AGRICULTURAL RELIEF

SATURDAY, APRIL 3, 1926

UNITED STATES SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY,
Washington, D. C.

The committee met, pursuant to adjournment, at 10.30 o'clock a. m., in room 326, Senate Office Building, Senator George W. Norris presiding.

Present: Senators Norris (chairman), Harreld, Sackett, Ransdell, Heflin, and Ferris.

The CHAIRMAN. The committee will come to order. We will proceed, Mr. Hirth, if you are ready.

STATEMENT OF WILLIAM HIRTH, PUBLISHER OF THE MISSOURI FARMER; CHAIRMAN OF THE CORN BELT COMMITTEE Resumed

Mr. HIRTH. Mr. Chairman and gentlemen, I want to take up the thread of the comment where I left it yesterday morning. I think, Mr. Chairman, that one of the big factors that must be taken into consideration with reference to any legislation of this kind is the question of overproduction.

The CHAIRMAN. That is going to be one of the objections that we will have to meet if we report this legislation.

Mr. HIRTH. Yes. As a prima facie proposition I think that any legislation that not merely stabilizes but give the farmer a real 100cent dollar, under existing conditions and taking into consideration the farmer's desperate situation, would almost inevitably be followed by increased production. For instance, I think I took occasion to say before your committee a year or so ago that we were heading toward higher hog prices, because the farmers have lost so much money in the production of hogs that they simply went out of the hog business, and that is the direct reason for your short hog supply to-day. Under the stimulated hog prices of the last few months we are heading in the other direction again. It happens that I have several purebred herds of hogs, and for the last several years we have not pretended to sell any breeding animals at all until within the last few months. It just shows that in his desperation the farmer goes headlong after anything that promises any real profit, and I think by the end of 1927, at the very latest, we will have another heavy hog production, and consequently a smash in hog prices, so that any matter of legislation that has been passed with the idea of giving the farmer a dollar of even purchasing power involves the element of overproduction, and that is the thing that you must take into

consideration, and I think that under a bill of this kind, where you propose to take the President and others who agree with him at their word, that proper solution of the problem is through the cooperative marketing organizations, that if you have a chance to put an effective check upon overproduction, you can do it more nearly through a bill of this kind, which, as I say, proposes to operate so largely through the farm organizations themselves.

If this bill becomes a law and you create a Federal farm board, I am sure that one of the first things that board would do would be to take the farmers of the United States into its confidence and explain that any increase in production that would result in a surplus, whether of wheat or pork or beef or anything else, unwieldy, would serve, through the equalization fee, to defeat its own purpose. Therefore I would hesitate very much to just simply go out, without taking the farmers of the country into our confidence, and increase their price so that the farmer is on an even footing with industry, labor, and the other forces that make his cost of production, without the most intimate contact that you can possibly establish with the farmers of the United States themselves; and that is what this bill does.

Here is another thing. The equalization fee, within itself, should be a tremendous deterrent in that, because undoubtedly your Federal farm board would say to the farmers of the United States "The more unwieldy your surplus becomes, the heavier your equalization penalty becomes." I do not think that you can approach it more effectively than through the bill that is under consideration. Unquestionalby you must establish the closest possible contact with the existing farm organizations, and also you must have some sort of penalty that shows the farmer that he must pay heed to whatever he is advised with respect to the matter of production.

As has been said before-Doctor Stewart said it very effectively the other day—the farmer can not regulate his production as a factory does, because he must take into consideration the element of weather, and all those things, but measurably he can.

With reference to the hog situation to-day, if we had some board that directly represented the farmers of the United States and that had the power to stabilize hog prices and make the pork dollar somewhat in line with the dollar that enters into the production cost of the farmers, there is no question that that sort of an agency could get a degree of cooperation from the farmers through their various organizations in a way that you could not possibly get otherwise. You could not possibly have it under a bounty plan, or under a direct price-fixing plan such as was advanced before the House committee some days ago by Mr. Meredith.

Certain gentlemen have referred to the equalization fee as a tax, and I have heard the statement made that there are Members of Congress who are against this bill with the idea that it is a tax upon the farmer, and according to their statements they hesitate to go back in the campaign this fall and advocate it.

