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determine, when necessary, how much acreage and when not necessary? Then he would have to control the seasons as well, because sometimes on less acreage you produce more?
Mr. PEEK. It might be well occasionally to go in the particular areas in a particular season, after the prospect of the crop was well in sight, and remove a proportion of the maturing crop and destroy it rather than have that proportion destroy the whole industry. That is what happens with unregulated, uncontrolled supply.
Now I want to come back to our other point.
The CHAIRMAN. Before you leave that, you don't mean to advocate, in order to maintain prices, the destruction of crops that are already produced, do you?
Mr. PEEK. I would destroy them before I would let the slight surplus destroy our whole national economy; yes, sir.
The CHAIRMAN. If our whole national economy depended upon extraordinary supply, as during one year, but we have in contemplation (or I have at least) that there never has been a permanent surplus
Mr. PEEK (interposing). I agree with you.
The CHAIRMAN. Consumption is perennial, production is annual; and our objective should be to so conserve the surplus of one year to spread it over those in which one did not occur. But this bill doesn't.
Mr. PEEK. I think it does. I think it does just that. I think the power is in this bill for government with producers and with processors to put every effort behind the disposal of our farm crops preferably in manufactured forms, I would say, so as to give employment to cur labor; but, failing in being able to get rid of it, having a considerable accumulated surplus, as we have at the present time, rather than let another big crop come on and destroy us, I would do what you suggest, I would take certain production out. But I want to make this point: The variation in yield from year to year in different areas is very material. In 1931—perhaps I may have those figures here.
In 1932 North and South Dakota produced about 11 bushels of wheat to the acre. In 1931 they produced 5. In 1932 North Dakota went up to about 11, and South Dakota about 13.
Senator SHIPSTEAD. What difference does that make in the total production for the State?
Mr. PEEK. I haven't the acres here. In Kansas and Oklahoma, the winter-wheat area, in the same years, while North Dakota was going from 11 down to 5 Kansas went from 13 up to 19 and Oklahoma from 9 to 17. Then in the very next year, North Dakota went from 5 to 11 and South Dakota from 5 to 13, while Kansas went from 19 down to 11 and Oklahoma from 17 down to 11. So you never know where you are going to rent your acreage.
Senator NORRIS. There is the very thing that from the very beginning of this farm problem has always bothered me. It seems to me that those figures demonstrate that it isn't a practical way to regulate production by regulating acreage.
Mr. PEEK. Senator, you are entirely correct. The Bureau of Agricultural Economics made a report some years ago to the effect that 75 percent variation in yield from year to year of all growing crops was due to weather and pest, and not to acreage.
Senator NORRIS. Yes. In other words, God has more to do with this thing than man.
Mr. PEEK. Exactly.
Senator NORRIS. That leads to a conclusion, doesn't it? Fundamentally this bill or any other bill trying to control production by a limitation of acreage is fundamentally unsound, isn't it?
Mr. PEEK. Which one are you speaking of? The House bill?
Senator NORRIS. Yes; or any other bill where the principle involved is trying to limit acreage, curtail production by curtailing acreage of a crop. We never know when we start in how we are coming out on that kind of a proposition.
Mr. PEEK. The bill that passed the House provided for a reduction in the acreage, or reduction in the production, or both.
Senator NORRIS. Well, we agreed a while ago we can't by law enter the province of God Almighty. We can list acreage, but we can't say how much is going to be produced on an acre.
Mr. Peek. No; but, generally speaking, in a condition such as the chairman mentioned a few minutes ago with respect to cotton, it would be possible to go into the normally producing areas of cotton, which have more or less uniform production year in and year out, and get some advantage of production by renting productive areas. I think you would get very little by renting unproductive areas. In other words, the idea of renting marginal lands—the word “marginal” is a word very greatly misunderstood. My understanding of marginal lands is high-cost-production lands. That is the marginal land, no matter whether it is in Kansas or Illinois.
Senator NORRIS. Maybe I am wrong. If I am, I would like to be corrected. I had a different idea. I thought a marginal land meant land that was just on the line, whether it was good to use for production of a stated product or whether it wasn't; in other words, where the production was doubtful it was on a line, and you didn't know whether to put it in a crop or not, because the chances of producing anything might be against you.
