New York State College of Agriculture At Cornell University Ithaca, N. Y. Library Cornell University Library HD9006.A51917U Food production, conservation, and distr 3 1924 013 805 670 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013805670 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION HEARINGS BBFORE THE COMMITTEE ON AGRICULTURE HOUSE OF KEPEESENTATIVES SIXTY-FIFTH CONGRESS FIRST SESSION ON H. J. RES. 75, H. R. 4125, H. R. 4188, and H. R. 4630 RELATIVE TO THE PRODUCTION, DISTRIBUTION, AND CONSERVATION OF FOOD SUPPLIES MAY 1, 2, 8, 9, 11, 14, 16, 18, 29, and JUNE 11, 1917 WASHINGTON GOVERNMENT PRINTING OFFICE 1917 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. House or Eepeesentatives, Committee on Agbiculttire, Tuesday, May 1, 1917. The committee this day met, Hon. A. F. Lever (chainnan) pre- siding. The Chairman. The committee will come to order. Gentlemen, the committee has met this morning to begin consideration of House joint resolution No. 75, to provide further for the national security and defense by stunulating agriculture and facilitating the distribu- tion of agricultural products. It is very desirable, in view of the situation, that consideration of this resolution be hastened as much as is possible with safety. I hope, therefore, that the gentlemen will all be present, so that we do not have to cover the ground the second time. I have asked Secretary Houston to appear before the com- mittee this morning to present the views of the Department of Agri- culture. I wish the gentlemen of the committee, especially the new members, to feel no hesitancy in asking questions. This is a com- mittee of Members and not of just one or two men. STATEMENT OF HOlf. DAVID F. HOUSTOH, SECEETARY OF AGRICULTURE. Secretary Houston. Mr. Chairman and gentlemen of the com- mittee, the subject is a very vast one, a very complex one, and I scarcely know at which end to begin. There is no doubt that it is very urgent that we take steps to increase the food supply of the Nation, to increase the production, especially, of the staple crops, to conserve and more fully utilize foods, to improve distribution,, and to control it whenever it may be necessary. We have recognized for sometime that the world's reserves of food, including our own, are low. Agriculturally Europe is in a very- difficult situation. The war has meant a vast disturbance of agricul- ture and I have the conviction that, even if peace were to come, we- would be called upon to continue, in large measure, to supply the demands of Europe for foodstuffs. Immediately after the Congress declared that a state of war ex- isted, I called a conference of the representatives of the State depart- ments of agriculture and of the land-grant colleges — the official agricultural representatives of the States — all those east of the Rocky Mountains. The conference was called in St. Louis, April 9' . and 10, to consider what steps we could most effectively take to stimulate production, to promote conservation, and to improve dis- tribution. Th«re was an exceedingly large and fine representation of 4 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTTON. th^se agencies. We held a two days' session and came to certain conclusions which were embodied in a report and printed. Doubtless a copy has reached each of you. The members of the body were practically unanimous on every item. Mr. Haugen. I would suggest, Mr. Chairman, that that report be printed in this hearing. The Chairman. Without objection -it will be printed at this pomt. (The report is here printed, marked "Exhibit A.") EXHIBIT A. [Report of conferences on agricultural situation, held at St. Louis, Mo., Apr. 9-10, and Berlceley, Cal., Apr. 13, 1917.] Program for Pood Production and Conservation — Conference of Agricul- tural Representatives of 32 States with the Secretary of Agriculture Prepares Program to Increase Production, Promote Food Saving, Provide Labor for Agricultural Industries, and Secure Better Distribution of Food Products. The Secretary of Agriculture requested the State agricultural officials arid repre- sentatives of the agricultural colleges in all the States from New York to the Rocky- Mountains to meet him in St. Louis to discuss the agricultural situation in the present national crisis. The conference convened at the Jefferson Hotel at 10 o'clock Mon- day, April 9, and continued through Tuesday. Thirty-two States were represented by 65 officials, and the department by the Secretary of Agriculture and th6 chiefs of the Bureau of Plant Industry and the Office of Markets and Rural Organization. After a thorough discussion of the major problems involved, the conference decided to deal with the whole subject matter in four major divisions: 1. Production and labor. 2. Distribution and prices. 3. Economy and utilization. 4. Effective organization. A representative committee of 15 ' was appointed by the conference to formulate its views on these subjects and to submit suggestions for courses of action. Sub- committees were appointed by this committee to deal with each of the enumerated matters. The subcommittees reported to the full committee, which in turn reported to the conference. After consideration of the report of the committee of 15, the conference decided to express its views and to urge the courses of action, as indicated below: ... THE farmer's responsibility. Upon the farmer rests in large measure the final responsibility of winning the war in which we are now involved. The importanco.to tne Nation of an adequate food supply, especially for the present year, can not be over emphasized . The World 's food reserve is very low. Not only our own consumers, but much of the worid at large must rely more completely than ever before upon the American farmer. 'Therefore, the man who tills the soil and supports the soldier in the field, and the family at home, is rendering as noble and patriotic a service as is the man who bears the brunt of the battle. The American farmer has long shown his ability to produce more food per man and at lower cost per unit than any other farmer in the world, but he has never had to do his best. He needs to do his best now. This is not the time in which to experiment with new and untried crops and processes. It is very important that the farmer devote his principal efforts to the production of such crops and the employment of such methods as are well established in his community and as are likely to yield the maximum return in food and clothing material. Within the next 60 days the final measure of crop acreage and food production for this year will have been estaiblished. We urge the importance of the immediate mobilization of all available service of the Federal and State Departments of Agricul- ture and the colleges of agriculture in cooperation with the press, the banks, the com- 1 The personnel of the several committees of different States and institutions represented at the con- ference and the names of those in attendance will be found at the close of this statement. POOD PKODUCTION, CONSEEVATION, AND DTSTBIBUTION. 5 mercial organizations, the religious and the social societies, that all may heartily join witih the farmer in performing the patriotic duty of providing, and ■conservingi food. Because, of the: world shortage of food, it is scarcely possible that the production of staple crops by the farmers of the United States can be too great this year. There is every reason to believe that a generous price will be paid for the harvest of their fields.1 INCREASING THE FOOD SUPPLY. There is yet time to add substantially to the bread supply by increasing the acreage of spring wheat in the Northern States. Throughout the United States, east of the one hundredth meridian, the com area may be increased to advantage, with a view to its uses both for human food and animal production. The production of a normal cotton crop is necessary. This can best be accomplished by more intensive cultivation and increased fertilization rather than by increasing the acreage and thus neglecting the food and forage crops so important to the South. , In the districts where wheat has been winter killed replanting is suggested with oats com, or sorghum, as climatic conditions may determine. Where barley and oats are jiroved and leliable crops, they should be planted to the maximum that can be effec- tively handled. In portions of the Northern and Eastern States, where the season is too short for the great staple crops, the buckwheat acreage may well be increased. An important increase in our food supply may be made by enlarging the area planted to navy beans in the North and West and to Mexican and Tepary beans in the South- west, and by stimulating in every reasonable way an increase in the area of potatoes planted, especially for local use. Sweet potatoes in the South will undoubtedly be needed in their fresh state in larger quantity than usual and also for storing for winter use either in their natural state or as canned or desiccated products. Where peanuts succeed, production may well be enlarged because of their value both as food and forage. A reasonable seed reserve for replanting tilled crops should be held wherever practicable. While it is important to utilize available lands in the staple small grains and tilled crops, care should be taken to avoid undue encroachment on the area used for pastur- age or hay which is required for live-stock production. Authority should be granted the Secretary of Agriculture to advance to farmers under proper safeguard seeds required to insure the production of crops decided to be necessary for the welfare of the Nation. THE SCHOOL CHILDREN'S PART. We appeal to the youth of the Nation to put forth every effort to produce foodstuffs in gardens and fields. There could be no better expression of true patriotic devotion to the country. It has been demonstrated through the boys' and girls' clubs that it is possible for the farm family to supply itself with much of the food required, thereby releasing the commercial product of the country for the needs of the people in the cities and in foreign lands. In a normal season it is certain that there will be large quantities of perishable products which can not be properly preserved in the home. ' 'To meet this emergency it is recommended that local and municipal drying and canning establishments be improvised to conserve this material. KEEPING UP THE MEAT SUPPLY. The live-stock holdings of the farmers of the United States are already too low. It would be most unfortunate if these numbers be diminished further under the pressure of the present demand for food. Indeed, an early increase of the animal products of the country should be made. Such an increase must come chiefly through the enlarg- ing of our feed supply by more successful methods of feeding, and through more com- plete control of contagious diseases. Milk production could be increased fully one-fourth by more liberal and intelligent feeding. Pork production could be increased substantially through the more exten- sive use of fall litters, better care, and feeding. The poultry products of the United States could be doubled within a year. Contagious diseases of farm animals take a toll of more than a quarter of a billion dollars annually. More than half of this loss is due to controllable diseases, such as hog cholera, black-leg and Texas fever. The Federal Government, cooperating with the States, could profitably expand its intensive regulatory services so as to embrace every important live-stock district in this country. 6 FOOD PRODUCTION", CONSEBVATIOIir, AND DISTRIBUTION. MOBILIZING FARM LABOR. One of the principal limiting elements of food production is the labor supply on the farm. Indiscriminate enlistment from the farms with no plan for labor replacement will reduce food production below its present low level. The plan for public defense should include as definite a provision for enlistment for food. supply as for service at the front. In addition to more tlian one-half of those applying for enlistment and rejected because of unfitness for military service, there are more flian 2,000,000 of boys between the ages of 15 and 19 years in the cities and towns not now engaged in productive work vital to the Nation in the present war emeigency. These constitute the most important hitherto unorganized and unutilized labor resource available for this emergency. In consideration of all these facts the plan of military enlistment should be broadened so as to include in a national service those who, by reason of their age or physical con- dition, are permanently or temporarily incapacitated for active military duty but who are able to render to the Government equally indispensable service in the production of food, supplies, and munitions. This enlistment should include three classes: Men beyond military age, men of military age but not accepted for active military duty, and boys under age for enlist- ment. The Government should make plans at once for the mobilization of this important resource for the production of food and other necessities. This proposed enlistment in the national service should be regarded as part of the public patriotic service in the present war emergency and be given proper official recognition. THE HARVEST EMERGENCY. The husbanding of a matured crop promptly is often the most vital and crucial point in production and is the point of the heaviest labor demand on the farm. We suggest that the Federal Department of Agriculture, cooperating with the State departments of agriculture and other agencies, should take steps to mobilize sufficient farm labor to meet all emergencies wMch may arise. A SURVEI OP THE POOD SUPPLY. We suggest the importance of a thoroughgoing survey of the food, labor, and other resources of the country and of the needs of the local communities to the end that every part of the country may be maintained in effective service. Therefore, we recommend; That power be conferred upon the Secretary of Agriculture, in cooperation with the Federal Trade Commission so far as racticable, to secure such information regarding the food supply of the Nation and all business enterprises related theretOj as may be necessary to enable Congress to legislate suitably for the protection of the people in the existing crisis and for the information of the Nation in its daily conduct, giving to the Secretary of Agriculture for this purpose power to administer oaths, to examine witnesses, and to call for the production of books and papers, with means of enforce- ment and penalties. That authority be conferred upon the Secretary of Agriculture to establish market grades and classes of farm products, including seeds, and standards for receptacles for such products. For this purpose he should consult the various trades concerned. The established grades for com and wheat undoubtedly will be of much advantage in purchasing supplies and the estabUshment of grades for other products will be fully justified for the same purpose. Purthennore, such standards, with a suitable degree of supervision of their application, will result in returning to the producer the value of the particular qualities he produces, thus encouraging adequate production in the future. This is of special importance in connection with the perishable crops, but applies with almost equal force to the staples. The Secretary of Agriculture should be authorized by law to license warehouses, packing plants, mills, cold storages, produce exchanges, cooperative and other ship- ping associations, commission merchants, auctioneers, brokers, jobbers, wholesale distributors, and other individuals, partnerships, associations, and corporations engaged in the business of marketing and distributing farm and food products. When directed by the President, the Secretary should have power, after advising with the Council of National Defense as to the necessity of such a step, to take over and operate such of these businesses as may be warranted, in a manner similar to receivership. In order to facilitate the solution of transportation problems. Government agencies should do all in their power to bring about a relatively adequate supply of cars for moving food and other necessities. FOOD PRODUCTION', CONSERVATION, AND DISTRIBUTION'. 7 Communities, counties, and cities should be urged to take steps that will lead toward a larger degree of local and district self-support, especialljr in peridiable products, by making inventories of food needs and surveys of neighboring possibilities of production and in general by closer cooperation of the local consuming and pro- ducing interests, and by the provision of local marketing facilities. PRICE PUBLICITY. To bring about a greater equality of distribution considering the consumptive demands of population centers, the market informatioTi facilities of the United States Department of Agriculture and the several State departments should be extended and made as effective as possible. It should include the publishing as widely as possible, for the information of producers and consumers of farm products, of average prices of foods, feeds, and live stock, and particularly those paid by the 'War Depart- ment, if purchases are made direct in the open market instead of by the usual con- tract method. If not incompatible with wise policy, the 'War Department should determine and state where training camps are to be located, so that local production can be expanded to care in some degree for the increased consumption as a measure of general economy and to effect a further relief of transportation facilities. Appropriate steps should be taken through suitable Federal authorities, such as the Council of National Defense, the Department of Agriculture, the Department of Commerce, and the Federal Trade Commission, to facilitate the supplying of agri- cultural implements and machinery, particularly for seeding and harvesting, by bring- ing about reasonable deliveries of the necessary material, in preference to filling orders for such products as are not required in the existing emergency. Steps should be taken at once to secure the preference movement of freight ship- ments of farm machipery, seeds, fertilizers, and spraying materials. PRICE FIXING, IP NECESSARY. The very low food reserves of the world, due to last year's short crops, the increased demands due to the consumption and waste of war and the disappointing condition of the winter grain crop give ample assvirance of profitable prices to producers this year. Therefore, the fixing of maximum or minimum prices need not be undertaken at this time, but the fact that such a course may become necessary in the future advises the creation of agencies which will enable the Government to act wisely when the neces- sity may arise. To this end, it would be well for the Congress of the United States to authorize the Council of National Defense, if deemed necessary, to purchase, store, and subsequently distribute food products, or to fix prices in any national emergency caused by a temporary or local overproduction, or by a sudden ending of the war, or by restraints of trade, manipulations or uneconomic speculation, in order that pro- ducers may not be required to suffer loss on account of the extraordinary efforts they are now asked to make, and in order that consumers may not be required to pay op- pressive prices in case of disorganized or inadequate transportation. Information should be cdntinuingly maintained by the Department of Agriculture that will afford the council intelligent data upon which to act wisely and fairly in any emergency. INCREASED HOME ECONOMY. We are the most wasteful people in the world in our ways of living. Our tastes and desires have been educated beyond our incomes. Almost as great a saving may be made through the more economical manufacture, piu-chase, and use of food as can be made through processes of production which are immediately feasible. Our breadstuff supply may be increased by one-twelfth, or 18,000,000 barrels of flour a year, by milhng our wheat so as to make 81 per cent of the kernel into flour, instead of 73 per cent as at present. This flour would have as high nutritive value as that which we now use. An important saving may be effected by making the diet as largely vegetarian as possible, without lowering food efficiency, by a partial substitution of such foods as beans and peas and of milk and its products, including skimmed milk, for the more expensive meats. At present prices a larger use of corn and rice products as partial substitutes for the more expensive wheat products is suggested. The substitution of the home-grown and home prepared grain products for the much more expensive refined commercial foods, known as breakfast foods, will make 8 POOD PBODUCTION, COIS'SEBVATION, AND DISTRrBXTnON. a large saving. Adequate gardens should provide the home supply (>i' vegetables, which are «xpeiiBive foods when purchased at existini; prices. -The home storage and preservation of foods, such as eggs, vegetables, fruits, and meats, should be in- creased. The serious food wastes that occur in many households through a lack of culinary knowledge and skill may be minimized through instruction in better methods. These economies will be secured chiefly, if not fully, through the further education of housewives. It is highly important that all educational agencies available for this purpose engage in widespread propaganda and instruction concerning the economical use of human foods. NATIONAL AND STATE ORGANIZATIONS NEEDED. The Council of National Defense is charged with the duty of mobilizing the re- sources of the Nation, having as one of its members the Secretary of Agriculture. We recommend additional machinery as follows: A relatively small central agricultural body, whose services and presence might be required in Washington constantly, to be composed of men who have wide knowl- edge of agricultural matters and executive experience. In selecting these men atten- tion should be paid to geographical distribution. A large national advisory body, composed of representatives of the leading agri- cultural agencies and associations concerned not only in production but in distributing and handling commodities. A small central agricultural body in each State representing various agricultural interests, including agricultural officials, representatives of agricultural colleges, bankers', business, fanners', and women's organizations, etc., concerned in the pro- duction, distribution, and utilization of food supplies and agricultural raw materials. This body sho Ad be designated by the governor and, if the State has a central council of safety or defense, should be coordinated with it. Such county, urban, and other local bodies as the State authorities, including this State central agency, may see fit to suggest. The national central body and the State central bodies will be expected to keep in intimate contact and to work in close cooperation. AN EMERGENCY APPROPRIATION. To meet the extraordinary needs of agriculture in this emergency, we recommend an appropriation of $25,000,000, or so much thereof as may be needed, to be available immediately for the use of the Secretary of Agriculture in such manner as he may deem best. The situation which now confronts our country is a great emergency — the greatest, perhaps, in its history. Emergency measures are needed to meet imusual conditions. The recommendations made in tms statement have been formulated because it is believed they are necessary in order to meet present conditions. They are war measures. It is strongly toged that Congress and State legislatures, in^ passing laws or in making appropriations intended to carry out these or other plans for assuring an adequate food and clothing supply, should, so far as possible, be governed by the principle that when the emergency ceases much permanent reconstruction in agri- cultural policies and plans may be necessary. The recomlnendations in the main call for Federal action, but State governments can and should cooperate to the fullest degree in considering and executing plans of cooperation and of supplemental legislation and appropriation for the great common purpose herein enunciated. RESOLUTIONS COMMITTEE OF CONFERENCE ON AGRICULTURAL SITUATION. Commissioners of agriculture. — H. K. Bryson, Tennessee; G. A. Stauffer, Ohio; Jewell Mayes, Missouri; Charles S. Wilson, New York; 3. N. Hagan, North Dakota; J. A. Wade, Alabama. Agricultural colleges. — ^W. O. Thompson, Ohio; H. J. Waters, Kansas; H. L. Russell, Wisconsin; Eugene Davenport, Illinois; Clarence Ousley, Texas; J. M. Hamilton, Montana. United States Department of Agriculture. — David F. Houston, Secretary of Agri- culture; W. A. Taylor, Chief of the Bureau of Plant Industry; Charles J. Brand, Chief of the Ofiice of Marketig and Rural Organization. FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 9 Following are the subconimittees appointed to consider the subjects indicated and to draft Mpropriate resolutions: Productvon and labor. — H. J. tV^aters, Eugene Davenport, J. A. Wade, Jewell Mayes, G. A. Stauffer, W. A. Taylor. Economy. — J. M. Hamilton, H. K. Bryson, W. H. Jordan. Distribution and prices. — Clarence Ousley, J. N. Hagan, Kenyon L. Butterfield, Charles J. Brand. Organization. — ^W. O. Thompson, Charles S. "Wilson, H. L. Russell, D. F. Houston. REPHESBNTATIVES WHO TOOK PART IN THE CONFERENCE — UNITED STATES DEPART- MENT OP AGRICULTURE. David F. Houston, Secretary of Agriculture; Charles J. Brand, Chief of the Office of Markets and Rural Organization; W. A. Taylor, Chief of the Bureau of Plant Industry. AGRICULTURAL COLLEGES. Alabama. — J. F. Duggar, director of extension service. Arkansas. — Martin Nelson, dean College of Agriculture; W. C. Laseetter, acting director of extension; J. G. Futrall, president University of Arkansas. Colorado. — ^Alvin Kezer, agronomist Colorado Agricultural College. Delaware. — Harry Hay ward, dean College of Agriculture. Georgia. — ^J. K. Giles, assistant State agent in extension work. Illinois. — Eugene Davenport, dean College of Agriculture; Cyril G. Hopkins, chief in agronomy College of Agriculture; Herbert W. Mumford, College of Agriculture. Indiana. — ^W. E. Stone, president Purdue University. Iowa. — H. A. Pearson, president Iowa State College and member of executive committee of colleges and stations; C. F. Curtiss. Iowa State College. Kansas.— H. J. Waters, president Kansas State Agricultural College and member of executive committee of colleges and stations; W. M. Jaidine, dean College of Agriculture. Kentucky. — George Roberts, acting dean College of Agriculture. Louisiana. — W. R. Dodson, dean College of Apiculture and director of station. Massachusetts. — Kenyon L. Butterfield, president Association of Colleges and Stations. Michigan. — R. S. Shaw, director Agricultural Experiment Station. Minnesota. — ^A. D. Wilson, director of extension work. Mississip'fi. — ^W. H. Smith, president Agricultural and Mechanical College; R. S. Wilson, acting director of extension work. Missouri. — ^A. R. Hill, president University of Missouri; P. B. Mumford, dean and director College of Agriculture. Montana. — J. M. Hamilton, president State College of Agriculture. Nebraska. — Samuel Avery, chancellor University of Nebraska; E. A. Burnett, dean of agricultiu-e; C. W. Pugsley, director of extension work; P. L. Haller, regent. New York. — ^A. R. Mann, acting dean College of Agriculture; W. H. Jordan, di- rector of experiment station and member of executive committee of colleges and stations. North Carolina. — ^W. C. Riddick, president College of Agriculture and Engineering. North Dakota. — ^E. F. Ladd, president Agricultural College; Thomas P. Cooper, director Agricultural Extension and Experiment Station. Ohio. — :W. O. Thompson, president Ohio State University and chairman executive committee of colleges and stations. Oklahoma. — J. W. Cantwell, president Oklahoma Agricultural and Mechanical College. ' Pennsylvania. — ^M. S. McDowell, director of extension work. South Dakota. — E. C. Perisho, president State College. Tennessee. — Charles A Keffer, director of extension work. Texas. — Clarence Ousley, director of extension work. Vermont. — J. L. Hills, dean. College of Agriculture; secretary of executive com- mittee of colleges and stations. Virginia. — ^Jesse M. Jones, director of extension work. West Virginia. — John Lee Coulter, dean. College of Agriculture. Wisconsin. — H. L. Russell, dean. College of Agriculture, and member of executive committee of colleges and stations. Wyoming. — ^H. G. Knight, dean. College of Agriculture, and director of experiment station. 10 POOD PEODUCTION, CONSERVATION, AND DISTBIBUiaON. STATE AGRICTJIiiTUKA.L COMMISSIONERS. Aldbamd. — J. A. Wade, coinmisBioner of agriculture. Arkansas. — John H. Page, commissioner of agriculture. Georgia. — L. B. Jackson, representing commissioner of agriculture. Illinois. — B. M. Davison, secretary, State board of agriculture. Indiana. — ^William Jones, financial secretary. Iowa. — ^A. R. Corey, commissioner of agriculture. Kansas. — J. 0. Mohler, secretary, State board of agriculture. Kentucky. — Mat S. Colien, commissioner of agriculture. Louisiana. — -Harry D. Wilson, commissioner of agriculture. Missouri. — Jewell Mayes, secretary, State board of agriculture. Montana. — Chas. D. Greenfield, commissioner of agriculture. Nebraska. — E. R. Danielson, secretary. State board of agriculture. New York. — Charles S. Wilson, commissioner of agriculture. North Dakota. — ^J. N. Hagan, commissioner of agriculture. Ohio. — G. A. Stauffer, secretary. State board of agriculture. Pennsylvania. — Charles E. Patton, secretary, board of agriculture. Tennessee. — ^H. K. Bryson, commissioner of agriculture. Texas. — Fred W. Davis, commissioner of agriculture. West Virginia. — J. H. Stewart, commissioner of agriculture. Wisconsin. — C. P. Norgord, commissioner of agriculture. Resolutions at Pachtc Coast Conference or AGRicirLTtTKAL Officials. A conference of the State agricultural ofiicials and representatives of the land- grant colleges, similar to that held at St. Louis, was held at Berkeley, Cal., on April 13. The conference was called at the request of the Secretary of Agriculture by President Benjamin Ide Wheeler, of the University of Califoniia. The seven West- ern States named below were represented in the conference. Following is a telegraphic report of this conference addressed, under date of April 13, by President Wheeler as chairman, to the Secretary of Agriculture: "At conference held to-day at University of California, in accordance with your suggestion, representatives of Arizona, California, Idaho, Nevada, Oregon, Utah, and Washington adopted unanimously following resolutions: "Resolved, That the agricultural institutions of the seven Western States here repre- sented express ourselves to Secretary Houston as heartily in accord with the conclu- sions of the St. Louis conference, and that we place our entire resources at the disposal and direction of the national Government in his. effort to mitigate the present serious food shortage. "Further resolved, That we at once acquaint the Secretary of Agriculture- with the extent of our available resources, and that we further state to him the additional funds needed to place the entire plan of agricultural advisement into operation in our States. "Further resolved, That ve advise our Representatives and Senators of our hearty accord with the Secretary of Agriculture and that we believe that a further Federal appropriation to grapple with the present agricultural situation would be wise. "Further resolved. That since the agricultural extension field men are already Federal officers, and that for the period of war they are to be even under more direct Federal supervision, that the county agents and other field men be given such official designation as to dissassociate them from civilians and bring to them the dignity and authority of other Federal officials who are occupied in prosecuting the war to a suc- cessful conclusion. "Benjamin Ide Wheeler, Chairman." Secretary Houston. The third day I met representatives of the farm press of the Union, whose publications have an aggregate circulation of about 10,000,000. The representatives of those papers considered the conclusions reached by the other body to whidi I have just referred and practically unanimously indorsed them. The statement recently submitted to the Senate in response to a resolution substantially incorporates the views reached at these two conferences. POOD PEODtrOTIOlT, CONSERVATION^ AND DISTKIBUTION. 