as Mr. Brown has stated, it was not very popular at the start with any people; it took education to get the public into such a frame of mind that they were back of it. I might say that this movement started on the farm through dissatisfaction on the part of some little livestock shipper out in the country, and it went up to the wonderful proportions that it has now reached and the position it now occupies. But as we grew bigger and became interested in more markets, we needed some kind of supervision, I might say some kind of protection. This packers and stockyards law was passed. It has been in operation now for some time, and I want to say very frankly that, taking everything into consideration, we feel that it has done wonders, and I am here, as president of the Farmers' Union of Iowa, and also representing the farmers' unions of the Middle West, to, in any way that we can, strengthen that law and make it more efficient in administration. That is what we are here for.

He

While we might not agree with every particular thing that is being proposed in these amendments, I want to say to you frankly that there isn't anything in those amendments that we seriously object to; consequently we want to go on record here as asking this committee, after carefully considering the recommendations of Secretary Wallace, to give him what, in your judgment is necessary. has had some experience in it now; he knows, of course, the parts that need strengthening. He knows the parts of the law that need amendment in order that he can do whatever is necessary in administering it. I may be a little out of order here, but I am going to mention this bill because I am only going to be here at this time, the bill known as the Williams bill. I do not know under what circumstances that bill was introduced. I do not know anything about it and do not care. I simply want to say to you gentlemen that if that bill should become law, as it is now written and offered, I feel that it would be the death blow to every cooperative commission organization in the country.

In taking up these amendments in detail, the detail of the work, I am going to ask you to hear our general manager who is eminently qualified to present any phase of it and to answer any questions better than I would be, because I have only been out on the firing line, boosting for this thing. I have not been on the market and have not been doing the real difficult work in this cooperative marketing.

I want to agree with everything that Mr. Brown has said, even to the county agent. If he will live up this to agreement with the Government under this Smith-Lever Act, he can be a very useful citizen and of great use to the farmer.

Mr. VOIGT. I came in late. What has been the attitude of the Agricultural Department in the administration of the packer act, toward the cooperative?

Mr. RENO. I think it has been very fair.

Mr. VOIGT. I understand there has been considerable complaint about the attitude of the department toward the cooperatives in the St. Paul market.

Mr. RENO. I do not know anything about the situation in the St. Paul market. I have not made a study of it. They are here, and seem to be able to take care of their own interests, and I do not care to enter into that at all.

Mr. JOHNSON. I would like to know from these gentlemen whether or not they agree with Secretary Wallace on these amendments. That would be helpful to the committee.

Mr. BROWN. Absolutely, except that we might suggest modifications which we will call to your attention before we get through.

STATEMENT OF MR. CHARLES H. WATTS, OF CHICAGO, ILL.

Mr. WATTS. Mr. Chairman, I am manager of the Farmers' Union Livestock Commission Co. at Chicago and South St. Paul. My boss, and the president of the association, has thrown several bouquets, but I am going to make my statement as brief as possible. I would much rather you boys would ask questions, in the committee or outside, it makes no difference, regarding our position on the market and our position on this packers and stockyards act.

I know nothing about all these bills that are introduced here, but we need supervision of some kind. When I opened the first livestock commission house, cooperative commission house, in Omaha in 1917, I found, before I had been in business there a month, that somebody should supervise not only my business but the whole outfit. We branched out from there to St. Joseph, Mo., and to Sioux City, and then I was loaned to the Kansas City Farm Union and opened a house in Kansas City. Then I was loaned to the Colorado Farmers' Union to open a house in Denver. All of those

houses have been successful.

