AGRICULTURAL RELIEF

TUESDAY, MARCH 30, 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), Capper, Gooding, Harreld, Ransdell, Heflin, and Ferris.

The CHAIRMAN. The committee will come to order. I understand there are two or three gentlemen here who have to leave town and want to be heard before they go. We will hear them now.

STATEMENT OF C. W. CROES, STATE MANAGER, SOUTH DAKOTA WHEAT GROWERS' ASSOCIATION

Mr. CROES. Mr. Chairman, I might say that I have not prepared a statement for this particular occasion, and in discussing this matter I would have to just go into the general condition as I have found it in studying it in our State. My work for the past four years has placed me in position to make a quite careful study of the agricultural situation.

The CHAIRMAN. What has been your work, Mr. Croes?

Mr. CROES. Cooperative marketing. I am State manager of the South Dakota Wheat Growers' Association.

The CHAIRMAN. Is that a cooperative organization?

Mr. CROES. It is a cooperative organization, yes.

The CHAIRMAN. Is your organization in the so-called National Council?

Mr. CROES. No; it is not.

The position of our organization, in the first place, was the result of a study and an attempt at a solution of the problem that began about four years ago with a conference at Sioux City of the northwest agricultural States, the departments of agriculture of the several States, and different cooperative movements, and at that time there was some demand for legislation such as we now seek, and at that time there seemed to be a considerable trend of thought that the cooperative marketing was the thing that could bring the results and should be looked to. I think the record here will show that I introduced and had passed throguh our legislature at that time a bill memoralizing Congress to pass some legislation similar to what we now seek, and comments came back to the effect that we must look to cooperative marketing, that the farmer must right the situation through his

own efforts and, as I say, we seem to be running along that line, and we went into this work with several of the northwestern States hoping that that probably was right and it could be accomplished along that line, and developed, I think, what is recognized as a successful cooperative marketing organization.

Our experience has taught us, as I think it has taught most of the cooperatives, that we can not hope for results through cooperatives alone soon enough to avert very serious disaster in agricultural areas; that with the cooperatives we must have some other assistance similar to what labor has, in addition to the American Federation of Labor and its strength, with the aid of the restricted immigration. We do not believe, and our experience, I believe, has convinced us, as I say, as well as others, that we can not hope to accomplish what is necessary to accomplish in the marketing of farm products without effective legislation along the lines which we now seek.

I might go briefly into the agricultural conditions that you perhaps are more or less familiar with, but yet it may be well to call your attention again to it. I think in general, over practically all of the agricultural area, and as evidenced more directly by late statistics that have been put out by the National Industrial Conference Board and the Department of Economic Research, and the Department of Agriculture, that there is shown a gradual but steady decline in agricultural resources, a gradual decline and quite rapid decline in agriculture's share of the national wealth.

Senator HARRELD. Is that in part due to the fall-off in value per acre of land since the war?

Mr. CROES. Not a material part of it, I think. I think that probably has had something to do with it. On the other hand, the fall-off, of course, would probably be considered a part of that, but it is a very small part.

Quoting the figures of the National Industrial Conference Board, in 1910 agriculture received approximately 18 per cent of the national income; in 1919, 17.9 per cent; in 1920, I believe, 13.5 per cent; and in 1923, 9.8 per cent. I think I hvae those figures correct, which, coming from a board that does not represent agriculture and can only be interested in agriculture as their best customer, are worthy of very grave consideration.

I could go on and quote figures and comparisons of that type to a great extent, which would only go ahead to show the same thing, and there are figures that I presume you have already had presented to

you.

Senator GOODING. You are talking about net results to the farmer? Mr. CROES. Yes.

The CHAIRMAN. As I understand you, those figures show that the farmer's dollar is practically cut in two.

Mr. CROES. About 53 per cent on the same basis, taking the exchange value of the major farm products, such as beef and pork and wheat and corn and rye and barley. I believe those are the six major farm products.

The CHAIRMAN. Do you include cotton?

Mr. CROES. No; I did not include cotton in that.

Senator GOODING. You are talking about cost of production?

Mr. CROES. No; I am talking about net return, exchange value of the product.

Senator GOODING. That is cost of production. That is the basis of it, is it not?

Mr. CROES. Yes, sir; that is true.

Senator GOODING. Increased cost of production. That is the basis of it all.

Mr. CROES. Yes. The exchange value of those products during the five-year period from 1920 to 1925 shows an exchange value to the farmer of 53 per cent of what those commodities showed in 1913.

I might just touch on the inflation of land, which is frequently referred to as being the chief cause of the farmer's difficulties.

Senator HARRELD. I simply asked how much effect that has had. I do not know. I am just asking to find out.

Mr. CROES. Well, I think those things are a factor in a way. In other words, the more a man retrenches, no matter how logical it was to retrench, first, if it comes on to him, the longer he had to retrench, the longer it would last, of course, but whether it would be logical to have to ask him to is another question.

Senator GOODING. On this same subject, I might say I have lived in an agricultural country, and I think I know the conditions. As far as the actual farmer is concerned, not 2 per cent of them participated in the boom at all. That was the real estate agent, quite largely.

Mr. CROES. That is true.

Senator GOODING. The farmer did not get into that much. Some of them did, of course, and tried to buy too much land, but that is not the basis on which to figure the trouble with the farmers.

Mr. CROES. No.

In arriving at this, I have always tried to take averages—the average farmer. You can site a particularly distressing incident, or you can cite a particularly promising incident on the other side, but that does not get you anywhere. By taking a general average, you will find about what you can expect tbout the average farmer. The CHAIRMAN. Let me see if I get your conclusion right. The figures you have given us show, if I understand them, that the net. income to the farmer in 1924, compared with the net income in 1913, was about 53 per cent.