11 At the request of the chairman of this committee and of the Senate Coiomittee, the department has undertaken to draft bills embodjdng the conclusions reached at these meetings and the sug- gestions made in the statement to the Senate. IVo drafts have been formulated, one dealing more especially with matters which are in line with activities of the Department of Agricidture, or in the nature of extensions of them, and another dealing with certain matters, power to deal with which, it was thought, should be vested directly in the President. One of the things of very great importance, which we have been giving attention to, is the perfecting of an organization in the Nation to assist, in this emergency, in increasing production, in promoting conservation and economy in foodstuffs, and in improving distribu- tion. The Nation, I think, is fortunate in having laid the foundations in another crises — in the CivU War — of two very powerful agricul- tural agencies, the Department of Agriculture, with its 17,000 people, and the land-grant colleges, with an equal or greater number of people and with large resources. The two nave been and are increasingly acting in harmony and cooperating in many directions. The country also has in each of the States a State department or board of agricul- ture. It seemed highly desirable that the agencies within each State be coordinated and that there be formed in each State a small State board of food production and conservation, either in connection with , a State council of safety or, where there was no such council, as a separate division. It was suggested that there be represented on this State board the State department of agriculture, the State land-grant college, farmers' organizations, and bankers and other business men. In Massachusetts there was already in existence a council of safety, one of five or six, I have forgotten the number. One section is the board of food production and conservation. It has also been sug- gested — and in many of the States the suggestion is being worked out — that similar small boards be formed in each local division. The Department of Agriculture expects to keep intimately in touch with each State food board ; and, in so doing, it wiU keep in touch, there- fore, not only with the agricultural college but also with the State department of agriculture, farmers' organizations, and business interests. I may add that I asked the executive heads of the great national farmers' organizations to come to Washington to confer with me. Thej responded promptly. There were represented the Grange, the Farmers' Educational and Cooperative Union, the Gleaners, and the Farmers' National Congress. The American Society of Equity was invited to send a representative, but could not do so. It proffered its cooperation. I think I am right in stating that, in general, they indorse the suggestions and recommendations to which I have referred. I think we can do a great deal to assist farmers in overcoming the difficulties confronting them if the recommendations are accepted. Prompt and generous action is needed. There is one factor in par- ticular of great importance, one about which there is much concern. I refer to the labor supply not only for the ordinary farming opera- tions, but especially for the harvest season. There is general agree- ment that labor may be the principal limiting factor in increasing production. It is true, generally speaking, that in the section west 12 FOOD PKODUCTIOK, COKSERVATIOK, AND DISTRIBUTION. of the Mississippi River and south of the Ohio River the labor supply is not very far short of nonnal, but even in that re^on there are particular areas where there is a shortage reported. The exact extent of it I have no means of knowing. There have been reports of nugra- tions of negroes from Alabama and Georgia. In the neighborhood of the larger industrial centers, even m the West, there are reports of a considerable shortage of labor. There are reports of greater shortages in the Northeast generally^-tn the section immediately north of us, in eastern Pennsylvania, in New Jersey, in northern Delaware, in southeastern New York, in south- eastern Michigan, and in parts of New England, especially in Con- necticut. The creation of a large army will involve some additional abstraction of labor from the farms. It is, therefore, of the utmost importance that steps be taken to assure the farmers that, in the harvest season especially, they will be able to secure an adequate labor supply. I believe the problem can be solved. It must be-, and I believe farmers should have no hesitation m extending their planting to the limit. The Nation must see to it that they have labor to har- vest their crops and must extend such aid as may be needed. Many suggestions have been made looking to its solution. I believe that the problem can be solved largely by organization and cooperation. The department is taking steps to place in each State, in contact with the State central board, a man whose thought and time shall be given to the matter of labor supply and its organization. He will work with the State centru,l board and the local bodies that are being formed. One of the first things that we shall undertake to do will be to make a sort of farm-labor survey. We know, of course, that even in the same community the load may not come on one farm at exactly the same time that it comes on another. Through cooperation on the part of the farmers, even in the same community, somethmg can be done to mobUize labor, to render help in a pinch on certain farms that need help, through the utilization of labor on other farms which may not, at a given time, be so hard pressed. Over larger areas, the possibihty of discovering labor in one section to render help in another part is even greater. The load does not come at the same time in different States. Through a careful survey, we can discover surplus labor or labor not fuUy employed at a particular time in a given section, give information concerning it to the proper agency in another section or State where there is a deficit, and assist in securing this surplus. We shall, as I have pointed out, work with the State central and local agencies and shall cooperate with other Federal departments, particularly the Department of Labor. We have done this in the past with some success without very much organization and without very much previous planning. In former years, when the crops were large, the Department of Labor has been instrumental in assisting State commissioners of agriculture in certain States to locate labor not then employed in their States and in adjoining States. I think we can do much to make more effective the regular labor remaining on the farms in particular localities. I think we can do something to bring about a transfer of labor temporarily from one section to another. I think it will be possible to call into service labor not heretofore regularly or fuUy utilized. You know we have had large niimbers of boys and POOD PRODUCTION, CONSEEVATION, AND DISTKIBUTION. 13 girls organized in clubs rendering useful service. There is an army of nearly 300,000 of' them. I. have no doubt that it can be extended; that its number can be increased; and that its services can be used in additional directions. It has been estimated that there are over 2,000,000 boys in towns and cities, some of whom have been in touch with rural life, who could be utilized, especially in harvest seasons, if proper-steps to organize them were taken. There are many in rural communities whose service has not been fully utiUzed. It might be found to be desirable and feasible for schools and colleges in certain sections of the country not to resume their sessions so early in the faU so that the boys may help on the farms during the harvest season. In some directions, ^Is may render valuable and valiant help. I am not trying to indicate aU the methods we might employ or per- sons we might utilize but sinaply to give some hints. Whether it will be necessary to go further, I can not now say; but, since ample food is so fundamental a need in this crisis, no step to render aid should be omitted which the emergency may require, and the farmers should know this. The department has done a great deal to direct the attention of farmers to crops to which they might give their attention, to crops which can be increased in particular areas, and has furnished addi- tional information as to the best methods. I think it exceedingly important that we take immediate steps to place additional agencies; at theias^sposal. Time is the essence of the matter. I have suggested,!^^ in linewith the conclusions reached at St. Louis, that the department)!,! be givfflQ funds and power, at the earliest possible moment, to extend, for th&^period of the war, the farm demonstration force. It is highly^ desirable at this time to increase this force not only to assist farmers in improving their methods of cultivation and in controlling plant and animal diseases, but also to aid in the matter of organizing the labor supply. We should have at least one county agent in each of the rural counties of the Union and two agents in some of the larger counties. We should increase the number of women couhty agents, because the matter of food conservation and utilization is only second in importance to increased production. There is no doubt that the women of the country can be used not only to bring about an increase in the food supply, but also greatly to assist in its con- servation. The Chairman. If it does not interrupt your line of thought, will you give the committee the number of rural counties that are now without county agents ? Secretary Houston. There are 2,850 rural counties in the Union, and we have, I think, about 1,700 organized. The Chairman. About half the counties organized ? Secretary Houston. A httle more than half; yes. I need scarcely say anything about food waste. I have published whatever wisdom I myself have on that subject. I have published what I could get from the experts. It has been estimated that we waste approxi- mately $700,000,000 worth of food annually. In large measure, saving must come from the intelligent action of the housekeepers. I am told — ^perhaps Dr. A. E. Taylor may be able to give you more accurate figures — that the women of the country control from 80 to 85 or 86 per cent of the consumption expenditure of the Nation. We, therefore, wish to work effectively and intimately with them through 14 FOOD PBODUCTION, CONSERVATION, AND BISTEIBUTION. the extension of the women county agent system, throu^ the vromen's organizations of the coimtry, and, of course, through the press which is intended Specially to reach the women. Yesterday, we had a conference with editors of journals intended especially for women. We desire their cooperation. I may say in this con- nection that the Council of National Defense has appointed a com- mittee, I think of seven women, to act as an advisory committee to assist in directions in which it is thought that women may be espe- cially helpful. The Chairman. In that connection, you have no authority now for the employment of women agents except in connection with the extension act. Do you propose m this resolution to give yourselve^ that authority so that you can employ women agents to help keep down waste in cities hke New York, Chicago, and Philadelphia ? Secretary Houston. Yes; and also to increase our regular work among farm women. The Chairman. Exactly. Secretary Houston. It is suggested that this fund, for which we are asking in this emergency, be used without requiring the States to put up an equal amount. There are three specific siiggestions bearing on the better utiUza- tion of foodstuffs which the Congress may wish to consider. One of them is that the bread supply of the country be increased through increasing the milling percentiige of wheat. This is not as simple a problem as it seems an first thought. It would seem an easy thing for the miUers to increase the millmg percentage from 72 to 80 or 81 ; but there are several asmcts of the matter which will have to be very carrfully considered. I am not prepared at this time myself to make a definite recommendation as to the exact course which we should follow. Dr. A. E. Taylor, who is here, will be able to give you fuller information on the subject. I am suggesting now only that the Government be given power to deal with the matter. There is also the suggestion that during this emergency power should be given to remove the limitations on the mixing of grains and to permit it under proper regulation. This is being done abroad in order to increase the bread supply. There is a third suggestion. It is that the Government be given power, to be exercised if necessary, to place a restriction on the use of food and feeds entering into the manufacture of beer, distilled liquors, and other beverages. The estimate of the amount of food materials entering into such hquors and beverages is somewhat crude. In terms of bushels, the estimates run as high as 107,000,000 or 108,000,000, and in terms of value as high as $145,000,000. Mr. Anderson. The statement has been made by the brewers' association that about 76,000,000 bushels are used in the production of beer and that there is quite a large percentage — -I do not remember the exact figure — ^which goes back into food lines, either as feed or for other purposes. Can you give us any information about what part of that goes back into food liues ? Secretary Houston. We are making a very careful study of that now, and I shall ask Dr. Taylor, at the proper time^ to answer your question. It is hardly necessary for me to say to this committee that almost as important as steps which might be taken directly to increase pro- FOOD PRODUCTION, CONSERVATION, AND DISTBIBXJTION. 15 duction are measures to improve the distribution of farm products. Ally effective steps that are taken in this direction wUl have a very- direct bearing on production, because farmers will not be very en- thusiastic about increasing their products unless they know that they can dispose of them, and dispose of them at a reasonable compensa- tion. We have, therefore, made suggestions having as their object, first, a fuller knowledge of actual food conditions. Nobody, so far as I am aware, now knows what the food situation of the Nation is. We have estimates of crop yields for the year; we have estimates of the normal consumption and of imports and exports, and all of us may make calculations; but nobody knows just what food there is in the country, where it is, who owns it, and all the other pertinent facts in connection with it. I think it is highly desirable in normal times that we have the power and machineiy to get the facts and to get them as frecjuently as necessary. I think it is overwhelnaingly important in this emerge ncy that we have power and machinery to get these facts quickly. We have at present neither the funds nor the power. I say it is important in normal times; and I have this in mind: We are called upon increasingly to furnish farmers and the coimtry generally with information wmch seems to be of value; and yet we are dependent, in no inconsiderable measure, on the volimtary cooperation of the people who have the information. I think it desirable, in the interest of accuracy, that we have power to check the returns and to secure additional facts. We must be sure that we are supplying accurate information. I am lur^er recommending, in order that we may know the developments from time to time, that the department be given increased power to extend its grades and standards and to license and supervise certain agencies engaged in distribution. The, Chairman. Would it not be better, Mr. Secretary, before you. take up the question oj grades, to discuss section 5, which has to do with the ejnereency seed proposition ? Secretary IfousTON. I do not expect to touch on this matter of distribution at length. Mr. Brand and Mr. Caffey wiU discuss it more in detail. So far as the correspondence coming to the department reveals conditions — and it and the number of visitors are increasing very greatly — the chief things in the minds of the farmers are, first, the labor supply, and, in a lesser degree, the matter of securing seed,, especially , at reasonable rates, tin cans, and other containers, the preferential shipment of things needed in farming operations, such as seed, fertihzer, farm machinery, etc. I may say, in this con- nection, it now seems that there will be a sufficient quantity of containers for canning and preserving foodstuffs. This is a matter which has for some time received consideration by the Department of Commerce and the Department of Agriculture and, so far as I am now aware, it seems likely that there will be a sufficient supply in due time. Mr. RuBEY. I have had letters asking me to take up the matter of the canning proposition, and the statement was made that our cans were being shipped abroad and that the canners of the country are going to be unable to secure cans in which to can their products this, summer and fall. What do you know about that situation ? 16 FOOD PRODUCTION,. CONSERVATION, AND DISTRIBUTION'. Secretary Houston. There is a bill pending before the ^Congress now giving the President power to direct exports. I hope its passage -will be expedited. If that bill is passed and it should 'appear that the increase in containers is not ample to take care of the domestic needs and to furnish some for export, the President would have ample power to deal with the problem, and would, I assume, deal with it promptly. My understanding is that the country wants not merely the number of containers heretofore used but about a 40 per cent increase, and that that is what we are especially considering and trying to make sure of. Mr. Young of North Dakota. One of my correspondents suggested that tin was being used to a larger extent now in putting tobacco on the market than was really necessary and that something might be done along the line of putting tobacco in paper packages- or other packages and leaving free that amount of tin to be used for canning loodstuffs. Secretary Houston. I have not heard that particular point raised, but I will say that the Department of Commerce has taken up with the canners of the country the desirability of canning perishables at this time and of taking care of nonperishables, which can be pre- served without canning, through other methods for the present. I should be glad to speak to Secretary Redfield about the matter you mention. Mr. Young of North Dakota. I will send the letter to you. The Chairman. Are you looking into the matter of drying vege- tables and fruits ? , Secretary Houston. Yes: Dr. Taylor can discuss drying of pro-' ■ducts when he appears. Returning to the matter of seeds: The correspondence coming to the department would indicate, and our knowledge, I think, would confirm it, that the farmers generally have «eeds in their possession or have already used them in ^planting. However, there are areas from which demands come for assistance. Those areas are especially sections of the South which were hit by the floods and storms and one in northwest Montana. There is a county in Montana, Fergus County, part of which, I beheve, has been somewhat recently opened up. There quite a number of the farmers have not yet acquired title to their lands. Their problem apparently is that of getting sufficient capital with which to purchase their seed; and equipment. Their problem is one which we have no special power to deal with ; and the only suggestion I can now make is that, as quickly as possible, those farmers form a cooperative credit asso- ciation and, through the aid of the State board of food production and conservation, induce local bankers to make them loans at reason- able rates. We ought to be in a position to secure seeds in large lots and to dispose of them at cost to farmers' where there is muc£ distress and also to safeguard seed stocks for next year. It would be desirable to have a* considerable fund available now to use in furnishing assistance in restricted areas. Mr. RuBBT. Do you think we would now have time to get any seed out which would help our farmers ? Secretary Houston. Not unless we should act right now. Mr. RuBEY. Very soon ? Secretary Houston. Yes. FOOD PRODUCTION, CONSERVATION, AND DISTEIBUTION. 17 Mr. KuBEY. I have more inquiries fr-om my section of the country for seed than for any other one thing. ., ,,, ..;.-.., j: Secretary Houston. It would require very prompt, action. Mr. Young of North Dakota. Would it be possible to separate the question of seed from the other questions in the bill and put it through ahead of the other matters? Secretary Houston. It would be possible and desirable to separate the county agent item, the seed, the food survey, and others bearing on production from the regulatory items. Mr. Anderson. I want to make a suggestion along that line which I have had-in mind for some time. If we pass this biU as it now stands with any regulatory features in it at all we are bound to have to deal with the question of price fixing. Secretary Houston. That is not in the measure already introduced, resolution No. 75. Mr. Anderson. As a practical proposition, if we go on with any regulatory bill at all we are bound to consider, when we get it before the House, whether we want to or not, the question of price fixing. If there are regulatory features in the biU, those propositions will be in order, and me committee wiU be placed in the position of having to meet those propositions on the floor without having considered them in icommittee. Therefore I want to make the suggestion that we put into this biU only administrative features relating to the con- servation: of the food supply, the seed proposition, and such others as are administrative in character, so that the department can go to work immediately upon the propositions that are administrative. We would; not have any trouble in passing such a bill, and we could practically pass it, in my opinion, by imanimous consent. Then that woidd give us an opportunity to consider these questioiis which are more or less important, and we would not have to mix them up with those matters which are purely administrative. Secretary Houston. These production items should be very promptly dealt with. I imagine they will not cause much debate. The other matters — the regulatory items — may cause much discus- sion and some delay. They can be put in a separate bill. The Chairman. The point that Mr. Anderson makes is a point that I have frequently made to you in conversations I have had with you, namely, that the moment you bring in a biU on the floor of the House touching this food situation you are bound to open tip a discussion of the whole field, and his proposition is: Would it not be an economy of time, as well as of discussion, to take all of the larger problems you present here and put them in one bill and take the administrative features of the program and put them in one bUl, because the latter kind of a bill could no doubt be passed by unanimous consent ? The other bill is bound to cause discussion, whereas the passage of the bin containing the purely administrative features could be passed promptly and you could begin work at once. The question of fixing a minimum price and a maximum price, these regulatory features, the mixed flour proposition, the whisky proposition and the matter of preferential shipments, are matters which are bound to cause a great deal of discussion and debate and, therefore, would it not be better, as Mr. Anderson suggests, to take these emergency proposi- tions, that we must have right now in order to meet the production 104176—17 2 18 POOD PBODUCTION, CONSERVATION, AND DISTEIBUTION. end of the propositiony and put them in one resolution and let^the other resolution carry all of the others ? "' j Secretary Houston. That would be feasible, Mr. Chairman, and npGnT*fl 111 A TheCHAmMAN. You would desire to take out of this bill more than three propositions; you have four or five propositions m tins bill which seem to be propositions that would not cause a great deal of debate. They could all be put into one bill. But I thmk it would save time to put into one bUl all matters relating to the Depart- ment of Agriculture and the Council of National Defense, because no matter what kind of a bill you bring on the floor of the House toucMag that situation the question would immediately be raised by the Pro- hibitionists, Are you going to handle the Uquor question ? . And the question would be raised immediately by others, What are you gomg to do about fixing the minimum and maximum prices ?! You can not keep those questions separate in the House and it seems to me you would save time if you carry them all in one bill. Secretary Houston. I see no objection to that. The Chairman. And, more than that, you can not prevemt germane amendments and practically anything would be germane to either one of these bUls. Secretary Houston. I see ho objection to taking out the things to which you have referred. There will be a decided advantage in sep- arating them from the contentious matter — the regulatory matter. Mr. Doolittle. Will you name those iteniis in this bill which you think immediately necessary ? Secretary Houston. The ones which occur to me, offhand, are the extension of the demonstration force, the seed item, the food survey item, the animal industry items, and those of a like nature. Mr. Young of North Dakota. And the two assistant secretaries? Secretary Houston. Yes; certainly. The Chairman. And the frankinh privilege ? Secretary Houston. Yes; that also. Mr. Haugen. Mr. Secretary, a few minutes ago you were speaking about high prices. Is not the most important thmg aboiit this the doing away with speculation and gamblmg ? / Secretary Houston. I think that is urgent. Mr. Haugen. Is not that responsible, more than anything else, for the high prices and the fluctuation of prices, wheat going up to $3 a bushel one day, then down, and then up again? Secretary Houston. I think there are many elements affecting price. I do not think you can say with certainty that any one factor IS exclusively operating or controlling. Mr. Haugen. But I said the most important? i Secretary Houston. It may be a very influential factor^ I should Uke to have more facts, fuller knowledge, before expressing a final opinion. . : Mr. Haugen. Should not that be included in the very first bill considered ? Secretary Houston. The difficulty I see is that it would raise many questions and delay action along other hnes. Practically everything in these two bills, except the items that I have mentioned .tending to increase production aiid to conserve the food supply, are regulatory in nature and are all linked together. POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 19 Mri Haugen. All of them will have to be dealt with ? Secretary Houston. Yes; and it is only a question whether it would not be better, as the chairinan says, to separa,te the produc- tion items which we ought to have right now from the regulatory matters which of course are quite important, but which may require time for discussion. There are in resolution 75 certain powers requested which wiU enable the department not only to know what is taking place in distribution, whether there is uneconomic specula- tion, inampulation, or corners, but will enable it to deal effectively with distributive agencies. In the second draft there are other Eowers. For instance, we are suggesting, especially in the second iU, not only the conferring of power on the Government to fix a minimum price, if the emergency requires it, to producers, but also a maximum price governing distribution, with a view to prevent through that particular method so far as possible speculation and manipulation. I want, while I am speaking, to make perfectly clear something about which there seems to be considerable confusion. In the matter of price fixing, all we are now requesting is that Con- gress give the Government power to deal with the matter. For what commodity it might fix the price, whether it would fix the price or not, how it would fix it, etc., I do not think anybody can answer just now. We must get all the Hght we can from the European experience in this direction. We shall have to study their experi- ence and our domestic conditions and relations. The thing I wish first to emphasize is that we are now simply asking the Congress not to leave the Government Avithout power to deal with this matter if the emergency requires it. . By a minimum price we do not mean, as some people have tried to indicate to farmers, the lowest possible price for which they could expect to dispose of their products, but a price sufficient to insure them against loss, a price under which or above which they might sell then" products if market conditions justify it. The minimum price is intended to stimulate production. It would be sufficient to give the producers a reasonable return at least. He might get more if the market justified it. The maximum price is one which would govern in the distribution of products. It might be applied if there was uneconomic speculations, corners, or manipulations, to control or prevent such evils. Power is also requested to deal with exchanges. Mr. Andeeson. I want to ask whether you are thoroughly com- mitted now to the proposition of maximum and minimum prices ? ' Secretary Houston. I am committed to the theory that the Con- gress ought to give the Government power to deal with them and to fix them if the emergency should justify them. Mr. Anderson. I had rather inclined to the feeling myself that the only satisfactory way to deal with the proposition is to fix a basic price, and determiming the price to the consumer on the basis of the basic price. That would, in a sense, mean a maximum price but in reality it would fix the price all the way through on the basis of the basic price and certainly would eliminate the speculative feature, guaranteeing to the producer a reasonable price and to the consumer a. reasonable price, based on the basic price. Secretary Houston. If the power is granted, the conditions and details would have to be very carefully considered. We should have 20 POOD PEODUCTION, CONSEEVATION, AND DISTKIBUTTON. to get information not oiily from all the experts here on the subject, but also from' those who 'haTe'^been ' abroad and from those wHo are engaged in trade and in production. I am not prepared at tms time to try to indicate the details for the exercise of the power. Mr. Anderson. I quite agree with you, and the only thmg i was trying to get at was whether the department is now committed to or has satisfied itself that the minimum and maxunum price is the theory that should be adopted in carrying out the power given ( Secretary Houston. It is my present impression that that' would be the wise course to give the Government power to fix a minimum price ia order to stimiflate production, a minimum price to t^e pro-: ducer, and to' fix a maximum price to control manipulations, i think that Dr. Taylor, who is here, may give you further mformation on this particular subject. i • • Mr. Haugen. I want to ask you whether in fixing the mmunum price you propose that the Government should take it over at a certain price ? Secretary Houston. I will a^k the Solicitor to answer that when lift ST^f 9iKS The Chairman. Are there any further questions? If not, we are very much obliged to you, Mr. Secretary. Secretary Houston. Do you desire to hear