When the packers and stockyards act was put into effect I was satisfied that it would be a good law and would supervise not only the cooperative commission houses, but all others; would supervise the stockyards and the packers and become of general interest to the livestock producers of the country. That law was not what I would like to have seen, but it was a starter, and while there has been some dissatisfaction about the administration of the law, personally I want to say that I think it has been done remarkably well, considering the authority that the Secretary of Agriculture has had and the little experience that the Secretary and his assistants have had in the real marketing of livestock on the terminal markets. The marketing of livestock on the terminal markets is a different proposition from any other business that is transacted in the United States. It is a business that is done upon honor. There never is a contract made, there never is a dollar paid on anything. All of the transactions are done by yes or no, and at the end of the day when it is figured up it comes out to a penny. It is a different business from any other business. This business has been supervised by the Secretary of Agriculture, with the assistance of men he has been able to hire. Personally, I would much rather have some real, practical livestock man, one who had had experience in the market, connected with the department, but I still say, in view of the authority which the Secretary of Agriculture has had and the force that he has had to throw together in a short time, that they have done a remarkable work.

Now, the only position that I want to take, and my recommendation and the recommendation of the Farmers' Union, is that this act be given a thorough test. As I have told Mr. Wallace and Mr.

Morrill, they have been in a position in the last year and a half to find out what they needed to make this law what was necessary; that I was willing for them to suggest any amendment that they needed, and that the Farmers' Union was willing to get behind those amendments and try it out under the act as amended. The amendments that I have looked over are not all satisfactory to me. There are one or two of them that I would like to have our secretary change, and that I think should be changed. For instance, in one of their amendments and I am not offering this as an amendment in any way, but as a suggestion-it gives the Secretary authority, upon statement of their auditors or representatives to suspend a mission man from doing business without a hearing. I rather think that every man should have a hearing before he is suspended, because that would cripple any business, not only a cooperative business. I do not want this committee to figure that I am here strictly for the cooperative selling agencies, because we do not require anything but just a square deal as against the other fellow. We will take care of getting our business. It would be a hardship on an old line firm, as well as a cooperative, to be suspended, when perhaps they are doing a business of thirty to a hundred cars of stuff a day. I hardly think the Department of Agriculture will object to that. Then, there is another amendment

Mr. DOYLE. Before you leave that, I wish you would give your reasons for your statement that you would be opposed to a suspension without a trial.

Mr. WATTS. Well, my reason for that would be this: An auditor in the department comes out and audits our books, and they are boys that are competent to audit a set of books, but men who are not thoroughly familiar with the transaction of business in the yards. They might pick out a clerical error on the part of some employee or on the part of somebody in the yard force, which would look like a violation of the law, report that to the Agricultural Department, and the man would be suspended the next morning from doing business.

Another reason is that I do not think any man should be convicted without a hearing.

Mr. DOYLE. Wouldn't it be, in effect, the same as closing the doors of a bank? It means that their reputation as a dealer is absolutely ruined for life, just the same as closing the doors of a bank to the public. Isn't that true?

Mr. WATTS. I would consider that any man who violates a law of the United States should have a hearing before he is thrown in jail. Mr. DOYLE. I mean as regards the suspension of business.

Mr. WATTS. Well, it is like putting a commission firm in jail if it is suspended in business.

Mr. DOYLE. What I mean is that putting your commission firm, a cooperative or an old-line firm under suspension, would ruin its reputation practically for life. It would be just like closing the doors of a bank to the public. The same impression would be created.

Mr. WATTS. It certainly would not do any old-line commission firm or any cooperative concern a bit of good to be suspended.

Mr. PURNELL. I do not understand that any of the amendments contemplate a definite and permanent suspension without a hearing. Mr. WATTS. No, but a suspension until they have a hearing.

Mr. PURNELL. For 30 days?

Mr. WATTS. Until they have a hearing. But you realize that any commission firm, old line or cooperative, that is doing a business of from fifty to a hundred cars a day, that would get a telegram tomorrow morning that they were suspended, would be placed in awful shape.

Mr. PURNELL. I am assuming that that is a very drastic step that would be taken only in extreme cases and if the facts warranted or justified their suspension. In that case I should say a man ought to be suspended.

Mr. WATTS. Yes.

Mr. PURNELL. If some act is committed by an agency or dealer which is so contrary to good policy and to the law itself that suspension would be justified, then it ought to be made, pending a hearing. I am assuming that the law will be carried out along safe and sane lines and that nobody will be persecuted.

Mr. VOIGT. Do you know of any case where there has been suspension where it was afterwards determined by the department that the suspension was not warranted?

