section 306 had, would be permitted to grant patronage dividends to their members from the earnings derived from the conduct of the commission business. But that has not been carried out.

At the present time the cooperative agencies in St. Paul and Fort Worth, and at St. Louis, we have found, are composed of men who have been expelled from the exchanges, that are engaged in business at a cut rate, and that those tariffs up to the present time have not been accepted by the Secretary of Agriculture.

Our only request in this connection is that the language be made plain, that the intention the committee had when it passed the act be made plain, by saying that where more than one market agency has registered and is transacting business at a stockyard under the supervision of the Secretary, all rates and charges for like and similar services rendered at such stockyards by all market agencies so engaged thereon shall be identical. In view of the attitude assumed by the Department of Agriculture, and as expressed in their annual report, which prohibits a cooperative association from making patronage dividends to others than members, that may be met. Speaking for the national exchange, I am not prepared to insist that this is our view, or rather that the portion extending from line 18 to the end of the section ought to be adopted as it reads, but we do feel that the advantage that the cooperative concern now has in being able to render the character of service which it cares to render, either efficient or inefficient, should not be added to, that they should not have an additional advantage of being able to cut rates at will, any more than a railroad company should be permitted, for similar reasons, to cut rates at will. We feel that service ought to be the standard of competition within the stockyards; that there is no reason in the world for permitting a man to start in business at a low rate, which invariably means inferior service, until he has built up a business, and, if you please, to sustain a loss, as has been the case where it has happened, in the case of the People's Cooperative of St. Paul, where they were making a flat patronage dividend of $3 a car.

Of course they did not call it a dividend, but what it amounts to is giving a $3 rebate. They admitted they had not made any money in nine months-eight months of operation; that they had lost money, but they were still running at the reduced rates.

The Central Cooperative in St. Paul has made a couple of changes in rate and to-day they are charging a less rate, for the sole purpose of changing an organization which is intended to sell livestock for its members into a commercial organization to sell livestock as a commercial institution. They have already been given by the law a distinct commercial advantage.

Mr. RUBEY. When you say cut rate, what do you mean by rate? Do you mean the commission man's charge?

Mr. BOYD. I mean the charge they make for selling livestock.
Mr. RUBEY. That is the only rate you refer to.

Mr. BOYD. That is the only rate I have in mind.

Mr. RUBEY. You do not have reference to charges for feeding or things of that kind?

Mr. BOYD. No, sir; as a matter of fact the stockyards company has but one rate, because it furnishes all the services of that character in the stockyard at a particular rate.

Now, the recommendation with respect to section 301, found on page 1 of the bill 5944, we feel represents the view of Congress at the time they included, in executive session, the parenthetical portion of section_306 (f). There never was a public hearing held on that matter. It came out in the record, never having been considered by the committee, and no witnesses having been heard, so far as I am informed. We feel it is just and proper to make a recommendation with respect to passing upon the right of the cooperative association to sell for a nonmember. If this committee wants to permit the cooperative associations to sell for nonmembers, of course, we will abide by that decision.

Now, there is one question in connection with the matter of dockage that seems not to have been brought out. An analogous situation, to my mind, would be the Pennsylvania tube of the Pennsylvania Railroad. The commission man owes no obligation to any other commission man; he has no contractual relationship with him; whatever duty he owes is to his shipper, his client, and he owes none to anyone else as long as he does not overstep the bounds to the extent of committing a public wrong. Now, if the Pennsylvania Railroad wants to exclude the Baltimore & Ohio Railroad from its tube, it has the right to do it. We perform a service as a public agent, and we feel if any other agency comes and demands the service of us that we do not have to give it to them unless we want to.

With regard to section 305, the recommendation made is intended to lay down some basis on which a reasonable commission rate may be arrived at. In line 7, page 3, after the words "market agency, that the words "market agency' "should be limited to mean a livestock commission firm that buys and sells on a commission basis, and not a stockyard company. Section 2 of the definitions gives the market agency as a stockyard, and that should not be; and when the statement is made that the Secretary be authorized to dispose of complaints by arbitration, we feel that that is a good suggestion. When our rates were under discussion, when complaints were brought about them, we said to the Secretary that we had no argument to make; that we were willing to leave it to his good judgment as to whether or not our rates were high. We left it to arbitration and have abided by that decision. The St. Paul Cooperative Association has not done so. They have not approved that award; they have not put the rates into effect but have stood out and insisted that they would not adopt them.

