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hand, you have testified from reports that you consider reliable that we are going to have an increase in acreage this coming year of over 7 percent? Mr. BLALOCK. Yes, sir.
Senator NORRIS. That seems to me to make us face an almost impossible condition?
Mr. BLALOCK. Senator, it does, but what can they do otherwise than plant cotton? They can't raise wheat at the price it is.. . They can't raise hogs.
Senator NORRIS. It seems to me we are reduced to this proposition that we must do something to enable the people to buy cotton who can't buy cotton now.
Mr. BLALOCK. I raise some hogs, I send them to a local packer not very far away, about 80 miles. The last shipment of hogs I got a little over 3 cents a pound for them. A 200-pound hog brings six or eight dollars.
Senator Thomas of Oklahoma. What commodities do you produce. on your land that pay you the cost of production?
Mr. BLALOCK. Not a thing in the world that I can figure out today,
Senator Thomas of Oklahoma. You raise nothing that pays the cost of production?
Mr. BLALOCK. No, sir. I have a small herd of cattle, small herd of sheep. I raise some hogs and a flock of hens and all. I don't get it out of anything.
Senator Thomas of Oklahoma. I am not asking you a personal question, but presuming you were an average farmer, you would have a mortgage on your land?
Mr. BLALOCK. Absolutely.
Senator THOMAS of Oklahoma. You would have a rather high tax to pay?
Mr. BLALOCK. Yes.
Senator Thomas of Oklahoma. Assuming that we could by some legerdemain remove your mortgage, assuming that you had one?
Mr. Blalock. I don't mind admitting, Senator, that I do have one. Part of my land is mortgaged, not all of it, I am thankful to say, but part of it is.
Senator Thomas of Oklahoma. Assuming that we can eliminate that by some sort of legerdemain, you have no mortgage on your land now. Assuming that we can by the same unknown process remove all taxes against your land, you would then have no taxes. to pay and no interest to pay, no mortgage debt to pay. Could you then live on your land under present prices?
Mr. BlaLOCK. Senator, I think I could answer that very clearly by quoting from a short speech I made at a tax meeting in my State not long since, at the capital in Raleigh. I briefly cited just three cases that I knew personally about of where farmers were unable to meet their tax payments. One was that of a neighbor farmer of yours, Senator Smith, in your State. He has a small farm. He told me he lived under conditions when he sold cotton at 5 cents a pound but he was able to live and get along. He said the taxes at that time were $8.50. Today they are more than a hundred dollars. Knowing the little farm, I have no doubt it takes half the cotton he can produce to pay half the taxes. Case No. 2 is that of a young man who was in my office and told me his father owned 175 acres of land. A year ago his father deeded 25 acres and the home place to his mother. He was unable to cultivate the land and get anything out of it and he couldn't rent it and he told the tax authorities to sell the other 150 acres. I had a copy of a letter in my hand of a farmer who had written to a sheriff of a county stating that he owed $230 back taxes on about 500 acres of land. At that time the land was yielding practically no income at all. It was in a special school-tax district. His proposition was if you can get the tax authorities to reduce that tax on that land to $50, he would try to continue to hold it and pay the $50 taxes and pay up the taxes in arrears, otherwise he was ready to deed it to the school. He didn't want it.
Senator Thomas of Oklahoma. I don't believe you caught the import of my question. Some of the witnesses contend that if we would reduce mortgages by scaling them down, that would be an element of relief. Others contend that if we eliminate taxes materially, that will be an element of relief. From the testimony given here that farmers are not getting the cost of production, it occurs to me that if they had no taxes to pay and had no interest to pay that they couldn't live very long on the farm because they couldn't continue to produce at a loss, because they would have to have some money to buy clothing and buy medicine and buy the things that they must eat that they can't raise. So it would be only a question of time, even if there were no taxes and no mortgages, before the farmers would have to leave the farm or suffer, because they couldn't produce enough to live?
Mr. BLALOCK. You are correct, Senator. I might add there that I had a canvass made not long since I did it for a purpose--I asked this question of a large number of farmers: What would you do with a hundred dollars if you had it? We were working on the domesticallotment plan. Invariably those people came back and said, “We would spend it for clothes and shoes for our families", and in many instances they said they would spend more than that if they had it.
The CHAIRMAN. Mr. Blalock, I had you go back to 1925 and 1926. The consumption of American cotton from 1924 to 1925, 1925 to 1926—the cotton year runs from August 1 to August 1—
Mr. BLALOCK. Yes, sir.