In the first place, since this measure is sponsored to the degree that it is by the farm organizations themselves, the onus of that is on the farm organizations; and their leaders are here asking for this legislation. If we are willing to vouch for it with the farmers of the

country, then certainly a Member of Congress ought not to hesitate to let us assume that responsibility.

In the next place, it is utterly beside the question to regard it as a tax. If, by levying an equalization fee of 5 cents per bushel against wheat, for instance, or whatever the fee might be that is required to take care of the given surplus, you make a 42-cent tariff effective, nobody needs to fear the result of defending that sort of thing with the farmers of his State. I think that objection is utterly puerile, Mr. Chairman, and I am inclined to believe that it is rather a case where the wish is father to the thought, rather than that men really can put such an impossible construction as that upon the equalization fee as it is here proposed.

The CHAIRMAN. Mr. Hirth, speaking as one who realizes, I think, the condition of agriculture, I must say that while I do not think it is insuperable and I do not think it is a reason for the defeat of such legislation as this, at the same time, to my mind it is the one objection to this kind of legislation that we fear more than any other one thing. That is the reason that I am particularly interested in hearing you testify on that point. I have thought about it, of course, a great deal, in respect of all these bills that have been before us. I believe that it is one of the serious things that we must contend with if we want to legislate to help the farmer. I think there is something in that objection. I do not agree with you when you say it is puerile. Experience may show that I am wrong. I hope so. But, at the same time, I do believe that there is something in the objection, and I would like to have it discussed by you people to the very limit, because if this legislation becomes a law, I think that is one of the things we are going to be up against right away.

Mr. HIRTH. Mr. Chairman, everybody agrees that the trouble with the situation, so far as wheat, pork, or commodities of that kind are concerned, is the surplus. .

The CHAIRMAN. I think so.

Mr. HIRTH. That is universally conceded.

The CHAIRMAN. Yes.

Mr. HIRTH. In other words, the next step in the proposition is that from time out of mind the surplus has fixed the price, not merely upon itself, but has determined prices in the domestic markets, and that has given the farmers of the United States since the close of the World War pretty much around a 50 or 60 cent dollar in actual purchasing power. If that is the case, then some device must be created that will segregate this surplus from that which is consumed in the domestic markets, and if the surplus is to be sold at a loss, which it must be in ninety-nine cases out of one hundred, then the next question arises, Who is going to stand the loss?

Senator HEFLIN. And how small you can make that loss?

Mr. HIRTH. Yes. There are only two things you can do, as I see it. You can either, by a bounty plan, take the loss out of the Treasury of the United States or you can make the consumer bear it, and the consumer ought to bear it, and is willing to bear it. Therefore, it seems to me, Mr. Chairman, that however unfortunate it may be that you have got to levy an equalization fee or something along that line; it is there, just like a stump in the middle of the road, and there is no way around it.

The CHAIRMAN. I think so; and the thing to do, I think, when we find something of that kind is simply to admit it.

Mr. HIRTH. Yes.

Now, taking the possible criticism of it, as I said a moment ago, there inevitably will be a loss in handling the surplus, and the next question is, who is going to pay the loss; whether it is to be paid out of the Treasury or whether it is to come out of the producer's pocket? If it is to come out of the producer's pocket, which I think is the only place where it should come from, then if you can say to him that by the payment of that sort of a fee he is protecting his domestic markets, for instance, with reference to wheat, making a 42-cent tariff or whatever the tariff may be in the future per bushel, effective so that he can collect it, I do not see where there is an intelligent farmer in the United States, Mr. Chairman, who would not instantly say, the mʊment he understood it, that that is all right; "I will be glad to pay it." The CHAIRMAN. I think he would, Mr. Hirth. They could be made to understand it very easily. At the same time, here is where the difficulty is, as I see it. The farmers are scattered all over the United States, or a large portion of it. Each one would feel, and each one would know that the more he produced the heavier he would be taxed to pay for this surplus, but overproduction means a larger surplus, and they have to pay it. But the individual farmer might say "But I will overproduce, on the theory that I am going to get a bigger price, and on the theory that my fellow farmers will heed this advice and not overproduce"; and the result will be that if they all did that, or a large percentage of them did that, we would get overproduction in spite of ourselves. For illustration, if this overproduction, say, in wheat was such as to make this surplus so large that it might tie up all the profit when we come to pay the loss on that large surplus, it might create a very difficult situation.

