I think it is a very exceptional case where the farmer speculated, but, at any rate, you said time and time again that he went broke on that account and had to quit it. Why still call him a speculator when he is through?

Mr. MARSH. I will give you a few figures from one of the Department of Agriculture's reports.

Senator NORBECK. What is the date of that report?

Mr. MARSH. This goes up to 1923. The percentage of reductions from full yield per acre of cotton has never fallen below 25.4 per cent in the 15 years from 1909 to 1923, and has been over 40 per cent in 7 of the 15 years. The reduction from full yield for wheat during this period has never fallen below 19.7 per cent, and has been from 25.7 to 38.7 per cent in 11 of the 15 years. For potatoes it has never been below 21.3 per cent

Senator NORBECK. When you speak of the farmer as a speculator you refer to him as a land speculator, do you not?

Mr. MARSH. It is an inherently speculative business. Senator Norbeck, I do not know of any greater fallacy than to urge the majority of farmers to own their own farms. Labor has too much sense to own its own factories. You do not catch the laborers saying, We are going to own our factories before we will work." Not on your life. They say, "Let the capitalists take the risks, and we will get the wages.'

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We have proceeded on the assumption that a farmer who has to take all the risks of nature and all the risks of marketing, and who had no training, could go in and compete without having special training and most of them have not had. That is perfect nonsense. Why did we open up our country so fast?

Senator NORBECK. The tendency is not from the city to the farm. The trouble is that the farmers are now leaving the farms and going to work for Henry Ford, starting on a brand new line.

Mr. MARSH. That is the inevitable thing, as I am trying to point

out.

Senator NORBECK. It is just the reverse of what you stated.

Mr. MARSH. No. I do not quite say that. They have gone out and tried to make money on account of the increase in selling price of farm lands, and they have them so high now that the profitable market for most crops is going to be restricted largely to the domestic market. They found that did not work.

Senator NORBECK. Iowa land that sold for $400 an acre is now selling for $150. Is that too high?

Mr. MARSH. I think it is too high. Take wheat. I know more about wheat. The average cost of producing wheat in 1923 was $1.23, out of which 32 cents was land rent. I think about the same proportion, 26 per cent, will apply to corn land in Iowa. We produced just as much per acre on this $25 and $30 farm land in the central part of Iowa, back in 1892, 1893, 1894, and 1895, when I was working there, as they produced when it was selling for $300 or $400, and a lot of it went up to $700 in Iowa, by the way-an utterly uneconomic basis. The best thing that could have happened to agriculture as a whole-and I am sorry for the fellows who lost; I begged them not to speculate, and Secretary Wallace, Secretary Meredith, and Secretary Houston all warned the farmers not to speculate in farm lands, but somebody did it, evidently—is the reduction in selling price of farm lands.

91358-26-pt. 2

I think you are correct, Senator, that it must have been some of the farmers who owned lands, or they would not all be broke, or so many of them would not claim they were broke.

Senator NORBECK. My theory is that the farmer is broke due to a lack of a fair selling price for his products, rather than anything else. It is not the farm owner alone who is broke. The renter is suffering just as much, or worse. He has not suffered from deflation

in land values, but, rather, in the price of his product.

Mr. MARSH. The farmers have to reduce their cost of production. They have been going around talking just like Doctor Coue, "Every day in every way we are getting better and better." They have been trying to hypnotize the farmers by saying that the farmers are business men. They are not. If they were, a lot of them would not be on the farm. Labor restricts the number of people who can go into any trade.

Senator NORBECK. Is that one of the troubles with the farmer? Mr. MARSH. Too many of them; yes.

Senator NORBECK. When you have twice as many coal miners as you need, when you have to pay a coal miner 12 months' wages for 6 months' work, is not that one of the troubles with the farmer, when he has to buy the coal?

Mr. MARSH. Looking at it from the other angle, there are those who say that you can do all your work on a wheat farm in three months, and the rest of the time you kick about prices. That is inaccurate in both cases. I admit that the coal industry is in a state of chaos, but I would like to point out to you that labor in nearly all the big protected industries got a smaller percentage of the value of the product in 1923, under the Fordney-McCumber Tariff Act than in 1921. I have all the figures, but I will not bother you with them.

Senator NORBECK. You arrive at that percentage partly by using the higher price at which the goods were sold.

Mr. MARSH. Certainly. I use the Government figures as to the wages paid and the value of the product, both years.

