It has seemed to me that that definition ought to be changed so as to let those people out, because the amount of it would be so small that it would cost more to keep the machinery going to collect it than it would be worth. It would also be quite annoying. The individual farmers would have to pay that, who are not making a business of it. Mr. HIRTH. You do not mean, Mr. Chairman, that this bill as it now stands, contemplates asking the farmer who kills his own hogs, or a fat cow, to pay that?

The CHAIRMAN. I have not read this print this morning, but up to this morning it does.

Mr. HIRTH. I am sure you will not find it in this print.

The CHAIRMAN. Well, I suggested to those who drafted the bill that they ought to change the definition.

Mr. HIRTH. Yes; because that amount is so insignificant that it ought not to be included.

Senator GOODING. The farmer ought not to be put to that annoy

ance.

The CHAIRMAN. The machinery to handle it is so expensive that it would not be practical.

Senator RANSDELL. You might ask the local housewife who spins so many pounds of wool or cotton for her own domestic purposes to pay as a processer as to ask the man on the farm to pay for it. That would not be practical at all.

Mr. HIRTH. That is not our intention, and if by any chance that idea is still in the bill it ought to be taken out.

Now, I am sure when the bill comes up for discussion on the floor of the Senate somebody is going to say "How are you going to assess it through these innumerable thousands of little butcher shops scattered all over the country?" I think the answer is that you require the drug store, it does not make any difference where it is located, and you require every moving-picture show in the country to account, under your present tax system, and I think you would have a good many less units to deal with in butcher shops than you would through the drug stores and moving pictures. If you can assess the tax against the drug store and the moving pictures, I think you can assess it against the butcher shops with equal facility.

I hope that you will ask any questions that occur to you as I go along, because I will be glad to try to answer them.

The CHAIRMAN. I will ask you now, this confidential report that we have, unless it is changed in this one which we have this morning, and I do not think it is, because I talked over the telephone last night about it, has a provision in it in regard to corn which is not included in the bill. I wish you would explain to the committee why that is put in the bill and what you propose to do in the way of stabilizing the corn market.

Mr. HIRTH. Well, you could not approach the corn question in the same way as you can approach these other questions, for the reason that in the first place we are not extensive exporters of corn.

The CHAIRMAN. No, but we have one year quite an oversupply of corn and another year we do not have enough, with the result that those who have a large number of hogs are not able to feed them sometimes, and it results in great disaster sometimes. There is a provision in the bill by which it is intended to stabilize corn, by holding over the surplus yield so as to use it during the lean years.

Senator RANSDELL. Is it not a fact that we do export large quantities of meat products? We do not export the corn, but we export it in the shape of meat. Can you handle it through meat products?

The CHAIRMAN. There is this difficulty with that: Sometimes we do not have enough corn, in some years. Living in a corn and hog country, I realize that every year or two we will have a very large crop of corn, and the next year we do not have corn enough to supply the American needs.

Senator SACKETT. That is a question of two different surpluses. The CHAIRMAN. Yes. If we could carry over some of the corn, that would relieve that situation.

Senator RANSDELL. If you apply the same idea to the hogs that you apply to the surplus, and export the meat products, that might solve the situation.

The CHAIRMAN. But it would not equalize the supply of corn. It is a serious thing.

Mr. HIRTH. I think you are both right, but, as Senator Ransdell has said, the thing is very closely interrelated. For instance, this year we have got an enormous corn surplus. We have got it for two reasons. First, because you have got a reduced hog supply, and you have got a reduced hog supply because the farmer was punished so severely, who produced hogs up to about 12 months ago, that they largely went out of the hog business, with the result that you have got a reduced hog supply to such an extent that it has very materially affected the corn price. Then, coming on top of a short hog supply you have had an enormous corn crop. In the meantime, the 1925 crop is one of the poorest from the standpoint of quality that we have produced in a long time, because of excessive moisture in the corn itself. In my opinion, you would have to approach the matter from two standpoints, or your Federal farm board would have to. First, it would have to approach it from the standpoint of a fair price for pork and beef, and I think 8 per cent of the time would thereby indirectly affect your price of corn and so stabilize it that the corn grower would receive a fair return, because the corn grower, as well as the producer of hogs and cattle, needs to be taken into consideration. Then, in a year such as we had in 1925, to which the chairman has just referred, your Federal board could strengthen your price situation tremendously by going into the market and removing one hundred and fifty or two hundred million from the market itself and storing it against future use.