from the Solicitor ? The Chairman. I would suggest, Mr. Secretary and gentlemen of the committee, that if we are goiag to separate these items that the first bill we will consider will present no constitutional questions at all, and that we hear from the Solicitor later on when we take up the other bUl. Secretary Houston. Then you do not want to hear from Mr. Brand until later ? The Chairman. No. Secretary Houston. You wish to hear this morning from those who are dealing with production and utiUzation ? The Chairman. Exactly. Secretary Houston. Dr. Taylor has been studying utilization and I would be very glad to have him appear. May I say before I go that Dr. Taylor is a member of the faculty of the University of Pennsyl- vania, ia charge of food investigations. He has spent some time in Europe. We have drafted him to assist us in studying the problems we are dealing with. The Chairman. Dr. Taylor, you may proceed in your own way to give the committee such information as the questions asked this morning would indicate they would like to have, and such other information as you think the committee ought to have. STATEMENT OF DE. A. E. TAYLOR. Dr. Taylor. Mr. Chairman, it is very difficult for me to judge what I can offer you. I spent a number of months in Germany last sum- mer as an assistant to the State Department in the study of nutrition there, especially in connection with the prison camps, andil studied their methods of handling their food problems. Their general plan has been, as in the other countries, to delegate wide authority to administrative departments. Practically speaking, in the first five days of the war, Germany delegated all power that the legislative POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 21 functions of the Empire possessed over the food supply to an admin- istrative department, andoiiipon the basis of this delegation of power they have proceeded to handle their problems of production, distri- bution, and consumption. Their general plans has been followed by aU of the other belligerent countries. The entire power of control is to-day vested in administrative hands. In Great Britain it is prac- tically in the hands of one man, in France in the hands of a com- mittee, and in Italy the same. Even in the neutral countries sur- roundingi the belligerent countries — in Switzerland, Holland, and in the Scandinavian countries — the administrative departments have been given very broad powers of authority by the legislative branches of those countries. So the actual handltag of these matters has been in administrative hands. The reasons are everywhere the same. The panorama changes so rapidly, the need for action is so impera- tive, and results so. dependent upon immediate control that legisla- tive regulation is everywhere out of all possibility. The German point of view in connection with the control of their food situation, which is similar to ours in many respects, although, theoretically speaking, it should not be so, has been to stimulate pro- duction, to mmimize the cost and simplify the machinery of distri- bution and to maintain the unit of consumption as near the physio- logical norm as possible. To do this they had to eliminate waste, since the usual waste that exists in any people can not be tolerated in war times. It may surprise the members oi this committee to reahze that Germany wasted each year over 30 per cent of the food units she possessed, including the balance of imports and exports. The waste is probably larger in this country. The program to reduce waste and to increase production was vested in their department of the interior. The problem of distribution and transportation were placed imder a second department, operating in direct connection with the first. In order to increase the efforts of the agricultural classes they enacted what amounted to a minimum price fixed for agricultxiral products. Their method was to make a maximum price for aU staple cereals and this at once became the minimum price. The moment you fix a maximum price to the consumer you neces- sarily fix a minimmn price to the producer. But the converse in their experience was not necessarily true. You can fix a minimum price to the producer without fixing the maximum price to the con- sumer; it is possible to do that when correct action is taken on the minimum price, which is an insurance price. For example, last year the minimum price at one time fixed on potatoes to the producer, for sale as such, was 4.75 marks per hundredweight. That was the minimum price. The producer was not compelled, however, to sell his potatoes; he might feed potatoes. The value of potatoes, as fodder at that time, was some 5 marks, and the result was that many German producers fed their potatoes in large part and sold the prod- ucts in the form of meat rather than as potatoes. This was made possible because there was no maximum price upon meat products which was at aU comparable to the price set upon potatoes. The Government confiscated half the barley at a fixed price; much of the remaining barley was sold at a much higher price. Except where the Government confiscated the commodity, the minimum price did not necessarily constitute the maximum price; but when they fixed the maximum price that constituted the minimum price. 22 FOOD PEODUOnOlir, OONSERVATION, and DISIKIBUTIOIir. Last year the fix6d prices in Germany for sale, confisoation or . otherwise, were as follows for grains, calculated in our terms: Oats, $1.07 per bushel; wheat, $1.77; rye, $1.37; and barley, .|1.61. These were the grains as they came directly from the farm and were not based upon samples or any method of rating. They were direct farm products, and these prices were regarded by all of the agricul- tural experts of Germany to be too low to cover the cost of pro- duction. Being too low, that they did not stimulate production, even to the extent that it was then possible with limited labor. A price was fixed upon sugar beets, and then the acreage was arbitrarily reduced, resulting in repression rather than stimulation. The calculation of the cost of labor and of fertilizer; the question of the value of grains and feeding stuffs as compared to the food stuffs in the country; the prices of aU productive materials and the acreage ?lanted, all showed that there was a notable increase over the normali 'he idea was to keep the cost down to normal, with the result that nothing was gotten by the transaction. The purpose of the German Government in fixing these prices was to hold the profits low. They ma,intained the principle that the retail price of^bread ought to be held to practically the normal rate, and that thought has continued to the present day. The retail price is 78 pfennigs for the 1,950 gram-weight loaf, which corresponds to less than 5 cents a pound . They have held to this principle and have kept the price of bread to the consumer to so low a level that it has prevented them from giving to the producer a price for the grain which was eompara/ble to the cost of production. The authorities boasted always that the price of bread was lower in Berlin than in London. The idea was to pacify the consuming classes, which were largely the social democratic laborers in the cities. But it only kept up the antagonism between the social democratic laborers in the cities and the farmers. This antagonism is more intense to-day in Germany than it has ever been in the history of the Empire. If the Government had held the price higher for the producer, that would have stimulated the production. They adopted at one time for potatoes a price of $4.75 per' hundred- Weight as the maximum price to the producer. They also established a price for the buyer of $5.75, and they then made the regulation that if it were not possible to maintain those prices the Government would pay the difference. The grower received his price of $4.75, and the consumer paid $5/75; but the trade price was either $6.75 or $7, and the difference was paid by the State. That enabled them to equalize the difference between the buying power of' the con- sumer, based on the wages he received, and the necessary price to the producer. ■!■ The experiences of Germany have indicated, I think, that if the price is to be fixed by the producer it must be a price large enough, m view of the extraordinary increase in the cost of production, to really be a profitable price. A mere insurance price against loss was not sufficient to stimulate production. It had to be a price that gave the grower an appreciable incentive if it were to be effec- tive. If this, in its necessary results, raised the cost to the producer^ ^ in the case of a particular article, beyond the purchasing power of the buyer, then the State had to stand the difference. The primary consideration is the fact that the food has to be produced; and the price at which it is to be sold is a secondary consideration. FOOD PRODUCTION, CONSERVATION, AND DISTBIBUTTON. 23 Their eixperience.imayi be. summarized in this statement: Price- fixingi is necessary, lif the agriculturalist, in view of the increased cost of. production, is to be induced to produce more foodstuffs; and this increased price must be based upon a really accurate calculation as to the direct and indirect costs of production. They found it was impossible to control distribution except by extremely wide authority conferred upon administrative officials; but that under those circumstances distribution could be controlled in an effective manner. Practically speaking, distribution has been controlled in an effective manner, except for one method of circum- vention, and that is where the rich purchasing class buys directly from the producer, without the intervention of any middle men. That sort of barter the Government of Germany has been unable to check. But whenever the transaction passes through a middle man they have been able to control it with but moderate difficulty. Mr. McLaughlin. Was it thought to be desirable to try to control the buying direct from the producer ? Dr. Taylor. They have tried to prevent it, and they have failed. Mr. McLaughlin. Why did they try to prevent it? Dr. Taylor. Because it permitted the rich man to buy two or three times as much as the poor man could purchase, more than the denominated ration. Let me give you an illustration of how it works in the case of a particular article. There was no maximum price upon the geese. The farmer was permitted to keep one half his barley at a fixed price, and the, other half he was permitted to sell. The farmer could either sell his barley at $1.16 per bushel or he could keep it and feed it to his geese, and good ones brought as high as $50. These would be sold to the wealthy dass, and they were able to secure a much larger amount of food than the ration permitted them to have. This they have been unable to prevent ip. any way. But apart from this they have found that the control of the middle- man has not been particularly difficult. They have elimiaated him. The attempt to nave the total cost of living approximated to the wages of labor has been a failure in Germany. It is clear, from the calculations of the economists, that the increase in wages to the laboring class of Germany has not been sufficient to cover the increase in the cost of living; it has represented definite loss to the laboring class. This has been finally recognized by the Government, and Germany has a civil pension list, which included, in November, when the last figures were available to me, between seven and eight million peopb. It is a civilian pension list which is designed to cover the difference between the wage and the cost of living. A similar pension list now exists in Great Britain, primarily for the families for those who enhst; and a similar pension list also exists in Switzerland, and in Holland, where the Governments have appropriated large sums to cover the difference between the wages and the cost of living of poor citizens. Mr. Anderson. I understand Germany has regulated the food proposition both from the angle of price fixing and regulating food consumption. I presume you intend to go into the regulation of food consumption in your statement ? Dr. Taylor. Yes;' the regulation of food consumption is made difficult by: the fact that they possess no fluid statistics. Such a thing as a fiving census of foodstuffs, or a survey, existed in no country 24 FOOD PKODUOTION, CONSEE.VATION, AND DISTBIBUTaOlir. before this war. This is the information which this proposfed survey- is designed to hring to this i Government. In the sense that the Steel Corporation knows how much money it has in bank, how much stock it has on hand, what the demand was last week, and what the prospects are in reference to demand and supply next week, no nation possessed for its foodstuffs. There was no country wMch had at hand a rehable statement of facts in reference to its food or feeding stuff supplies except for the larger cities. The Gemians spent six months ia obtainmg an accurate survey, and the British have done the same thiag. Such a survey has to be in hand in order to stimulate production. Similar surveys have been carried out ia Italy and in France. The purpose of such surveys is to show the fluidity in the market of foodstuffs; not merely to show the stocks and receipts, but the mobility, how they can be moved, to what extent they are accumu- lating, and under what impulses they can be brought into movement within the channels of trade. It is not sufficient merely to know what the actual amount of wheat is, but we must know aU ,the facts in connection with the wheat after it has been harvested. It is apparaat to all the nations in the war now that when peace comes "they will have the machinery and the experience to enable them to recon- struct themselves and to continue ia time of peace upon a plane of efficiency in production, distribution, and consumption never before deemed possible, merely because of the information that was never before at hand. Mr. McLaughlin. Was it found to be as difficult a problem as was expected ? Dr. Taylor. Yes; it is a difficult problem. It practically amounts to the transferring into an administrative office of the Government of the working statistics ol the particular trades, and the facts are difficult to obtain. Mr. Jacoway. Dr. Taylor, you said that in the first two years of the war the German Government lost 30 per cent of the food in its trans- portation. I wish you would explain that. Dr. Taylor. I will be glad to do so. Mr. McLaughlin. Before you do that, I would like to ask you one question. You said they obtained complete statistics ? Dr. Taylor. Yes. Mr. McLaughlin. It took about how long? Dr. Taylor. In England and Germany about six months each. Of course neither one of those countries possessed the machinery which this Government has. In an official report prepared for the German Government, the statement was made By a prominent German statistician that the crop statistics and the machimery of the Agricultural Department of the United States were the best in the world. Mr. McLaughlin. It may take too long now to tell us what the plans of Germany were. You are in possession of those, so you can give them to the department ? Dr. Taylor. Yes. ; Mr. Anderson. I have read some magazine, articles in which it was alleged that the expense of the inspection and regulatory service of one kind and another for the control of food in both England and Germany imposed a heavy tax on the products ? , FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 25 (Dr. Taylor. I have no information as to England. It was re- farded in Gerniany as the greatest piece of conservation work they ad ever done. It placed them in a position where their labor and money eould be used to the best advantage. They knew where they stood and they knew where the saving could be made, and they were able to direct their efforts in the right direction and to the best advantage. The administrative officers of Germany feel that the solution of their problem would not have been possible in any other way than by first having a complete survey. They have made mis- takes, but that was not the fault of the survey. Mr. Haugbn. How is the fixing of prices to be accomplished ? Is it proposed that the Government shall step in and say that so much shall be sold at the minimum price 1 Dr. Taylor. I do not know about that, but I feel that the con- tingency can never arise. If we were to have this year a bumper crop, it would not half fill the needs of the people of Europe. It is Soing to take a two years' crop to repair the deficiencies in their ve stock, in their body tissues, and in their stores. The conditions in Holland and in Switzerland are almost as bad as those in Germany and in other countries. It is practically impossible for them to Sroduce cattle, and the cattle they have are emaciated to the last agree. They have no stock of wool or animal produce of any sort. The entire population is emaciated. They have no future stocks of food. There is no food in Europe except the grain hid in the distant granaries of Russia, and it wiU take two bumper crops in this country, added to all they could produce this year and next year on the basis , of their war-time experience, to place them where they were the year before the war broke out. Mr. Anderson. This whole proposition of price-fixing in the present situation is based on under supply ? Dr. Taylor. On a total under supply ? Mr. Haugen. But they have been fed on the live crop. Dr. Taylor. Yes ; after a fashion. Mr. Haugen. There are less people to be fed to-day than there were a year ago. Dr. TAYLOR. A million or two. Mr. Haugen. My contention is that you can not fix the price unless you furnish them a buyer. Dr. Taylor. The buyer is there. : Mr. Haugen. But there is no guarantee of a buyer unless the Government guarantees the buyer. Mr. McLaughlin. Our Govermnent wiU become the buyer during the war, and the supply and demand wiU take care of it afterwards ? Dr. Taylor. Yes. Mr. Haugen. How is the Government to take care of it ? Dr. Taylor. The European buyer will buy all he can in war time, and his .government wiU buy as soon as the war is over. . Mr. Haugen. They wiU buy it as far as they need it, but beyond that we have no assurance. Dr. Taylor. But their need is so enormous. Mr. Haugen. It is hard to estimate the need and also the supply a year in advance. Dr. Taylor. That is true. But if you will take the amount of foods we have ever exported and contrast them with the people of 26 FOOD PRODUCTION,. CONSERVATION, AND DISTBIBUTTON. Europe as you see them now, there will be no question but that they wjill- take it. ■,.:.■ ■■< ,,,.,;■ -i y-"'- •■> '• "'' Mr. Haugen. There will be no question in Germany, but America is different. Dr. Tatlor. But the food conditions in other countries are almost as bad as those in Germany. Mr. Haugen. But they have other countries to draw on; they have Canada and the United States, and Germany has not. Dr. Tatlor. But I am speaking of peace times. Then the whole of Eiirope must draw upon America, and there will be an enormous demand for food. The extent to which they are now divested of food supplies is extreme, and it would require more than any one crop we can raise to repair the losses. Mr. Haugen. The proposition is that the Government is to fix the price, but no guarantee is made that it will be taken at the price fixed. * Dr. Tatloe. That is not my function; that is a legal question... Mr. Haugen. I wanted to get at the proposition. Dr. Tatlor. I think probably Mr. Brand can tell you about that. Mr. Brand. I can respond to that so far as the theory of the bill is concerned. The point is that if the maximum or minimum prices are fixed, particularly the minimum prices, the seller would be issued a permit to sell at the market, and that the Government guarantees the difference between the minimum and the market prices. Mr. Haugen. Is that the proposition ? Mr. Brand. Yes. Mr. Haugen. That the Government guarantees the price ? Mr. Brand. That is the thought of the bill ; that it will guarantee the minimum price. Mr. Haugen. Does the bill so state? Mr. Brand. No; it confers the necessary power. Mr. Young of North Dakota. Doctor, I understood you to say that the people in Europe have been underfed, and that it will re- quire a certain amount of food consumption on their part to build them up again to their normal physical condition ? Dr. Taylor. Practically speaking, the entire population of Europe may be regarded as imderfed. They are below their ordinary con- sumption and their ordinary bodily weight, and below their desiiies; and the psychology and physiology of those peoples will be to rebuild themselves after the war. Mr. McLaughlin. An American correspondent, speaking last night at a meeting in this city, stated that he had been a long time in Germany and that he had gained 12 pounds during the first three weeks after he left Germany. Dr. Taylor. That was Mr. Swing ? Mr. McLaughlin. Yes. Mr, Young of North Dakota. That is represented by an increased amoimt of food consumed ? Dr. Taylor. Yes. When I was in Germany I tried to live on the ration for a short time. The tendency of the ration in the Central Empires is to bring every individual down to minimum weight, FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 27 t^rhere the ration will hold him. That applies to some extent to all the other nations, because food supplies are short and wbrk id excessive. The Chairman. How long were you in Germany ? Dr. Taylor. From March to October, 1916. (Thereupon, the committee took a recess until 1.30 o'clock p. m.) AFTER RECESS. The committee reassembled, pursuant to the taking of recess, at 1.30 o'clock p. m. STATEMENT OF DR. A. E. TAYLOR— Continued. The Chairman. You may proceed. Dr. Taylor. Dr. Taylor. One member of the committee asked this morning about how the percentage of waste is determined. The crop sta- tistics yield the data for plant produce. We obtain from the sta- tistics of the meat trade the figures for the meats produced in large slaughterhouses. We get the statistics in reference to the rural and house slailghterings from the local county officials. We obtain, in a crude manner, the amount of foodstuffs consumed by the agricul- tural popiilatioh. We secure the amount of imports and exports, and strike a balance. AH sources of food supply are covered in this way. All these are calculated for their nutritional values and divided by the total population. In the British reports this was given for each individual as 3,100 calories. We know that no people consumes that amount of food, because it is far in excess of the needs. That is the intake of a man who is working, and would be excessive for women and little children. When we calculate the amount of a ration, we find that the ration in Great Britain is not in excess of 2,400 calories a day. The amoujit of food totally available was 3,100 calories and therefore the waste must have been 700 calories per capita per day. A figure for waste can be shown to hold for every civilized nation: The waste occurs in the harvesting, in the transportation, in the markets, in the home, and in decomposition. The attempt is first made to attempt to estimate the destruction of foodstuffs on the fai^m by vermin, and by decomposition, etc. Then we consider the waste in transportation, the exposure of the products to the weather, etc.; then the waste in the wholesale and retail markets. Finally, we consider the waste in the home. We attempt to segregate the waste. The Chairman. Where do you find the largest amount of waste? Dr. Taylor. That depends upon the product. In the case of potatoes, the total waste of potatoes can not be reduced to less than lb per cent, and in Germany about two-thirds of that was shown to occur with the producer. When they cover-in for wintertime it was often done without due regard to or provision for the severity of the winter. In the case of waste in green vegetables, the waste is very largely in the channel of trade. In each case it has to be determined by a survey. 28 FOOD PBODUCTION, CONSEKVATION, AND DISTRIBUTION. Mr. Lee. When you speak of potatoes, you mean the Irish po- tato? • Dr. Taylor. Yes. ' ' ' ' The Chairman. Is there any process for drying the Irish potatoes ? Dr. Taylor. Yes; they have a very good process for dryingthe potatoes. They use either the vacuum plant or a fan plant. They nave permanent plants and portable plants. They go out and dry what is raised in excess of the demands; they dried hundreds of thousands of potatoes last year, and all kinds of v^etables also. They have garden associations for drying; and the portable dryers go to the markets on Saturday afternoon and select the vegetables that will not last over until Monday, and they dry them at once. The indications are that last year the driers saved about on&-fourth of the total vegetable production of Germany. These products, when cooked, have about the same normal color and the natural taste of the vegetable before it is dried; they are in many respects quite superior to the canned article. The Chairman. They have everything except the water? Dr. Taylor. Yes. The Chairman. Doctor, have you considered the advisability of the Government's inaugurating some system of portable drying con- cerns in rural communities in this country, and fixing dates when farmers might bring in their vegetables, their potatoes, their beans, and things of that Kind, land have them dried? Dr. Taylor. That is exactly what they are doing. The Chairman. Do you think that would be practicable in this country ? < v Dr. Taylor. It has been practicable there. It was merely a,;ques- tion of organization and capital, and it was done partly by th®- State and partly by the organizations themselves. The Chairman, Are these portable concerns very expensive ?, . Dr. Taylor. I do not know, because the cost of the machines was very high in war time. It was said not to be an expensive process. As a matter of fact, the vacuum dryers used for diying apples are said to be inexpensive. The Chairman. Would it be practicable to inaugurate a proposi- tion of either encouraging the farmers to do that, or furnishing home dryers for our farmers ? Dr. Taylor. Certainly encouraging. The Chairman. Your idea wouW be that it would be better to have the portable dryers, to go from town to town ? Dr. Taylor. Yes; because their radius would be increased. One dryer of that kind could get around to a number of townships. They have devel(^ed dehydration in Germany also for the sugar beet. Owing to difficulties of transportation, refineries can operate only for a certain area. They found that by drying the sugar beets they could extend the operations of one refinery in area, and also enable it to carry its operations throughout a longer time. Sugar pulp is now commercially dried in this country. The Chairman. Mr. McCann, can you give us any figures on that ? Mr. McCann. I may say that a machine with an output of 25,000 costs about $12,000. Mr. Thompson. Does that mean a machine complete in itself, or do they need any foundations, or is there any local expense ? FOOD PBODUCTION, COltSERVATION, AND DISTRIBUTION. 29 Mr. MoCann. They require an operating plant, and several of them have been erected on rolling stock. I beheve the most suc- cessful process, determined by the character of product that has been produced, and that has been tested out by the Army and Navy, is that developed by the fan process, in •which the cellular structure of the product is not destroyed.. Dr. Taylor. Then another improvement was in the collection of garbage, to separate the garbage of the inorganic type from the gar- bage of the organic type, as between vegetable garbage and ashes, and things of that sort; one is utilized for cattle feed, and the other is sent to the incineration plants. That was carried on in aU cities with a population of over 40„000, and the result of the collections, when they got them in operation, was that they returned 2,000,000 quarts of milk a day and far more than paid for the expense. These collections were made with a special machine, and the materials were dried, pressed, and dehvered in brick form. The Chairman. Based upon our population, have you figured out how much that would amount to in saving in this coimtry ? Dr. Taylor. No, I have not, because mat assimie that we could collect with the same unit of expense. Then they have been up against the problem of loss in transporta- tion. This ,they were not able to solve, and the transportation prob- lem has been the most difficult problem in Germany. The military demands are enormous, and the rolling stock is going down, and the railway system of Germany is its weakest point to-day. The Chairman. Have you considered the proposition of a ccran- pleta control of the transportation system of this country, with special reference to preference to the needs of the situation as they may arise? I have this in mind: You frequently have gluts in some markets, and starvation in other markets. For instance, the potato grower in Michigan or South Carolina may send 10 carloads of pota- toes to Chicago. It is found at some switching point that they have plenty of potatoes in Chicago, but that there is a tremendous demand for potatoes in Washington. Would you advocate the proposition of giving some power to make switches in a case of that kind? Dr. Taylor. That might be done. The Cahfornia Orange Growers' Association may start several carloads of oranges to Cleveland, and if they find that Cleveland does not wish oranges, those cars can be sent anywhere else in the United States. Mr. Rtjbey. The point is to stop those cars before they get to Cleveland. Dr. Taylor. Yes. Mr. Lee. Would it not be better to ascertain the point to which the cars are to be sent ? Dr. Taylor. It would be, but that is the basic proposition. If grain from the moment it enters the elevator or the mills, the beef and packing-houses' products, and the cold-storage articles were all regarded as in interstate transit, subject to a central organization, so that transportation could be expedited by the Interstate Commerce Commission, with central control, there would be greater efficiency. The Chairman. And a saving of great waste ? Dr. Taylor. Yes. The Chairman. I notice in the morning papers that the sidetracks of railroads in Indiana are fiUed with car loads of wheat that should be moved. 