The CHAIRMAN (continuing). The consumption of American cotton exceeded production up to 1929. If you will look at the figures, you will find that.
Mr. BLALOCK. Yes; I think you are correct on that.
The CHAIRMAN. The price was fairly remunerative. From 1929 on through these 3 years, in spite of the fact that the crop has not as an average exceeded the previous production per year, the consumption dropped off until where the surplus piled up at the rate of a million and a half to two and then to three million, until as a result of underconsumption we are now faced with a world supply of American cotton of around 12,000,000 bales.
Mr. BLALOCK. As much cotton as we could consume if we didn't consume a bale this year.
The CHAIRMAN. More than 5,000,000 of which are in this country. Therefore, if we produce a normal crop this year and there is no relief given to those who consume our product, if there is no rise in price, no more general distribution of money, why, we are just hopeless and it looks to me as though if there isn't something done toward curtai)ment of production and an increase in the price of that which is produced, we face the possibility of having a stagnation of salable cotton.
It has been my idea that we have got to address ourselves to the reduction of this surplus and for that reason, I introduced the bill that I did for the Government to take what cotton it had and sell it to the farmer in lieu of his this year's production, sell it on credit at the present prices. I believe it would have been a wise thing and a very profitable thing if two years ago when wheat went so disastrously low and cotton was so low if the Government had appropriated money enough to have bought that surplus and offered it to the farmers in lieu of their yearly crop. We would have given him an equity in this Government supply and also would have relieved that surplus and congestion and started him on the way.
Mr. BLALOCK. Senator, I agree with you absolutely. I think if your bill could have become a law, it would have helped us very materially, cut down the carry-over and also had the very effect you suggested of helping us to curtail that acreage, the increase of acreage we are now facing.
Senator POPE. How much cotton has the Government now?
Mr. BLALOCK. I would say in round figures, seed loan, and all, possibly two and a half million bales.
The CHAIRMAN. Now, it must be remembered that the trade must have from two to three million bales carry-over of old cotton.
Mr. BLALOCK. Oh, yes.
The CHAIRMAN. Therefore, if we could get rid of two and a half or three million bales of surplus and have a reduction in production, it would almost relieve the situation so far as the law of supply and demand in cotton is concerned. But back of all that there has got to be some relief in this financial situation. We can't talk about surpluses being the cause for the reason that articles that we have of which there is no surplus are cheap or cheaper than those of which there is a surplus. We have got to address ourselves as a body of farmers and American citizens to seeing that the amount of money in circulation shall be increased to where there will be bargaining power all along the line or all this legislation is merely treating symptoms temporarily with doubtful relief.
Mr. BLALOCK. We had no abnormal carry-over since 1921 in cotton until we began to step up after 1929.
Senator POPE. That was due to lack of consumption?
Mr. BLALOCK. Yes; and heavy overproduction, too. We produced the second largest crop ever produced in the South in 1930.
Senator SHIPSTEAD. The lower the price, the greater the production? As the price goes down, it is necessary for the farmer to produce more and therefore he increases his production? Do you think that is true?
Mr. BLALOCK. I think it is absolutely true. The seed-loan people are now trying to hold down the production of cotton to 30 percent less than last year where they make a loan. One of them told me “Cotton is the only thing the farmer can get anything out of, and if we adhere to that rule, he can't repay his loan." As long as I have known about cotton farmers, they figure they have to make more bales to get the same amount of money. The payment on the mortgages is the same, the payment on taxes is the same, they have to get more money somehow. That is the way they figure it.
Senator FRAZIER. There seems to be a wide difference of opinion among those who have testified as to whether this bill goes far enough to give the farmers the cost of production. We all admit they must have cost of production if they are going to put their business on a paying basis. What is your opinion on that?
Mr. BLALOCK. Senator, I have no criticism, you might say, to offer against any other proposal that has been submitted here. My thought, however, is that these farmers agreed upon this proposition. We were in hopes we could agree on something and get some action. I mean no reflection on any Senator or anybody else but somebody asked me yesterday what would be the success of this bill and I told him it depended on how long Nero fiddled, if we didn't get some action on some bill it would be too late to do anybody any good.
Senator Pops. How do you feel about fixing the price of cotton for domestic consumption?
