left over in the evening and the day following that they were not there they had certain days that they came in the grocers bought this stuff, and now they are working harmoniously, and it has helped everybody. I never have seen such a success as that thing has been. They just give them about four squares right down on the market

street.

Senator NORRIS. In modified form I think that is true of nearly every city in the country. They have the market down here and the farmers will come in with all kinds of stuff. Under this bill there would be certain products that he brings in that he would have to pay a tax on. The man that was selling on the curb down here at the market, if he sold pork, if he sold beef, he would have to pay a tax on every pound he sold. Well, one of the things that I am concerned about is, would we not get so much opposition, even though you concede for argument's sake that they ought to pay it-opposition to this petty tax being collected, a large portion of which will be consumed in the cost of collection-would we not be running into a swarm of trouble in our bill, getting a lot of dissatisfaction that we ought to avoid if possible?

Senator MURPHY. There is no doubt that there would be a lot of irritation.

Senator NORBECK. How much tax would be collected?

Senator NORRIS. The smaller it is the worse the irritation would be. Senator NORBECK. The Department would not get around to all these little fellows.

Senator NORRIS. But they would be liable to punishment. A man would come in with a whole wagon load of stuff, a small portion of which only would be taxable-he might have just a little pork, a little sausage, something of that kind, maybe only 10 percent of what he had, and the entire tax would be 10 or 15 cents, and he would have to pay that for somebody, somebody would have to be around there to get it, and it would cost more to get it than it is worth.

Mr. TUGWELL. Might I suggest, Senator, that it might cost more than it would be worth to get that amount; but that amount is in the interest of a far greater amount which you are going to give them by reducing production, presumably.

Senator NORRIS. Yes; I concede all that.

Mr. TUGWELL. We have thought over that a good deal, and we have not seen any way to draw a line.

Senator NORRIS. I think we drew a line in the McNary-Haugen bill. I forget now what the farmer could do on his home farm, but we gave him some leeway. He did not have to pay anything if he disposed of his stuff to some other farmer. I am not sure but that we fixed it on the amount of business that he did.

Mr. TUGWELL. That would have to be a pretty detailed matter. Senator NORRIS. It would be hard to frame something that would not be unjust.

Mr. EZEKIEL. We considered the possibilities there and decided that if any definite limits were set up the problem of administering that exemption would require a tremendous force; that is, it would create more problems than the returns would justify.

Senator NORRIS. It would depend a good deal on the amount of exemption. If you had the exemption up so high, you would not

pay any attention to these farmers coming in-eliminate them entirely. You would only have to watch the larger fellows that come in in the way of manufacture.

Mr. EZEKIEL. The assumption in this discussion was that the stamp tax would be used, so that the only agency of collection might be the post office, and everybody would know that when a ham was sold it. would have to have a stamp showing that the tax had been paid on that ham.

Mr. TUGWELL. Administered in that way, it would not be such a nuisance.

Senator NORRIS. Now, suppose the law provided that you would have to have a stamp on every ham you sold and every pound of sausage you sold, I think that would strike the farmer pretty hard; and, whether it is right or not, I think the farmer would do a lot of complaining about that.

Senator NORBECK. Probably not any more than about the 1 cent on his cream can. He kicks a good deal about that-the 1-cent tax on his cream can and 2 cents on bank checks.

Senator BANKHEAD. Why not make it subject to slaughterhouse inspection?

Senator NORBECK. I was wondering, Senator, whether we could not agree on that. I do not want to criticize the bill. I think it is pretty well written; but I was just thinking that if the Department could be persuaded that it would be better to make it discretionary, you could rewrite the section so that it would be up to them where to draw the line. This law cannot be administered unless you give the Department a lot of leeway, and I am perfectly willing to give it to them. Senator POPE. Mr. Secretary, you mentioned awhile ago that the processed commodities be limited to human consumption.

Mr. TUGWELL. May I answer this question first? You would suggest that at the end of section (b) there a clause be added-"No tax shall be required to be paid on the processing of any commodity by the producer thereof on his own premises for consumption by his own family, employees, or household "-you would add a clause to read something like this: "or on the sale of commodities processed within the household, where the total annual sale is not more than " a certain amount?

