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that bill on account of its equalization-fee basis. There must be a substantially complete abandonment of the attacks that were made upon that bill, and now, if I am to correctly interpret the views of those who say the farmers ought not to have this legislation, they are limited to the claim that the farmers do not want and will not pay this equalization fee. So, it seems to me, gentlemen, it now being conceded that agriculture is in a situation of indefensible inequality; that this bill is not price fixing; that the Government is not going into business; that the Government is not going to lose a cent by the reason of the setting up of this farm board; that the one question that seems to be uppermost now in the minds of those who oppose the bill, the one rock under the harrow, is the matter of the equalization fee.

The farmers of the United States, as I understand them, would rather remain in the situation they are in and strike back with those natural weapons that this situation is putting in their hands, and try in some way, by resorting to those remedies that lie in the hands of every American citizen, to get out in that way rather than to accept a subsidy for the support of their business. They do not want to prostitute the soul of American agriculture by being mendicants at the back door of this Congress on down through the years, and all idea of meeting this situation from that standpoint must be abandoned. I say "must be abandoned." It must be abandoned unless there is a complete reversal of feeling among these farm people.

Senator SACKETT. Do you refer to the debenture idea?

Mr. MURPHY. Either the debenture idea, or just coming right out and saying what you mean, paying it out of the Treasury and being done with it. There is no use of beating around the bush and taking it out of one pocket and putting it back into the other. It is a direct subsidy out of the Treasury.

I do not share Mr. Hirth's views on the matter of overproduction, although we are working together, and have been for years, in a wonderfully harmonious way. No one in this country connected with this fight better realizes the splendid intellectual ability and mental honesty and great force of Mr. Hirth than I do, but I do not agree with him on the overproduction idea. But, if that is eliminated, what would you say about the incentive held out to the farm people to overproduce if you should pay the loss that arises out of everything that goes off our farms into export? There would be nothing whatever to check him. There would be nothing in such a plan to develop that fine morale that is necessary in our agriculture, when agriculture gets the job of stabilizing its business into its own hands, as some way, some day, it is going to get it.

While I am on the subject of overproduction, let me throw out a line of thought. As you know, Mr. Hirth, I have expressed this every time I have discussed that subject. The central purpose of this bill is the stabilization of the industry of agriculture. We do not mean to stabilize the wheat business irrespective of the stabilization of the other great staple crops of the country, because that would inevitably result, if left in that way, in a situation that would be difficult to handle. There would be a tendency, if you stabilized the price of wheat to the height of the tariff wall, and let pork and beef and cotton in their present unequal situation, to the develop

ment of the wheat business. There would be a tremendous tendency toward the development of the wheat business. What we have in mind, gentlemen of the committee, is the stabilization of all agriculture, and when you stabilize cotton and corn and hogs and cattle and wheat, you have stabilized the whole industry of agriculture, out of which exportable surpluses come.

In 1914, Mr. Chairman, my wheat dollar, my corn dollar, my hog dollar, my cattle dollar, my oats, barley, and every other dollar, was worth 100 cents, and I could go into the market place with any of my commodities and exchange them, full value, for anything that I used on my farm. We were not overproducing in 1914. There has never been a day in the life of agricultural America when its devoted men and women did not put the last pound of effort into getting out of the ground the last dollar's worth of crop. This Government and the State governments have spent hundreds of millions of dollars in the enterprise of getting over to the farm people better methods of farming, diversification, soil conservation, better methods of tilling, all with the fundamental idea of getting out of the ground the last pound the ground would produce, and any reversal of that policy is bad morals, and it is bad business.

But the point I want to stress, Mr. Chairman, is that these farm people can not get any more out of this ground than they have been getting out of it. In the last six years in the great Northwest, which we represent, the farmer has produced more food per man than ever in the history of the world. He has worked his wife and his children, and they have worked long hours. Why? With the same overhead they wanted to get the maximum results, and they can not get any more out of this ground than they have been getting out of it.

Again I want to stress the fact that if you stabilize all the major crops, nobody is so foolish as to rush into wheat production, because he can not make any more money out of that than if he were raising hogs or cattle. What is the result of this? The central idea in the bill is to let the man with corn land grow corn, and the man with cotton land grow cotton, and the man with oats land grow oats, and the man who can grow cattle best, or produce dairy products best, should stay in his business. That is stabilized agriculture, and as' surely as this bill becomes a law that is what the American farmer is going to do. You must give him credit for being the smartest and best business man in the country. No other business man would have lived one year, to say nothing of six years, and kept their tempers and their souls wholesome and sweet, as the farmers have done in six years of adversity.

Do you you know what the support of America's protective system has meant to the farmers up in the great western grain and meat producing regions of this country? In my State since 1919, for six years, the maintenance of America's protective system has cost every farmer, on every fairly good quarter section of land, at least $400 per year.

The CHAIRMAN. We will adjourn until Monday at 10.30.

(Whereupon, at 12 o'clock noon, the committee adjourned until Monday, April 5, 1926, at 10.30 o'clock a. m.)

X

AGRICULTURAL RELIEF

MONDAY APRIL 5, 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), Deneen, Sackett, Smith, Ransdell, Heflin, and Ferris.

The CHAIRMAN. The committee will come to order. Mr. Stealey is the first witness this morning.

STATEMENT OF C. L. STEALEY, GENERAL MANAGER OKLAHOMA COTTON GROWERS' ASSOCIATION, OKLAHOMA CITY, OKLA.

Mr. STEALEY. My name is C. L. Stealey. For five and one-half years I have been general manager of the Oklahoma Cotton Growers' Association, a cooperative organization of Oklahoma cotton farmers. This association during last year handled something over 206,000 bales of cotton.

