The CHAIRMAN. Now will you take up subsection (c)? (c) The Secretary of Agriculture is authorized, with the approval of the President, to make such regulations with the force and effect of law as may be necessary to carry out the powers vested in him by this act. Any violation of any regulation shall be subject to such penalty, not in excess of $100, as may be provided therein. Senator NORRIS. There may be no escape from it, and Congress has done it a good many times, but it is a very dangerous thing, this subsection (c) on page 10, for the Secretary to make a regulation and provide a penalty for its violation. Senator WHEELER. That is done, of course, frequently. Senator NORRIS. Not always. Usually the penalty is fixed in the law. But it gets you into trouble in either case, because you delegate to the Secretary the right to set up a penal statute and you delegate to him the power to fix the penalty for its violation. Senator WHEELER. Of course, you do that in the Interior bills, I mean in the Forestry Bureau of the Agricultural Department on land questions. We have got innumerable cases where the Secretary makes rules and regulations, then the penalty is provided that in case of violation the penalty shall not exceed so much. You have it in the narcotic law; you have it in practically every department of the Government at the present time. I agree with you it is a bad thing, but it is not new. Senator NORRIS. Is this subsection (c) copied from any existing law? Secretary WALLACE. NO. Mr. LEE. It is not copied from any existing law, but as the Senator says, there are numerous precedents for that sort of thing that enables you to make your penalty fit the violation. If you put in a flat penalty, it puts you in the position of not suiting the penalty to the violation. The CHAIRMAN. Have you any statutes that have a provision similar or exactly like this? Mr. LEE. Yes; and there are 3 or 4 cases that have been sustained in the Supreme Court involving those statutes. Senator NORRIS. I have heard a good many Senators say on the floor of the Senate that if they lived a million years they would never vote for a provision of law that delegated to any person the right to make a statute and fix the penalty for its violation. It is a very dangerous thing to do. Senator MCGILL. The penalty fixed in this case does not seem excessive. Senator WHEELER. Let me ask you this. "Any violation of any regulation shall be subject to such penalty, not in excess of $100, as may be provided herein." Would you not have to go into court to enforce that penalty? Mr. LEE. Yes. Senator NORRIS. You would have to go into court and set up this law, and under that law the Secretary has made such and such a law, and the man has violated that law. Senator WHEELER. Exactly. Now, you have that penalty. Let me say this to you, Senator, that under the present existing rules of the Interior Department and various other departments of our Government you have a provision that if you violate those rules and regulations of the department you can be sent to the penitentiary for it and sentenced to as long as 3 years in the penitentiary and to a $2,000 fine, because if you conspire, under the general conspiracy law, if you conspire to violate one of these regulations of the Department of the Interior, or these other cases-because I have prosecuted cases under them myself—you can send a man to the penitentiary for 3 years. Senator NORRIS. You are sending him to the penitentiary in that case under a law of Congress, the law against conspiracy. Senator WHEELER. NO. Senator NORRIS. There is no such law here. Senator WHEELER. But you are sending him to the penitentiary for violation of a regulation. Senator NORRIS. If it is conspiracy, it is not violation of a regulation, Senator. If it is conspiracy, then it is under the law governing conspiracy that the Congress has passed. Senator WHEELER. I beg pardon, Senator, you will then have a conspiracy to violate a regulation, not a conspiracy to violate a law. Senator NORRIS. All right, that is just the same as a law. Senator MCGILL. This does not provide for punishment for a criminal offense. Senator NORRIS. Well, now, I do not know about that. It is a penalty of $100. Senator BANKHEAD. You would have to sue him for it. Senator McGILL. Not a fine. Senator NORRIS. No; it is not a fine. Mr. LEE. The maximum is $100. That just gives the Secretary discretion. For minor violations he could make the penalty less than $100. If you made it $100 flat, that would make it so that he would collect perhaps more than is necessary in some cases. Senator MCGILL. He would have to bring suit to recover. The CHAIRMAN. All right, Mr. Secretary, take up the next one. Secretary WALLACE (reading): (d) The Secretary of the Treasury is authorized to make such regulations as may be necessary to carry out the powers vested in him by this act, including regulations establishing conversion factors for any commodity and article processed therefrom to determine the amount of tax or duty imposed with respect thereto. (e) The action of any officer, employee, or agent—————— Senator MCNARY. Pardon me just a minute there. Then there are two departments of government that have a right to fix this tax. What particular tax does this include Including regulations establishing conversion factors for any commodity. Does that mean the tax to convert wheat into flour, or dairy products into cheese? Senator BANKHEAD. That same provision was in the allotment bill, and we approved it, that part of it. The CHAIRMAN. Mr. Lee, will you explain just what that means there, that the Secretary of the Treasury is authorized to make such regulations as may be necessary? Mr. LEE. There are several provisions in the bill-I will illustrate it, for instance, by the floor-tax provision on wheat. First you start Senator BANKHEAD. An occupational tax. Mr. Laz. A prossing tax. Six cents processing tax in this country, or 3 cents under this bill. Then raw cotton coming in or processed here also pays that tax. It does not matter whether the cotton be domestically produced or foreign produced. when it is processed here it pays that tax. But, supposing the importer instead of bringing in raw cotton brought in shirts or overails, or most any product of cotton, and put them on the market, obviously they have got to pay a corresponding amount of duty equivalent to the tax that is being imposed here, or they would be able to