Senator SACKETT. How are you going to get the money to do that? Mr. HIRTH. You would have to use a part of your revolving fund. Then I think you could borrow very heavily against your warehouse receipts, and it ought not take such an enormous amount of money. Senator RANSDELL. You do not mean to store the corn, do you100,000,000 bushels of corn?

Mr. HIRTH. Yes. In other words, remove that much from the market in order to stiffen the price for the time being, and hold it against future needs.

The CHAIRMAN. The principal object in getting the corn, as I understand it, is to hold it for what might be a short crop next year. You can stabilize the price, if you do not have an oversupply of corn, by stabilizing your hog price.

Mr. HIRTH. Just as Senator Smith said yesterday with reference to cotton, sooner or later the world absorbs every pound of cotton

P

that is produced, and sooner or later we absorb every bushel of corn that is produced. It is largely a matter of equalizing and taking the pressure off a depressed market so that the price can become more stabilized and more equal, but the point is you would have to handle the two things together. In other words, you can not handle the corn problem without taking into account your hog and your beef problem.

Senator RANSDELL. This machinery would handle whatever surplus corn there was; either buy it and store it or get rid of it some other way, so that it would not be forced on the market at a low price?

Mr. HIRTH. Yes; just enough to strengthen the market. I do not think, for instance, that it is the province of a board of this kind to go into the general storage business on a land office scale. I think its chief mission is to make your existing tariff effective, whatever the tariff may be, and if the tariff is unfair, if the existing tariff rate does not give the farmers' dollar 100 per cent purchasing power, then the cure is to increase the tariff, but in this present instance there is no question but what if this corn was merchantable and you had your Federal farm board functioning, it could help out the marketing enormously by removing a certain portion of the crop from the market.

Senator RANSDELL. Without interfering with any of the legitimate agencies that are now engaged in dealing in corn?

Mr. HIRTH. You would not interfere in the slightest degree. There is no board of trade member in the United States that has any right to come before Congress and protest this legislation on the theory that it will put him out of business, because any legitimate grain merchant can go ahead and operate just as he has been operating so it does not disturb any of these agencies. If they are legitimate grain merchants, it does not disturb him. It does not disturb any packer. On the contrary, I think that the meat-packing interests of the country would welcome the stabilizing influence that a measure of this sort would create, because it is perfectly true that there are times when they lose millions through these radical price fluctuations, which they can not foresee any more than the farmer can foresee.

Now, with reference to cotton, I do not want to go into that. because the cotton men are here and are much more capable of speaking for themselves than I am, but undoubtedly your chief assistance to cotton would be through advancing finances so that they could market in an orderly way, and so that they could have a definite price influence from one year to the other.

The CHAIRMAN. As I understand it, as far as cotton is concerned, the proposition involved in this bill is that the board would be able to control the world price of cotton. There is not any tariff on it, because the world can not get along without our cotton, and if they had our cotton they could hold it off of the market and sell it at a price that would be remunerative?

Senator RANSDELL. That would be true, but they would have to have a great deal more than $250,000,000, I take it."

Mr HIRTH. But on the other hand, with a commodity as staple and preservable as cotton, you ought to be able to get tremendous advances against it through private channels?

Senator RANSDELL. I believe you could.

Mr. HIRTH. I just want to give it to you as my humble opinion that this bill presents the greatest opportunity the South has ever

had. You produce more than half of the world's cotton, and if England should be able to stabilize the price of rubber, for instance, and Brazil the price of coffee, then why should not the South insist that the world should pay it enough for as great a vital commodity as cotton so that the cotton planter will be paid a reasonable wage for his toil?

Senator RANSDELL. He certainly ought to be placed in that position, and I sincerely hope that this bill will do what you think it will. It will have very enthusiastic support from the southern Representatives and Senators if you can persuade us that it will do that. It will certainly get mine.

Mr. HIRTH. If you will permit me to put it in the form of a question, Why should it not do that when the South produces more than half of the world's cotton? Why can not the South have something to say about the price?

Senator RANSDELL. It seems to me that it most certainly ought to. It is only a question of how to do it. This method is certainly the most feasible and the most plausible one that has ever been presented to me. I like it better than anything I have ever heard of.

