market, if there was a surplus there would not be any trouble about limiting production with such an organization, would there?

Mr. DAVIS. It is a practical method to get at acreage through the organization of the producers themselves.

Senator GOODING. I rather think your statement of three years' surplus of cotton is rather an unfortunate statement, because, with an organization such as you are trying to perfect, that would not exist at all.

Mr. DAVIS. I stated, Senator, that that was an extreme illustration of what they might be called upon to do.

Senator GOODING. You will find those things are often talked up by the enemies of legislation, and used to advantage sometimes.

Senator KEYES. Senator McNary brought up the question of the tariff on cotton, and I thought it was stated here that there was no tariff on cotton. My recollection is that there was a tariff on long staple or Egyptian cotton.

Mr. DAVIS. That was cut out. That is my understanding.

Senator SMITH. Senator Keyes called my attention to the fact' that there might have been, and I believe there did exist at one time, a tariff on long staple or Egyptian cotton.

Senator GOODING. The Senator does not agree with me, but I am going to talk to these cotton people when they come on. You can not tell me that what they did with wool they will not do with cotton. They neglect American wool when they can get foreign wool, until they can beat the price down. There is only one staple of cotton. Nobody needs to tell me that they will not use the foreign cotton when they can, at the right time, to beat down the price of the domestic cotton. However, that is up to the cotton growers. If they do not want a tariff, we will not try to force it on them, but I am sure that their best interests require a tariff, and that it would work very well with them.

Mr. DAVIS. In carrying out the principles that have been discussed, the measure which is before the House, and which we hope to have an opportunity to present before this committee, creates a Federal farm board, so constituted as to be chosen by and representative of agriculture, with the representatives geographically distributed over the country, one from each Federal land bank district.

Mr. Chairman, I have here charts showing the mechanical set-up, which I would like to distribute, if I may.

(The chart is here reproduced in full facing this page.)

Mr. DAVIS. This chart was prepared by Mr. Frank Evans, secretary of the American Farm Bureau Federation, to show the set-up of the organization proposed under the House bill, and summarizes the powers and duties of this Federal board. It should be recognized that the board does not buy or sell, either directly or through agencies for its own account, but it does administer the equalization fund so as to enable associations and corporations created by the commodity groups themselves to control the surplus, and the costs and losses incident to controlling the surplus will be absorbed out of these equalization funds created for each of the basic industries. The price bargaining, therefore, would be done by the organizations of the producers themselves, backed by the power of this board, but would not be done by the board itself. It is provided that operations shall be through associations or corporations created by the producers,

except that in the House measure there is a period of two years during which surplus handling transactions may be carried on through other agencies under agreements with the board. That is to allow the producers an opportunity to organize in commodities that are not already organized. Where there is an effective cooperative association competent to handle it, the operations in control of surplus would be authorized only with those cooperatives.

The reason why this commodity list which it is proposed to handle under this measure is limited to wheat, cotton, cattle, and hogs is that these are the four principal cash commodities of the American farmer. Their stablization would do more to stabilize the industry than the stabilization of any other group of commodities, and it is recognized that as broad an operation as this can be started practically on only a limited number of commodities to begin with.

Senator GOODING. That is, you have corn, wheat, cotton, and livestock?

Mr. DAVIS. Corn is not included. I will explain the reason for that, if you wish, in our recommendation.

Senator MCNARY. Hogs, and not corn.

Senator GOODING. You need not take it up out of order at this time unless you care to present it now.

Mr. DAVIS. I think that comes in at this point, because I am explaining why the list is limited to these four to begin with.

Senator GOODING. We have heard so much about corn that that will be interesting. Let us have it.

Mr. DAVIS. The chief difficulty with the present corn situation is the fact that our hog population in the United States is 12,000,000 or 13,000,000 head less than it was a couple of years ago, and the American hog is the chief consumer of American-grown corn, and the first step toward the stabilization of corn is to bring about a normal livestock population, and then to attempt to maintain that livestock population at a fairly steady level, and when you have done that you have put a check on the disastrous interaction between corn and hogs that has been at the root of the Corn Belt difficulty. Even if you put corn in here, the first thing you would have to do would be to bring the livestock population up to normal, and then hold it there, and that can be done through the operation with livestock.

Senator GOODING. You are going to create a market for corn through your livestock.

Mr. DAVIS. Yes, sir. It is well known that only a relatively small portion of corn moves in commercial channels. It is primarily a feed crop. The Department of Agriculture issued a bulletin on the 19th of March, I think it was, or this current month, in which it made the statement that the percentage of American corn which moves commercially and is exported, taking the two combined, seldom reaches 10 per cent of the production.

Senator MCNARY. It used to be 15, two years ago.

Mr. DAVIS. I was quoting from this bulletin. I have the complete statement here.

Senator MCNARY. Two or three years ago we always figured on 15 per cent.

Mr. DAVIS. Fifteen per cent is the amount they usually figure that moves out of the county in which it was grown. A good deal of that is sold to other feeders, but, as I was saying, the amount that is

used industrially and commercially, which gets into the primary market and is exported, seldom reaches 10 per cent of the crop produced. That was in the statement of the Department of Agriculture last week.

It is felt that the first thing to be done in the corn situation is to get at the livestock problem. It should be borne in mind, too, that under this bill the board is instructed to study the problems of surplus or excess supply in other commodities, in addition to those four basic commodities, and to recommend to Congress its findings and recommendations through the proper channels whenever it has worked out a practicable plan dealing with other commodities.

Senator MCNARY. You have a provision here for the relief of the

corn emergency.

Mr. DAVIS. That is a part of the House bill.

Senator MCNARY. That is a part of the proposed legislation.

Mr. DAVIS. The reason that is carried there is that after you have stabilized your livestock population, then if you are going to guard against a condition that forces a reduction of herds, you have to insure a corn carry-over from years of high production against the exigencies of the short crop. Nineteen hundred and twenty-five was a year of high production in relation to livestock. Therefore, if the board were in operation to-day, under that emergency section it would go out and select corn and buy corn to start this carry-over program. What happened to us in 1924 was that we had a short corn crop and a large livestock population, and we did not have a sufficient carryover to fill in the valley there of corn supply. The result was that corn rose in price and people got rid of their hogs, which put the hog price down, and we reduced our hog population materially. So, to stabilize Corn Belt agriculture, if you stabilize pork prices and livestock population, and then insure a corn carry-over, you will go a long way toward doing it, in the judgment of men who have given a great deal of study to that problem.

On the other hand, it is recognized that this board should be studying other surplus problems, and the men who are presenting this, as a result of earnest study on their part, recognize that subsequent amendments will be desirable and necessary.

It has been called to our attention that the Federal reserve act, passed in 1913, has been amended by 16 separate acts of Congress affecting a total of 39 sections, so that the total space occupied by amendments to the Federal reserve act is now almost as large as the space occupied by the original act itself, and it is not supposed for a moment that this bill will not have to be changed if enacted to include other commodities as fast as the opportunity might work out to recommend a practicable method to do it.

It is provided in the measure that the operations of the board shall commence with any one of these four commodities when two conditions are found to obtain: First, that there is or may be an excess supply over current requirements; and second, that a substantial number of the organizations of the producers are in favor of such operation. In that event it is provided that the board shall determine upon and announce its period of operation and determine upon the amount of the equalization charge necessary to build up and maintain the equalization fund for that commodity, prescribed the rules and regulations for the collection of that equalization charge,