Mr. CROES. Fifty-three per cent. That is the average of the five years from 1920 to 1925.

Senator HARRELD. Now, I wish you would explain how you arrive at that net figure?

Mr. CROES. I am taking those figures from the National Industrial Conference Board, and as I understand their method of arriving at that exchange value, it is to take the price of the commodities of agriculture and arrive at their purchasing power by computing their relative level with the all-commodities price.

Senator HARRELD. I believe you said they only considered six major commodities.

Mr. CROES. I said just taking those six major commodities of agriculture.

Senator GOODING. It runs through all of them.

Mr. CROES. It runs through all of them, and it is reasonable to believe they would not vary very much.

Senator GOODING. There is the simple situation. An implement dealer said to me at my place sometime ago, "I can not understand

what is the matter with the farmer." I said, "That is funny. Bring out your cost of implements for 1914, what you sold them to the farmer for, and bring them out now and show them to me and look at them yourself. That is the whole story. You have increased bis cost of farm implements and everything he has to buy for the home and the farm 100 per cent. If he does not get something like a corresponding increase, what happens to him? And he has not been getting it.

It is an easy, simple thing to understand. I do not care what industry it is or what business it is. Why, the Senators had to increase their salaries here, and I know Senators in the last two years have had their rent increased as much as their increase in salary alone, to say nothing about other increases. Now we have a new civilization, and it ought to be easy to understand by everybody. The farmer has just simply been legislated against by his own Government, but we say it was made necessary by the war. I know, when go to buy a machine that costs me twice what it did before the war, what is the matter with me. I know why our farmers are going broke all around me. It is not strange that they commit suicide, is it?

I

Mr. CROES. I have in my portfolio a very brief statement covering this. If I had known I was to cover this, I would have brought it along. I am sorry I have not got it here. But it covers about the same figures I have mentioned here. It is true, just as the Senator has said, that in almost every channel that you follow along agricultural interests, you find that his purchasing power, the exchange value of his commodity, has been depreciated from 25 per cent to 50 per cent of his pre-war purchasing power.

Senator HARRELD. Do you agree with Senator Gooding that that is altogether due to the increased cost of production? Mr. CROES. To the increased cost of production?

The CHAIRMAN. It is not all?

Senator HARRLED. He said it was all.

Mr. CROES. I do not believe it is altogether due to the increased cost of production, but to the exchange value. I would not say all. The CHAIRMAN. Well, that has a very large influence on it, no doubt. For instance, take freight. The freight on agricultural products has increased tremendously.

Mr. CROES. Maybe not the cost of production, but the cost of overhead, which is the cost of production.

The CHAIRMAN. Freight has increased 68 per cent. On a manufacturing business, or any business that was running on a small margin, that increase of freight alone would put them out of business. Senator HARRELD. I agree with you in principle, but I do not think that it is all due to any one thing.

The CHAIRMAN. No; I do not think so.

Senator FERRIS. In Michigan the cost of labor is a tremendous factor.

The CHAIRMAN. Yes.

Senator FERRIS. It is almost impossible now to hire a man at any salary, because of the automobile industry and the industries of the bigger cities of my State, so that thousands and tens of thousands of farmers have surrendered and given up. I have a report this morning that shows in my own country over 500 farms have been deserted in a comparatively short time.

Senator HARRELD. That has resulted in decreased production, which would mean higher prices.

The CHAIRMAN. The farmer can not decrease or increase his production at will. He does not know, when he sows his wheat, what the profit is going to be, or what the crop is going to be.

Senator HARRELD. What I was getting at is if we call all these farmers into industry, or industrial pursuits, there would be a shortage of production.

Mr. CROES. But it would be almost impossible to call them into industrial pursuits because in a great percentage of the cases the farmer is out there, owns a farm, has an equity or interest in it, and he has got to stay with it and operate it, or he would lose all he had. Senator HARRELD. That is true, but as his neighbors leave it would tend to reduce production.

Mr. CROES. That is true, but he would have to wait for that to come all the way down the line.

The CHAIRMAN. I suppose if you carried it out long enough and let enough of them fail you would eventually reach that condition. Mr. CROES. We would eventually reach that condition, yes.

Senator CAPPER. Canada, South America, and all European countries are increasing their production.

Mr. CROES. Yes; and from an economic point of view, from a national-welfare point of view, I do not think it can be considered a sound proposition to encourage the decrease of agricultural production.

Senator HARRELD. No.

Mr. CROES. It would take considerable discussion to cover that, but I do not think that that can be considered as sound.

The CHAIRMAN. Well, it is certainly an impractical proposition, because the farmers are necessarily disorganized, too many of them scattered over too much territory, and the production of any particular year does not depend entirely upon the number of acres cultivated, but depends upon the bugs and worms, winds and water, and dry weather and wet weather.

Mr. CROES. Right here I think I would like to just mention this. There has been a lot said about orderly marketing, and there has been a lot said about the farmers' inefficiency, etc. We do not pretend to say that the farmer is not just an ordinary human being, a fair representative of the American citizenship, heir to all the failings that American citizens have in any other line of work-no more and no less. I do not take any stock in the inference that comes sometimes from other interests that the farmer's condition is due to his own fault, which is lack of efficiency. I think the records will show that the American farmer stands as high above the world farmer as the American man of industry or any other class of American citizenship. He holds his own on about the same par with the world. He has different conditions to contend with than other business, but he is as efficient in his place. There is still just as much need for progress in his line as there is for progress in industry and transportation and all those things, and in perfection of operation-no more and no less. The fact that in the last five years he has been relegated to almost a pre-war exchange value for his commodities, while industry and fabor have been able to maintain practically a war-level standard of