30 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Taylor. There are great quantities of grain standing i^ cars on sidetracks all over the country, and millers face the situation of grain bought and paid for > which they can not get delivered'.' A.s a result of that, they have to go out and buy grain every day at the market price in order to keep their mills in operation, because they can not get the grain that belongs to them on account of the lack of cars. The Chairman. Is that largely the cause of the speculation ? Dr. Taylor. That is one of the causes. Many millers have a man out every day covering their needs for the next few days, notwith- standing the fact that they have large amounts of grain which they have paid for lying on sidetracks that can not be delivered. Mr. McLaughlin. In Germany is there a law prescribing how much wheat jnust be used to go into flour ? Dr. Taylor. That is all definitely regulated. They attempt to force production on the one side, and they attempt to curtail waste on the other hand. There is also the attempt to stretch what they have. There are three ways of doing that, and these have all been imitated by the other Governments. One is the attenipt to segregate food from feed and prevent them from overlapping. Li other words, not to permit food to be used as feed. They prevent the feeding of bread grains to live stock and make a segregation of feeds in order to- prevent that which is set apart for human food being used for animal food. This restriction has been a complete failure in Germany. They have failed to prevent the farmer from doing exactly what he wanted to do with his products. The farmer holds wheat. They have never held the German farmer down to the ration for the industrial people. The farmer does what he pleases with his produce. The German Government confiscated his grain, but it ccluld' not take it away from him. They had no one to go to the farmer to get the grain; they had nothing in which to haul the grain away; they had no storehouses ; and they had to leave it on the farmer's; place. He was notified that the grain belonged to the State and that he was to use only so much lor himself. But they could not make that effective, because they had not the means to effect dis- possession. Then there was no way of punishing the farmer. They could not fine him or imprison him, and all they could do was to teU him not to do it again. But the farmer did the same thing with each successive crop, because his problem was directly in front of him, and he did not believe the stories that there was a shortage in the cities, and therefore he followed his own instincts, and the agri- cultural class has suffered less than any other class in Germany. It is not possible to prevent the farmer ^rom using food for feeding stuffs. They stretch flour in several ways, recognizing that bread is the keystone of the nation's food. They make more flour, either by- increasing the milling percentage or making mixed flours,' or pre- venting the industrial use of the grains. No industrial starch may now be made in Germany from grain. They have stopped the distillation of spiritous liquors forbeverage f)urposes ; they still manufacture much alcohol for industrial purposes rom grain. The ability to save grain from the manufacture of alcohol depends upon the power to obtain alcohol in other ways FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 31 The alcoliol required in war times must be so largely in excess of th© amount produced in peace times, that unless other sources are available, one can not save grain. It may be predicted, I think, with confidence, that the industrial alcohol required in this country during the next fiscal year will exceed the production of alcohol for beverage purposes that ever occurred in the United States. A nation at war, therefore, faces not the question of reducing distillation, but the question of finding distillers and securing the production of industrial alcohol, and seeking sources for it outside of the substances that may be used for food purposes. In Germany a large fraction of industrial alcohol is made from a crude sugar obtained from straw by a chemical process, and we are developing the production of alcohol from sawdust. They utilize their sugar beet residues, and between the sugar beet residues and the straw sugar they are able to produce the larger part of the alcohol they need without using millable grain for that purpose. They use a certain amount ofpotatoes. The Chairman. What do you mean by straw, what kind of straw ? Dr. Taylor. Ordinary grain straw, acted upon by alkali. The Chairman. Wheat straw? Dr. Taylor. AH straw* We are using sawdust now, and we have one plant which is turning out 2,000 gallons of alcohol a day. The Chairman. Is that in Georgetown, S. C. ? Dr. Taylor. I am not sure. It is in the southeastern part of the country, somewhere. The Chairman. We have the raw materials for aU the industrial alcohols we need ? Dr. Taylor. Yes. But there wUl be no possibility of saving bread grains from the manufacturing of distilled spirits, with the war demand as it is and will be, unless we utilize some other source. The Germans have abolished the manufacture of beverage spirits from grains. ,i Mr. McLaughlin. Distilled spirits ? Dr. Taylor. Yes. Mr. McLaughlin. Not the brewed spirits ? Dr. Taylor. They have reduced the manufacture of malt to 40 per cent", leaving it to the brewer to determine how much beer he will produce; and the brewers have found that they do not need to reduce the amount of beer production in proportion to the amount of malt produced. In Belgium the brewers operate on next to nothing. I was told in Germany last fall that with 40 per cent of normal malting .they were producing 65 per cent normal volume of beer.- In other words, they were diluting it about 50 per cent. That can be done by a clever brewer without the discovery being made by the average drinker that there is any appreciable dilution. It brings it to somewhere near 2^ or 3 per cent alcohol. Mr. DooLiTTLE. What is your idea about prohibiting the use of grains in this country for the making of alcohol ? Dr. Taylor. I do not see, unless we seek out other som-ces for the production of industrial alcohol, how we can save grains. We used last year in the production of malt for beers about 52,500,000 bushels of barley. If we were to reduce that to 40 per cent, as they have done in England and in Germany, we would save 30,000,000 bushels 32 FOOD PKODUCTION, CONSERVATION, AND DISTRIBUTION. of barley that can be used to stretch the wheat supply. We could also save 8,000,000 bushels of corn and a milUon and a half bushels of rice. The total amount of grain used last year for making fer- mented hquors was 68,400,000 bushels, and if we reduce that to 40 per cent that would require about 26,000,000 bushels. Mr. DooLiTTLE. Will you correct a statement credited to Dr. Waters, in which there was a misprint of figures in regard to the amount of grains used in the production of alcohol ? Dr. Taylor. The newspapers credited to him the statement that the amount of grain used was 640,000,000 bushels. That was the equal to the entire wheat yield. The figure for fermented Mquors is 68,400,000, and for distilled spirits 39,300,000, a total of 107,700,000 bushels of all kinds of grain. As stated there, nothmg could probably be saved from distilled spirits. It may involve the turning of whisky plants into industrial alcohol plants, which can be done at very low cost, and without much inconvenience. Whatever reduction the Government might choose to make in the preparation of beer, the gain Inay be directly calculated. What would be saved from distilled spirits would, in any event, be largelj^ corn, whereas in the case of beer the saving wotild be in barley, which has definite food uses. Mr. EuBEY. Can you give us the figures of the grains used for brewing ptu-poses ? Dr. Tatlok. The grain used for brewing purposes for the year ending the middle of October, 1916, was barley 52,439,000 bushels, corn 13,573,000 bushels. Then there was a small amount of rye, oats, wheat and barley, making together only 72,000 bushels. There was quite a large amount of rice, about 2,354,000 bushels, makidg | in all, for beer and fermented Uquors 68,439,000 bushels of grain. In distilled spirits the barley used amounted to 4,000,000 bushels, corn 32,000,000 bushels, rye 3,100,000 bushels, and other grams 60 or 70,000 in addition. Besides, there entered into the making of beers 54,000,000 pounds of sugar, 37,000,000 pounds of hops, 2,740,- OOO gallons sirup; and 24,750,000 pounds of other materials.' There entered into the manufacture of distilled spirits 152,000,000 gallons Jj of molasses, a portion of which was edible molasses (due to the very heavy demand of industrial alcohol makers), a portion of which was nonedible. The amount of each class of molasses we do not know. We have not yet been able to secure information upon that point. The total was 153,000,000 gallons. The valtie of all materials was about $145,000,000. Mr. Anderson. Have you any figures as to how much of the malt was reconsumed ? Dt. Taylor. We have no figures as to how much malt was recon- sumed. A large proportion of the distillers and brewers' grains are fed to live stock. A certain fraction is lost; some is used as fertilizer. The exact amounts are not determinable by any data or records we have. The opinions of the trade are contradictory. The larger portion is probably fed. The Germans have solved the question of stretching flours, and that is being done in all coimtries concerned. It has been found, . • however, impracticable and unprofitable to mUl to higher than 81 or "82 per cent of the weight of the grain. The 93 and 97 per cent millings of the Germans were not a nutritional success. Mr. Jacoway. Why? FOOD PEODUOTION, CONSEEVATION, AND DISTBIBUTIOIir. 33 Dr. Taylor. Because nothing is gained by milling higher, so, far as energy nutritional units are concerned. If we mill 100 pounds of wheat to 97 per cent and another 100 pounds to 82 per cent, and take the 82 poimds of flour from one millmg and 97 poimds of flour from the other, and feed them to a group of experimental individuals, we will find that no higher utilization will be obtained from the 97 than from the 82 pounds, using the protein as measurement. The Eresence of the coarse matters lowers the utilization factor and eyond 82 per cent practically nothing is gained. Up to 82 per cent we do gain; beyond that merely rob the grain offal of energy units. Mr. Jacoway. You gain more by feeding them to the stock ? Dr. Taylor. Yes; therefore, the routine milling of most foreign nations now is about 80 per cent, on the basis of standard grain. And there is more than that to be considered. The British law states that they shall mill to 81 per cent; the British law of peace time permitted 18 per cent water in the flour. Our law permits only 13^ per cent of water. In their 81 per cent milled flour there is 3 per cent more water in practice, which corresponds to 75 per cent in our flour. Our milling is about 72 per cent on our standard and 75 per cent on theirs, so we are really not so much lower than they as is apparent upon paper. The French mill to 80 per cent. Mr. Lee. What is taken out of the grain when you make Graham flour? Dr. Taylor. Some of the so-caUed whole-wheat flours Are only 82 per cent. The true Graham flour is 97 per cent. Mr. McLaughlin. You speak about 72 per cent or 76 per cent. Is that the percentage which goes into what is called patent flour? Dr. Taylor. No, sir; the hi^est patent flour is about 56 per cent milling of the weight of the standard grain. Into the so-called stand- ard and second flours goes the other fraction, and the svoca of these amounts to about 72 per cent in the case of standard wheat. Mr. McLaughlin. Is there any truth in the story of an experiment having been carried out by one of the agricultural colleges oi feeding guinea pigs first with whole-wheat bread and they flourished and grew fat, and later they were fed upon patent flour bread alone and they starved to death ? Dr. Taylor. Such animals do not thrive on an exclusive diet of patent flour. Leaving the guinea pig out of the question, because that is a peculiar animal (they can not live on the whole oat grain), l3r. GrenfeU has observed some interesting results along that line in the people in Labrador. You know that when a person lives on polished rice alone he will contract beriberi. When people live on patent flour as the principal or exclusive food, they fail to maintain nutrition. Mr. Lee. Would a person live longer if he were to eat 95 per cent of the grain in the flour ? Dr. Taylor. With a mixed diet, no; on a flour diet, yes. No investigations having been made on that subject, my reply rests upon collateral' evidence. This question deals with balanced pro- teins and with substances known as water-soluble substance-A and fat-soluble substance-B, commonly called vitanims. These are certain substances necessary for nutrition besides fat — protein, 104176—17 ^3 34 FOOD peoduction:, conservation, and distbibution. carbohydrate, and tke salts that exist in all native foods to a dif- ^erefl,t extent in different, portions. They are present m a^ kinds ol vegetables and fruits and m meats and dairy products, and a person who lives on a normal mixed diet does not run any danger ol de- ficiency disease if the vitanims have not been destroyed by heat. If one were to Mve on bread alone, it would be of absolute importance as to what kind of flour he used, to have whole-wheat flour instead of patent flour. Mr. McLaughlin. I heard Gen. Gorgas say when I was on the Isthmus that beriberi was caused by polished rice. Dr. Tayloe. Yes. There are no indications in the civilized world, as a whole, that the differences in the mflling of flour used by people on a normal mixed diet have had any influence upon their general nutrition. It is of course well known that the coarse flours pro- mote free action of the bowels and patent flours do not. Mr. McCann. With respect to the findings of Dr. Powell and Dr. Sulhvan, of the United States Public Health Service, as published in a bulletin issued in April, 1916, regardmg the deficiency, of salts, and the various phosphorous compounds and others on the devel- opment of the young, deficiencies which are notoriously character- istic of highly milled grains, to what extent should the findings of those men now affect the decisions of a body of this kind 1 Dr. Tayloe. None. There are too many uncontroled variables. There is no evidence that in the case of people nourished upon a mixed, iateUigently selected diet that the studies on so-called defi- ciency diseases apply. There is no evidence in this country that we, as a people, are on the edge of deficiency diseases and that the Government could avoid them by increasing the milling 0|f graia. Vogttein's studies were made on the diet of a localized group of cer- tain t3rpe, subsisting on a very limited and peculiarly chosen diet, a diet that is not necessary in this country at all, but which rested upon the psychology and economic conditions of the class imder consideration. The literature we have at hand on the subject does not indicate the widespread existence of deficiency diseases, and the factors of unbal- anced proteins, lack of vitamins, and lack of minerals are still con- fused in the occasional instances of the diseases under discussion., A subject so unclear to the scientific iavestigators is not the subject for governmental regulation. The Chaieman. Assuming that we should give permission to increase the milling of the grain 82 per cent, what saving would be effected ? Dr. Tayloe. It would be a saving of about 8 per cent over the present production of fiour. This woidd represent an increase of some 1,750,000 barrels of flour for each 100,000,000 bushels standard wheat. The Chaieman. That is, by increasing it from 72 to 81 per cent? Dr. Taylor. Yes; I think if there is to be a higher milling, it ought to be raised gradually. If we were to attempt to do it at once, we would provoke difficulties in a majority of the bake shops within a week. Bakers have to be taught to use higher-milled flour. It can not be done suddenly. Mr. Young of North Dakota. Did they ever know how to make good bread in England? Did you ever get any real good bread there before or after the war started ? POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 35 Dr. Taylor. Certain types of British bread are good and very substantial, at least. There is no question but that the technique of the baker has to be developed. Ovfer there everybody uses baker's bread, and it made at first a great deal of difficulty. In Belgium the C. R. B. controlled the bakers, and they had to teach them. Then, with the 82 per cent milling, in those countries a certain number of individuals have had to become accustomed to the change. With the higher millings, 93 per cent in Germany, a certain number of individuals never did become accustomed to the bread; the bread constituted a persistent source of irritation. They have been also mixing flours, and the present tendency seems to be to favor mixing. They now do that in England up to 10 per cent. They are mixing flours in France, Holland, and in Switzerland. One present German flour, if I am correctly advised — the figures have not been officially verified — consists of 65 or 70 parts of a mix- ture of rye, wheat 30, with 35 parts of barley flour. They have found mixed fl-ours very satisfactory. You can add about 10 per cent of corn meal, not corn starch, or 10 per cent of rice flour, to wheat flour, without altering the bread-making quahties or the taste of the bread to any material extent ; and you can add about 25 per cent of properly made barley flour or rye flour if it is not milled too high, and German experience with that has been very successful. Mr. Anderson. What distinction do you make between corn flour and cornstarch ? Dr. Taylor. Corn flour includes the protein of the grain. Corn- starch is practically pure starch. Of the diff eren t kir ds of meal, com is the most difficult of all to mix. They have tried it in Germany, but they found it difficult. Rice works weU up to 1 per cent. Bar- ley and rye work very well in the amounts given. Mr. Young of North Dakota. You would not consider that the white part of the corn would add any particular food value to the flour ? Mr. Taylor. It will add the starch, which is the part that is not especially needed. Furthermore, cornstarch added to bread does not act as com flour when the bread is made, but is much more injurious to the bread-making qualities of the flour. Pastry makers have always used starch, and it produces a product more of a pastry type than a bread type. The difliculty with the com flour in this country is that we have so little good quality white com flour. The crucial feature of the bread situation is this : If a people has the normal amount of bread to which it is accustomed, it may be deprived of many other articles in the diet, and wiU stand repression with equanimity; but if the bread ration be low, repression or sub- stitution elsewhere in the diet can not be easily enforced. Every attempt must be made here and with the allies to maintain the bread ration practically intact in quantity. Mr. Young of North Dakota. May it not be made up in meat ? Dr. Taylor. No ; it can not be satisfactorily made Up by anything. Both in England and in Germany the bread ration has been in part supplanted by dairy products and meat; but it can only be done with the use of a type of cooking that becomes impossible to a large number of people who have to consider the cost. On a large scale it is expensive, impractical, and unsatisfactory. J 36 FOOD PEODUCTION, CONSERVATION, AND DISTEIBUTION. Bread ought to constitute' 40 per cent of the diet; that is, of' the normal diet. In France it Aivas 52 per cent. We could, by stretching our wheat flour with the other grains avail- able and by> milling not to exceed 80 per cent, increase our flour stock about 25 per cent. Whether this increase in flour stocks would be wisely applied to all flour consumption is a question that can only be determined when the total wheat and grain stocks of 9ur country and Canada are checked up with those of our a-flies. It is necessary for the adjudication of this question that all the grains m the nations concerned be pooled, and that some central authority in this country be empowered to determine what is the wisest course in regard to our flour production. Here, as in Europe, the decision must rest in an administrative officer. It can not be legislated upon, because the facts are not available in advance and the situations fluctuate. It will depend upon the crop conditions and the available stocks. It is possible that the available stocks of wheat and bread grains in this country and Canada may be found to be actually sufficient to require only slight mixing or higher milling; and, on the other hand, it may be found that very much higher degree of milling and a greater degree of mixing will be necessary, depending upon our circumstances and the conditions in England and France. Mr. McLaughlin. We have to take into consideration the matter of the food supply for Russia, do we not ? Dr. Taylor. We do not, at present at least. Mr. McLaughlin. Why ought we not to do it ? Dr. Tayloe. It is my understanding that Russia has the food in the interior, but has not the facilities to get it to the cities and the front. It is a breakdown of the transportation system that is caus- ing the scarcity, and transportation from the allies to Russia is so precarious that it is sufficient only for military purposes. The Russians will have to solve the problem of getting their own hidden food supplies to their large cities and their western frontier. They have the grain; there is no lack of grain, but there is a serious break- down of transportation facilities, so that the grain can not be trans- ported to the large cities and to the western front. Mr. Haugen. Is it your understanding that they are suffering from lack of food ? Dr. Taylor, Qn the western frontier they are short, and in the industrial cities. They are upon short rations everywhere in Europe. There is no single people of Europe, even those not at war (with the possible exception of Spain), that is getting anything like its normal peace time supply of food. Mr. Jacoway. How long will' the present supply run Germany? Dr. Taylor. Until the new crop comes in, probably, with a very close shave. The belt is right up against the backbone. Mr. Jacoway. In other words, they will make it reach ? Dr. Taylor. They will make it reach, in my judgment. Mr. Jacoway. How much longer ? Dr. Taylor. It depends upon the next crop — ^upon the fertilizer, the labor, and all other conditions in production, which are very difficult in Germany. The disorganization of labor and transporta- tion in Germany are their most serious problems. Mr. Jacoway. Has Germany a balance of food now ? FOOD PKODUCTION, CONSERVATION, AND DISTRIBUTION. 37 Dr. Taylor. No; she has a minimum amount of food now, just enough to get along, for the industrial classes. The wealthy classes and the agricultural classes are in pretty good shape, 'but the 20,000,000 mdustrial population in the large centers are on a mini- mum ration, and have been since April, 1916. Mr. Jaooway. Just before the committee recessed this morning, you said that Germany found she was losing 30 per cent of food units in peace time but later she made up that lost ground. Dr. Taylor. She found she had been wasting 30 per cent in peace time. Mr. Jaooway. How does she do it ? Dr. Taylor. In every possible way the waste is checked up. She takes the total garbage, for example, and separates the utilizable fraction; from the waste of aU kinds of vegetables and fruits that would spoil she takes the substances that can be utilized for the manufacture of alcohol. She creates a substance for the manufac- ture of alcohol by preparing crude sugar from straw. Mr. Jacoway. Does it not take a lot of officials and other men to carry out a plan of that kind ? Dr. Taylor. Yes, it took a relatively large staff, but small in proportion to what they saved. It was very easy when they had the machinery on the ground and had the information. It has been a very profitable feature of Germany's conservation measures. It has reaUy been the only instance where she has gained much. She has not increased production; but she has reduced waste to a low minimum. The iChairman. Are there any questions any member of the com- mittee would like to ask Dr. Taylor? What is the food supply of France to-day? Dr. Taylor. We do not know that definitely. I understand Mr. Hoover wiU bring the figures. But in general it is supposed, on the basis of the crops, with the rate of import that held before the 1st of January, that England, France, and Italy would be able to pull through until their new crops, with close figuring, but without lux- uries. Any reduction of the tonnage between now and the coming in of the new crops would have an apprehensive result upon the pres- ent food supply. I think the truth is that before England, Italy, and France get their new crop harvested they wiU be about as close as any people ever wish to be. - Mr. Jacoway. What about the food supply in the physical domain of the two countries ? Dr. Taylor. It is low. Mr. Jacoway. Do they not have to import stuff ? Dr. Taylor. I am including that. I said with the normal im- {)orts as they were before January. We have now no way of calcu- ating what is going in. Up to that time it was apparent that the English, French, and Italians would come through on the rate of imports they had estabhshed plus their known food supply. Any increased activity of the U boats would, of course, reduce it, but to what extent we do not know. We are advised it is a very serious condition. Mr. Jacoway. I would like to have you state to the committee how these countries are saving their perishable stuff. 38 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Taylor. I do not know oflficially what England, France, and Italy are doing. I have toldyou what Germany is doing.' I presume they are following the same plans. Mr. McLaughlin. You say Germany has not been able to increase her food supply ? Dr. Tatloe. She has not; her food production has fallen. Mr. McLaughlin. How about England and France ? Dr. Taylor. England is supposed to be increasing her food pro- duction very materially. Neither Jtaly nor France has equalled her peace-time food production. A&. Young of North Dakota. The area in France was cut down. Dr. Taylor. The area in France was cut "down. France and Italy have riot equalled the average peace-time production. Mr. Heflin. How much of the area was made imfit by the dyna- miting of the land by the armies ? Dr. Taylor. I do not know. Mr. Heflin. It has been reported that they have made a large area unfit for farming purposes for several years. Dr. Taylor. I do not know. Mr. EuBEY. In the early part of your remarks you called our attan- tjon to the fact that you had read and studied the regulations and ■"aws adopted in Germany in regard to food conservation. Are those laws and regulations voluminous ? Dr. Taylor. I have four books, comprising the regulations of the German Government. They are aU regulations, not laws. * Blanket authority was given the department concerned, and I fancy there are seven or eight hundred rulings of the German food board. I haye four volumes. Mr. Jacoway. Are those all carried out under rcilitary law? Dr. Taylor. No; they are carried out under the department con- cerned. Up to June, 1916, Delbrueck, the Secretary of the Interior, had entire cnarge. When he retired from ojQ3.ce and Heeffrich assumed- the office, a special bureau was created which is still in existence, that has charge of food affairs. He is directly responsible to the Chan- cellor and not to the military authorities, though they could depose him. The food supply is under the administration of what corre- sponds here to the Department of the Interior and the Departmeat of Agriculture, combined. Mr. Jacoway. Do you know of a law under which England is sup- posed to have guaranteed the Canadian farmer a price of $1.75 a bushel for wheat for three years ? Dr. Taylor. I heard she had offered that, and the Canadians declined it. I do not know officially. Mr. RuBEY. I think it would be valuable for the members of this committee if we could get in some concise way a statement of the regulations and rules and laws that have been passed in these countries and what they have done to conserve their food supphes. That is the reason I asked that question. I do not know whether it would be practicable to get that or not. Mr. McLaughlin. I had that in view when I asked the witness this morning if he had that. Dr. Taylor. That can be abstracted for this committee. Mr. Heflin. How many pages to the volume, of those you have? POOD PBODUOTION, CONSERVATION, AND DISTBIBUTION. 39 Dr. Taylor. I suppose they would correspond to six or eight hundred pages of your hearings. _ The administrative branch of the German Government has authority, and it regulates in accordance with the developments of each month. They would regulate and plan for each new crop according to the fertihzer, the labor, and the other conditions. When the crop came in, they would regulate in accordance with what the crop had yielded. Mr. Young of Texas. Do you beUeve any such system as that could be put into operation in this country? Dr. Taylor. In its larger features, yes; not in its minute features. Mr. Young of Texas. How do they get this information to the individual farmer? Dr. Taylor. They have a large machinery in operation. There are 27 states and principalities; each one is divided into districts, and each one of the districts into communals. Each communal has a man at the head, and he is supposed to know the conditions and to keep the department informed. The machinery is not as good as that possessed by our Department of Agriculture. The Chairman. Doctor, to summarize your testimony, would you say that in view of your studies of world conditions, that we need very much to conserve and increase our food siipply in this country ? Dr. Taylor. We need to conserve and increase our food produc- tion; we need to eliminate waste; and we need to control distribution. This can be done, according to the experience of European nations, only by an administrative force possessing ample powers to act in accordance with the information in their possession. Mr. Haugen. When it comes to production, the great question with us is labor. We have millions of acres of land to cultivate which is not tilled. Dr. Taylor. It is the labor. Mr. Haugen. Is not that the most important part, to secure the experienced laborer ? Dr. Taylor. Yes. Mr. Haugen. Are conditions here any different from what they are in Germany ? Dr. Taylor. No ; labor is there the chief consideration. Mr. Haugen. But we have the advantage; we have the land. Dr. Taylor. They also have more land than they have labor to-day. Germany has more land than she can properly cultivate or fertilize. Mr. Young of Texas. Doctor, I want to ask this question: I think this is a different system of government from the Governments that they have over there, and I must disagree with you. I do not believe that you can put the system into effect in this country here that they have got over there, because our people have been trained along different lines, and you can not go down in Texas and tell a man that he must plant so many acres. Dr. Taylor. I do not suggest that. Mr. Young of Texas. I am from an agricultural State, and I do not know , anything but agriculture. I believe the solution of this problem in this country is to let the farmer know he is going to get the proper price for his product and he will do the rest. That is the way I feel about it. 40 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Tatlor. I think that is true; but in the distribution and utiH- zation of foodstuffs in this country there must be a central authority, cognizant of our stocks, and able to take action, for example, on the question of milling flour or mixing flour, because only a central authority could possibly secure the information, and the power of action should be concentrated. The Chairman. It is a question of the diversion of shipments. Dr. Taylor. It is partly a question of diversion of shipments. It is an administrative function ; in England they have given power to one man, and their Government is quite like ours, in fact. Mr. McLaughlin. Is Germany supplying labor for the farm by enforcing enhsted men to do farm work ? Dr. Taylor. She has rarely had enlisted men come back from the front to do farm work. Mr. Haugen. Did she not lose by taking men from the farms and putting them in the shops ? Dr. Taylor. They made mistakes. She reduced her farm effi- ciency very much. Mr. Haugen. Is not that one of the things we have got to guard against in this country ? Dr. Taylor. Yes; the same as they did in England. England sent fu"st-class farmers and mechanics to the front and sent them back again. Mr. Haugen. To what extent are prisoners of war used on the farms? Dr. Taylor. About 1,000,000 prisoners are employed, largely in farming, but they are inefficient. We reached the conclusion that a prisoner of war was about two-fifths inefficient; largely because he was two-fifths fed and two-fifths paid. That is the way one Irishman expressed it to me. The Chairman. Is there anything further of Dr. Taylor, gentle- men? Mr. Heflin. a gentleman just suggested to me before I came into the room that France and England were taking a good many German prisoners. Now, they willhave some difficulty in feeding them, and he suggested that this country might bring them over here, and put them on these large farms, to help produce food supplies. What do you think of that ? Dr. Taylor. It might be a good plan if we could get them over, except that it would lead to reprisals from Germany. Germany insists that a prisoner of war must be kept in the country of his particular captor. That has led to the following situation: The British took, I think, between — well, I will not state the figures, because I do not wish to be inaccurately quoted, but a large number of prisoners of war, whom they had in England, and took them to France to work on the docks at Havre. Germany retaliated at once by taking a large num- ber fo British prisoners from the prison camps in Germany and send- ing them up into one of the conquered provinces (Covaland); and the American ambassador, who was intrusted with England's affairs in Germany, at once made request that he should be permitted to in- spect these prisoners. But the governor of the conquered province refused to permit the ambassador of the United States or any one of his associates to go into the conquered province, and these men were FOOD PKODUOTION, CONSERVATION, AND DISTRIBUTION. 