The legislation which we are proposing to Congress was framed by the executive committee of the American Cotton Growers' Exchange, an organization formed by the 12 cooperative cotton marketing associations of the States of North Carolina, South Carolina, Georgia, Alabama, Mississippi, Louisiana, Tennessee, Arkansas, Missouri, Texas, Arizona, and Oklahoma, these organizations all being formed on the same general plan and for the same purpose. They handle jointly something over a million bales of cotton a year.

In attempting to frame this legislation we were simply trying, through the experience that we had gained, to handle the one important agricultural commodity of the South, and work out in the light of that experience the policies that have been laid down by the Government, by the dominant political parties of the Government, in order that service might be rendered as desired by the stabilization of agriculture in line with modern developments of business. In doing this we had first in mind the advantages that would come to agriculture and society in the increase in markets that might be brought about if we could get the agricultural commodities distributed in an orderly way at a stabilized price, with responsibility for the ownership and the development of these markets in the hands of intelligent and responsible powers. We believe that manufacturers of cotton products would be able to greatly increase their output if they could

be assured of a normal supply at a normal price, and that this alone would not only increase the returns and the prosperity of the farmer, but would greatly increase consumption, thereby taking care of, in a practical way, a large part of what has hitherto been regarded as surplus.

We have also tried to keep in mind the facts that have been so clearly developed, that there are enormous wastes now taking place in connection with the handling of cotton from the farmer to the producer, and have tried to encourage organization and legislation that would make practical the elimination of this waste which, we are told by those best qualified to speak, amounts to something like 25 per cent of the total price paid by consumers of raw cotton.

In considering the whole agricultural problem I am not prepared, nor are my associates in the American Cotton Growers' Exchange, to speak with reference to details of crops other than crops.

In attempting to suggest legislation by which these purposes, as proclaimed by the Government and the two political parties as being fundamental, we have first provided for a form of control of the handling of the surplus or temporarily unneeded crop, so that it would be responsive to the interests of the producer. You have before you this tentative draft of a proposed bill. It provides first for the formation of a Federal farm council which would be an advisory council only to assist and encourage the assembling of information and to see that this information is properly distributed to the public. This council would be created by the responsible farm organizations in the 12 Federal land bank districts, five members of the council selected from each district, four of whom only have been selected by the farm organizations, the fifth one from each district to be appointed by the Secretary of Agriculture to represent the interest of society in general. So that agriculture, if it were to become dominant, would not be in a position to outrage the rest of society.

This council would serve without salary compensation, meeting twice a year at the call of the Secretary, and drawing a per diem for the time given to the work of the council.

The chief work of the council would be the nominating of men to be appointed by the President, with the approval of the Senate, to act as a Federal farm board, three men to be nominated from each one of the Federal land bank districts, one of whom would be appointed by the Preisdent. This Federal farm board would have power to administer the law that would be passed, would have power to determine the existence or prospective existence of an excess supply of any agricultural commodity over the likely immediate needs, and after a period of three years, with reference to corn and cotton, to declare an operation period, and to set up an equalization fee, so that the cost of stabilizing the price and the cost of the merchandizing of the temporarily unneeded part of the crop would be borne by the producers of the commodity itself.

The bill sets up how the board may assess this fee and how it may be collected. Because of the immediate difficulties in connection with putting this system in operation, the bill would provide that for three years from the date of passage an equalization fee would not be applied to cotton or corn.

Senator HEFLIN. That is an amendment that is to be offered? Mr. STEALEY. That is an amendment that is to be offered.

It would provide, with reference to wheat and livestock, that an equalization fee might be applied at any time after the creation of the board. This fee will be determined by the board in the light of the present or prospective excess of supply and collected under regulations laid down by the board on the first sale or processing of the commodity. I think it is generally agreed, in the case of wheat and livestock products, that the fee would be collected at the packing plant or at the mill.

With reference to cotton, which would not be applied for three years, the first processing is at the gin, and if and when the fee is collected on cotton it would probably be done at the gin or at the first sale. That is because of the difficulty in working out the detail of the plan; because it is a new policy it was thought that three years had best be given for the study of the plan, perfecting the machinery for carrying into effect and for consideration of the program by the farmers and others interested before it would be applied at all.

With reference to corn, I am not prepared to speak except to call your attention to the fact that only a comparatively small part of the corn actually goes into commerce as corn, and it is likely that the stabilization of livestock markets would, in the long run, take care of most of the difficulties in connection with the marketing of corn. The bill provides that when the board has determined that there is necessity for the stabilizing work of the board, and it has declared its operation period, it shall set up an equalization fund, into which the moneys collected from one of the major agricultural commodities on which an operation period had been declared shall go, and the commodity shall be operated, so far as funds are concerned, absolutely independent of the other commodities, any losses or profits suffered or gained in each case being suffered or enjoyed by the individual commodity.

The bill also provides that after the board has determined that the equalization fund for any commodity has reached the point where the commodity is properly financed for orderly marketing and distribution of the whole of the supply according to demand, and that the further collections on that commodity are likely to take care of the further needs, the board may, in its discretion, retire it first provides that the board may issue participating receipts at the collection of this equalization fund, of serial numbers, and then it may, when it has determined that the requirements of the board are properly financed for that commodity, it may, in its discretion, provide for the return to those holding the receipts of a percentage of what has been paid in, that percentage to be determined by the value of the assets of the equalization fund for that commodity as compared with the total payments in the equalization fund for that commodity, these participating receipts to be retired under this percentage rule in the order of a serial number.

The CHAIRMAN. Is there any provision made, in case the board does issue participating receipts, that the person to whom they are given shall in turn divide them up among those who have produced the commodity? For instance, you issue a participating receipt to a miller who has bought a lot of wheat, and has originally, when he bought the wheat from the farmer, deducted the amount fixed by the board, and you would give him back a part of that money which

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