Senator NORBECK. I would rewrite the section and say that the Department may make exemptions for a small quantity.

Senator NORRIS. Take that just as it is, it seems to me you have got more language in there than you need-"No tax shall be required to be paid on the processing of any commodity by the producer for consumption by his own family."

Senator MCGILL. By the producer on his own premises.

Senator NORRIS. Yes. Why don't you strike that out?

Mr. TUGWELL. That might let in cooperatives.

Senator MCGILL. Strike out beginning with the word "by" in the second line, strike out the balance of it.

Senator NORRIS. One farmer might butcher a hog today and sell it out among his neighbors. That used to be quite common.

The CHAIRMAN. What about taking a wagonload of corn to the gristmill to have it ground into meal, as is done on my premises, and so on my neighbor's, and he processes it for toll; am I going to pay

a tax on my own corn to bring it back home? thing straight now.

No; let us get this Senator NORRIS. That is right. I do not see any answer to that argument.

The CHAIRMAN. You just cannot do it. Mr. TUGWELL. Yes; he would have to the clause.

Senator NORRIS. Well, he ought not to. his family.

The CHAIRMAN. He is going to haul it

own use.

pay a tax on that, under

He is going to get it for

right back home for his

Senator MCGILL. You cannot make your exemption too great, or you will not have any bill here.

Mr. TUGWELL. You could meet that by striking out "on his own premises."

Senator NORRIS. Yes; and that ought to be done. That ought to be done by all means.

Mr. TUGWELL. By the producer thereof, but for consumption by his own family, employees, or household.

The CHAIRMAN. Our people down there plant little patches of wheat-our section does not grow wheat except in little available spots that produce it. They will get 75 or 100 bushels of wheat and carry it to a flour mill, a commercial mill-here are four or five round about that ship in wheat, and they find it cheaper to ship it in from the West and process it there than they do to handle the flour, because they get all of the by-products and they make something out of that. Now they carry this wheat there and have it ground into flour for their home consumption and there you are again. Senator MCGILL. They buy the wheat?

Senator NORRIS. This man that does not buy the wheat-now this is a common thing. A man raises wheat himself; he goes to a mill and he estimates that it is going to take so many bushels of wheat to keep his family in flour during the year. He takes that many bushels to this miller and he leaves it with him, and the miller grinds it and ships it away; but on the books of the miller this man is credited with so much flour. He gets so many pounds of flour, so many pounds of bran, so many pounds of shorts for every bushel of wheat that he takes there. But it is not his own wheat in the modern mill. We used to go to a mill and pay toll and get back our own product; we do not do that now.

The CHAIRMAN. No; you get back the equivalent.

Senator NORRIS. You get back the equivalent. Why should we tax that?

The CHAIRMAN. Yes; that is what I say. That is for home consumption.

Senator MCGILL. Why would you not meet the situation if you strike out beginning with the word "by", line 3, strike out the balance of the section?

Mr. TUGWELL. One of the things you want to get out is, own premises "?

66

on his

Senator MCGILL. Strike out beginning with the word "by" on line 3, and then strike out on line 2" on his own premises." Senator NORRIS. That still would not do it.

Senator BANKHEAD. In lieu of this, the Secretary of Agriculture may provide for regulation or exemption from the tax of commodities processed by the producer thereof, or processed by the producer for home consumption.

Senator NORRIS. Strike out the last clause would be better yet, Senator. Just stop with the period and strike out the last, where it commences with "or."

Senator BANKHEAD. You mean "or processed"?

Senator NORRIS. Yes.

Senator BANKHEAD. Suppose he takes it to a mill and has it processed and he does not process it himself? "The Secretary of Agriculture may provide by regulation "—that gives him time to work it out" for exemption from the tax all produces processed by the producer thereof "-that is at home-" or processed for the producer for home consumption."

Mr. TUGWELL. I think that is a good idea.