41 thus deprived of the protection of the American embassy. The state- ment of Germany was that they had only done this as a reprisal. Mr. McLaughlin. How does the number of French and British prisoners taken by Germany compare with the number of German prisoners taken by France and England? Dr, Taylor. The English and French now probably have more German prisoners than the Germans have of British and French pris- oners, but of course the number of Eussians is still very much in excess of all others. I beHeve that there are now in Germany about 60,000 British prisoners, and the British probably have over twice that many German prisoners by this time. They are working in all countries, doing agricultural labor, largely, and road work. The Chairman. Gentlemen, we wOl^ow ask Dr. Pearson, who has lately been called to the department, president of the Iowa State College, to give us the benefit of his experience in this situation. STATEMENT OF DR. E. A. PEARSON, PRESIDENT OF THE IOWA STATE COLLEGE OF AGRICULTURE AND MECHANIC ARTS. Dr. Pearson. Mr. Chairman, you have stated that I have been called to Washington temporarily. Secretary Houston requested me to come here for a temporary period, merely to assist him on some of the special work which has been heaped upon him in this emergency. My position is president of the Iowa State College of Agriculture and Mechanic Arts. Prior to that for four years I was commissioner of agriculture of New York State. The Chairman. Now, Doctor, in your own way give the com- mittee the benefit of your views about this matter. Dr. Pearson. Mr. Chairman, I wiU be very brief. It is hard to take up the most important hne of thought, after such a vigorous and well-informed man as Dr. Taylor. It seems that he has given such great emphasis to the main purposes of Secretary Houston's recom- mendations that further statements are imnecessary, but there are just one or two points that I will mention. Almost everything that Dr. Taylor has said has been an argument for our securing accurate information of the food and feeding stocks and similar or closely related items now obtaining in the United States. Any statement in reference to the possibility of extending the flour, or increasing our rations in other ways — all this depends upon our ascertaining first what we have in this country. I think the members of the committee are fully aware of our lack of knowl- edge of the true situation throughout the country, and the abnormally high and unreasonable prices that have resulted from that in some cases. Yesterday President Waters, of the Kansas Agricultural College, told me of an experience in that State. He said that there had been reports of a shortage of seed for certain fodder crops. Kumers of prices being advanced caused some persons to be alarmed lest they might not be able to get seed at all, and they were rushing into the markets and making purchases, and depleting small stocks at retail points. Inquiry was very quickly made, as they happened by good luck to have the facilities and funds at hand, and they dis- covered that they had enough seeds of that kind to serve for two 42 FOOD PKODUCTION, CONSERVATION, AND DISTEIBUTION. crops in Kansas. That fact was made known, with the result that the market was immediately sfeableized. In. our own State of Iowa there were similar rumors, on account of seed potatoes, and many of our people were wondering if they would have any potatoes, to plant, and we went so far, on the strength of those rumors, as to commence negotiations for bringing in car loads of seed potatoes from the North, but at the same time we were mak- ing inc[uiries throughout the State and we found that the farmers of Iowa in sections where inquiries went were well prepared with seed potatoes for their crops. I would not underestimate for a moment the seriousness of the situation. Membfers of this committee are, of course,- informed as to the shortage of food reserves, and the shortage of our own crops and the condition of the crops m the Argentine, and the fact that we now must supply food to the allies in larger quantities than ever before, but at the same time I would call attention to the fact that some persons h,ave taken undue advantage of the situation, and some very unreasonable charges and costs are the results. The quickest way to relieve that situation is to get the facts. The Chairman. Doctor, if you will permit me, is not that one of the very important things to be done — the food-survey proposition ? Dr. Pearson. By all means. The Chairman. That is fundamental ? Dr. Pearson. Yes, sir ; that is absolutely fundamental and can not be started too soon; it cannot be started too soon because our crops, as has been pointed out by the gentleman from Texas, will be largely a voluntary affair on the part of the farmers, and they can not act intelligently until they have advice, and from headquarters, for their consideration. The Chairman. You can not work out any good ssytem of dis- tribution unless you know the facts as to where the products are, and how much, and so on, can jou ? Dr. Pearson. No; that is all included. The Chairman. Let me ask you one question in that connection,- Doctor. We made an appropriation in the sundry civil bill of some $750,000, I believe they finally agreed upon, for the Federal Trade Commission to conduct an inquiry. Is the appropriation , that is here asked by the department to do this work in any great conflict with that, or is it supplemental to it ? Dr. Pearson. I understand it is entirely supplemental. The Chairman. The funds that you would nave would be used in cooperation with the Federal Trade Commission, I take it ? , Dr. Pearson. Supplementary to the inquiry which you have just referred to, so I understand. Mr. Heflin. Doctor, what suggestions have you to make as to how we should go about getting this information, as to the food supply of the country ? Dr. Pearson. If you would be wiUing to let another representative of the department answer that question, I would prefer it. Mr. Heflin. Very well. I thought may be you had thought of some plan. Dr. Pearson. I have not personally gone into those details, and other men have. FOOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 43 Now, Mr. Chairman, Dr. Taylor has pointed out the fact that Germany could not materially increase her agricultural production. That has been one of her most serious difficulties, and the reason has been very largely because already before the war she had developed her agriculture to such a high state of perfection. And to a some- what less degree the same condition exists in France, and even in England. The principal way in which England is increasing her production is by the breaking up of great areas of land that have not been devoted to crop production. On the contrary, there is a tremendous opportunity for expansion in this country by means of perfecting our methods. Thirty per cent may represent the waste in consumption in this coimtry. It does not represent the waste in production. On a good summer day the insects of this country destroy about $10,000,000 worth of good products, and it is an unnecessary tax. One way for us to increase our production is, of course, to secure more labor and to bring more land under cultivation, in so far as we are able to do that, but we all realize the great difficulty in connection with the labor. Secretary Houston has worked out a comprehensive plan for assisting, in cooperation with the Department of Labor, the farmers along that Une. But, aside from that, there is an opportunity right now for the farmers of this country, being properly impressed as they are with the seriousness of this situation, to increase their production and to increase the production after it is once secured, by preventing un- necessary losses, due to insects and other destructive agencies. You, of course, are familiar with the work of the county agents. One of oiu- great needs is to have a county agent in every county of the United States, and two county agents in many of these counties, including, as the Secretary has said, a good many women county agents. I will not take your tinie to try to tell you what those men are doing, because I believe you are perfectly familiar with it; but just a word about the woman county agent. Along with the neces- sity of reducing that enormous waste which has been referred to as, amounting to $700,000,000 a year in this country, there is another very great necessity resting upon the women of our country, and that is to adapt their demands to fit the supplies that are at hand. The women of oiu* country need to learn and to teach all of us to Uke the food that is produced nearby, as far as it can be adapted to our purposes. For example, in the corn belt there is now great need of developing the use of com as human food instead of shipping out our corn and in shipping in ^ large amount of other food products. If that operation is developed to a reasonable extent in this country, it will have more than an appreciable effect upon conserving the transportation facilities of the country, and we know that they are tremendously overloaded. The Chairman. Doctor, is the reason for that statement that the people of the corn belt do not eat corn bread very much or very generally ? Dr. Pearson. Yes, they do not; they do not eat it even as much as they do in the South. I do not know how to explain it, except by the old saying that "a shoemaker's children go without shoes." It just happens so; that is all. Mr. Haugen. We have no surplus corn, have we ? 44 FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Pearson. Because we are shipping out corn all the time. We might relieve the shipping facihties by using some of that corn at home, and not shipping other foods in. Mr. Haugen. But it is just as important that we supply our alhes with food as ourselves ? Dr. Pearson. I beg pardon? Mr. Hatjgen. It is as important to supply our alhes with food as it is to supply our own people? Dr. Pearson. I think that Dr. Taylor would support me— and I will refer it to him — in the statement that it would far easier for us to learn to use our corn in this country so as to make the wheat avail- able for our allies, than to attempt to reverse that. Am I right. Dr. Taylor? Dr. Taylor. Yes; because they do not understand the use of corn at all, and they would have to learn something in war time, which is very difficult. Mr. Haugen. But our people will have to learn, too. Doctor? , Dr. Taylor. It is not so much a question of learning the taste as it is learning the preparation. We know the preparation and we know the taste, but wheat is the bread luxury the world over. They do not know how to use corn meal, except to a very limited extent. They can not handle it — can not bake it. Mr. DooLiTTLE. Is it not a fact that a good many people do not know the difference between corn meal and corn flour ? Dr. Pearson. Yes. There are many sections in this country that are devoted so largely to one or two crops that they are allowing other communities of the country to produce the balance of their rations, Vhen they might just as well produce them at home. We look upon the county agents as the minute men in this important matter. They are the ones who are nearest to the farmers, and the ones who can most readily work out the solution. The Chairman. Doctor, do you feel that you have men available for that work at this time, or can you get them? Dr. Pearson. We can get a large number. We would have to appoint some temporarily and put in better men later. The Chairman. In that connection, I have a letter from a very intelligent man in my district,- who is not planting cotton this year and has not been planting it for three years, but who is raising noth- ing but vegetables, hogs, and things of that kind. He sent me a ham not long ago, and they almost took it away from me when I walked through the corridor. He compjains of this situation, which I know to be true in my own country and probably through other sections of the country. Take the Mississippi farmer who raises 50 bushels of Iowa potatoes and has no market through which to sell them. Would it be possible to utiMze the county agent as a means through which you could put the producer in touch with the market for these various crops which you expect to be produced, other than the ordinary crops in a given section of the country ? Dr. Pearson. These county agents now inspect conditions and are rendering good service along that line; they are in a position where they may be of real service to the farmers. For example, one of the county agents in the State of Iowa went into Chicago a short time ago and spent some days on Water Street studying me egg market, and he discussed with the dealers their method of packing eggs. He FOOD PEODTJCTION, CONSERVATION, AND DISTRIBUTION. 45 came back to his district and gave that information out in one section particularly vrhere there were large numbers of poultry and large num- bers of eggs to be shipped, and they began to pack their eggs in the correct style, with the immediate result that they received a larger price, and that industry was stimulated at once. The Chairman. Have you thought of the proposition of having in each State, according to its size, two or three or half a dozen highly trained experts on marketing, to advise the farmers as to the particular points at which they mi^t sell to the best advantage the various things they are producing ? Dr. Pearson. Those experts are being put into the agricultural colleges now, Mr. Chairman; quite a number of colleges have them, and they are in touch with the county agents of their respective States. The Chairman. Have you given any attention to the proposition that has been made to this committee in the form of a bill by Mr. Sumners, of Texas, very largely indorsed, too, of the establishment of {)roduce exchanges under Government regulation in the various arge markets of the country ? Dr. Pearson. Personally, I have not gone into that question. Mr. Brand has. In reference further to the county agent proposition, the agricu— tural colleges are taking the position that a number of their faculty may go into the field at once and take these positions tempol rarily. "'Dean Russell, of the Agricultural College of Wisconsin, who is in Washington now, tells me that they have about 40 men who are willing to go out in the counties and take up the work of the county agents. They call them emergency food men, so as not to confuse that service with the county agent movement. But they confidently expect that the counties having the services of these emergency food men will insist upon having a county agent before the time that the emergency men must leave those assignments. We have in the State of Iowa also a large number of our faculty ready to go out in the same way, giving up their vacations for that purpose. There are a considerable number of teachers in the high schools, who are the type of men to make first-class county agents, and w]p.o are ready to go out in that way; thus we can draw a large number of men into this service just as soon as the necessary means is provided. Mr. Jacoway. Take the question of the Iowa potatoes, as suggested by the chairman. Suppose a farmer has got an immense crop of Iowa potatoes on hand. Will you explain to the committee how you would dispose of those potatoes in order to give a fair price to the man who raises them ? Dr. Pearson. I judge you mean a crop beyond the needs of the country ? Mr. Jacoway. From what I gather here, you can hardly get a crop beyond the needs of the country and the allies, but potatoes wiU spoil if they are not sold readily or put into some place where they wiU keep. . . , . Dr. Pearson. The Department of Agriculture is trying to devise methods of disposing of surplus potatoes. That is a question that Dr. Taylor and the experts in the department are considering. Mr. Young of Texas. There is no question about the productive capacity of the soil in my part of the country for potatoes, sweet and 46 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Irish, and as far as the Irish potatoes are concerned, they ought^to bring a rich revenue to the farmer, but ehmatic conditions in that section are such that unless the farmers can market these wops of potatoes at once, they go bankrupt, because they deteriorate and are destroyed so quickly. That is the trouble we are up against down there. If they have no market at the time the crop comes on, they can not save those potatoes, by reason of the ehmatic conditions, and the result is that the average farmer just plants enough for his home consumption, and he can not keep them for his home con- sumption. Dr. Pearson. One of the fundamental ideas in connection with the production of food products is that communities should give chief emphasis to their main crop, which they know how to handle, and to nonperishable articles, and they should raise other articles only to the extent that they will be needed for their own use. Mr. Young of Texas. That is what has kept us in the South to one crop, cotton. Dr. Pearson. You ought to get corn in with your cotton and you will be rendering a patriotic service. I know you are doiag it to a large extent now. Mr. Young of Texas. That is true; but it seems to me with these war conditions on, and the modem improvements in the way of milling machinery, we are producing a great food crop along with the cotton. Cotton seed now makes a great food crop. Dr. Pearson. Some business men in the South have already put out canning equipments at a cost of $250 each, which makes it pos- sible for persons in their community to preserve their crops. Many crops can be taken care of by drying. Corn is better dried than canned. I suppose there are some articles that will have to be canned or preserved in crocks. Mr. Haugen. What additional information could the experts of the Department of Agriculture give that is not accessible to the market experts and is not given in the ntarket reports of the large cities ? Dr. Pearson. They are better informed than many of the experts, and the experts of the Department of Agriculture would be still better informed of the Department of Agriculture had the facilities for getting the information that these gentlemen have. Mr. Haugen. What additional information can they give? Dr. Pearson. For example, the Department of Agriculture now has no way of knowing how many eggs there are in storage in the country. They may ask for voluntary reports, and they get a great many, but they have no way of checking them up. Mr. Haugen. I have reference to the marketing, and not the supply. Dr. Pearson. I am afraid I do not quite understand you. Mr. Haugen. I had reference to the marketing, and not the supply. In what way can the department give additional informa- tion to the dealer ? Dr. Pearson. In reference to the marketing? ' Mr. Haugen. The merchant who buys the eggs and ships them. Dr. Pearson. One of the most important ways is for the' depart- ment to keep in touch with the situation throughout the entire country, so as to keep the producer advised as to what portion of POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 47 the country is in greatest need of his product, so that eight carloads of melons, for example, will not go to one city when they need only six, and some other city which needs three carloads would get none. The department would be in position to assist and is it the mtention to develop that kind of service, if the necessary facilities are pro- vided. So, to a certain extent, the department can inform the pro- ducers of the country where their products are most needed. Mr. McLaughlin. As to the manner of getting men for work on the farm, I asked Dr. Taylor if in Germany there were any enlist- ments for that, and I think he will pardon me when I say that I think he did not quite get my idea. He thought that I meant the use of soldiers or men who were more fit physically in other ways to be soldiers than to work in the fields. I meant did the Government go to the extent of forcing men or requiring them to enlist for that particular kind of work. Dr. Tatlor. Last year the Department of Agriculture recruited in the cities for farm service. This year the Government is enhsting specifically for farm service and takmg them to the farms as a national obligation. Wc. McLaughlin. Now, about the pay of those men. How are they compensated ? Does the Government pay them or does the Government require the farmer to pay them ? Dr. Taylor. The farmer pays them. Mr. McLaughlin. What rates ? Dr. Taylor. I suppose at the current rate. The soldier used to get 40 cents a day on the farm. Mr. Laughlin. The soldier ? Dr. Taylor. The prisoner of war used to get 40 cents on the farm. That was supposed to be about a third of the normal rate, because The Hague Convention provides that the prisoner must receive, as pay, what was the normal pay for his work, minus the cost of sub- sistence, and that calculated out for the prisoner of war was about 40 cents. The average pay of the civil German laborer was about $1 and it was to this distinction that the prisoner of war made his objection. That was high for the German agricultursl laborer. Mr. McLaughlin. I saw some time ago a suggestion by a man who pretended to know a good deal about the need and how to supply it and he proposed that men be required to work on the farm, and the farmer be required to pay him $50 a month and board. That is not helping the farmer very much, because few can pay that amount. I did not know but what the Government imdertook a part of the obligation and paid a part of the wages. Dr. Taylor. It supplies the laborer over there, and the rest de- volves upon the agriculturist, and the pay is supposed to be the current pay in that area for that work. The Chairman. All right, Dr. Pearson . Mr. RuBEY. I would like to ask you a question. I have heard it stated that one reason they do r ot use com bread for the soldiers is that they can not keep the bread made from corn, and therefore it is absolutely necessary to supply the Army with flour. Is there any- thing in that? Dr. Pearson. Would you allow Dr. Taylor, as a chemist, to answer that question ? Mr. RuBEY. Yes, sir. 48 POOD PKODUCTION, CONSERVATIOM', AND DISTRIBUTION. Dr. Taylor. Only wheat and mixed flours can be supplied the armies. Mr. KuBEY. That is what I Understood. Dr. Taylor. That is true the world over. The Chairman. Dr. Pearson, I wonder if you have given a great deal of thought to the proposition of the minimum and maximum price ? Dr. Pearson. I have given some thought to that. I could not help it since coming to Washington, and seeing the letters and tele- grams, and having mterviews with a large number of people who are coming here and presenting their difficulties to the Department of Agricmture. I believe the Secretary of Agriculture has made good suggestions as to how these difficulties might be remedied. It is a fact that the farmers of the country are sensible to the situation, but it is also a fact that in times past the farmers of this country have been called upon to increase their production in one line or another, and they have responded, and at times they have found to their sorrow at the close of the season that the crop was so large that the bottom had gone out from the market, and they remember those experiences and now they are reading in the papers that everyone is putting in gardens, and the idea has gotten into the minds of many farmers that there is going to be an overproduction, and they are sending here and asking information of the Secretary of Agriculture as to whether there is any real danger of that. It is my judgment that Dr. Taylor has not overstated thematter at all. The shortage of food in Europe has been referred to as a food vacuum, and I think it is entirely reasonable for the Government to assume the risk in this case, instead of asking that the farmers assume the risk, and thus establish a minimum guaranteed price, which will assure the farmers that they wiH come out whole with a reasonable profit, and encourage them to increase their area and use the most efficient methods possible. I feel very certain that they will respond to that kind of encouragement. Secretary Houston invited here the head oflRcers of the five largest agricultural organizations, and they were very prompt in saying that such a step on the part of the Government would bring an immediate and very general response. Mr. Young of Texas. On what basis would you make yooir figures as to the minimum price that you would fix that the farmer should obtain ? For instance, I mean wheat and a few things like that, and aU the different crops that a farmer would raise. You can not reach a set of figures that would be satisfactory even to the experts who have charge of that proposition. Dr. Pearson. I hope it wiU not be necessary to set a minimum price on our staple crops, but I think one method by which to arrive at such a figure would be to average the prices that have obtained in recent years, and add to that a reasonable percentage to cover the increased cost of seed and labor, and thus estabhsh your price. I believe fully, as Dr. Taylor said, and as he has proved from the experience of Germany, that a minimum price is not going to remedy conditions, if the farmer can not see a profit in it. Mr. Young of Texas. Right on that point, there is one of the things that you are up against. I do not know how it is with the rest of the country. I only speak for my own section. You take the FOOD PEODUCTION, CONSERVATION, AND DISTRIBUTION, 49 average wagon that every farmer must have. In my own boyhood, which is very recently, they used to cost us $55 apiece. That same wagon now we are paying $125 for. Every kind of farm machinery has gone up in proportion. When I was a boy you could get a span of the average-sized mules for $200 or $225, and until recent years. Now that same span of mules will cost $400 or $500. In other words, everything that the farmer must of necessity have to grow the crop that his land will grow has increased to such an alarming extent, together with the labor -that he uses on that farm, that the prices that he obtained 10 years ago, which would have been quite a profit for him, would be suicide to any farmer down there now; he could not survive. And all those things enter into any set of figures that would be made. Dr. Pearson. I intended to cover those in my statement. Mr. DooLiTTLE. Doctor, is it your idea that any possible minimum price that may be established should include not only the cost of production but also a fair and reasonable profit to the producer ? Dr. Pearson. Yes, sir. Mr. Jaoowat. Here is a man in Kansas that has a thousand bushels of Iowa potatoes, we will say. The proposition is made to him that his Government is going to guarantee him a minimum price. Now, what shall he do; whom shdl he notify that he has these thousand bushels of Iowa potatoes? Where shall he ship them? Through whom shall the transaction be made, in order that he may get his minimum price and the Government may benefit by the crop that he has raised ? Dr. Pearson. That, of course, involves the whole subject of organization. The Secretary of Agriculture has worked out a com- prehensive scheme of organization, which I might describe very briefly. He proposes to nave a central committee in each State, including representatives of the agricultural colleges — I think he mentioned that this morning, did he not ? The Chairman. Yes. Dr. Pearson. I will not repeat what he said then. That com- mittee is in touch with the State situation. In turn, every county and township is in touch with the county agents, who are the official representatives right on the ground. Now, just how or when or where the official observation shall be made, I am not prepared to say; but the Government could not take notice of a very small lot or a few pounds or a few bushels. It roight be that they would recog- nize carload shipments at the station, or at some central point. The chance is so small that it seems to me the Government ought not to hesitate about taking it. It would mean everything to a great many farmers to have a definite statement that the Government is behind them. We have a great deal to gain, with very little risk. The Chairman. The suggestion has been made, Dr. Pearson, by certain Members of the House who have talked to me about this matter, that if the Government should fix a minimum, say, on potatoes, of $1.50 a bushel, that the price of potatoes to the farmer would never go above $1.50 a bushel. What is your view of that ? Dr. Pearson. I will just read a memorandum, which Dr. Taylor has been good enough to hand me. He says that a competent German agricultural expert told him that the minimum price of 104176—17 4 50 POOD PBODUCHON, CONSERVATION, AND DISTEIBUTION. Staple crops ought to be double that of peace times. That is merely an observation. ' ' lilr. Haugen. HoW do you ascertain what the price was m peace times ? Prices fluctuate. Dr. Pearson. We wiU have to take averages. Mr. DooLiTTLE. Now, Doctor, is it a fact that history shows that prices of commodities have been higher the year immediately foUow- mg the close of a great war than they have at any time during the war ? Dr. Peaeson. I can not answer that. Dr. Taylor. They are very high; they are as high as tliey are in war, at least. Mr. DooLiTTLE. And continue up untU the second year after the war? Dr. Taylor. I do not know how long. Mr. Young of Texas. There is another suggestion about the price of food products. The fellow who produces has got one point of view. Diametrically opposed to that point of view is the point of view of the great consuming public. Aiiy system_ that is wprked out would certainly have to be worked out on a basis that the point of view of the city man would not prevail as against the point of view of the man who produces the crop. Dr. Pearson. Certainly. That brings up the maximum price. The governor of North Dakota, who is called here to attend a meeting before the Federal Trade Commission, made the remark yesterday that farmers in his section of the country had sold potatoes for less than $1 a bushel, and then they had seen those potatoes go on the market finally for three or four dollars a bushel, indicating mat there is some unreasonable manipulation between the farmer and the con- sumer. It is believed that that manipulation would largely disap- Sear of its own accord, if it were known that a department of the rovemment has the authority to act promptly and eflSt^iently in matters of that kind. Mr. OvERMYER. You do not think the matter of disposing of the crop after it is raised should be a matter of the conscience of, the producer, do you? For instance, a farmer has a largei number of {)otatoes in storage, and will not sell them. That