Mr. BLALOCK. As cotton producers we are just as vitally interested in not seeing a tax too high to cut down consumption. We rather disagree with our cotton-manufacturing friends that they will not be able to pass on an excise or processing tax. The tobacco manufacturers pass it on to the consumer. We heard the head of the Millers' Association say every dollar would be passed on to the consumer, and I am satisfied they can do likewise, but we don't want to see a tax imposed on the manufacturers that would be high enough to curtail consumption. I think under this bill the Secretary of Agriculture is given the authority and the power there to discuss the situation with the cotton manufacturers, discuss the situation with the cotton producers and reach a fair basis for the tax. We don't want to cut down consumption any more than the cotton manufacturers do.
Senator Pope. I had in mind particularly Mr. Clair's plan, pegging the price of domestic cotton at 18 cents.
Mr. Blalock. Mr. Clair has a very fine plan, I think. We were discussing it with him last night. I think there is one thing lacking that always has to be taken into consideration: If you give us too high a price for cotton, we are going to continue to heavily overproduce. There is a possibility, unless there was some way to control acreage, if you had unlimited acreage production and you were to give us 18 cents a pound for our domestic consumption and the world price was 6 cents for cotton. There is one third used in this country and two thirds shipped abroad. That would give us 10 cents a pound. If you had unlimited wide-open authority to produce all the cotton you want, I was telling one of my Texan friends there was no power under heaven to keep them from planting everything in cotton, Consequently instead of cutting down your surplus cotton, you would add to it. I think any kind of measure like that must have some kind of limitation on acreage.
Senator FRAZIER. Would that apply to the cotton growers in your State?
Mr. BlaLOCK. Yes, sir; they would produce more cotton by far than they are even at 10 cents a pound. We grow a great deal of tobacco. Tobacco is our largest cash crop.
Senator SHIPSTEAD. What was the price of your cotton from 1912 to 1914?
Mr. BLALOCK. About 12 cents a pound.
Senator SHIPSTEAD. If you could get 20 cents a pound now with the present high taxes, do you think you could work out?
Mr. BLALOCK. We would start all right, but of course as cotton became more profitable, other things entering into the production of cotton would go up. For instance, we are buying our fertilizer this year on a very cheap basis. If the price of cotton goes up, labor goes up, fertilizer goes up, everything that enters into the cost of production goes up, so eventually your margin of profit would be greatly reduced.
Senator SHIPSTEAD. You testified in behalf of the House bill?
Senator SHIPSTEAD. Are you familiar with Senator Smith's amendment to the House bill?
Mr. BLALOCK. Yes.
Mr. BLALOCK. If we can't get the original House bill, I would like to see Senator Smith's bill enacted right away.
Senator SHIPSTEAD. Would you rather have the House bill as it was? Mr. BLALOCK. I think so. I
say that in this way, that was the bill that the farm organizations-practically all of them--agreed upon, in fact, all that were represented and all that were asked to be represented, they agreed upon that plan, and I believe in standing by your agreements.
Senator SHIPSTEAD. What I am interested in is whether you think the Smith amendment improves the bill. If it improves it, there is no reason why we shouldn't adopt it.
Mr. BLALOCK. As I see it, I would prefer the original bill; I believe it gives more latitude, and I have confidence in the President and the Secretary of Agriculture that they will use those provisions wisely. I think it is in their minds to call in the various groups that will be affected by any of the operations of the bill and have them in as advisers. I don't believe they will go wrong.
The CHAIRMAN. Before Mr. Blalock leaves the chair, as he is one of the witnesses that have appeared for the bill, when he spoke a moment ago about raising the price with decreased production, historically that is not the fact, but it must be taken into consideration that 70 percent of all the cotton used outside of America is American cotton, and if we ever get to the point where we fix the price of American rather than let Liverpool fix it, we will automatically fix the price of the world's cotton.
That is unquestioned, because 70 percent of all the cotton consumed in the world is American cotton, and more than 85 percent of it is what is known as desirable manufacturing quality of cotton. So that I think that if we ever can get to the point that America, that produces more than two thirds of all the world's cotton, can fix the price rather than Liverpool, we will fix the price of American cotton.
Now, to what extent the rise in that price would invite the use of other textiles as a substitute for cotton is a thing that has never yet been proven. You must remember that during the war cotton rose to 45 cents a pound and long staple to a dollar and a quarter a pound, and that continued for a year or two, and then it brought a high price with only one drop from 1918, it was an average of 20 cents a pound. If you take the production of foreign cottons, there was no appreciable increase except in Russia where the increase was some