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Senator BANKHEAD. It is my thought and I wanted to bring it out while Senator Norris was on that question that hogs are included in here, and that is what we were discussing, in order to help the corn grower because you get the benefit of the corn through the meat?
Mr. PEEK. That is true.
Senator BANKHEAD. You put the meat in here so as to reflect it back to the corn grower?
Mr. PEEK. That is right.
Senator KENDRICK. Mr. Peek, you know something of the plan or system of marketing livestock, do you not?
Mr. PEEK. In general; yes.
Senator KENDRICK. Have you ever been in our central livestock markets, for instance in Chicago, when there would be 35,000 cattle, 65,000 sheep, and as many hogs in the yard in one day? You have seen that, have you not?
Mr. PEEK. Yes.
Senator KENDRICK. Are you not compelled to believe from such observation that because of the perishable character of the commodity the marketing of livestock and livestock products involves more of a risk than is the case with ordinary commodities?
Mr. PEEK. Yes; I think so, Senator; but I think that conditions can be greatly improved under the cooperation of the Government, producers, and processors. I think if it is possible to work through associations of producers and get the word back to the farmers of what a normal flow is, and get some diversion from one market that is glutted into another market that is not glutted, a great good can be accomplished.
Senator KENDRICK. That may be true, but those of us having a good deal of experience in the business know that we have been at least half a century endeavoring to regulate the receipts in the markets so that they would be more or less uniform. Now, there are times when, because of the conditions under which livestock is marketed, it is next to impossible to dispose of everything in the yards on the day of arrival. Also, you know that in the movement of grain and other nonperishable commodities there is not much danger in delay except the cost of storage, but in the case of livestock there must be no delay; the shrinkage in the livestock, the cost of carrying, will, within a short time, eliminate any equity that the shipper has in the commodity. There cannot be delay, you must keep them going; we have all seen those markets glutted so that there is no outlet, and now I am concerned as to what will happen if there is any obstruction or any obstacle that is interposed to prevent a movement as free as we have at the present time. I ask you, in the face of the proposal here to increase the price to people who have already very limited buying power, are you not afraid that there would be such congestion result in the market as would compel many of these shippers to lose their commodities instead of selling them?
Mr. PEEK. No, Senator, I am not impressed by that. I think that under the law as drafted, in the case of hogs for example, it would be possible to reflect back to the producer's information, and perhaps regulation, if necessary, as to the particular types and weights that the market is active upon, so as to avoid a glut of heavy hogs, if you please, when light hogs are desired. A great many things in that connection can be improved. I do not say they can be remedied, but they can be improved. I have discussed this subject with organizations of producers, with the Secretary of Agriculture, and with some of the processors, and I think I may say that what the processors fear is that something is going to be attempted without rhyme or reason. I have no such fear.
The CHAIRMAN. I have confidence in the Secretary of Agriculture and I believe as far as it is possible he is going to administer this law cooperatively. We have had experience with unpopular laws. Unpopular laws do not work, and it must be made a popular law and must be a cooperation of producers, processors, and consumers if it is to be really effective and helpful.
Senator KENDRICK. You agree that there is limited purchasing power at this time? No one denies that. No one who has given any study to the situation in the country but will agree that at least half of our problem lies in underconsumption as well as overproduction. The great majority of the people must buy very carefully. It is planned to increase the price gradually under this suggestion. It matters not whether the entire list of meat food products, cattle, hogs, sheep, and everything, is included so there will be no discrimination, but if you bring that situation in, what is certainly going to happen is what has happened in the past, that where meats have been too high the people do not consume them. That has been of record time and time again. At least in the beginning there is grave danger that in the administration of this law there will be gluts and congestion that will prevent any possibility of evading disaster.
You speak of the regulation of the flow or the movement to the market. At the present time they know 1,500 or 2,000 miles from the market just what the market has today and what the prospect is of car loadings, and yet we have these congestions in the market, just the same. Under the present situation the packers will buy, presumably, at the lowest point they can and yet when they have purchased all they can reasonably and profitably handle in a day, it is apparently their purpose to clean up the yards that day whether they want all the livestock or not, in order that the movement to market may be continuous. So that this situation, as I see it, is almost certainly destined to bring derangement and demoralization where we now have what might be called an assured cash market for everything that goes to the yard. I have said frequently that the best part of our livestock market today is that we can recover some cash for our commodities when we take them into the markets. If this legislation would upset that feature, it would be unfortunate.