ought not to be eft to a man's conscience. There ought to be a way to compel him to place those potatoes on the market. Dr. Pearson. It might be discovered that some one in a certa^ section has unreasonably manipulated prices, and if so, he ought to be under the same rules which aflfect the others. The chairman of the committee ashed, if in my opinion, tbe price would ever go above the minimum price established by th§' law. In my opinion it would. Mr. McLaughlin. Go above? Dr. Pearson. Go above. The minimum price is the guaranteed minimum. For example, there might be a minimum price of $1.50. In my opinion the pnce would go above that figure if there were a shortage and an economic justification, just the same as it would in times when there were no minimum price setabhshed. The Chairman. I agree with you fully. Doctor, but the question question has been asked here several times, and I wanted your opinion on it. rOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 51 There is one other thought in my mind on the maximum-price Eroposition, and it is this: If we could have any assurance that we ad th6 authority to divert shipments and prevent gluts and to turn the hght on storage concerns and packing houses, if we had the power to know the whole food situation, the power to prevent improper speculation, and the regulation of all those things — in other words, if we could make certain of the lack of the machinery of distribution and also be assured of the economical distribution, would there be any necessity, as a matter of fact, for a fixing of a maximum price ? Dr. Pearson. I believe I commented on that when you were out of the room. I think there would be hardly any necessity; there might in some cases. The Chairman. That is my own view about it. Dr. Pearson. Now, Mr. Chairman, there is only one more point that I think it worth while for me to detain you for, and that is the vital importance of prompt action in this matter. I think it is no exaggeration to say that every day of delay in providing the means for the Secretary of Agriculture to get his work underway is costing this country the equivalent of miUions of dollars. We know what the springtime means in agriculture, and there are very few spring- time days. Then, aside from that, there is another reason why the Secretary's program should be put into operation. It is this. There are a good many people throughout our country who are aroused, who are anxious to do their part, and they are writing in, and the de- partment is being simply flooded by thousands of letters asking what they can do, and it is necessary to practically tell them to wait, and while they are waiting their enthusiasm is cooling ofi^ very rapidly, and we are losing a magnificent army of volunteers to a greater or lesser extent by everj^ day of delay. I am sure you wiU appreciate the importance of that matter, and I wiU just leave it with you for your consideration. The Chairman. Are there any further questions of Dr. Pearson, gentlemen ? Mr. Humphreys Doctor, I would like to know your opinion of the general purposes and general effects of this legislation. Is it to assure the producers of a reasonable price, or to assure the con- sumer of a reasonable price, or is it both ? Dr. Pearson. It is both, but I think I might safely put the greater emphasis upon the first. Of course if we get a large pro- duction and everyone knows it there is very little da,nger of the con- sumer having unduly high prices. Mr. Humphreys. Well, you say you think it is largely the first; that is, largely the purpose to assure the . producer of a good price for his product ? Dr. Pearson. Yes, sir; so as to increase the production. I do not think it is going to be possible, under any conditions, to overproduce on our sta^e crops this year, and probably not next year. We ought to stimulate production in every way possible. I think it is quite conceivable that this country itseM will be on limited rations within another yetar if, by bad luck, we have small crops, such as we have had in sortie recent years. Mr. YotNG of Texas. Doctor, I have just one concrete e^cample in my section of the country. Some years ago, in Kansas City, there 52 FOOD PEODUCTION, CONSEBVATION, AXD DISTBIBUTION. was an agitation there for growing Elberta peaches, a famous brand of peaches. A great deal of the country in east Texas is adapted' .to the growing of that particular fruit. The farmers went wild and spent their money to plant these orchards, and the result was in a few years' time they had magnificent orchards, as perfect trees as you ever saw, but to their astonishment they had no market, and the fruit rotted on the ground, and those orchards were cut down and put back in cotton. Now, you can see the danger line of encourag- ing farmers to raise a great crop of foodstuffs when they have no market for those foodsttiffs. Those of us who come from agricul- tural districts are going to catch the Dickens when we go home. Dr. Pearson. That is a point that must be fully understood. Sec- retary Houston has said that this is no time for experiment. We should raise in communities and lay great emphasis on those crops which we know we can raise and market, particmarly the staple crops. I do not object at all to experiments as you referred to in times of peace, because in a certain percentage of those experiments we can say that we have discovered a gold mine ; but this is no time for any such experiment. Mr. Chairman, I might say that I left a note at the hotel for Presi- dent Thompson, giving him your message that you would Hke to have him come here to-morrow morning at 9 o'clock. The Chairman. Yes. I may say to the committee, gentlemen, that since you have dehvered the message Dr. Thompson and the committee from the experiment stations and agricultural colleges called on me and tendered their services to this committee. I asked those gentlemen to appear some time to-morrow morning between 10 and 12. They have a meeting with the Council of National Defense, but when they come we will take care of them. I am very much obhged to you, Doctor. Mr. Haugen. Has the department reached any conclusion as to what the maximmn price will be on the staples ? Dr. Pearson. Not as yet. Mr. Haugen. I understood you to say that the department would guarantee a minimum price 1 Dr. Pearson. Yes. Mr. Jacoway. Doctor, in the South we have got what we call a sim-drying process. I want to ask you, as a matter of fact, from the standpoint of the chemist, if you have any way of curing an Irish potato by letting it dry in the sun and in that way preserving it? Dr. Taylor. I know you have a very dry temperature. That can be done in the Imperial VaUey and those sections of southern Cali- fornia adjacent thereto. . I do not think, with your humidity and your cMmate, that you could cure potatoes by drying. I am not competent to make that statement. Mr. Humphreys. May I ask your opinion on the same question I asked Dr. Pearson, the general effect of this bUl, whether it would be to guarantee or secure to the producer a good price or to the con- sumer a reasonable price ? Dr. Taylor. It is both. It principally guarantees to the producer an insurance and a positive return price. Then it stabilizes, the whole market, because the whole world knows what price they have to pay for that article. Beyond that it minimizes the manipulations in the FOOD PEODUCTION, COXSEBVATION, AND DISTBIBUTION. 53 channels of trade and tends to actually reduce the price to the con- sumer, and thus the price to the consumer will tend to be lower, if the rnarket price of raw staples is known, than when the market price is not fixed. In other words, it tends to bring the two closer together and limits the scope of manipulation between the producer and the consumer; it tends to hold it lower. Mr. Jacoway. I take it from your answer to Mr. Htimphreys's ques- tion there that the difference between the minimum price and the market price should be borne by the Government ? Dr. Taylor. The difference between the minimum price and the market price, if it be lower, should be borne by the Government as a war contribution. Mr. Humphreys. Would not this bill, in your opinion, if enacted into law, tend to increase the cost of everything ? Dr. Taylor. I think it would h9,ve the contrary effect. It would give a higher payment to the producer, and would hold down the price for the consumer, and leave less for the numerous chain transac- tions in between. Mr. McLaughlin. With the increased production, you have got to do something to insure good prices. Dr. Taylor. It has got to be high enough to be a real good price, and they have got to take into consideration every economic element of the production, the cost of labor, the cost of food, the cost of machinery, and, when it is calculated, it will appear to be more than what would appear on a casual inspection. Mr. McLaughlin. Of course transportation will have to be taken into consideration. Dr. Taylor. Everything. The Chairman. Gentlemen, Dr. Rawl is with us this afternoon, and is prepared to discuss in detail the appropriations that will likely be controlled by his division in the Bureau of Animal Industry. Dr. E.awl, suppose you address the committee on that subject. STATEMENT OF MR. B. H. RAWL, FOR THE BUREAU OF ANIMAL INDUSTRY, DEPARTMENT OF AGRICULTURE. Mr. Rawl. Mr. Chairman, I do not know to what extent you wish me to- go into the consideration of these various proposed emergency undertakings. I assume, unless you wish it otherwise, that this discussion by me should be a very brief outline of the proposals that serve as the basis of these estimates. The Chairman. Let me inquire, Mr. Rawl, are you ready now to speak for the Bureau of Animal Industry only ? Mr. Rawl. The Bureau of Animal Industry only. The Secretary's office this morning asked me to be prepared to discuss these items relating to the Bureau of Animal Industry, in case that was desired. The Chairman. I think it would be very well to have a brief dis- cussion of what you propose to expend through the Bureau of Animal Industry, and how. Mr. Rawl. In the first place I wish to state that it, of com-se, has been impossible to formulate specific, detailed working plans for this proposed emergency work. These are merely estimates, and the limiting factor in some cases at least will be the number of available men who are capable of doing the work. Of course, in some lines that 54 FOOD PEODUCTION, CONSEKVATION, AND DISTBIBUTION. will apply more than in others, but, this is an important consideration, as I am sm-e you will realize, and one which may miake it necessary to change the amoimt for certain lines of work from what is proposed here, m other words, it may be impossible to obtain help enough to carry on one line of work as extensively as indicated here, while another, requiring a different character of service, may be increased to advantage. The first item of 1790,000 is for the purpose of enlarging the animal husbandry work of the bureau, not including work with poultry. It is proposed here to put a sufficient number of employees into the differ- ent States to effect the greatest possible economy in the use of Uve- stock feeds. For instance, one of the concerns here which uses a large number of horses, with the help of one of the employees of the depart- ment, was able to reduce its feed and make a very material saving. That is apphcable to a very large^percentage of farms. Mr. DooLiTTLE. WUl you state that saving right there for the record ? Mr. Rawl. The exact amount I do not remember, but it, was a very material saving for one of the large transfer concerns here. Mr. Hattgen. Wifl you tell us how it was done ? ,__Mr. Rawl. It was done simply by formulating a different com- bination of feeds., Most of you who are familiar with feeding live stock know how often work horses are fed largely on corn, which is expensive as a source of the protein. This can be supplied much more cheaply from other grains or from some of the by-praducts,, Mr. Haugen. The farmer is going to feed his cattle what he has on his farm; he is not going to sell his oats and buy corn. I think a farmer who has farmed 40 years knows as much about it as anyone. Mr. Rawl. The idea is to have men enough to supply every county agent .with information that will enable him to suggest to every individual with whom this agent comes in contact a more economical system of feeding. I think there will be farmers who wiU ignore it, but when corn goes to $2 a bushel there will be many others who will heed when they are told how to feed more econom- ically. Mr. Hatjgen. Is it not a fact that the farmers have been told that for 25 years ? Mr. Rawl. Yes. Mr. Haugen. And if you told them again, what effect would it have ? Has not the fanner tried it out and does he not know very fairly? Mr. Rawl. Some of them do and some of them do not. You know agricultural development is slow. The only difference now is that we have a critical situation^ and if it is put up to the farmer that he can help to meet this and at the same time benefit himseU, it is belieyed that a good many of them will take advantage of the oppor- tunity. Mr. Anderson. Does this proposition include the salary of addi- tional county agents ? Mr. Rawl. No, sir; it is proposed entirely to get capable men to deal with the feeding and redistribution of live stock to furnish that type of information to the coimty agent for his use; in other words, to have a number of live-stock men in each State to assist the county agents to carry on various lines of live-stock work. FOOD PEODTJCTIOK, CONSEEVATION, AND DISTRIBUTIOH'. 55 Mr. McKiNLEY. Why can the department not send literature out to the county aigent ? Mr. Rawl. For the same reason that it has been impossible ' to impart working systems in agriculture entirely in that way. Every- thing that can be done with hterature will be done, and every particle of information that can be conveyed by means of pubhcations, reports, and letters will be put into the hands of the county agents. Mr. YoTJNG of North Dakota. The effort in the past has always been to get them to do it on the groimd of self-interest ; but the effort now is to get them to do it, not on the ground of self-interest but on the ground of patriotism ? Mr. Rawl. To meet a great national situation. Mr. Anderson. This proposition involves the sending out of men to work with the coimty agents ? Mr. Rawl. Yes, sir. Mr. Anderson. How many ? Mr. Rawl. That particular item in the Animal Husbandry Divi- sion anticipates about 260 men. Mr. Anderson. Where will you get them ? Mr. Rawl. We have some of them in view. Mr. Heflin. Do you mean to say that these people who are working in conjimction with the county agents will be men who are now er^aged in the Department of Agriculture upon the pay roll ? Mr. Rawl. No, sir; this will be largely supplemental work. Mr. Heflin. How are you going to get the services of the men suggested by Mr. Anderson if you are not going to pay them for it ? Mi. Rawl. Perhaps I misunderstood the question. This money is not to be used by the present employees, but to employ an additional force to go into the field to do the work. Mr. McLaughlin. One trouble has been that when men are em- ployed temporarily in these departments, on the showing that they will be temporarily attached to the roll, they are never separated from it. Mr. Haugbn. Now, if I understand the Government's pohcy, it is this : It is proposed now to sidetrack experiment propositions, and to employ all Kinds of men of experience in agriculture to go out through the country and instruct the farmers how to farm. Now, then, if you take the practical, experienced men from the farms and start them out riding in Ford cars through the country, we have compli- cated the labor problem all the more. My position is that you better leave these men on the farms and have them hoeing and plowing and producing crops, rather than riding around in automobiles, especially at this time, when we have no money to spend. There is a limit to Uncle Sam's credit. We have started out already with a seven billion dollar bond issue, and we are appropriating bUhons now instead of nullions as heretofore, and I thmk it is a good poHcy to tak^ into consideration the expense as well as the results. There are times when we can afford joy rides, but we can not afford them at this time. Mr. RuBEY. These men could walk. That is the way they did it years ago. They do not need to use automobiles. Mr. Haugen. The slower they are walking the less they accom- plish. 56 FOOD PEODuonoiir, conseevatioit, and DiSTBisunoiir. Mr. E,AWL. The department, so far as I know, does not expect a serious discontinuance of present work, and the question of Where men can best be utihzed is a question, of course, that is nation-wide and I simply give you ideas that are presented by one division of the bureau and passed through the regular channels of the bureau and the department as a basis of these estimates. The Chairman. You propose there to employ some 260 of as highly trained men as you can get? Mr. Rawl. Yes. The Animal Husbandry Division has one hun- dred or more men in sight at the present time who are fairly high- grade men; that is, they are well trained and many of them experi- enced men. They will form the nucleus around which this force can be developed. There is an item for poultry work, $316,000, devoted very largely to the same sort of work, putting out men and information, and giving the country every facility to increase its poultry production . Mx. Haugen. How many men do you propose to employ, how many additional men ? Mr. Rawl. For the bureau as a whole ? Mr. Haugen. Well, what you propose now. Mr. Rawl. I have not the number of men, but it is estiiha,ied that it will take about from $2,500 to $3,000 to put a man out and keep him constantly in the field. The Chairman. That includes his salary and traveling expenses? Mr. Rawl. Yes, sir. Mr. Haugen. How many would that make? Mr. Rawl. It is estimated here at 96 men. That is probably estimated at $3,000 per man and some additional expense for office wofk, $28,000. Mr. Haugen. I mean altogether for that bureau ? Mr. Rawl. For the bureau, as a whole, the emergency estimate is $4,191,000. Mr. Haugen. How many men will that employ? Mr. Rawl. That has not been estimated in terms of men, but it would provide approximately 1,300. Mr. Haugen. WiU not that be used in salaries ? Mr. Rawl. A very large part of it will be used in salaries and travel expense. These items I have been speaking of relate to the Animal Husbandry Division alone. The present organization can be supplemented very rapidly. It is wholly out of the question to do tnis emergency work on the scale proposed with the same efficiency and economy of our ordinary work. Some inefficient men will he employed and will have to be discarded, but the question is, Does not the occasion warrant such an effort to maintain the live stock pro- duction of this country ? It seems to me that almost everybody has been thinking and tialking of increased production of grain, potatoes, and other food crops and this is of course important but it is also important that oui live stock production be maintained. This must be done, however, with the use of less grain than is usually fed and this means a better iitilization of rough feed, more legume hays and more skill in feeding. I feel that it is extremely important that steps be taken now to prevent a reduction of our Uve stock. It would be a calamity to reabze a year hence that on account of the high price of grain our hve-stock, and POOD PEODUCTION, CONSERVATION, AND DISTKIBUTION. 57 paxticularly our breeding stock, had decreased to a point where it was wholly inadequate to meet the needs of the Nation. There is an- other very important feature of this animal-husbandry work included in that same item, and that is the redistribution of Hve stock. The tendency, when prices are high and feed scarce, is to sell live stock, even the breeding stock. It is proposed that the Department of Agriculture ascertain where there are animals for sale, ascertain what the grade, examine them for disease and all that sort of thing, and put this information in the hands of the extension workers and other agencies in regions where animals are needed. There is now an increasing tendency to sell dairy cattle and a good many are going to the butcher. Mr. Heflin. As a matter of fact, are not 75 per cent of the live stock owned by the packers of the United States ? Mr. Eawl. I can not answer that question. I should not imagine so. Mr. Heflin. Yes, sir; 75 per cent. Mr. Rawl. I can not say. Mr. Haugen. You refer to range cattle? Mr. Heflin. Yes, sir. The Chairman. Now, take up the next item. Mr. Rawl. I have covered only the Animal Husbandry Division. For the Dairy Division there is an estimate for the redistribution of dairy cattle, of S75,000. Our idea is to put men into the dairy States and locate the cattle that are for sale, test them for tuberculosis, and, through county agents, place them in other reigons where they are needed. Mr. Heflin. Do you think you could find a market for the cattle where it ought to be ? Mr. Rawl. Yes, sir; this is going on more or less all the time. -For the last six or seven years, grade dairy cattle from in the dairy States have been going into the region west of the Rocky Mountains and into the South. Mr. Haugen. Would you consider it advisable for the Government to produce stock and place them on Government lands ? Mr. Rawl. We have not considered that. Mr. Haugen. Is it not a fact that this agitation of minimum and maximum price-fixing has discouraged the stock man, so that he is not buying cattle ? Mr. Rawl. I can not say whether that is true or not. I am in- clined to think not, but I am not sure. Mr. DooLiTTLE. Have you any opinion on that? As a matter of fact, has not the result been the opposite to what Mr. Haugen stated^that it has encouraged them ? Mr. Haugen. The report has gone out that the Government is going to fix the price, and that price will be fixed so low that they can make a profit of but 8 or 9 cents a pound. Mr. DooLiTTLE. If that report has gone out, it ought to be cor- rected. It has been stated here to-day by the gentlemen who have this matter in charge, that they intend, if there is a minimum price, that it shall not only recompense them for all the expense or reason- able expense in the production of a product, but also include a fair and reasonable profit. 58 FOOD PRODUCTION, CONSBBVATION, AND DISTRIBUTION. Mr. Haugen. Yes; but that is a newborn babe that has come to light to-day. Mr. Rawl. I want to say that high prices do not discourage the selling of cattle that are kept on ranges. The man who has a range is not deterred from holding cattle as long as those range facilities exist, but when it comes to buying, feeding, and wintering his stock at the present high prices of feed, he is liable to sell, but I do not beheve that the owners of cattle are going to sell short on their range stock at this season. Mr. Haugen. The danger is that the price is going to be fixed at 4 or 5 cents a pound, as it has been in the past, and he is not going to keep his cattle if he can get 9 cents a pound for them now, or take the chance of getting 9 cents in the fall. Mr. DooLiTTLE. There is not any dnager of that. Mr. Haugen. That is the report that they are receiving, at any rate. If there is to be a minimum price, there should be a guaranteed price; they can not be made effective in any other way. Mr. DooLiTTLE. I agree with you entirely. The Chairman. Take up your next item, Mr. Rawl. Mr. Eawl. The next item is for the purpose of increasing our gen- eral dairy-production work, such as we are doing now throughout the coimtry, in order to meet the demands of the new county agents, if they are put on, which in some States will more than double the county-agent work, and our proposal is to employ additional dairy- men enough to aid aU the county agents in dealing with their dairy- production problems. This will require $200,000. Mr.' McLaughlin. What wiU they do ? Mr. Rawl. They will, through the county agents, virtually direct the dairy-farming activities of the regions in wmch they work. The next item of $150,000 relates to domestic-science work. Some of you may remember that last session a small item of $15,000 was proAdded for sending out dairy specialsits to aid women agents to teach the women on the farm how to make dairy products for home consumption. These women agents can go through their counties and back into the interior and teach how toprepare these homemade dairy products for home consumption. This becomes a very sig- nificant factor at the present time, because if more women agents are employed, and if that kind of instruction can be given to them so that they may start a nation-wide movement for the utilization of milk products as a substitute for meat in the homes, every pound of meat released thereby will add to our general meat supply, which is a very important factor in the food situation. For instance, a poimd of cottage cheese contains practically the same food value as a poimd of average meat. There are himdreds of thousands of farmers that could make and use a pound of two of cottage cheese a day. It is not a commodity that can be shipped across the country; but if the farmer eats it himself and for every poimd he consumes releases a pound of meat, that poimd of meat will go into the channel where it is needed. These women agents in every coimty of the country could be instructed in this work, which is sim- ple and requires little equipment. We should like to furnish the help to instruct these women agents so that they can demonstrate to the people and teach them how to make and to use these dairy products. POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 59 Mr. Haugen. Now, if it is the proposition to open the door wide to the sale of this bull butter, and thus destroy the market for real butter and of course make it impossible for the farmer to produce butter, while they turn their attention to those other things, the pro- duction of cheese and the use of the milk, wiU they not go out of^the butter business entirely and use their milk for other purposes ? Mr. Rawl. There will be other factors that wiU determine that, Mr. Haugen; what I am speaking of here does not materially inter- fere with the butter situation, since these products are made from skimmed milk and serve an entirely different purpose from butter. I think there are hundreds of thousands of farmers who are not selling any dairy products at aU, but who have a cow or two and who wiB be aided in utilizing more completely the products of the milk from the cows than when butter alone is made. Mr. Anderson. It strikes me that all of this, or a very large part of it, can have no possible effect upon the immediate necessities. It is a lot of birdshot, and it does seem to me that if the department is going to meet this very difficult situation in any large way, it has got to fire bigger guns than are involved in this proposition. Mr. Rawl. Of course, I am dealing only with the lateral ends, Mr. Chairman, in regard to this proposition and not the larger policies that you have been discussing here to-day. I am dealing with the birdshot, you may say; what the individuals workers do. Mr. Anderson. There can not be any immediate effect upon the situation in this kind of work. Ml-. Rawl. I can not agree with you. I believe that if you go into a county and teach the domestic-science agent how to make cottage cheese and how to make it on the farm with almost no equipment, or an improvised equipment, and if that agent goes back the next week and gives two or three more demonstrations, and the next week does the same thmg, and tells the people that every pound of this product they produce has as much food value as a pound of meat, I think it will have a, wonderful effect. The success of this work will depend,' of course, on the qualifications of the workers we can get to go out and teach the women, and upon on the quahfications of the women themselves. Mr. Haugen. The bill here carries $25,000,000. That will prob- ably employ eight or ten thousand people. That is about the amount to be provided. You have 17,000 people employed now. Now, when that removes 8.000 people from other activities, you cpmphcate the labor situation exactly to that extent. Mr. Young of Teaxs. They would not take the farmers; they would take these people from the cities to go out and instruct them. Mr. Haugen. If it is to be of any value at all they have got to send experienced, practical men. We have sent college boys out, and we know what results we had. They are all very fine fel- lows, but they do not know anything about farming. If we want to teach the farmers we have got to do it with men who know some- thing about it. The Chairman. Gentlemen, I have asked Mr. Rawl to make this statement in the hope of finding out just the method by which the department expected to spend this $25,000,000. On the big poli- cies you have heard the Secretary of Agriculture, and you nave 60 FOOD PKObUCnON, CONSERVATION, AND DISTKIBUTION. heard one of his ne# men. Dr. Taylor, and you have heard Dr. Pearson. I think it is hardly fair to Mr. Rawl to ask him to discuss the bigger policies involved in this proposition. What I woiild like to find out from him is just how he is going to try to use the propor- tion of his $25,000,000 that has been allotted to his particular bureau, the Bureau of Animal Industry, and we can not go into the utmost details on this proposition if we are going to get through with it, so we want to hurry just as much as we can. Mr. Haugen. Mr. Chairman, I did not want to delay the pro- ceedings, but you will recall that when questions were asked the Secretary, he referred us to these people in charge, and very properly so. The Cblairman. Certainly Mr. Anderson's question is right. This is a "bird-shot" proposition, and Mr. Rawl has said that he is dealing tvith the individual who is on the job itself. Mr. Haugen. But, Mr. Chairman, if there ever was a time for guarding the purse strings of the Government, this is the time to do it, certainly, and to take account of waste in expenditures. Mr. Rawl. I beUeve the" department is thoroughly in sjmipathy with that. We do not want to waste a dollar. We have made these proposals in the hope of helping in a critical situation, realizing fully the difl&culties that must be met in carrying them out. Wliether it is wise to use this money is something for Congress to decide. Mr. Haugen. I am"sure nobody questions the motives of you or anybody in the department. That is not it. It is just what is best to do. Mr. Rawl. May I proceed ? The Chairman. Yes, if you wiU. Mr. Rawl. Another item of $175,000 is for work with the cream- eries and other dairy manufacturing plants. Our creameries manu- facture about 600,000,000 pounds of butter annually. The milk from which it is made would, in addition to the butter, make possible the production of about 3 pounds of cottage cheese for each pound of butter. It would be possbile if all these by-products could be assembled and taken care of, to make the equivalent of about a bil- lion and a half or two billion pounds of a good substitute for meat. Mr. McLaughlin. What do you mean by by-products ? Mr. Rawl. Buttermilk and skimmed milk, which are now fed to live stock or wasted. There is a great field for utilizing these prod- ucts in this way, if we can get the farmers and creameries to take care of and assemble them. This will depend on the price these products will bring at the factory. Mr. McLaughlin. Can you find a market for those dairy products ? Mr. Rawl. These creameries are scattered all over the United States, and we do not look with favor on the idea of shipping cottage cheese long distances. It is a product that must be consumed quickly. Our idea is to have it consumed at home, in the vicinity of the creamery where it is made. Mr. Haugen. What do you propose to convert the buttermilk into? Mr. Rawl. It can be mixed with skimmed milk and converted into cottage cheese. The skimmed milk, when it is good enough, can be condensed. In our little creamery at Grove City, Pa., every pound of buttermilk and skimmed milk is used in this way in making food FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 61 products, and it is believed that many other plants can do the same thing if they are given a little assistance. Mr. Haugen. Can it be made into preme to good advantage? Mr. Rawl. Into what? Mr. Haugen. Preme, what you sent a sample here of, this yellow stuff. It is made out of buttermilk. You made it in your depart- ment. Mr. Rawl. I do not know what you have reference to. Mr. Young of North Dakota. What is preme ? What is that ? Mr. Rawl. Primost is condensed whey. It is a marketable article. Casein can be made from buttermilk as well as from skimmed milk. Mr. Young of North Dakota. Primost is made out of whey? Mr. Rawl. Yes, sir; it contains albumen and milk sugar. It is called in some cases whey cheese, out it is entirely different from the regular cheeses. The next item, $50,000, is to furnish assistance to the cheese fac- tories to stimulate cheese production as much as possible. Another item of a ntiiUion and a half is for the purpose of suppressing diseases of live stock, and it is proposed to put on additional men, averaging about 10 to each State. The more important liv«-stock States would, of course, use many more than the less important ones. These men would be utilized in suppressing all animal diseases, such as tuberculosis, contagious abortion, blackleg, anthrax, etc. ^ The Chairman. Would you regard that as an emergency propo- sition? Mr. Rawl. Yes. If there is an outbreak of disease in a commuioity and it can be suppressed quickly and the animals saved from destruc- tion, 'we shall have so many more animals, hence this is considered an emergency measure. The Chairman. Take up your next item. Mr. Rawl. In addition to that just mentioned for general disease suppression there is an item of $500,000 for the eradication of hog cholera. The Chairman. What is the total for your bureau ? Mr. Rawl. A little more than $4,000,000. I have not the exact totals, including an item of $400,000 for tick eradication and $35,000 for the eradication of dourine. The Chairman. Your appropriation now is something over five millions, is it not, in the regular appropriation bill ? Mr. Rawl. It is $3,555,326, including $501,620 for meat inspection, but not including the original $3,000,000 naeat-inspection fund. Mr. Anderson. Does this include meat inspection? Mr. Rawl. Including all meat-inspection funds; the present appro- priation is $6,555,326. Mr. Anderson. How much is for meat inspection? Mr. Rawl. $3,501,620; leaving a balance for other work of $3,053,736. Mr. Anderson. Are we to understand this $4,000,000 is an addi- tional amount for services for which you are now expending about $3,000,000 ? ^ , • 1 Mr. Rawl. Yes, sir; it is for a service similar to that for which we now spend $3,053,736. . The Chairman. In other words, you are doubhng your particular appropriations for the hues of work you propose to lollow ? 