Mr. PEEK. Yes; but if you produced very little it would have very little effect on the market.
Senator FRAZIER. And high cost of production ? Mr. PEEK. And high cost of production. The CHAIRMAN. This general principle is true: A great area is likely to produce under normal conditions more than a small area. We can't get away from that; and the reduction of acreage in cotton, that I am familiar with, has in general-I know there are exceptions-resulted in a reduced production.
Mr. PEEK. Senator, in the case of cotton in 1930, all the cotton States averaged 147 pounds of cotton to the acre.
The CHAIRMAN. I am very familiar with that.
Mr. PEEK. In 1931 they averaged 201, and in 1932 they were down to 162 again.
The CHAIRMAN. Yes.
Mr. PEEK. I think that the acreage rental by itself is not sufficient; and, I think, generally applied it would be much more expensive and extravagant than going in and catching the production in the particular place where it was being produced in the particular year. Then, again, any general plan for reduction of acreage throughout the United States, regardless of the deficiency of supply in particular areas, is very unsound.
I was in your State the latter part of November. A gentleman told me he had just shipped in a carload of corn for which he paid 62 cents a bushel. I asked him how much the corn cost, and he said 10 cents, and the 52 cents was freight and charges on it. I would like to have somebody go down and explain to your people in South Carolina why they should reduce their corn acreage when that is the situation there; a third of all the corn in the United States being produced in two States, Iowa and Illinois.
The CHAIRMAN. I recognize that we have a condition here where the surplus is not the barrier to a rising price, because we have no surplus. It is purely an inability to buy, and I want to understand how if we put a tax on the processor which at once will mark the difference between the farm price and the average of the thing he buys, where are we to get the consumptive power to maintain that enormous rise at once?
Mr. PEEK. I understand that the bill as it passed the House does not contemplate the immediate tax in the full amount, that it specifically provides to arrive at the price gradually, but I think that the condition which you recite is due to the depleted buying power of the farms, extending over a period of 12 years rather than to any other single condition, and I think until you get the farmer back into the market so he can buy something that this jam is not going to be broken at all.
The CHAIRM IN. That is exactly my idea, and what I am trying to get at is, so far as my commodity is concerned, to get rid of this surplus, and I think the Government would have been well sustained in common sense and statesmanship if it had when these enormous surpluses had piled up, far below the cost of production, possessed itself of these surpluses and substituted them for the subsequent production. I think that was indicated, certainly indicated, and until the bargaining power not only of the farmer but of the masses of people, the working people, has been brought back to where they can exercise some degree of purchasing power, we are not going to relieve this situation. But whether we are going to do it by turning over to the Secretary of Agriculture the entire overlordship of every farm in America, every factory in America, every milling process in America—if it is possible for any one man or a combination around him to license and control every processor in America and every farmer in America, if that is our only hope, I am in despair.
Mr. PEEK. Mr. Chairman, I came down here to Washington with this agricultural question on my mind more than 12 years ago. In the agricultural conference called by President Harding in 1922, that conference went on record directing attention to the disparity of prices between agriculture and other commodities and calling upon the President and Congress to take such steps as were necessary to correct that disparity. Twice legislation was vetoed addressing the question. In the last campaign the issue was clearly drawn between the President of the United States and the ex-President of the United States in regard to agriculture, and the people of this country rendered their verdict and, as I understand, he approves this procedure. After the last 12 years, I am in favor of giving him an op
portunity with the broadest kind of powers to work out a program which is aimed at this fundamental question.
Senator NORRIS. Mr. Peek, a while ago you gave us an illustration of a man in South Carolina buying corn for which he had to pay 63 cents a bushel and he said the corn cost 10 cents a bushel and the balance was freight and other charges. Did he tell you where he bought that corn?
Mr. PEEK. He told me in Iowa. I didn't ask him the station.
Senator NORRIS. Then it follows from that that between Iowa and South Carolina to transport this commodity, this farm product, it cost about five times as much as the product itself was worth?
Mr. PEEK. Not as it was worth; as the market price.