Mr. HIRTH. Unquestionably. That is one of the most effective deterrents to protect against possible overproduction.

The CHAIRMAN. If there was some way to force it on everybody that would be true, but we have not any way to do it. We have to depend on each individual farmer.

Mr. HIRTH. You mean the limitation of production?

The CHAIRMAN. Yes.

Mr. HIRTH. As I said a little while ago, I am satisfied if this bill passes and this Federal farm board is created, that through the different farm organizations they will immediately take the farmers of the country into their confidence. That might go so far, Mr. Chairman, that they will suggest acreage. Of course, there will not be a penalty for anybody who does not follow the suggestion, and yet the moral force of it, and the contact of neighbor with neighbor, will be very powerful. In other words, if you have any chance under high heaven to control it, you have that chance through the farm organizations themselves, as this bill enlists those farm organizations. You have no chance in the world if you simply turn it loose, and if you simply make an arbitrary fight, either through direct price fixing, or through some bounty plan. Then there is no direct cohesion.

The CHAIRMAN. I think you make a good point. I think there is a great deal in it. You will have an opportunity, through these organizations, to keep production down somewhat.

Mr. HIRTH. Yes.

The CHAIRMAN. At the same time, there is no way to compel it to be done, and the wickedness of it is that the man who obeys that injunction of the farm leaders not to overproduce is penalized by having to pay for the fellow who disregards that advice and overproduces. Mr. HIRTH. Yes.

Senator HEFLIN. But if you should carry on this propaganda, as you suggest, talking with the farmers and acquainting them with this situation, and trying to get the idea into their heads that they will get more for a small crop or a medium crop of wheat or cotton than they would get for a large crop, they would soon see that it was to their advantage to do just what you tried to get them to do.

Mr. HIRTH. I think so, Senator. In any case, you have to proceed upon that theory.

I

The CHAIRMAN. I think so. I am not trying to avoid that. think that is right. I am only asking these questions for the purpose of bringing out the facts, and to see how we can meet what, to my mind, is something that we can not avoid, but have to meet.

Mr. HIRTH. Yes.

Senator RANSDELL. Mr. Chairman, would not that overproduction in one year, which must be cared for, not by the general public, but by the wheat producers themselves, give them such a severe lesson that the next year they probably would not overproduce? They might do it once, but they would have the experience of the burned child who would dread that fire the next time, whereas if the whole public had to stand that loss they would say "Oh, well, we don't

The CHAIRMAN. The point I make, Senator, is that even in that case some farmer could say "Well, everybody is going to heed this advice. They are following that advice, and therefore there will not be overproduction. There is no law about it and I can do as I please about it. I will just double my acreage. I will make money out of this transaction, while the other fellows who obey will have to stand the penalty, if there is one."

Senator RANSDELL. There is that danger, but I do not believe it is a practical one with the great mass of the people.

Senator SACKETT. Mr. Chairman, I would like to ask your opinion. I get the witness's idea of this cooperation through the farm organizations, but in order to make that effective it has to be backed up by the equalization fee, which helps to hold it down.

The CHAIRMAN. Yes.

Senator SACKETT. As your fear grows of more men overproducing, that equalization fee must grow larger.

The CHAIRMAN. Yes.

Senator SACKETT. The variation in that equalization fee indicates to me this sort of a difficulty. That is, in effect, a tax upon production. Does Congress have the right, under the Constitution, to turn over to a board the levy of that tax, and make it possible for it to be collected, even for this sort of a purpose? That is a thing that I would like to hear some one discuss.

The CHAIRMAN. I would be glad to hear some one discuss it. I have not looked up the constitutional or legal question. At first blush, looking at it, it does not seem to me that it is unconstitutional. I doubt whether a court would hold that it is a tax. It is a part of