62 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Rawl. We are asking for approximately $4,000,000 to sup- plement the work that is now costing 13,053,736. Mr. Hutchinson. Do not the various inspection services of the States appropriate large sums of money for this work ? Mr. Eawl. No, sir; not for educational work. I may say there has been no desire on the part of the department to replace its work- ing relations with State organizations, but instead to supplement them. We seek to harmonize our work in every possible way with the forces of the kind you mentioned. Mr. Hutchinson. The States are doing that work now, are they not? Mr. Rawl. They are doing it to some extent; yes, sir. Mr. Anderson. Are these estimates based on the work which you think would be done, or are they based upon the work which you think it is possible for you to do in the next fiscal year ? Mr. Rawl. I do not quite understand that question. Mr. Anderson. What I am getting at is this: I think it is very doubtful that you can get the men this coming year to carry your plan into full operation, and that it is quite possible estimates are very much higher than the amount which you will possibly expend, in view of that fact, and consequently I asked the question whether the estimates are based on what you think ought to be done and hope might be done, or whether they are based on any real informa- tion on me number of men you can actually get? Mr. Rawl. I should say that the estimates are based upon what we hope to accomplish. In some instances we have some idea of the number of men available. I do not think there will be any doubt about getting veterinarians enough to do the veterinary work and utilize that money advantageously. I think that there are a suffi- cient number of them in the country to supply that need. Now, as to some of the other items, as to whether there are enough or not, I do not know absolutely. The Chairman. What about your tick-eradication work ? Mr. Rawl. That will be handled very largely by the veterinarians. I think there is an ample supply of men to do that. Mr. Haugen. The Army is going to get quite a number of veteri- narians. Mr. Rawl. There is another factor that we must not lose si^ht of in connection with tick eradication. The States now provide about twice as much money as the Govern- ment, and their inclination is to increase their proportion. There is now a large organization for this work and, with proper supervision, men who are not professionally trained are doing a considerable part of it. Mr. McKiNLEY. Do the State organizations entirely cooperate with you? Mr. Rawl. Do you refer to any particular work, or in general ? Mr. McKinley. I mean generally. Mr. Rawl. Oh, yes, sir; they do. But of course sometimes there are matters to be adjusted. There is a little friction sometimes, but that is usually adjusted. Mr. McKinley. Is it not a fact that the Government is now en- deavoring to take over the entire control of the local State organi- zations ? FOOD PKODUCTION, CONSEBVATION, AND DISTEIBUTION. 63 Mr. Rawl. No, sir; The understanding between the State and Federal organizations is becoming very much more defined than in the past, and I think it is working out very nicely. I do not beheve ii is the inclination of the State ofiici§,ls at the present time to raise any point over this, because they realize that there must be uni- formity of action, and they are wUling to join in a comprehensive plan to meet the situation. Mr. Haugen. Is that work to be done in cooperation with the States ? Mr. Rawl. Oh, yes. As I said a moment ago, that relates to a departmental policy, which I am not in position to discuss, but I can say that the department has no incHnation to disturb the present cooperative relations with States. Mr. Haugen. Does not the biU provide that the State shall put up an equal amount ? Mr. Rawl. I think not. Mr. Hutchinson. Mr. Rawl, would it not be better to appro- priate this money directly to the States and let them utUize it ? Mr. Rawl, I do not think it would. You would then have a mere multipHcity of organizations. Mr. Hutchinson. We have one now, and you want to give us two ? Mr. Rawl. I do not catch your point. Mr. Hutchinson. We have organizations to handle these great questions. Mr. Rawl. The organization is as much a departmental organiza- tion as it is a State o];ganization. At the present time we have an organization that embodies usually the educational activities of the department and of the States, and it is with that organization that the work would be done. Mr. Candler. It is not the intention to disturb the relation between the National Government and the States, but simply to make the work more intensive and to enlarge it ? Mr. Rawl. Yes. Mr. Hutchinson. It is simply to supplement those activities ? Mr. Rawl. Yes, sir. Mr. Haugen. To what extent do you cooperate with the State dairy commissions, for instance, in our State? Mj. Rawl. Well, to some extent. Mr. Barney is doing some educa- tional work. The cooperation of our bureau relates entirely to educa- tional work. If Mr. Barney is cooperating with your agricultural college, then we are cooperating with Mr. Barney. His dairy pohce work is done independently; the Bureau of Chemistry is cooperating with him extensively in food-control work. Mr. Haugen. He is doing both ? Mr. Rawl. He is doing both. " Mr. Haugen. There is no duphcation in work ? Mr. Rawl. No, sir; none to any extent. Mr. Haugen. And there is not a waste of appropriation ? Mr. Rawl. No, sir; I do not think there is to any degree. Our organization with States is more efl&cient to-day, in my judgment, than it has ever been. Mr. Haugen. He is engaged in the very same work that you are ? Mr. Rawl. Where this is the case the work is usually harmonized 64 FOOD PBODUCTION, CONSEBVATION, AND DISTBIBUTION. Mr. Haugen. With respect to the testing of cows and all those things ? Mr. Eawl. Such work comes under the State hve-stock sanitary- board, and it is under its jurisdiction that the intrastate veterinary control is enforced. SometiAes considerable effort is required to harmonize the agencies of all these different institutions, but on the whole it is worlmig very well. (Thereupon, at 4.25 p. m., the committee went into executive session.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. House of Repkesentatives, Committee on Ageiculture, Wednesday, May 2, 1917. The committee this day met, Hon. A. F. Lever (chairman) pre- siding. The Chairman. The committee wUl come to order. The executive committee of the agricultural colleges and experiment stations have a meeting here in Washington and are tendering their services to the Oovemment. President Thompson, of the Ohio University, and Dean Russell, of the Agricultural College of Wisconsin, are here this morning. Dean RusseU has kindly consented to give the com- mittee his views of the situation ahead of us. We wilf be very glad to hear from Dean Russell. STATEMENT OF DE. H. I. EUSSELI, OF THE AGRICTJITURAI COLLEGE OF WISCONSIN. Dr. Russell. Dr. Thompson and I are here to represent the Association of Agricultural Colleges and Experiment Stations in regard to this matter which is before you. Of course, these agri- cultural colleges vrere born during a period of blood and stiess in the civil war, and the purpose which Congress had in their establishment was to be of such assistance to %\\e nation as was possible. Now, here is fche opportunity of the agricultural colleges to be of that service. The military work which has been carried on in these colleges — and these are the only military institutions with which the Federal Government is directly connected in connection with State governments — is yielding a large number of students to the Govern- ment in connection with this Reserve Officers' Training Corps. The agricultural colleges to-day, gentlemen, are practically depleted of their student body in connection not only with this military service but the food-production service. Practical^ all of she junior and senior classes of the agricultural classes are out from those colleges and have been given credit for their work for the balance of the semester in order that they may go out and participate in this food- production work. In TCij own college over 200 of those men have been sent out in the last two weeks, and arrangements are being made to place them upon farms in Wisconsin and in other States where they are actively con- cerned in matters of food production. The agricultural college has a very close relationship with the Federal Department of Agriculture, which has been working through the auspices of the Smith-Lever biU. Machinery, therefore, exists at the present time for this supplemen- tary relation in which the colleges can work with the Federal Govern- ment through the Department of Agriculture in work of this sort. 104176—17 5 65 66 FOOD PRODUCTIOlir, CONSERVATION, AND DISTRIBUnON. As members of the executive committee of the association of these colleges we are here to say that the agricultural colleges are at your disposal and at the disposal of the Secretary of Agriculture with reference to any phase of work which can be undertaken. Now, of course, manifestly that work to be of most value this year must concern itself with food production, and through the medium of these county agents — ^which are already establishea under the terms of this Smith-Lever Extension Act, which is capable of expansion, the organization already being in^ existence — ^it will be possible very easily and very economically to put into the field the men qualified and trained who will assist in the organization of counties with reference to this food-production work. The suspension of our junior and senior classes will release at once a very considerable- number of our staff from active teaching work. To be specific, in my own college, this suspension of these two classes, which will involve several hundred students, will enable us to put into the field at once from 15 to 20 not inexperienced men, but experienced men, our best teachers in the college. They will be assigned at once to these counties where there are at present no county agents. In our State we have about one-third of our State covered with these county agents. The most productive counties are as yet unorganized in that respect because they have been most profitable and the farmers are the most satisfied and the wealthiest ; therefore, ' they have been the slowest to see the necessity of organizing these county agents because they were satisfied with their own conditions. What we propose to do is to place our very best college men into these now imorganized counties, working directly in touch with the Department of Agriculture in this organization work. It seems to me that from the standpoint of economy it is the wise and most effective way in which we can do our bit as agricultural colleges in connection with this problem. Now, it is unnecessary to take your time further other than to assure you that every agricultural college in this country is in position to be of service, with and through the Department of Agriculture, in their respective States in taking up these problems which are of utmost concern just now — that is, increasing the amount of food supply which we are going to have at the end of this season. The Chairmax. Have you considered the proposition of delaying the opening of the schools and colleges this present year, say, imtit the 1st of November or until the 15th of November? Dr. Russell. That has not been given official consideration as yet, although it is a matter which we have under consideration. One problem which compMcates that, Mr. Chairman, in the case of universities is that agriculture is only one part of a university, and it would be impossible for us to do that imless the entire university was to come under this same rule, because our students are taking agricultural subjects in the agricultural college and hberal arts in the hberal arts college. Now, manifestly, we would have to come imder one method to do that. But in the State colleges of agri- culture, such as Michigan, Iowa, and a number of other States, where they are separate from the university and where the liberaJ arts work is wholly controlled by the agricultural college, such a plan as that might be put into operation much more easily. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 67 The Chairman. I. had in mind 'particularly delaying the opening of the rural schojols and rural high schools. Dr. Russell. Eather than colleges ? The Chairman. Yes. Dr. EussELL. Well, now, those matters would come under the jurisdiction of the State superintendent of public instruction and not under the auspices of the university or college. That question is being considered, of course, by a good many States and might, with propriety, be done. It has been customary, I might say, in certain of our districts where particular crops are grown in large quantities — ^potatoes, for instance — to let the students out for a week or so. The potato harvest with us comes in the latter part of September. Now, it is frequently the practice at the present time to let out school, as they say, during potato week, so that the boys and girls may go back on to the farm and assist in this harvesting of the potato crop, say for a period of one week ia the latter part of September or the 1st of October. That has been practiced sporadi- cally by various schools, rural schools, and high schools, in those- districts where this particular crop is a dominant factor. Our crops, are so diversified and the harvesting divided to such .an extent throughout the year that that problem is not so imminent; we do not have the peak load that you have in the grain producing States where the harvesting is by far the heaviest part. The Chairman. You attended the conference at St. Louis at which an endeavor was made to work out some relief in connection with this situation ? Dr. EussELL. Yes. The Chairman. Do you agree with the plan outlined there? Dr. EussELL. Yes. There was a committee of 15 appointed, and I was a member of that smaller committee which drafted these reso- lutions. I think those resolutions represent a safe and sane mode of procedure. There are some problems relating to distribution which may, of course, present questions about which there may be differ- ences of opinion. However, it seems to me that the suggestion which I understand has been made of separating those items into problems relating to production on the one hand, as opposed to problems relating to distribution on the other hand, so that we may get imme- diate action, is a very wise one. We have, as I say, at the present time 20 men whom we are ready to put into the field now if we know that we can proceed under a plan. Therefore every day now is a golden opportunity. One day now, gentlemen, is worth more than a week 30 days from now, because our potatoes are not yet planted and our corn is not yet planted, and if we can get those men right out this week they can be of more value in influencing production through seeing that all of the corn is tested and that aU of the potatoes, for instance, are graded and disinfected than they can be if this matter is delayed, say, two weeks, and then thOT are put into the field. The Chairman. You spoke a moment ago about one-third of the counties in Wisconsin being under county agents' control ? Dr. Ex/ssELL. Yes. The Chairman. Have you enough men to, put one man in each of those counties in Wisconsin ? 68 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Russell. We propose in tbis emergency relationship to put these men in under a different title ra-ther than comity agents. Wo have certain standards with reference to our county agents. It is exceedingly difficult to get properly quahfied county agents for this emergency purpose, ancf therefore we desire to call them something which will involve an emergency relationship. We intend to put our own college staff out there with the purpose of having those : men there continuously to simply tide over this emergency, and ^ just as rapidly as these counties adopt the regular coUnty agent'' system we will try and supply men for them, which will r^plactf these emeregency men. That is a matter, however, which will necessarily involve county initiative, and we will not try to force them. We will have enough men to practically cover the entire State perhaps by districts rather than counties. Take a man, for instance, for organizing purposes. He may cover two adjoining counties from the standpoint of organization. Now we will put under him one or two of our best senior or graduate students who will work as understudies and in that way multiply his fin,gers, you see, from the standpoint of actual accomplishment. The Chairman. Have you given any consideration to the propo- sition of maximum and minimum prices, as they have been explained ? Dr. Russell. Yes; very careful consideration. The tJroblem comes up with us especially in regard to potatoes. We grow 30,000,000 bushels of potatoes under ordinary conditions and usually get 40 cents per bushel. That is $12,000,000 for Wisconsin. Last year we grew about 14,000,000 bushels and got $1.50 per bushel'. We made more money last year on half a crop than we make ordi- narily on a whole crop. Now, what are the conditions ? This year potatoes are selling — and the State council of defense has com- mandeered all the seed stock in the State — for $3, $3.25, $3.50 a bushel. Now, the State council of defense said, "We want to give you a fair profit but it must not be an exorbitant profit. Will vou hold your potato stock, now held at the $3 rate, if the council: of defense will bring together these orders so that they may be handled in carload lots?" These men very patriotically said they would, although they could have gone out in the market and sold them for 50 cents or $1 more. Under those conditions, and with 10 to 12 bushels to the acre, see what it costs the farmer for his seed. Every acre of potatoes that goes into the groimd in Wisconsin will cost for seed alone this year $35, and it wul cost $75 to raise a crop of potatoes on that acre. At our food conference there was present a man from Maine and he said that in Maine it woiild cost $110 per acre, because there they put about 130 worth of commercial fertilizer in the ground, especially in Aroostook County. See what that means. You are asking the faimer to put forth herculean efforts to produce food products under existing conditions which cost him froni $70 to 1100 per acre, that is what it will cost him to raise that crop. The average production in the United States is between 100 and 110 bushels. In other words, it will cost to produce that acre of potatoes this year from 70 cents to $1 a bushel on the average. Mr. McLaughlin. What is the average yield in Wisconsin ? Dr. Russell. One hundred and ten is about the average but, of course, it is much dependent upon seasonal conditions. Last year FOOD PBO0UCTION, CONSEEVATION, AND. DISTKIBUTION. 69 we had a^drought in certain portions of the State which reduced our average and we only had about half a crop. Mr. DoOLiTTLE. Do you mean bushels or dollars ? Dr. KussELL. Bushels per acre; it is about 110; that is about the average of the United States, a little higher than that. Do you remember what the average is, Dr. Taylor ? Dr. Taylor. I think it is between 100 and 110. Dr. Russell. Yes, in round numbers about 100. Now, we have got to protect that farmer in some way and we hope that the natural operation of the law of.supply and demand will give him an adequate return for his labor. But we are telling our farmers this year, "You study this thing very cautiously; that is, as to whether you are going to mcrease your acreage of potatoes, and why not consider the question of increasing your acreage of beans?" Now, potatoes grow best upon this sandy loam soil, of which we have several million acres, and that is the kind of soil on which beans grow best. Now, look at the difference in regard to costs of seed. We say t the farmers, "One acre of potato seed wiU cost you $35 this y ar, whereas 1 acre of bean seed — that is, beans enough to plant 1 acre— will cost you $4 or 14.50. In other words, you only have about one-eighth the expenditure if you must buy your seed outside in order to plant." Now, when you think about it potatoes are a bulky crop, a perishable crop. They must all be sold this year and can not be carried over, hke wheat or beans or a crop of that sort. A farmer may well pause this year, it seems to me, and consider whether it is going to be to his advantage — unless there is some sort of rehance on which he can lean — to go extensively into potatoes when he might ■grow navy beans at one-eighth the cost of the seed, and produce a crop which is exportable to the trenches and which can be held indefinitely, because a bean does not deteriorate. We wUl have the normal acreage in Wisconsin. Normally we plant 370,000 acres, and in spite of the fact that seed costs are phenomenally high this year our farmers are going to plant the normal acreage. We are urging our potato farmers to plant the normal acreage and a little more, but we are- not urging a man who is not engaged in potato growing to plant a large acreage. Students have been coming to me and saying, " Do you not think it would be a good thing for me to go out and rent 40 acres and put 25 or 30 acres into potatoes ?" I have said, "By no means, because you are running a chance, unless you are a potato farmer and unless you have the machinery for the economical production of potatoes at the lowest figure " — and that is especially true of the southern part of the State, wiere the soil is not especially adapted to potato culture in comparison with this sandy region in the north. " You are run- ning a grave chance of not getting a yield this year, with the high price of seed, that will make your returns as much as you antici- pate." I have said that because in all human probabihty we can not figure on any $3 potatoes next year. If we get $1 a bushel for pota- toes under normal conditions we are getting big returns. It costs us about 25 or 30 cents, imder normal conditions, to raise a crop. TTien, again, labor is exceedingly high. This year we are paying $60, whereas a year ago it was $40. Those are questions which must come into the costs of production. 70 FOOD PEODUCTION, COFSEEVATION, AND DISTRIBUTION. This bill, as I un*rstand 'it, gives the Secretary of Agriculture authority to secure the information on which you, as Members of Congress, can at anv time put on a minimum as well as a maximum figure, if, in the ju^ment of Congress, that appears to be the wise thing to do. However, I think we ought to go that far, because we ought to know what the conditions are to be. Whether we should have a minimum price put on at the present moment or not is, per- haps, a debatable question. However, unless that is done imme- diately it will not influence production because all of our potatoes will be in the ground inside of the next 15 days— well, a httle later than that, say, the third week in May, because we plant oUr late stock about the third week of May — but in the bulk of the United States they will be put in within the next 15 days. The Chairman. Do you grow cowpeas in your State ? Dr. Russell. No; we grow soy beans. However, what we will push will be navy beans. Mr. Heflin. Do you grow velvet beans? Dr. Russell. No"; we do not grow velvet beans, as they are more adapted to the southern climate. Mr. Young of Texas. It is already too late to do much to en- courage planting in many portions of the country becauses in some sections the harvest is already on. Dr. Russell. Yes, that is true; but corn and potatoes are two things which we can influence immediately. Mr. Young of Texas. That is, in your section ? Dr. Russell. Yes. .Mr. Young of Texas. But in my section the crops are already planted. Dr. Russell. Yes; your stuff is up. Mr. Young of Texas. Our onion crop is now being harvested. Mr. Lee. How many bushels of beans do you raise per acre and what is the normal price ? Dr. Russell. The norinal price is $3, but that is not the price for beans this year. Mr. Lee. How many bushels do you raise to the acre ? Dr. Russell. Twenty, twenty-two, twenty-five, and thirty bush- els to the acre. Now, we do not grow nearly as many beans as Michigan, because that State is a great bean section. As I say, we grow the white navy bean and the soy bean. The soy bean is going to come into use for food to a greater extent than ever, I think, and as yet the American people do not know the nutritive value of soy beans as human food. Mr. McLaughlin. What is the relative value of those two beans ? Dr. Russell. The navy bean is the better bean because it is much more adaptable for human food than the soy bean. Mr. Haugen. Are they now being used for food ? Dr. Russell. Yes; and they are going to be used more and more. Mr. Heflin. The velvet bean is being used as a food element, is it not? Dr. Russell. Yes; but that bean is a southern bean, aiid I have not had much experience with it. The Chaiema!n. Why do you not grow cowpeas in Wisconsin ? Dr. Russell. Because we can grow soy beans better. The cowpea is more of a warm weather crop and you grow it in the South very FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 71 successfully. We can grow the soy bean more successfully because it stands the cooler nights that we have while cqwpeas do not like cold nights. The Chairman. The suggestion was made to us yesterday afternoon that a large portion of this emergency fund might be used advan- tageously in fighting animal diseases and also m encouraging the production of food animals in this country. "Would you regard that a wise expenditure as an emergency proposition ? Dr. EussELL. That depends upon what you caU an emergency. I think, gentlemen, that we have got to look at this thing from a three-year point of view, at the least. If we go into this war with the expectation that our plans are on a three-year basis then we have got to look to the question of our animal food supply. However, what is going to happen in the next 90 days would not have so much influence except in the case of hog cholera, from which disease, as you know, we lose mUhons upon miUions, and that is where immediate results might be secured. The question of tuberculosis is an entirely different one because of its slow and insidious development. We ought, however, to use this opportunity, on the plan of a three-year cam- paign, of intelligently directing our efforts with reference to the ehmination of not only animal but fungus diseases. We could secure more results on the plant diseases than we could on the animal diseases. If it were not so late we should test every bit of seed oats that may fo into the ground, because that is the easiest controllable thing. In ^T'isconsLu we have reduced the oat smut from 20 per cent to one- half per cent, and that has been brought about through a campaign of general application of the formalin treatment throughout the whole State. Of course, it is too late for results this year, but something could be done as to hog cholera and particularly black leg, from which diseases, as you know, losses are suffered in Missouri, and other States, amounting to miUions of dollars. Those diseases are not so apphca- ble to us, because we are on the northern belt of hog cholera. While we have our losses, they only run into the hundreds of thousands of dollars and not into the miUions, as in Missouri, Kansas, and Nebraska. Mr. Lee. And you would include, of course, the treatment of the cattle tick? Dr. EussELL. Yes; of course, that would be a problem ia the far- ther South. The Chairman. Have you given any consideration to the matter of either absolutely closing or restricting boards of trade and produce exchanges ? Dr. EussELL. No ; I have not, Mr. Chairman. That problem is so comphcated in its economic relations and our attention has been primarily spent upon these problems of production because those are the things that have got to be taken up, and now it is speed of action. What we want now, gentlemen, more than anything else, is immediate action with reference to these things which affect pro- duction, if that can be done. Then these more abstruse, compli- cated and debatable problems which involve economic relations can come along in a few weeks from now. Mr. Anderson. At this point I would like to ask relative to the general poUcy tlaat should be pursued. I have had in my own mind the idea that it would be much better to concentrate our efforts, 72 FOOD PEODUCTIOlir, OONSEBVATIOlir, AND DISTEIBTmOK'. SO far as it is possible, upon those things which promise a more or less laige return rather th^ to sprep.