Senator MCGILL. That leaves it discretionary with the Secretary of Agriculture.

Mr. TUGWELL. I like that. I think that is very good.

The CHAIRMAN. But you have not cured the point that was raised by Senator Norris, that he has got some sausage that he has processed at home, and has got some pork. You still have not reached that. This is all right as far as it goes.

Mr. TUGWELL. Yes; this would fix that, would it not?

Senator MCGILL. No; he could not take his own sausage to town and sell it.

Senator NORRIS. No, he could not do that.

Mr. TUGWELL. No; he cannot have his cake and eat it, too.

Senator NORRIS. The farmer has not had his cake for so long that I would like to see him get some.

Mr. TUGWELL. This is a question of having it and eating it both. Senator NORRIS. I would let him have it and eat it too.

Mr. TUGWELL. I am afraid you cannot do that.

Senator NORRIS. He is at the bottom of this big pyramid and I do not want to make him mad if I can help it.

Senator POPE. I asked a question a minute ago in regard to processing for human consumption. Is that limited somewhere in the act?

Senator BANKHEAD. It says "by his own family, employees, or household."

Senator NORRIS. Well, I think we can include that now [reading]: The Secretary of Agriculture may provide by regulation for exemption from the tax on commodities processed by the producer thereof or processed for the producer.

Now strike out "for home consumption ", then you have met my point.

See if this is not right now:

The Secretary of Agriculture may provide by regulation for exemption from the tax of commodities processed by the producer thereof, or processed for the producer.

Senator MCGILL. Well, that is all right for the farmer, but take it in my State, at Hutchinson, Kans., one of the largest millers in the State is also one of the biggest farmers. He will raise more

wheat probably than any other one man in Kansas, and he will bring it right into his own mill and process it.

Mr. TUGWELL. That, I think, would be a great encouragement to the factory farmers.

Senator NORBECK. The packers feed thousands of steers, too. Do they get in under this?

Senator BANKHEAD. I think they would, under Senator Norris' amendment.

Senator MURPHY. If you open the door to exemptions here you are going to operate against the very end you seek.

Senator NORRIS. As modified, Senator, it would be up to the Secretary of Agriculture. He could fix a limitation.

Senator McGILL. On that sort of a situation?

Senator NORRIS. He could meet your big fellow by putting a limit on it.

Senator BANKHEAD (reading):

The Secretary of Agriculture may provide by regulation for exemption from the tax of all commodities processed by the producer thereof, or processed for the producer.

The CHAIRMAN. Of course, the Secretary could say “beyond a certain amount you can not go."

Senator MCGILL. I agree with you he could refuse to grant an exemption to one who was in the business of processing.

Mr. TUGWELL. I am not a lawyer, as you know, but it is my understanding that an administrative official has no power to exempt from taxation anything. Is that true or not?

Senator BANKHEAD. This would be a legislative authority.

Mr. TUGWELL. But can Congress delegate the power to exempt from taxation?

Senator MCGILL. We are delegating to you fellows to raise the tax and lower it.

The CHAIRMAN. Do we not delegate to the Interstate Commerce Commission the power to regulate the rates in interstate commerce? Senator MCGILL. It would be necessary for him to have authority to deny exemption to a class, for instance, as in the case of persons engaged principally in some other business.

Senator BANKHEAD. I think it would have to be uniform. It would be questionable as applied to particular classes.

Senator MCGILL. Would it be uniform if you exempted those who were strictly engaged in the business of farming if you did not also deny exemption to one who was engaged in the two occupations, that of farming and processing?

Senator BANKHEAD. If you make exemption apply to all alike falling within a classification, it would be all right.

Secretary WALLACE. Shall we adopt this then?

Senator BANKHEAD. I am for it.

Secretary WALLACE. It reads then:

The Secretary of Agriculture may provide by regulation for exemption from the tax of commodities processed by the producer thereof, or processed for the producer.

The CHAIRMAN. We will receive that tentatively.

Senator MCGILL. Could you not add something on there to this effect—no; I do not believe you could either. I was thinking of

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