Senator HEFLIN. Take last year, for instance. We exported a little over 8,000,000 bales, and the carry over was smaller at the end of the year than for many years previous; and if we had made a crop of only fourteen and a half million bales, or something like that, we would not have had enough cotton to have supplied our own mills and supply the export trade, because we made a million bales more— about 16,000,000 bales, I believe and cotton prices have gone down and we are selling cotton now at $30 a bale less than we got for it

in 1925.

Mr. HIRTH. Senator, just along the same line, it seems to me that is an astounding situation. If I remember correctly, in round figures you produced about 15 per cent more cotton in 1925 than you did in 1924, and yet, with 15 per cent more cotton, that is bringing the southern planter more than $100,000,000 less money than the smaller crop did before.

Senator HEFLIN. That is true.

Mr. HIRTH. We have produced a corn crop of 600,000,000 bushels more in 1925 than we did in 1924, and yet the 600,000,000 bushels excess production, the whole crop is worth $300,000,000 less than the short crop of 1924. It seems to me that that is an astounding situation, and that Congress ought not to say that it can not be solved.

Senator HEFLIN. I agree with you that Congress ought to do something to relieve the situation.

Senator RANSDELL. Is there any reason why we should not apply to our American products at least, to some extent, the same principles which have enabled the British to control this rubber situation? They certainly have controlled it and made us pay what we think a very outrageous price for rubber. We do not want anybody to pay an outrageous price for our products, but if the same plans or purposes which they have applied could be applied here, it would help us wonderfully, I imagine.

Mr. HIRTH. We are proposing to apply them.

Senator RANSDELL. Do you understand that this is substantially the same method which they have used over there?

Mr. HIRTH. In substance; yes, sir. The processes of course are different. Our objective is the same. We are simply adjusting it to the surplus situation, which they are not.

Senator RANSDELL. Mr. Hirth, it would be helpful to me, and I assume to others, if we could get clearly before us just how the British did that thing. I do not know how they did it. I saw something in the papers about it, but it is hard to understand.

Mr. HIRTH. I will see that you do get it.

Senator RANSDELL. I know they are trying to do something which is of intense interest to the South. They are going to produce an additional million and a half bales of cotton every year in the Egyptian Sudan. Only about a thousand miles through Egypt proper. The British are going forward wonderfully right now to increase the world's supply of cotton. That is something the South is tremendously interested in. The whole Nation is interested in.

The CHAIRMAN. They have just completed a very large dam there. Senator HEFLIN. But they can not produce short-staple white cotton as we produce. They produce the longer staple, like our sea island cotton. The loss on the 16,000,000 bale crop at the lower price we are now receiving, $30 a bale, would amount to $480,000,000 to the cotton producers of the South.

Senator RANSDELL. That is, assuming there would be that loss on each bale, but you know we did not suffer that loss in the early part of the season. It is fully that now.

Senator HEFLIN. But I am just figuring that on the crop. It fell down considerably; $15 or $20 or $25 but a loss of $30 a bale on the 16,000,000 bale crop would be $480,000,000 to the cotton growers of the United States.

The CHAIRMAN. There would not be a loss of $30 on each bale? Senator HEFLIN. Yes.

The CHAIRMAN. That is the total price?

Senator HEFLIN. No, no. That is the loss we are now sustaining. We are getting 18 cents a pound for it. We sold the crop of 1924 for 24 cents a pound. We are now selling it at 6 cents a pound less, or $30 a bale.

Senator RANSDELL. But, don't overlook the fact that we did sell a great deal in the early part of the season for 24 cents. I am selling now for under 18, and in the early part of the season I did get around 24, so you can not apply those figures to the entire crop.

Senator HEFLIN. Well, I do not think we sold as many as a million and a half bales for that.

Mr. HIRTH. Well, when you take what I said a moment ago, that your 1925 cotton crop was about 15 per cent greater than the 1924 crop, and yet in the aggregate it is selling for $100,000,000 or more less than the 1924 crop, it seems to me the indictment is so overwhelming in a situation of that sort that it challenges the attention of everybody.

Senator RANSDELL. It does.

Mr. HIRTH. Now, the next point that I want to mention, I am not going to have time to finish.

The CHAIRMAN. Then we can stop right now and begin to-morrow morning. We will adjourn until 10.30 to-morrow morning.

(Whereupon, at 12 o'clock noon, the committee adjourned until to-morrow, Saturday, April 3, 1926, at 10.30 o'clock a. m.)