3. The highest price obtainable for our export agricultural products is no higher than the lowest price at which they can be bought in the world. These products are therefore sold for export at the world's free-trade prices.

4. As the export and home prices for staple agricultural products are the same, it follows that these products are sold at home and abroad at the world's free-trade or Liverpool prices.

5. Nor is this all. The cost of transportation from the place of production to Liverpool is first deducted from the Liverpool price, and this, whether the product is exported or sold for consumption at home, even within sight of the place of production. We have, as a conclusion, that by reason of the protective tariff, manufactures are sold in our country at enhanced or artificial prices, while agricultural staples are sold for export and home use at the world's freetrade Liverpool prices, less cost of transportation from place of production to Liverpool.

6. As the importance of the staple agricultural industry exceeds that of manufacturers, and as it is the only great industry in our country that must sell its products at the world's free-trade prices, and must, through the operation of the tariff, pay protection prices for necessities, and as this is the only great industry to do this, it therefore follows that staple agriculture pays the cost of protection to the manufactures.

7. Protection to manufacturers made a high wage rate possible. This wage rate brought skill, and skill developed inventive genius, and inventive genius produced labor-saving agricultural machines. These machines in the hands of the American producer of agricultural staples amply repaid him for any costs for the protection of manufactures. With the powerful aid of labor-saving machines he could, until recently, produce his crops so profitably as to enable him to compete successfully with the cheapest labor in the world. In other words, the agricultural labor-saving devices gave the American producer as much protection as manufacturers enjoyed from the protective tariff.

8. It was destined, however, that the time should come when the American producer should lose his advantage. That time has come. It has been found profitable to place these labor-saving machines into the hands of the cheapest field labor in the world, and as a result the advantage enjoyed by the American producer is gone. The loss of the advantage has had a tendency to materially lessen the volume of the net returns to producers of staple agriculture, thereby removing the prop which has been the support of the protective system. Protection to manufacture must therefore be abandoned, or the source of the support of protection must itself be protected.

9. The ruling prices for agricultural staples, a portion of which we export having declined to about one-half the former rate, and as these prices promise to remain low permanently, therefore we will be no longer able to continue the profitable production of agricultural staples unless the prices of necessities be lowered to the world's lowest free-trade rate or the prices of agricultural staples be enhanced in our country the same as manufactures are enhanced— but not by a tariff alone, for a tariff can not enhance the home price of export which is sold at the world's lowest price. It can, however, be done by a Government bounty on agricultural products exported from the United States to foreign seaports. This, when done, will enhance the price, not alone of the exports, but in an equal degree the much greater quantity sold for home consumption.

10. Duties on imports levied for protection protect home manufacture and production by enhancement of prices, but they can not protect fully one-half of our industry, namely, the staples of agriculture, because they are exports and not imports.

11. The producers of the unprotected half, being consumers of protected home manufactures, and of duty paid imports, pay all costs of the protective system.

12. The true purpose of protection should be, not to levy on a portion of the American people only for the support of another portion, but to protect all American industries against the competition of foreign countries.

13. An industry producing a surplus for export can be protected by a Government bounty on exports of such surplus. It would enhance the price in our country of the quantity exported and also the greater quantity for home use.

14. To protect an industry producing a surplus for export, there must be a fund to pay the cost of a bounty on the export, and in consideration of that which has been stated above, equity demands that the funds collected as duty for the protection of the manufacturing half of our industry should be applied

to the payment of bounties on exports for the protection of the other half, namely, staple agriculture.

15. A just government has no right in equity to create revenues for the benefit of some to the injury of others. But the Government does produce revenues by the protective tariff, which benefit some and injure others, and uses such revenues to meet its expenses. In this the Government is unjust.

16. To correct this injustice the Government should either cease to collect protective duties, or should use the revenues derived from protecting one-half of our country's industries to place the unprotected half upon an equality with the former, and thus effect a just balance between the two, thereby removing the antagonism between them, now disturbing our political and economic system.

17. The protective duty levied on imports and expended on staple agricultural exports will therefore protect both manufactures and staple agriculture.

18. Now, since the Government must have revenue for support, all the people should be required to contribute by modes of just taxation to such support; any revenues derived from the protection of manufactures should be considered a trust fund, and may be used for the protection of unprotected staples of agriculture by aiding their export.

STATEMENT OF F. W. MURPHY, WHEATON, MINN.