undersell our own manufacturers; therefore, you allocate to that cotton shirt or those overalls under the conversion factor a duty corresponding to the cotton in them, proportioned to the existing processing tax in effect on the cotton. The CHAIRMAN. That would apply to the wheat products? Mr. LEE. That would apply to wheat, to any of its products. The CHAIRMAN. All right, Mr. Secretary. The balance of this is in conformity with what you have already said, so start with section 11, please. Secretary WALLACE. The next is commodities: SEC. 11. As used in this act, the term "basic agricultural commodity means wheat, cotton, corn, hogs, cattle, sheep, rice, tobacco, and milk and its products, and any regional or market classification type or grade thereof; but the Secretary of Agriculture shall exclude from the operation of the provisions of this act, during any period, any such commodity or classification, type, or grade thereof if he finds, upon investigation at any time and after due notice and opportunity for hearing to interested parties, that the conditions of production, marketing, and consumption are such that during such period this act cannot be effectively administered to the end of effectuating the declared policy with respect to such commodity or classification, type, or grade thereof. Senator MCNARY. Mr. Secretary, why did you arrive at that list? Of course they are basic, most of them. We had so much controversy over the recommendations in the House bill that we reduced it to just wheat and cotton. There has always been a terrible fight as long as the products are mentioned in the bill. The hog fellows and the cattle fellows and the sheep fellows and the wheat fellows all want to be out, while if it is at your discretion-the great testimony that we had on the allotment plan for days here was that the great majority felt they wanted the other bill. Secretary WALLACE. Very much inspired testimony; you realize that? Senator MCNARY. Well, I do not question the character of the testimony. We had representatives, reputable representatives, from various groups, feeders, and others. The CHAIRMAN. Men actually engaged in the business, very sin cere men. Secretary WALLACE. Yes; I know. Senator MCNARY. Now corn. Corn goes through hogs, doesn't it, Mr. Secretary? Secretary WALLACE. Yes. Senator MCNARY. Do you think it is necessary to mention corn when only about 1 percent of the 4,000,000,000 bushels raised could be exported? Secretary WALLACE. It is necessary to control corn acreage if you are going to control the hog situation. Senator MCNARY. In my experience I have found that the simpler you make a bill, the fewer commodities you include, the less opposition there will be, both here and on the floor. I am wondering why you increased that and if you believe it necessary to include these various commodities? Secretary WALLACE. If it were confined to the allotment plan only, I would be dead against including a number of these commodities, because they are not on the export market. Sheep are not on the export market; in fact, we import nearly half of our wool. Beef cattle at present are not on the export market, although they are likely to be within 3 or 4 years from the present trend of production. Dairy products are not on the export market at the present time, although they are likely to be in 3 or 4 years from the present trend of production. Senator FRAZIER. Are all those selling below cost of production? Secretary WALLACE. They are all selling below cost of production, and the representatives of the producers at this meeting which was held last week indicated that they wanted these products in; as a 166630-33-4 Senator Me War. Was Mr. Katzen u Secretary Wallace. As a namer of fat. I visit a Cabinet meetAg and was cut there when we was forced out Mr. Tagwell bres.ded. Senator M.Saar. I wodd lie to mow who game to this list and wax. Secretary WALLACE. WII you tell them. Mr. Turwell? Mr. TrovaLL. The representatives of the farm organizations had a considerable argiment about whether any list ought to be put in or not, on the theory that if any farm produet was below parity price it ought to be raised to parity prie, but after const ferable arr.ment about it they thought the Secretary of Agrimiture ought to be protecter to such an extent, because they were afraid that some very small producers might come in asking for relief. so they preferred to define the basic agricultural commodities, and I have the Let which they submitted here. They seemed to feel that this was the way that it would operate best. Senator WHEELER. After all, this is going to be within the discretion of the Secretary anyW17. Mr. TROWELL. It is going to be within his discretion. The only reason any list was put in was to protect the Secretary. Senator MONARY. If you are going to include all commodities, vegetables should come next to cotton, probably the same as cotton, larger than any other product of the soil. Mr. Trowell. But they are either not selling below parity price or not so far below that their organized representatives thought they ought to be included. Senator MONARY. Who is here representing them? Mr. TrowELL. I do not think there was a representative of the truck growers present. Senator McNARY. I am not talking about the truck growers; I am talking about the canning industry. Every farmer has something to carry to town that goes into cans in some form. And hay is not included here, one of our great crops. Fruit is not included. You could not include them because they are excluded by reason of their omission. Do you not think you ought to have power to include other agricultural commodities? Senator McGILL. I think fruits should be included. Senator MCNARY. I would not say that. We had it up some years ago in the old equalization bill, and we finally cut everything out and said agricultural commodities in the discretion of the Secretary. We left the broad power with him and kept down a tremendous amount of opposition. He could operate on any commodity that he believed would be benefited. Senator WHEELER. I know some of the representatives of farm organizations have talked to me about it and some of them wanted it left wide open, but frankly, I do not think it ought to be left wide open because I think. after all, it is more or less of an experiment. The whole thing is bound to be an experiment, and some protection ought to be afforded the Secretary of Agriculture, |