With reference to the St. Paul situation, Mr. Rumble has interrogated Mr. Brown about the conduct of the business of the St. Paul Central Cooperative Commission Association.

Now, I devoted considerable time in St. Paul looking into the situation. The Government brought a complaint charging irregular practices against that concern. It was brought on 13 counts of specific irregularities. The trial of the case was necessarily limited to evidence pertaining to the issues in that complaint. However, it developed in that case that not only were they committing the irregularities set out in the complaint but, in my judgement, when the question is brought to light it will be a staggering proposition.

As an illustration of what I mean, they sell pigs at St. Paul and they sell them to one man without competition, and they have done so for a long time. A man by the name of Heintz, of the Westport

Shipping Association of Westport, Minn., testified on the stand that pigs that he had seen sell for 8 cents a pound at the St. Paul stockyards he was paid by the Central Cooperative 5 cents a pound, and that men at St. Paul engaged in the business of buying pigs on that day offered $8.10 for those specific pigs that were sold for a nickel a pound. That is simply a characteristic situation, I think.

Mr. VOIGT. Has that case been decided by the department? Mr. BOYD. It is under advisement at the present time. So far as patronage dividends are concerned, it will be found on page 6 of the Annual Report of the Packers and Stockyards Administration, dated September 10, 1923. The department is attempting in every way possible to cause the cooperative concerns to conform to the regulations that they have set out. So far as weighing at St. Paul is concerned, there has not been to my knowledge a single complaint of improper conduct or improper weighing that had any merit, or where the complaints have reached any proportions whatever.

I would like to say in the case of H. R. 6424, the department bill, that the packers and stockyards administration, under the direction of the Secretary, will make a statement in regard to it, and it is barely possible that we will be in full accord with what that statement may offer. We have expressed our views to the Secretary in accordance with the suggestion of the chairman. The Secretary will be here to-morrow, and if there is any objectionable matter in the amendment we should like to have an opportunity to so state.

Mr. DOYLE. Mr. Chairman, there are some people who want to be heard to-morrow. Is it possible for the committee to meet at 9 o'clock and give an extra hour to those people?

The CHAIRMAN. How much time will you require to-morrow, Mr. Veeder?

Mr. VEEDER. I do not think it will take us more than an hour. If we can go on at 9 we will be through.

Mr. RUMBLE. I think we will be through in an hour, and we desire an hour.

The CHAIRMAN. Is there anyone else? I understand Mr. Veeder would like an hour and you want an hour?

Mr. DOYLE. Secretary Wallace will be here,

Mr. VEEDER. Couldn't we go on at 9 o'clock and get out of the way?

The CHAIRMAN. If there is no objection on the part of the committee we will meet at 9 o'clock.

Mr. DOYLE. You will instruct the clerk to notify the members, Mr. Chairman?

The CHAIRMAN. Yes; that is always done.

The committee will stand adjourned at this time until 9 o'clock to-morrow morning.

(Whereupon, at 12.10 p. m., the committee adjourned until tomorrow, Saturday, March 8, 1924, at 9 o'clock a. m.)

COMMITTEE ON AGRICULTURE,
HOUSE OF REPRESENTATIVES,
Saturday, March 8, 1924.

The committee met pursuant to adjournment of yesterday at 10 o'clock a. m., Hon. Gilbert N. Haugen (chairman) presiding.

Present: Representatives Haugen (chairman), Purnell, Williams, Sinclair, Thompson, Clague, Clarke, Ketcham, Aswell, Jones, Swank, Rubey, Johnson, Doyle, and McSweeney.

The CHAIRMAN. The committee will kindly come to order. Are you ready to proceed, Mr. Veeder?

Mr. VEEDER. I would like the committee to hear Mr. Eaton first.

STATEMENT OF MR. F. L. EATON, OF SIOUX CITY, IOWA

Mr. EATON. Mr. Chairman and gentlemen of the committee, I am president and general manager of the Sioux City Stockyards, of Sioux City, Iowa. I will try to be as brief as I can upon one or two bills that we are interested in. I want first to say that so far as the bills which are before this committee are concerned, we are not interested in anything except those parts of the bills which pertain to stockyards. The rest of the bills we do not care to say anything about.