Mr. WATTS. I do not know of a case, but I do not think the department has had authority to suspend anyone up to this time.

Mr. VOIGT. You claim there is something in a pending bill which gives the department that authority?

Mr. WATTS. Yes; there is an amendment pending.

Mr. PURNELL. That is one of the amendments proposed?

Mr. WATTS. One of the amendments suggested by the Secretary. I will say this, that no matter what the department requires to make this law effective, the Farmers' Union Livestock Commission Co. will try not to be suspended; but my personal opinion is that any selling agency, old line or cooperative, should have a hearing before they are put out of business or suspended.

Mr. PURNELL. This amendment contemplates a hearing before they are put out of business. You are objecting to a temporary suspension without hearing.

Mr. WATTS. Yes.

Mr. PURNELL. I grant you that there is a lot of argument on your side of it. I do not mean to indicate by my question that I do not agree with you. I am just wondering if it would be a bad thing to hang that up in front of men who are liable to violate the spirit of the law even though the department does not enforce it very often.

Mr. WATTS. Of course, I am just making the suggestion, and I am perfectly willing to leave it up to the committee.

The CHAIRMAN. This matter was given consideration when the bill was being drafted, it was thought possible that would be going too far, so the Secretary was not given the right to suspend, the bill was drawn in its present form. I assumed that the Secretary of Agriculture would do just exactly as the Comptroller of the Treasury does when he finds it necessary and suspends a bank without a hearing or trial. The question here is whether the Secretary of Agriculture shall have the same power. I agree with you it is taking some chance. I understand the matter is being threshed out between you and the department and that possibly you may come to some agreement on what shall be done.

Mr. WATTS. That has been suggested by me to the department, but Mr. Morrill looked at it the other way. There is this difference between closing a bank and closing a commission firm

The CHAIRMAN. If you close a bank, that is the end of that bank, and if you close a commission house that is pretty nearly the end of the commission house, isn't it?

Mr. WATTS. If your money is in the vault of the bank when it is closed, that money is not going to rot or depreciate, but if we should be suspended this morning, and we have 50 cars of livestock consigned to us, that has got to be moved.

The CHAIRMAN. I take it arrangements could be made to move the stock, but I trust that you will be able to work something out with the department.

Mr. JOHNSON. What else have you to suggest?

Mr. WATTS. I take it for granted that this committee is as well posted on this proposition as I am, and that when you decide on these amendments that the Agricultural Department has submitted here, that the committee will be just and fair to every selling agency on the market.

Mr. KETCHAM. Mr. Watts, with regard to the operation of the livestock exchange, I am interested to know how you feel with reference to the operation now since the law has been written, with relation to how you felt before there was any law; so far as your association is concerned, are you more comfortable now under the law?

Mr. WATTS. Yes; we are.

Mr. KETCHAM. Following that a bit further, I would appreciate it if you would indicate something concerning your natural growth. While I know it in a general way, for the purposes of the record just in a general way-I do not want you to go into any detailed statement, but if you will just make some general statement I shall be pleased.

Mr. WATTS. Well, I will say that the Farmers' Union Livestock Commission is not as large as some of the other cooperative organizations.

Mr. KETCHAM. I did not refer to that particular company, but I mean the whole cooperative movement generally in the marketing of livestock. What would you say from your own experience about its growth and development?

Mr. WATTS. Well, the cooperative marketing of livestock has been the most successful cooperative organization that has ever been started up to the present time in the United States.

Mr. KETCHAM. Will you give your judgment as to what effect it has had on the stabilization of prices so far as the producer is concerned?

Mr. WATTS. I think it has been very slight up to this time.

Mr. KETCHAM. To what do you attribute that? Do you attribute it to the relatively small amount of business that you do?

Mr. WATTS. Well, the cooperative marketing of livestock has only been in existence since 1917. Of course, the first year and a half that we were in business we were severely handicapped. We have not, up to the present time, had the privilege of doing business on all of the markets in an open and free manner.

Mr. KETCHAM. But when that time is reached and you come to a commanding position in the market, if you do, what is your judgment