Senator NORBECK. The wages might have been just as high, but not in proportion to the value of the product.

Mr. MARSH. That is true.

There is another specific thing that could be done. Last year we drafted a resolution which Senator McKellar introduced, and the Senate adopted, calling upon the Federal Trade Commission to investigate the 150 "open-price" associations, and they tried to duck it. You remember the fight with the Attorney General. Finally the Attorney General said he had a right to do it. Practically everything the farmer buys, as well as the rest of us, is fixed by an open price-fixing association.

Senator NORBECK. His freight rate is fixed by Government laws, practically?

Mr. MARSH. Substantially, through the instructions to the Interstate Commerce Commission. That was the first precedent in our history where a legislative body, so far as I know, stated to a Government administrative body, such as the Interstate Commerce Commission, what should be the basis of value, and then what returns should be given. Quite a lot of the Senators who voted for the Esch-Cummins law are not now here. But it was a thoroughly pernicious principle to establish.

Senator NORBECK. Just to keep the record straight, I was not here at the time, so I am not in that Esch-Cummins list, but was not the Esch-Cummins law rather a law to reduce the bonus to the railroads than to increase it?

Mr. MARSH. I should judge, from the way in which the railroads tried to get it through, that it was not. I should judge from the results that it was not.

Senator NORBECK. The Government paid a larger bonus to the railroads in the six months preceding the adoption of the EschCummins law than in the six months following.

Mr. MARSH. How it worked out on a fair valuation, I do not know. Their books showed a little more. I will admit that.

Senator NORBECK. Was not one of the purposes of the EschCummins law to get away from the bonus to the railroads? It made it peter out for a certain length of time. Before that you had a bonus to the railroads with no time limit on it.

Mr. MARSH. There was no time limit, but as Senator Cummins said, they were paid a rental which would shock the moral sense of mankind.

Senator NORBECK. Then, the real bonus to the railroads was from McAdoo instead of from the Esch-Cummins law, was it not? Mr. MARSH. Oh, no. It was approved by Congress.

Senator NORBECK. But it came preceding the Esch-Cummins law, did it not?

The CHAIRMAN. That came by virtue of a law. We passed a law providing for the taking over of the railroads and paying them the average of the three preceding years as a rental, and in those preceding three years, in the aggregate, the railroads received higher returns than they ever received in the three successive years in their history. That was done by specific act of Congress.

Mr. MARSH. Yes.

Senator NORBECK. Yes; but all we say is that the Esch-Cummins bill did it. Was not that bill passed to put a stop to that very thing you are referring to?

The CHAIRMAN. That was passed to cover the period when the Government was operating the railroads, and it expired when the Government turned the railroads back.

Mr. MARSH. May I say, with reference to the investigation of these open-price associations, which fix the prices of all commodities, that I incorporated in that resolution a statement that the commission should especially study to what extend these combinations were able to charge high prices on account of the tariff which they enjoyed. Just this last week Federal Trade Commissioner Humphrey objected to that, the only one of the commission who did, because we have no effective competition, substantially, in this country, except through imports.

Senator Walsh of Montana will put in, in a day or so, a resolution which we have drafted, which I trust the Senate will adopt, directing the Federal Trade Commission to investigate all the mergers in the last four years, and what legislation or regulation is necessary in order to protect the American people, as investors in these great combinations, as well as to protect the consumers; that is, to prevent profiteering. I mention this because you asked what our program

was.

It has been, as rapidly as possible, to restrict and prevent the

exploitation of the farmer. I do not agree with Senator Brookhart's statement I quoted, although I sincerely hope he will be seated. I do not believe that it is going to be any help to the farmer to try to bring him up to the artificial level, which industries in this country have.

The CHAIRMAN. As I understand it, while this bill is to elevate the farmer to the artificial position occupied by industry, as I understand it, in a nutshell, you would reverse it and take away the stilts that industry has, and take away the artificial support which it has. Mr. MARSH. I never saw a nation successfully living in a ballon or any number of balloons, and we realize that we are up against a world situation, and that you can not pass privilege around. That is one of the exasperating things about privilege.

Senator NORBECK. Will you not agree to this, that if we do keep passing it around, we should include the farmer in the list?

Mr. MARSH. I certainly do, if you can, but I say you do not include the farmer in any special privilege when you say that the cotton manufacturers, the meat packers, and the exporters of his products are exempted from the operation of this law.