Mr. MURPHY. Mr. Chairman and gentlemen of the committee, my name is F. W. Murphy. I live at Wheaton, Minn., up in the lower end of the Red River Valley. I have the ownership and am charged with the responsibility of farming 5,000 acres of land. Senator SMITH. How did you manage to get down here if

that much liability?

Mr. MURPHY. By borrowing the money, Senator.
Senator HARRELD. How far is that from Detroit?
Mr. MURPHY. Detroit, Minn.?

Senator HARRELD. Yes.

Mr. MURPHY. About 90 miles south and west of Detroit.

you have

The CHAIRMAN. You were a member of the so-called Des Moines Council?

Mr. MURPHY. I am going to explain just whom I represent.
The CHAIRMAN. I wish you would do that.

Mr. MURPHY. I was in Washington in the winter of 1923 and 1924 for five or six months and took a very active part in the campaign for the enactment of the original McNary-Haugen bill, and during that campaign a number of us who were active in the work succeeded in developing a pretty strong general organized agricultural backing for that bill. When the bill failed to pass in the House we had a conference here in Washington with those representatives of farm organizations and farm people who were still here and decided to hold a meeting in St. Paul, in my State, in July of 1924, with the idea in mind of developing a central organization through which the American farmers might speak in coming to this Congress, in demanding what seemed then to be positively necessary, as it is to-day still more necessary, that legislation be enacted giving the farmer the benefit of the American protective system, and the meeting was held in St. Paul in July, 1924, and attended by representatives of 49 farm organizations of this country, including six or seven national farm organizations, such as the National Grange, Farmers' Union, the American Farm Bureau Federation, the American Wheat Growers, the National Livestock Producers' Association and one or more others that I can not recall, and the others attending that meeting

were State and regional farm organizations of farm prople throughout the country, with the exception of the cotton States. At that meeting, which continued for two days, the American Council of Agriculture was developed as a national organization to speak in a national way for the organization people, not, however, to the exclusion of any of the national organizations speaking for themselves, and not in any field of service of any of these farm organizations, and I am chairman of the board of that council.

The CHAIRMAN. You mean you are chairman of the National Council?

Mr. MURPHY. I am chairman of the board of the American Council of Agriculture.

The CHAIRMAN. That is different from the National Council? Mr. MURPHY. Yes. I do not know of any other council named "American Council."

Senator SMITH. Of farm organizations?

Mr. MURPHY. There is a National Board of Farm Organizations. The CHAIRMAN. What is this council of which Robert W. Bingham, of Louisville, Ky., is chairman?

Mr. MURPHY. I do not know the legal name of that, but it is a cooperative organization.

Senator HEFLIN. What connection have you with the one that Mr. Marsh represents?

Mr. MURPHY. None.

The CHAIRMAN. Just look at that letterhead. There is an organization of which Mr. Peteet is secretary, who is pretty well known to this committee, and who has testified here on several occasions. Mr. MURPHY. That is the National Council of Farmers' Cooperative Marketing Associations.

The CHAIRMAN. Marketing associations?

Mr. MURPHY. Yes, sir. Walton Peteet is secretary.

The CHAIRMAN. That is not the council you are saying was organized in St. Paul?

Mr. MURPHY. No, sir.

The CHAIRMAN. You are not connected with this?

Mr. MURPHY. No, sir.

The CHAIRMAN. All right.

Mr. MURPHY. In May of 1925 a meeting was held at Des Moines, participated in by a very large number of leaders of farm organizations in the West, the Middle West and the North Central States, and as an outgrowth of that meeting the so-called Corn Belt committee was organized, of which Mr. William Hirth is chairman, who is here and will speak in support of the same legislation that we are addressing our support to.

In December, 1925, the American Council of Agriculture created at St. Paul-that is the one I called your attention to--and the Corn Belt committee, to which I have also directed your attention, was held at Des Moines on the 21st and 22d of December, and at that joint meeting of those two great organizations, representing organized agriculture, a legislative committee of 12 was selected to come here to urge the enactment by this Congress of legislation then right definitely agreed upon, and I am here as the chairman of that legislative committee of 12.

The so-called Des Moines conference of business interests created the committee of 22, which is a committee representing the business interests of the 12 States participating in the Des Moines conference, and George Peek is chairman of that committee, and that committee is backing the legislation that our legislative committee of 12 has brought here and is supporting in this Congress.

The CHAIRMAN. There is unity of action between your committee representing the farm organizations and the committee representing the business organizations?

Mr. MURPHY. Yes, sir.