There is another feature on which I would like to have your opinion, Meat food products cannot be delayed in their movement from the slaughterhouse to the consumer. As you know, we had our experience with embalmed beef in the Spanish-American War, when for a time people almost stopped using meat products. That nearly killed the cattle business at least, as I have occasion to know, and I apprehend that we may have some repetition of that if anything in this plan is calculated to obstruct, to interfere with, or even to delay the movement of meat products from the producer to the consumer.
Mr. PEEK. Senator, I am more fearful about the result if we do not do something constructive than I am if we do. I think that when you have a situation similar to that to which I referred a while ago, such as exists in wide areas in the United States, where the most conservative of our people are rebelling against due process of law, that we can not ignore that, if you please, to fit into the convenience or normal customs of what has been in the past. I do not concede that this bill need work any hardship upon the processor, but I do concede that it will help the farmer.
Senator KENDRICK. Do you not think it possible that it might delay this movement?
Mr. PEEK. I think that depends entirely upon the administration. I think that farmers are not going to, and they should not, continue to feed the people of this Nation and to supply this cheap food at less than it costs them to produce it, and under a system of distribution which spells ruin to them through no fault of their own.
Senator KENDRICK. Well, Mr. Peek, you will agree that ever though we are producers, there is hardly any man on a farm or a ranch who is not sufficiently intelligent to know when he is making money and when he is losing. Assuming that we do know that we are losing money, there are two things in connection with your statement that impress me very much. As you may know, I have a wide acquaintance among the cattlemen and sheepmen west of the Missouri River.
Mr. PEEK (interposing). Yes, Senator.
Senator KENDRICK (continuing). I do not know any of them in my long list of acquaintances who want this legislation applied to their
commodities. That is one thing. The next thing is that we recognize the fact, and I think we are right in it, that we have no monopoly on low prices. We are suffering and taking our medicine, as it were, along with every other class of people, and I know quite a number of livestock growers who even now are rather pleased that we have enough cheap food for people at this critical time, instead of having high prices for it. I think it is a better thing to have a surplus than a deficit, even though some of our people are not recovering the price of production.
Mr. PEEK. Senator, you refer to the prices of agricultural commodities as compared with others.
Senator KENDRICK. As compared to others? If I may correct that impression, Mr. Peek, I think it is true that you can hardly refer to a single industry in the country that is not today going through a period of travail and grief and suffering. It is almost universal.
Mr. PEEK. I agree with that, Senator, but certainly we would not lay that on the doorstep of the farmer.
Senator KENDRICK. I am a farmer, and I estimate that my time will come again. I have had good prices, as all of these people producing hogs and mutton and livestock have had in the past.
Mr. PEEK. Senator, I have sat in meetings with the father of the present Secretary of Agriculture, in 1922, with processors, bankers, and others, when exactly that theory was advanced. I sat in meetings with them the other day and heard the same argument advanced again. There has not been one single year since 1921, when the products of the farm, and particularly the grain and livestock, have had a purchasing power equal to that which they had before the war. Not one single year. Now, it is like the “ kitty” in the poker game. The farmer is being short-changed all the time, and the small percentage that is coming off, the small amount for which he does not get a one-hundred-cent dollar in the aggregate results in the condition which finally absorbs everything.
Senator KENDRICK. I am not protesting against the increase in price, but I am one who has given this question quite a little study. I may say, incidentally, I heard our chairman make a statement on the floor of the Senate during war times, that if you wanted to increase production you must make production profitable, and I have thought of that statement many times. Mr. Peek, I have observed, that when you make production unprofitable, so far as our livestock production is concerned, you do not need to put any particular governmental restrictions on production; the products will handle that themselves, and it will be reflected in a very short time in all the different kinds of livestock.