Senator NORBECK. You are speaking about the McNary-Haugen bill, which is not before us.

Mr. MARSH. I am speaking about this bill. There is no provision that the Government shall audit those people. I thought there was until I checked it up. You have a provision that the Government pays its share of the losses claimed by these exporters.

Senator NORBECK. If that is your objection to the bill, that is an easy matter to cover with an amendment. Just what would you say

about the measure then?

Mr. MARSH. I would say it was not quite as foolish as it is now. Senator NORBECK. But you still would not be for it?

Mr. MARSH. No. I am not going to be for any ineffective measure. I will tell you another thing you can do. Hang on to our water power. The disgraceful selling out by the farm organization leaders of this country in connection with this Muscle Shoals proposition is outrageous. I want to give you a little history

Senator HEFLIN. Mr. Chairman, I object to this witness slandering the other representatives of farm organizations who are here in this city. I think that those I have come in contact with are honorable men and I object to the time of this committee being taken up by this witness in slandering other gentlemen.

Mr. MARSH. Mr. Chairman, this witness is at the disposal of these other gentlemen in any court of law, and he challenges them to debate this question anywhere.

The CHAIRMAN. The witness has a perfect right to criticise them, of course, in courteous language. He has a perfect right to criticise anybody on any side of any of these questions. He can do that.

Senator HEFLIN. I protest against him taking up the time of this committee to give his opinion about Muscle Shoals. That is in my State, and I do not propose that this man shall do that.

The CHAIRMAN. I think, if we are going to tell the witness that he shall not talk about Muscle Shoals or any other thing, we will have to shut up shop. If this witness thinks Muscle Shoals has something to do with the farm situation, he can discuss it.

Senator HEFLIN. I am willing to have him discuss Muscle Shoals, but I object to him talking about men selling out on Muscle Shoals. The CHAIRMAN. He has a perfect right to discuss it.

Senator HEFLIN. I suggest that if he is going to do this, and the committee wants to permit him to do it, we should permit Mr. Chester Gray, and Mr. Thompson, the head of the Farm Bureau, to come here, as well as these other gentlemen he is attacking, and let them face him and hear him. I do not want this committee to be made a place where men can come and express their fanatical opinions and make wild statements regarding other people. I do not think we ought to do it. If this witness can talk in courteous language about these things and discuss them, that is all right. That is one thing.

The CHAIRMAN. That is what he must do, of course.

Senator HEFLIN. He must do it. I am not going to consent to the other tactics.

The CHAIRMAN. If anybody else wants to discuss it, and continue the hearings indefinitely, he can discuss it, too.

Mr. MARSH. I do not care if you do discuss Muscle Shoals and do not take any action on it until this Congress adjourns. Then the American people will not have lost the last natural resource of which the great privileged classes and their mistaken friends in and out of the Senate are attempting to deprive them.

Here is what the National Grange resolution says, which was passed in their session in 1924 at Atlantic City. They had had a committee investigating this question of public and private ownership of water power for a long time. They reported:

Regarding the Muscle Shoals project, in which the Government has already invested something over $100,000,000 of the people's money, we believe that the Government should make the necessary expenditure to finish the plant and operate it for the benefit of all the people in the production of fertilizers and electricity. If this course is found to be impracticable, we then recommend that Muscle Shoals be leased.

There is no legitimate "if" in there. If Congress wants to do it, it can.

Then, President Coolidge saw fit to put Mr. Taber, the national master of the grange, upon his agricultural conference. Then Mr. Taber swung over to the Muscle Shoals lease.

What happened to the Farm Bureau? I told Mr. Gray Silver this morning that I was going to discuss this. A few years ago Mr. Silver and Mr. Howard were called before the House Committee on Expenditures in the War Department, because they claimed that the Congressmen who did not vote for an appropriation of $10,000,000 to continue Government operation at Muscle Shoals were controlled by the corporations, and then something happened in that dark spot. Mr. Bradfute, of the Farm Bureau, went on this President's agricultural conference, and sometime, when you are in one of your inimitable moods, a judicious combination of irony, courtesy, and satire, Mr. Chairman, I hope you will point out that the President's appointive power is used not only on commissions of the Government, but on farm organizations, to enable him to get by with his plans. Just this week I read that Mr. Taber, the national master of the grange, has been appointed a delegate to the International Institute of Agriculture meeting in Rome. I just point out the sequence of