Senator NORRIS. I don't doubt it a bit. I wish I could get your attention to the fact that there is one element in the farmer's difficulty that nobody seems to discuss or consider. It is possible in some way to lower that terrible exhorbitant cost of distribution? Why aren't we talking about freight rates and such things as that as one of the elements at least that enters into the farmer's problem?
Mr. PEEK. I think this bill addresses it, Senator, when the price to the farmer is referred to as the price at local markets.
Senator NORRIS. I don't want that to be understood as a criticism of this bill. I simply want to get in the record here that there are some other things
Mr. PEEK. That is true.
Senator NORRIS. That seem to be vital to the farmer that are not involved in this bill or this proposed legislation.
Mr. PEEK. That is very true, and I can give you a specific illustration, not in connection with the farm but in connection with agricultural implements. That is that they can ship from Moline to the Pacific coast by way of Baltimore, Md., and around by boat and save about half of the freight over shipping all rail from the Mississippi River to the Pacific coast.
Senator Norris. Suppose on the illustration that you give-it might not have all been freight, but practically all, I suppose, was freight-amounting to 53 cents a bushel on corn from Iowa to South Carolina, suppose that freight had been only 20 cents instead of 53, then it is fair to presume that between the Iowa farmer who produced the corn and the South Carolina farmer who consumed it that this difference of 33 cents a bushel would have been divided; it might have made it profitable to both of them?
Mr. PEEK. I hope that would be true. As a rule, the farmer pays the freight both ways.
Senator NORRIS. In this case they paid the freight only one way, but they paid it five times.
Senator FRAZIER. The 53 cents wasn't all freight.
Senator SHIPSTEAD. A year ago the traffic manager of the Deering company testified before the Commerce Committee of the Senate that they could ship farm machinery from Moline down the Mississippi and aronind the Panama Canal to the Pacific coast, a distance of 7,000 miles, and save $23 a ton freight, as against 2,000 miles across, Moline to San Francisco?
Mr. PEEK. It is pretty close to 2,000 miles.
Senator SHIPSTEAD. You recognize, then, that the high freight rates cause
Mr. PEEK (interposing). Oh, absolutely. And another thing, in connection with our export markets of wheat, I believe our average cost of wheat from the point of production to ocean shipment is about 25 cents a bushel, while with the principal competing countries it is about 10 cents.
Senator Norris. In those cases, now, you are comparing the freight in the United States with the freight in Canada?
Mr. PEEK. Yes; and Australia.
Senator NORRIS. The Canadian farmer gets a freight rate that is very much below what the American farmer gets ?
Mr. PEEK. Yes.
Senator WHEELER. At points, for instance, right across the line from Montana the Canadian farmer gets an advantage of approximately 10 cents on a bushel of wheat.
Senator BONE. Isn't it a fact that under the rail hauling charge in Canada that wheat is conveyed there about 900 miles for the same amount as in this country for 300 miles?
Mr. PEEK. I am not sure of the figures, Senator, but I am sure Senator Wheeler has the figures.
Senator Bone. There were a number of hearings where that was brought out. Is not it also a fact that in rail hauls half way across the continent that the freight charges are more than the market price of the crop ?
Mr. PEEK. That is not only true in that instance but that is true also in instances within the Missouri and Mississippi Valleys.
Senator SHIPSTEAD. It costs 24 cents a bushel to haul a bushel of grain from Shelby, Mont., to Duluth at the mills, and that when rye was selling out there for 5 cents a bushel.
The CHAIRMAN. How much a bushel, did you say?
Senator McNARY. Mr. Peek, returning to the consideration of the bill, on the 12th of January last the House passed an allotment plan providing elaborate machinery with which to deal with the problem. You are familiar with that?
Mr. PEEK, Yes.
Senator McNary. In this bill the only reference to machinery is subdivision 1, section 8?
Mr. PEEK. On page 6? Senator McNARY. Yes. Mr. PEEK. I think it is. Senator McNARY. You think the plan proposed in the last bill where plenary and unusual power is granted to the Secretary of Agriculture without the specifications of any mechanics will work satisfactorily?
Mr. PEEK. Well, as you know, Senator, I did not agree with that allotment bill as it passed the House last winter. Senator McNARY. Yes; I remember that. The Senate took
the House bill and reported what I think was the same scheme in a