The CHAIRMAN. All right. I think we get it now.

Mr. MURPHY. Yes. We are in entire harmony in our demands here.

Senator SACKETT. Which bill is this?

Mr. MURPHY. There has been laid before you a committee print of the bill, and I can identify it more specifically by calling your attention to the testimony of Chester Davis, given here the other day in explanation of that bill, as that is the one that we are supporting, and that is the one that organized agriculture of this country is backing here in this Congress.

Senator SACKETT. Is it this print of March 30?

The CHAIRMAN. Yes; that is it.

Senator SACKETT. Is this committee print a modified form of the Dickinson bill to some extent?

The CHAIRMAN. When Mr. Davis was before us we had a first print and they have been working with the cotton men ever since, and I put them in touch with the drafting bureau and ordered this printed myself, through the proper sources, for the benefit of the committee.

Senator SACKETT. That is the crowd that was here the other day? The CHAIRMAN. Yes.

Mr. MURPHY. We have been in town, Senator, for more than a month, and for more than three weeks we have been engaged in presenting this bill before the House Committee on Agriculture. We closed our hearings over there two or three days ago. I want to assure you gentlemen of the committee that there are no deflections in our ranks, and there is no dissension. Our people are agreed absolutely upon this legislation.

I am not going to make a very long statement, but when I finish I want to ask Mr. William Hirth, chairman of the Corn Belt committee to make a statement to you touching conditions agriculturally somewhat as he understands them, and also confirming the set-up of our agricultural committee, showing that it does represent organized agriculture. I make this one exception, that the National Grange has not come forward supporting this bill, neither has it come forward opposing it. I do not know what the attitude of the grange will be definitely upon that, but I do know that the grain States of the Northwest and the Middle West are supporting the bill, and also some of the corn States farther east.

Senator HARRELD. What relation has the cotton group had with this bill?

Mr. MURPHY. I would prefer, Senator, to have them speak for themselves, which I rather think they may do to-morrow morning.

They are here and have been in conference with us for two or three days.

Senator HARRELD. I knew they had. That is the reason I asked the question.

Mr. MURPHY. Yes. I had hoped they would be ready to appear to-morrow. I do not know definitely that they will be, but they will make their own announcement in respect of this legislation..

We have devoted a great deal of time, gentlemen, to a consideration of this subject, and arising out of the importance of our connection with this movement to secure national legislation for the farmers it has been necessary for us to make a sincere effort to find how legislatively we might do for the farmer what has been done so successfully legislatively for other groups, and I want to assure you that we have counseled with the best minds of this country, not only throughout agricultural America, but here in the East, in the industrial world, comparing notes, getting the best authority we' could, going to the bottom of this thing with a view to determining what might be done in a constructive, permanent, worthwhile way for the farm people of America, whose situation is so unequal, as to challenge the best thought and immediate attention of everybody in the country. We have reached certain definite conclusions as to the kind of legislation that will do what must be done.

The presence of the surplus is what makes it impossible for the American farmer to so adjust supply as to just meet demand, as you have so well said, Senator Smith. I think you put that as cleverly and as constructively as any man has stated it since we have been connected with this work. It is the surplus that goes into export that makes it impossible to have supply meet domestic demand. This compels the American farmer to dispose of his products of which we have exportable surpluses substantially on the basis of a market fixed in foreign countries. It puts the farmer in the situation where he must take what is offered, a situation under which no business group, it seems to me, can have any independence. The farmer is asked to pay what is asked of him for the things he uses and at the same time is compelled to sell what he produces at what is offered.

If it were not for the development in such a profound way of our protective system the farmer might get away with that situation fairly well by reason of the fact that he works longer hours and harder and is compelled to have his women folks and his children work. He might get away with it if it were not for the fact that since 1914 his overhead has increased at least 100 per cent. The expense of handling his business has developed more than 100 per cent since 1914, and in the meantime he is still selling his products on the basis of a world market. It is not the dollar price that the farmer is getting, but is the low purchasing power of his dollar. It is the lack of purchasing power of the farm products that has crushed agriculture.

Many suggestions have been made as to how the surplus of farm commodities that go into export might be removed from the domestic markets to the end that the farmer might have the benefit of such tariff protection as is now afforded to him, and we are addressing to the job of making the existing tariff schedules effective for the farmer plus the stabilization of his market, and this bill is suggesting a longtime, permanent agricultural policy for the United States, enabling the farmer to stabilize the market by fitting the supply to the demand