I want to call your attention first to H. R. 6424, which is a bill which seeks to regulate or to give the Secretary power to do certain things beyond what the act itself originally conferred upon him.

The act itself is a little ambiguous to us as to the definition of stockyards and marketing agencies. Section 301 of the act reads: The term "stockyard owner" means any person engaged in the business of conducting or operating a stockyard.

Then section (b) says:

The term "stockyard services" means services or service furnished at a stockyard in connection with receiving, buying, or selling on a commission basis or otherwise, marketing, feeding, watering, holding, delivery, shipment, handling, or weighing, or handling in commerce, of livestock.

In many of the stockyards part of those services are performed by the stockyards company and some of them are not performed by the stockyards company.

Then paragraph (c) reads:

The term "market agency" means every person engaged in the business of (1) buying or selling in commerce livestock at a stockyards on a commission basis, or (2) furnishing stockyard services, etc.

Now, Mr. Chairman and gentlemen, the trouble with us is that we feel that some of our agencies come under the item of stockyard owners and also under the item of marketing agencies, and we do not know just where we are.

In a conversation yesterday with Mr. Morrill, of the packers and stockyards administration, he told us that, so far as the administration is concerned, they distinguish between the two, and a stockyards owner is not a marketing agency in accordance with their rules and regulations. Therefore, in order to clear up that matter we would like to propose that amendment be made to this bill 6424 as follows: That H. R. 6424 be, and hereby is, amended by inserting between lines 2 and 3, on page 1, the following:

That the packers and stockyards act of 1921 be, and it is hereby, amended in Title III by inserting before the word "and" at the end of subdivision (c) of

section 301 the following new matter: "Provided, That such person is not a stockyard owner as defined in subdivision (a) of this section."

Mr. CLARKE. Does that agree with Mr. Morrill of the department? Mr. EATON. This amendment was not suggested to him. It was written by us after our talk with him; but my understanding is that the department so construes the act.

The CHAIRMAN. Would that prevent the stockyard owner from performing those stockyard services, the watering and other things? Mr. EATON. I do not so understand it. I understand whatever stockyard services the stockyard owner does he does as a stockyard

owner.

The CHAIRMAN. Well, if the stockyard owner is engaged in the two activities, being an owner and also furnishing the service, he comes under the act. I am asking if this would except him from the provisions as a commission man from furnishing the services of the yard. The owner is one thing and service is a different thing. The bill was drawn with a view of reaching all of them, and if a stockyard owner furnishes these services he should be liable just as the commission men or others.

Mr. EATON. We think he would be, because the term "stockyard owner" means any person engaged in the business of conducting or operating a stockyard, and if the business of conducting or operating the stockyard, the stockyards owner does a portion of those things that are covered in there, and whatever they do they do as operators of stockyards, and I do not think it relieves us at all.

The CHAIRMAN. The feeding and watering would come in under the operation of the stockyards?

Mr. EATON. Yes, sir.

Mr. JOHNSON. But you do not sell stock?

Mr. EATON. No; we do not sell stock.

Mr. JOHNSON. This is to drive out the fellow that sells and goes broke; isn't that it?

Mr. EATON. What we want to do is to have a definition so that we know whether the bill applies to us or not. If this amendment should be adopted, bill 6424 would not apply to stockyard owners, except in certain sections where stockyard owners are particularly mentioned, and therefore we would have nothing further to say about the bill and would not be interested in it except as to that.

Mr. DOYLE. You do not care to be put under the two classifications, both as owner and as an agency?

Mr. EATON. That is the point. We want to know where we are. Mr. CLARKE. You have not suggested that amendment to the department, have you?

Mr. EATON. Only to one gentleman whom I saw here this mornng. He was not authorized to speak for the department, but said that personally he saw no objection to it. I don't want you to understand that the department has approved this, because they have not seen it.

Mr. CLARKE. It is too bad you have not submitted it to them.

Mr. VEEDER. If I may interrupt here, to explain, the department stated yesterday, as I understood it, that it was the intention to define a stockyards company operating stockyards for livestock, and weighing livestock, as a stockyards owner. As far as the stock

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