Mr. PEEK. Senator, I am sorry to disagree with you again but I disagree with you fundamentally in that. I say that a very low price compels the farmer to raise more units at the low price in order to meet his fixed cost, than does a reasonable price. Senator MURPHY. May I suggest, Mr. Chairman, may
I gest in that connection that we are feeding our corn now to hogs that are at the lowest price in the history of the country. We are feeding them now all that corn, the third biggest crop we have had in the State, and notwithstanding the low price, we are feeding just as many hogs because we have nothing else to do with the corn.
Senator KENDRICK. I assume, Senator Murphy, that in all probability you are feeding these hogs that you have on hand because that is the best avenue through which to market the corn?
Senator MURPHY. Precisely.
Senator KENDRICK. My statement is based on observation. Four or five years ago every ewe lamb in the flocks of the West was kept and bred at the proper age and, as a result, the number of sheep in this country increased by leaps and bounds. Since the market collapsed, the system of marketing not only the ewe lambs but many of the matured ewes, has continued unabated. I insist this will apply to cattle as well as other commodities as it does cost something to increase production and breeding, and it is my thought that the absence of profits will not only automatically prevent any increase in production, but actually decrease production.
Mr. PEEK. Well, Senator, we have been following the policy ever since the war that we followed before the war, when we were a debtor nation instead of a creditor nation, agriculture and other industries before the war were encouraged to produce without limit, in order to meet our trade balances on the other side. At the end of the war we woke up as a creditor nation. We passed emergency legislation in the interest of other industries, but we left agriculture to go at once to the level of world prices, and the natural forces that have been at work, as you suggest, with different farm commodities, and if anyone wants to say that they are in favor of withdrawing all artifices which stand in the interest of other groups, then I say they are entirely reasonable in their position and that
will correct the disparity. When the farmer both buys and sells in the world market, the disparity will be corrected, in my judgment, but I think there will not be an institution standing in this country if we were to adopt such a policy, because it would mean more than cutting in two the present level of industrial prices.
So there are just two things left. One is to bring other things down or bring agriculture up; and for the first time since the war, since Secretary Wallace died in 1924, we have an administration which is inclined and determined, so far as I can learn, to bring agriculture up, and I think that we should all support it.
Senator KENDRICK. I am not opposed to that. Mr. Chairman, I do not want to testify for the witness; but I would like here to reflect the attitude of the livestock growers of this country. We are perfectly willing to see the commodity prices of every farm product increased, but we do not believe in this system of turning our individual business over to a departmental head here in Washington. No one will deny his good intentions, and no one will deny probably, if left to him individually, his ability to improve on the management of our business, but we are a little bit anxious about the agents he would send out. [Laughter.] Mr. PEEK. Senator, you are speaking of the livestock growers ? Senator KENDRICK. Yes. If I know how, I am; yes.
Mr. PEEK. Well, of course, again I must disagree with all of your conclusions, because I think that when the farm organizations of the country are represented through their recognized leadership, and are substantially unanimous in their conclusion along a certain direction, that they reflect the view of the great quantity of farmers, many of whom, I have no doubt, are less able to present their own case than you.
Senator SHIPSTEAD. Mr. Peek, before we leave the hog question, I would like to ask you a question.
The purpose of this bill is to raise the prices on the basic articles included in this bill?
Mr. PEEK. Yes.
Senator SHIPSTEAD. I asked Mr. Peek if it was not a fact that this bill was intended to raise the domestic price on the basic articles included in this bill. Now, if we are limited to cotton and wheat, it is assumed that the bill will be effective and wouldn't raise the domestic price on those two articles. There are many States that produce little or no cotton and little or no wheat but do produce a great many hogs.
Mr. Peek. Yes.
Senator SHIPSTEAD. And unless hogs are included in the bill, is there any likelihood that they would share in this restoration of parity price?
Senator BONE. Or corn?
Senator SHIPSTEAD. The only way you can process corn is through the processing of hogs.
Mr. PEEK. All of these farm commodities in the form of food are competitive one with the other. If we drink a glass of orange juice at lunch, we do not eat meat or we do not eat wheat. That is an extreme example, but all are competitive one with another. But the