of this act, then it should be amended by striking out the period after the word "parties” on line 18, inserting a semi-colon and adding the words “Provided however, That in making such agreements there shall be no discrimination in favor of any processor, association of producers or other agency so engaged.” The necessity of this amendment must be apparent, with the Agricultural Marketing Act still unrepealed, if favoritism such as that under the Farm Board is to be avoided in the future. As a matter of fact, the interest rate should be a minimum instead of a maximum to guard against such gross favoritism as in the case of one group that now enjoys a rate of one-eighth of 1 per cent on nearly $16,000,000 borrowed from the Farm Board. Very truly yours,
Thos. Y. WICKHAM, Chairman. 166630-33-23
PROGRESSIVE FARMER-RURALIST Co.,
Raleigh, N. C., March 27, 1933. Senator E. D. SMITH, Chairman Senate Committee on Agriculture,
Washington, D. C. DEAR SENATOR Smith: We earnestly urge you to support the general principles of the farm relief bill proposed by President Roosevelt. We are convinced that the large degree of latitude in its operation which the bill gives Secretary Wallace and the United States Department of Agriculture will be wisely exercised. He will consult with agricultural leaders in making such adaptations as will best fit in with varying or changing conditions, or that accumulating experience indicates should be made. We sincerely hope that the general plan will not be hamstrung by unfriendly amendments, but President Roosevelt instead given liberal authority to carry out the promises he made to American farmers and which these farmers expect fulfilled. A basic principle which should not be disturbed is that of restoring farm prices to their pre-war parity with other prices, and with this assured and the President's farm mortgage program enacted into law, the farmers of the South can win their way back to independence. Respectfully submitted.
W. KERR SCOTT,
Chas. F. CATES,
Committee North Carolina State Grange.
To the Senate Committee of Agriculture and Forestry:
GENTLEMEN: This testimony is in reference to bill H.R. 3835. Before going into the details as to whether or not the farm relief bill, as passed by the House of Representatives, is advisable to be passed by the Senate, I wish to draw to the attention of the Senate Committee of Agriculture and Forestry that the object of the bill is to levy a tax on basic agricultural commodities with a view of raising prices to the extent of the tax levied, which would be paid over to the producer, to enable him to acquire purchasing power for the necessities in industrial commodities.
The basic agricultural commodities mean wheat, cotton, corn, hogs, cattle, sheep, rice, tobacco, and milk and its products. You heard the objection of sheep raisers as to the inadvisability of levying a tax so as to advance prices on sheep, because that is not possible to apply to sheep, for the various reasons that were explained in the testimony.
I wish to point out that milk and milk products cannot be applicable to the general terms of this act for the very reason that it is not to be compared with cotton and grain of any kind. The cotton and grain commodities are produced once a year in the United States, and milk is a daily crop so to speak. Milk cannot be kept longer than the day it is produced, and has to be distributed when sold as #uid milk, and when a product is produced out of the milk, such as butter, cheese, etc., it has to be done within the week it is produced, and prices for any commodities produced out of milk are daily fluctuating because they are also fluctuating in quantity of production, and the seasons of the year and the weather at any given time, which makes a change in the prices of those commodities. As a matter of fact, butter is so sensitive as to advances or drops in prices that one fourth cent a pound makes a difference as to whether or not it could be sold quick, or it will have to be held for a time in storage, to be sold later.
When it comes to the season of surplus production of milk products, then the only way it is possible to sell those surpluses, is when there is a free way of trading in it. No one could be forced to buy it, because they do not have to buy it and invest money in a commodity that will be sold 6 months later, and one does not know whether or not he would be able to get his money back, out of it, even when à profit would not necessarily be the question. Very often the question is to remove the surplus from the daily tradings, so that the business of the day could go on without interference.
Therefore, interference by levying a tax or by having any Government agency interfere with this line of business, would be greatly detrimental to the producer and distributor alike, and instead of a gain of any kind, there would be a loss to all, without doubt whatsoever.
As to the provision of the act covering all commodities produced by the farmer, will say that prudence would caution any man in authority, to add other complicated machinery to relieve a situation that has been sick for 4 years or so, and which has been caused by a complicated legislation that was not necessary, and the farmers and the country as a whole, are now paying the penalty for same.
Another experiment is to be fostered on the farmers and the country with the idea that it will help them, when in reality it will destroy every possibility of recuperation through advancing prices of farm commodities.
It would seem that any Member of Congress would realize that since prices started to slide down, beginning with the passage of the Agricultural Marketing Act, creating cooperative marketing agencies in agricultural commodities, that there might be something wrong in that. The fact is that from the date of the passage of the Agricultural Marketing Act creating those nationally cooperative agencies with Government aid and nursing, every independent distributor of agricultural commodities was out of the buying or distributing of those commodities, and therefore the farmer has lost customers that he would have gotten if that act would not have been passed, since there were only a few dealers who tried to deal in grain or cotton, but they were not aufficient to buy up all the farmers' crops, whether cotton and grain, and therefore all those products were begging for a market. The organizations created by the Government under the Federal Farm Board wasted $500,000,000 to try to bolster up prices and hold the commodities for higher prices, and they failed to do that. Couldn't the Congress see that any interference that would be created again, would be more harmful than any possibility of attaining any good in it?
In the testimony given by witnesses on this bill at the Senate Committee of Agriculture, Senator Wheeler, of Montana, brought out points that the question of leaving business to its natural economic development, has been suggested before, but in the opinion of the Senator, nothing could come out of leaving things to natural consequences. I believe that the Senator was not correct in that statement. In the first place, in the case of farm relief, never was anything left to the law of supply and demand, but there was always interference by somebody, to help the farmer, while in reality the farmer neither wanted nor needed that help, but that so-called help has always been detrimental in doing harm to the farmer and to the Nation.
The present proposed farm relief bill is one of those measures that will harm the farmer as the Agricultural Marketing Act harmed him, and as any other acts supposed to help the farmer did him no good.
All that Congress needs to do, is to repeal the Agricultural Marketing Act, have cooperative marketing organizations take care of themselves the way independents are taking care of themselves, give notice to the people engaged in commerce in the United States that they will not be interfered with by any hampering laws, and this will be a signal for new enterprises and for advancing prices in all agricultural commodities.
1, therefore, suggest the repeal of the Agricultural Marketing Act especially the cooperative marketing feature thereof, and as for immediate help, all that the farmer needs, is to adopt measures to have the farmer on a farm retain same, and I believe that the bill recommended by the Hon. Henry A. Wallace, Secretary of Agriculture, with a few modifications or improvements in that bill, would just do the proper thing for the farmer to hold his farm, and the rest could be left to the laws of healthy economics where supply and demand govern prices. Respectf: ''y yours,
ARTHUR MEDWEDEFF. (Whereupon, at 5:25 p.m., the committee adjourned.)