(i tnem oyt over ajarge area. Dr. Russell. I think you are right there. I would takie. those things that yield the biggest return on the investment. You are dealing with a problem fliat may yield a return ranging from 5 per cent to 500 per cent, and I should take up those things which are going to give the biggest returns on the investment. Mr. McLaughlin. If you thiiik; that something should be done in the matter of fixing prices, will you kindly tell us what you think ought to be done ? Dr. Russell. I do not know, gentlemen, what is the wise thing to do, because we do not have the knowledge at present as to what that price should be. Mr. McLaughlin. But how should it be done ? Dr. Russell. It should be done by Federal authority. Mr. McLaughlin. How much legislation should there be and how much general authority and discretion should be given ? Dr. Russell. Manifestly it should not be done by the States themselves. For instance, our council of defense is going to have the power to exercise that question of price control, and it would be a mistake, gentlemen, to have the States do that. That is a national problem. Suppose Wisconsin should put the price at $1 a bushel and Minnesota put it at 70 cents. See what kind of a mess would result. Therefore Congress should be the one that should fix this thing as apphcable to the Nation. It is impossible for Congress, in its wisdom, to make that determination now, and, therefore, it should be lodged in the hands of somebody who can secure the neces- sary data to make it a matter of what is just and right. Therefore that authority should be lodged in some of your admin- istrative organizations. Presumably the Secretary of Agricultm-e, as representing your agricultural interests, would be the one that should be given that power and authority. I believe that if the Secretary of Agriculture is given rather plenary powers of that sort it will be a matter of no small moment in influenciag the question of speculation, because if the speculators know that this thiig can be determined and put into operation by the Secretary of Agriculture at any time they are going to be loath to engage in a comer which might result in very violent fluctuations in prices. The situation at the present time, gentlemen,^in regard to the rise in prices, I think, is due more to hoarding by consumers than to any other one factor. We have been discussing that matter before the Federal Trade Commission for two days. Let me tell you a case ia mind. One of our professors came into my office and told me that the people living out on what they call the Heights had gotten together and were talkiog over this matter and said that they made up their minds that they were going to get a stock of sugar and flour, and had collected $175. When you get these college professor people to scrape $175 in cash together and go down town and plank it clown for sugar and flour, you can better beheve that the com- munity at large are doing the same thing. The grocer from whom Prof. Van Hise's wife buys their groceries said to her the other day, "Do you not thinlc that you should buy some flour and sugar?" She saidj "Why, I do not know." He said, "The prices are going up quickly, going up every day, and my POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION, 73 advice would be to lay in a stock." She was anxious, of course, to run her household on an economical basis, and so she mentioned it at the table to the professor. The professor brought his fist down on the table, and said: "No; do not do such a thing as that. That is the most unpatriotic thing that could be done." A man who was at the conference with the Federal Trade Commission from Vermont said that that was Yankee foresight. As a matter of fact, it is as unpatriotic a thing as can be done at the present time for a person to go out, as this man said, with a family of two and buy 8 barrels of flour, sufficient to last four years. I came down on the train the other day, and on that train there were half a dozen mLUers who were coming here to appear before one of your committees. Those men told" me that the demand for flour during the last 14 days was twice- the capacity of their entire milling equipment, and that under ordinary conditions at the present time they would be operating their mills on a 50 per cent capacity. They said that they were operating the mills at full capacity all the time, and that they had orders for months ahead beyond all their supply. That has been brought about through this publicity that has oeen given to this food shortage, which has led everybody to think, "Good Lord, what is going to happen; I will go and buy a supply." The channels of commerce have simply been drained dry of every avail- able material, and the miUs are paying higher prices than they other- wise would, because they want to take care of this business. The result is to-day that all through the coimtry every consumer that has any money and what he calls foresight has gone into the market and anticipated his ordinary demands. Prices have simply skyrocketed on this knowledge of the advance in prices during the last 30 days mucli more than during the six months before on account of this pubhcity. Nobody can control that by law. I do not know how you could say to me, "You must not buy" if I have the money to pay for it, but if there could be a campaign of pubhcity presented through the papers, and I am sure the papers would be willing to do that to allay the hysteria which is now evidenced in the minds of the people, it would do more to break this rise in prices which has oc- curred in the last 30 or 60 days than anything else. We are not going to starve; there is enough in the country. Mr. DooLiTTLE. Do you consider that the heavy demand of the consumer is the chief cause of the unprecedented rise in prices ? Dr. EussELL. This is the result of a number of factors. The pri- mary cause is shortage, a world shortage. In the first place, our lines of production have been gradually lessening in comparison with the lines of consumption. Add to that a world shortage of a miUion bushels of wheat this last year, and the war demand, and you have the three factors. Each one by itself might not have resulted in this condition. Then, there is the brealdng down of the trans- portation system, which has had a big effect. At the present time there are not enough freight cars in the United States to haul the products. The railroads can not handle the business and the whole- salers can not secure the supply. High prices are the resultant of all those factors. Mr. DooLiTTLE. Do you include in that, in your opinion, specu- lation on the board of trade ? 74 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. RussKLL. Certainly- that comes in as a subsidiary effect. Just to what extent that has skyrocketed prices, I can not' say, but undoubtedly it is a part of the problem. The Chairman. We are very much obliged to you, Dr. Russell. STATEMENT OF DE. W. 0. THOMPSOIT, PRESIDENT OHIO STATE UNIVERSITY. Dr. Thompson. Mr. Chairman and gentlemen of the committee, again I appear before this committee on behalf of what we suppose is the agricultural interests. At the recent St. Louis conference, which was attended by a very considerable number of presidents and deans of colleges of agriculture, after some discussion, conference and committee reports, we agreed substantially upon the outhnes of the measure presented in resolution No. 75. This, of course, does not commit us to all the details in the resolution as presented here any more than it commits any of you gentlemen. That conference agreed most heartily that it was the duty and opportunity of the colleges of agriculture to come to the rescue of the country in every possible way. We set out a number of problems contributing to production and we felt that every State should have a council of national defense on agriculture. Speaking for Ohio, upon my return, on the call of the governor, within a short time we had in Ohio fifty-odd men from the university in the districts, 21 employment agencies actively engaged; we had a war emergency board com- missioner in every county and a man in every township in the State, and the State has been thoroughly aroused. We have done in that regard all we could do. We did this very promptly. Substantially this has been done in every other State. Upon my return I sent to every college of agriculture in the United States a message stating the substance of the St. Louis conference, asking the colleges to at once take action, to meet their constituencies and to call attention to the importance of the State council of defense on agriculture and the necessity of reaching every rural district in the State. I am confident that as a result of that conference the agri- cultural colleges have reached the greater portion of the comitry. I bring that simply as a matter of information that may not have reached you from those States. The agricultural colleges have taken very active action in this matter of production. They recognized the lateness of the season, but in Ohio, for example, where com is yet to be planted, I am sure that a very active interest has been developed in the matter of planting corn. Mr. DooLiTTLE, When is the time to plant com ? Dr. Thompson. From the 5th to the 20th of May is the normal time. We are already planning our campaign for putting out the wheat crop for next season. We are starting in Ohio on the assump- tion of a war of five yeai"s. If Germany can get into Russia, and there seems to be nobody in Washington who seriously doubts it, the com- bination of Russia, Germanj^ and Austria as a basis is almost beyond the power of being conquered. That means indefinite war. We are recognizing the fact that it is a contest between the material resources of the United States, England, and France, against the greatest combination that Europe can present in those three countries. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 75 Mr. Young of Texas. "WTiat do you mean by Germany getting into Russia? ' ' ' Dr. Thompson. When the German transports get to Eiga and land the troops and you have a German army between Petrograd and the Russian troops and another German army to the south, nobody can tell what will happen. Russia will furnish the storehouse for the German food, and if you feed the Germans, Germany can fight in- definitely. So we are going into this thing with great seriousness in Ohio. We do not think that we have entered upon any summer campaign. Our council of defense is laying plans for an indefinite campaign. We are expecting the United States practically to be the financier of this war. The Chairman. In your judgment, we ought to predicate our legis- lation on the basis of at least three years duration of this war ? Dr. Thompson. I should say five years. Three years is what the Government is planning. I think that is the minimum unless there is a collapse that nobody can foresee. If the collapse is in Russia, which everybody seems to fear, I do not know where the end is and I do not think anybody knows. The Chairman. The reason I asked that question, the committee was yesterday rather taken off its feet by the large sum for fighting animal diseases and for increasing the meat food supply of the country, the committee feeling that that was a problem that could not be handled as an emergency. If this war is to last from three to five years, I think we wul all agree that we had better begin now to lay out a plan for conserving the meat food production of this counti'y and do it vigorously. Dr. Thompson. That money, if it is available, will be regarded as a resource; it shall not be a liabihty. In other words, Ohio will not spend the money that the Department of Agriculture is authorized to spend unless we see our way to spend it wisely and economically. We shall treat it as a reserve and draw on it just as a man draws on his bank account in the case of necessity. We intend to do everything we can to support the Nation in this crisis. Mr. McLaughlin. Do you expect that a part of this money placed at the disposition of the Secretary of Agriculture wiU in turn be placed at your disposal and that the duty will devolve upon you of spending that? Dr. Thompson. Yes, sir. Mr. McLaughlin. It will not be spent directly by the Secretary of Agriculture through his agents ? j, a • Dr. Thompson. We shall cooperate with the Secretary of Agri- culture and use the agents in the States as the mediums through which this money is expended. These agents are the agricultural colleges. We are not going to scatter money ptomiscuously over the State of Ohio. We shall be very careful in the expenditure of any money that the Government puts at the disposal of either the De- partment of Agriculture or Ohio as one of the local units. The Chairman. There will be cooperation under the agricultural extension bill ? Dr. Thompson. Yes, sir. We have fifty-odd men on our pay roll, toward which the State legislature nor the Department of Agriculture has contributed 1 penny up to date. We will try to continue this 76 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. until summer with the resources in our hands. We have not touched $1 of any emergency money. We have financed this whole matter. Mr. McLaughlin. Several States have made appropriations ? Dr. Thompson. Yes, sir. Mr. McLaughlin. Michigan passed an appropriation of $5,000,000 ? Dr. Thompson. Yes, sir. Mr. McLaughlin. Not all the other States have done the same thing? Dr. Thompson. A number of them have, but not all of them. Those interested in the question of production have recognized the importance of storage and preservation of foods. In other words, this food must be cared for when it is grown. We are plan- ning a campaign of 300 women in Ohio during the growing season for the purpose of preserving foods and developing methods of preservation that do not involve tin cans which seem to be greatly m demand and in excess of the supply. In other words, we want to address ourselves to that problem. Then, there is the problem of transportation, to which reference has already been made. That is a vital question. That question win have to be handled in some way. Attention has been directed to the shortage of cars and other problems will arise, unless proper transportation of food can be provided. We recognize the importance of labor in that connection. Over two hundred students have left the Ohio State University within the last few weeks to go into agricultural production. Ninety per cent of these students, approxi- mately, went to their fathers' farms, where they are most welcome and happy, and most efficient for increasing production. More than 2,500 boys left the high schools within the last two weeks to go back to the farms. I wrote to every high school in the rural districts about that matter and assured them that we would be glad to receive the boys next autumn, if they come, without any discount upon their standing. In other words, we.have undertaken to mobilize the sons of the farmers in the Ohio colleges and high schools and send , them back to the farms for active work this summer. We have gotten that number aheady into the farm operations. AE of the colleges of agriculture are recognizing the importance of farm labor. This is a most serious problem which we are confronted with, because the coinpetition is such as to attract them away. Mr. louNO of Texas. What are the farm wages? Dr. Thompson. They vary under the conditions, but they run anywhere from $35 to $65 per month. That is one of the most serious problems which we have to confront. The Chairman. Have you taken into consideration the millions of idle people around little villages and towns and large cities, who hang about the street corners, soda foimtains, etc. Dr. Thompson. Yes, sir; that has been the subject of discussion, and the governor has said that he was prepared to say that men should either go to work or go to the workhouse. We nmst all recognize that that quality of labor is quite inferior. There are retired farmers in Ohio that can bo utilized in stress times very efficiently. The Chairman. They are not loafers ? Dr. Thompson. No, sir. Those men can be used efficiently. There is a certain amoimt of labor in these villages that can be FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 77 TitiKzed, but an Ohio farmer can not utilize a soft-handed city boy who does not know one end of a horse from the other. The question of the market situation will have to be dealt -vHth aind we shall cooperate with the State council of defense in that matter just as rapidly as we may. The question of price fixing has been dis- cussed here this morning. I shall not add to that, except to say that we must recognize when the farmer is ready from patriotic duty to assume a definite fixed charge and to pay wages in competition with the national demand from munition factories and the city call, that the farmer is being asked to carry a pretty heavy burden. We are entering into contracts right now with munition factories and other factories for clothing running through 12 months or 18 months or 2 years, at a definitely fixed price. We can enter into contracts at definitely fixed prices running one, two, and three years with these people. Other governments are doing it. But nobody is saying to the farmer, "We will give you so much a bushel for wheat for the next three years. We will give you a certain amount per bushel for corn for the next three years." Then, there is the question of taking the farm labor and putting it into the Army. So the farmer is con- fronted with a very serious situation from the standpoint of labor and of finance. Then, there is the force of the Government back of the manufac- turers to prevent or correct a strike if it comes. There is absolutely no force that can be mLobilized to protect the farmer. He is in a helpless situation, confronting a very serious problem. We are taking this matter very seriously in our minds. I suggest that to you as simply one of the problems with which your committee might deal. I only want to assure you, and I think I can speak in behdf of the colleges, of the moral support and the cooperation on the part of the colleges in any program which is to be announced, and to assure you that the colleges, with their activities and the extension agencies and others will stand shoulder to shoulder on any plan that this Govern- ment adopts for the efficiency and safety of the public in this most trying experience that the world, not the United States, has ever seen. Mr. McLaughlin. I regret that you did not discuss the price-fixing proposition. We appreciate to some extent, but not as fuUy as you do, perhaps, the labor problem and the other difficulties confronting the farmers, but it may be up to us to do some legislating on the ques- tion of price-fixing or to enact some regulatory measure in that regard, and I was hoping that you would give us your opinion. Dr. Thompson. We recognize the seriousness of the situation. I think we all agree that the time has not yet arrived when we should fix prices for farm products. We think that time has not yet arrived but we think that it may arrive. We believe, therefore, that the Secretary of Agriculture should be clothed with the power and au- thority now to meet any situation which may arise. We beUeve that that should be left to the Secretary or to the department, and we shall gladly use our influence with the State council of defense to keep the Government advised. The difficulty may come in 60 days or it may come in 90 days, and when the time comes that something should be done we would like simply to assure you of the support of these colleges in doing anything that can be done. Mr. McLaughlin. It may be up to Congress before information is obtained to enact some legislation. For one I should like to know 78 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. what kind of legislation we should enact; whether we should enact a blanket bill, giving the Secretary of Agriculture the authonty, to fix prices and all that, or, whether there. should be some suggestions m the law or some restrictions. . Dr. Thompson. It would ill become me to undertake to advise Congress or the Government on a matter of that kind, because I am not very expert in such matters, but I think I might express the average intelligence of the country in saying that we believe that legislative matters lie with Congress. Executive matters may be vested ia the Secretary of Agriculture, but it seems to me, and I am speaktag only for myself in this particular, that Congress would make a mistake if it passed blanket legislation. It seems to me that it would be wiser if it prepared to meet the emergency, and if it could give the Secretary of Agriculture or some other executive officer the . right and authority to act upon suggestions from Congress. I be- heve that Congress wiU be iu session right along, and there is no reason why an emergency matter of this character should be debated in Congress for weeks and weeks, as it plight be in time of peace with great propriety; I should hesitate to fix prices in time of peace with- out a long discussion and a thorough investigation, because it does involve some very important economic principles, but in time of war, when the emergency is upon us, democracy meets its severest test when it is willing for the moment to turn that authority over to the commandiag general. That is the test of our efficienty at that point. I believe in de- mocracy through and through. When that time comes the com- mander in chief should have full authority, and I believe our business is to obey. I would not confer that authority in times of peace. This is an emergency measure and I should give somebody authority to act in times of an emergency and trust him, whether that be the President of the United States or the Secretary of Agriculture or the Secretary of War or some other authority. We have to centralize our authority and trust our leader, so that when the emergency arises he can do the right thing. I do not believe that any Govern- ment officer under the conditions will go far astray. I believe they will try to do their patriotic duty in the interest of the country, and I think you will find that the troubles will be minimized. The Chairman. I think it is contemplated in the bill that will shortly be introduced to confer this extraordinary power upon the President of the United States, with the advice and suggestion of the Council of National Defense. Do you regard that as a wise provision 1 Dr. Thompson. In time of war, I should have entire confidence in it myself. Mr. Haugen. Is it not a fact that the people in the country are very much concerned about this price-fixing matter ? Dr. Thompson. Where the matter has been discussed they are greatly concerned, yes. Mr. Haugen. Is it not so aU over the country? Dr. Thompson. I could not say how widespread it is, but it is no doubt a matter of concern where people are reading the agricultural papers. Mr. Haugen. Then is not this a question that ought to be settled and quickly settled ? It seems to me that the whole policy ought FOOD PKODUCTIOIf, CONSERVATION, AND DISTRIBUTION. 79 to be annojinced, eit^ier that the price is to be fixed or that the price mOT be determined. Dr. Thompson. I recognize Mr. Haugen (interposing). Is not that one of the most important propositions before Congress to-day, if our purpose is to stimulate production ? Dr. Thompson. I should put it slightly differently. I should say that it was vitally important that the producers of the country should know that Congress is ready to support them in that matter as an emergency develops. Mr. Haugen. Do you not think we are asking too much of the farmers when we ask them to take a chance on the future in regard to prices, and that we ought to fix prices and forever dispose of this question, so that people may know just what is going to be done and not have them hanging up in the air ? Dr. Thompson. In regard to the matter of fixing prices, if you fix one you have got to fix two, and if you fix two you have got to fix four. Mr. Haugen. But I think we should decide whether we are going to fix prices or not. Dr. Thompson. We might decide on the pohcy and leave the details to Executive action, and then the Executive can meet the emergency. Mr. Haugen. I think it would have to be left with somebody to fix prices, but I think the pohcy ought to be announced and let the people know what is going on. Mr. Young of Texas. Necessarily everything would have to enter into this price fixing. Prices would have to be fixed as to plows, wagons, teams, and aU manufactured articles that a farmer must of necessity have. If there is to be price fixing as to the farm products, it would necessarily follow that tnere must enter into the thing the question of price frxing as to all of the things he uses. Dr. Thompson. Quite true, sir; and furthermore all of the agencies of marketing, because if they were not controlled you would leave him helpless. Mr. McLaughlin. In line with what Mr. Haugen and Mr. Young have said I gather that the impression prevails m some sections of the country that it is the purpose of the Government to fix the normal price during times of peace in order to prevent excessive prices to the consumer or to the Government, if it becomes necessary for the Government to take over these products. I think that impression, if it prevails to any extent, ought to be corrected, because it IS certainly incumbent upon the Government, if it undertakes to fix a price, to take into consideration everything, including what Mr., Young has mentioned, the increased cost of machinery and every appliance that a farmer uses, and that every move a farmer makes and everything that he uses costs more. I do not know how to remedy the prevailing impression that has taken possession of the people in some parts of the country and get before them the fact that the Government wiU take into consideration all of these things and fix a price in keeping with present conditions, just as largely as can be done. 80 FOOD PHODUCTION, CONSERVATION, AND DISTBIBUTION. Dr. Thompson. If you want a reply from me I will say that Ijhere is no intention to fi^ permanently peace prices. The only situation that now confronts the Grovemment is a war emergency and any price fixing we do now must be a temporary proposition due to the emergency and must be a war emergency. I think it most unfortu- nate that this country should get any impression that Congress now proposes to legislate for peace conditions. Mr. DooLiTTLE. Do you think the country has that impression ? Dr. Thompson. I do not think they have it in Ohio. , , . , Mr. DooLiTTLE. I know they have not in Kansas. They think that if there is a minimum price to be fixed it wiU be fixed on a war basis guaranteeing a fair price to the producer. The Chairman. That seems to be the general impression, as I get it from my correspondents from different sections of the country. I think it is rather unfortunate, probably, that we have used the words "minimum price" and that it would be better to say "guarantee a reasonable price to the farmer." Dr. Thompson. It is a war price; that is what it is. It is not an economic condition but a war condition and it is temporary, we hope. The Chairman. Is there anything further, gentlemen? If not, Dr. Thompson, this committee is always happy to have you and Dean Russell appear before it, and we thank you very much. In the outline of the bill which has been sent up to me and which, gentlemen, I have sent to the Printing Office to have printed for you and hope to have it back in the next couple of hours, I notice that Dr. Taylor asks for an appropriation of $7,500,000 for this emergency- seed proposition. I will ask Dr. Taylor to give the committee some information as to that. STATEMENT OF DE. WILLIAM A. TAYLOR, CHIEF OF THE BUREAU OF PLANT INDUSTRY. Dr. Taylor. The basis of that estimate, Mr. Chairman, is the conviction in the mind of the department that under the conditions as they exist, with reference to tne crop that will be planted in the fall of 1917 and in the spring of 1918, it is quite probable that in one section or another, with reference to some one or more important crops, we may' face somewhat the situation that was faced in the southeastern United States last August, which we are feeling the full effect of now. As the result of the destructive floods and storms of that time from North Carolina southward and westward to the Mississippi, where the effect of the storms in midsummer was prac- tically to wipe out the crops of the year, the corn, the cowpeas, the soy beans, and, to a less extent, the cotton, a very great shortage of the varieties that were suitable for planting this spring in that region resulted. The shortage was not great in proportion to the entire production of the corn of the country but was great with reference to the types and varieties of corn that were suitable to grow in the sections which were devastated. Should such a situation arise it would require prompt action, at the harvest time, to prevent suitable seed from being fed in the ' section where it is, rather than to be held for planting and be replaced for feeding purposes from the surplus of similar crops in other sec- tions. It is emergencies of this type that the department has in FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 81 mind when it suggests the provision of a sufficient fund to make it possible to st»p in and act when the conditions make action reason- able and necessary. It is probable now clear that action of that character would have been helpful in the hard spring wheat States last fall, where the supply of really suitable seed wheat was short and where a distinct improvement of the crop this year could have been accomplished through the holding available for seeding of much good seed wheat that has already been consumed. The same thing is true, and critically true, with reference to the soy bean seed supply, which was mentioned by Dr. Russell, and correctly so, as one of our important potential food supplies, capable of quick increase through the southern half df the country and portions of the rest of the country east of the one hundredth meridian. The seed supply of soy beans has, during the last three months, to a considerable extent, gone to the oil mills and bean bakers. After having been bought up by the oil crushers in the fall with the intention of extracting the oil and seUing the meal for feed the food price — that is, the baking price — rose entirely above what the crushers regarded as economically possible for oil production, and a large part of the supply which now the country woxdd be very glad to have to plant went into consumption. We can not say with reference to any portion of this item, Mr. Chairman, that it will 'be needed for any particular crop. Our view is that the ice is so thin and the leeway so narrow that it is highly desirable in the interest of prudent foresight to be able to act with reference to any important crop when any emergency of this character arises during the growing season. There is not much that could be done now with reference to seed for the summer crops. The Chairman. I was just going to ask about that, because your statement seems to go to the future rather than to the present supply of seed. T)"r T^ATT oTi "i (*s sir The Chairman. This appropriation, then, would be used only as an emergency arises in the future? Dr. Tatxor. It would be intended as a safeguarding appropriation available to meet such emergencies as in this country arise in one section or another ahnost every year and which, under existing con- ditions, it would not be prudent, from the standpoint of national in- terest, to leave unprotected. The Chairman. I have had some telegrams from Montana, i be- lieve, and that section of the country complains of a seed shortage. I have also had a number of letters, as well as telegrams, and inter- views with Members of Congress from the flood belt of the South, including Mississippi, Alabama, Georgia, and other States, com- plaining likewise of a shortage there. Is it proposed to use any ot this fund, or could any of this fund be used in handling those situations ? Dr Taylor. It would be a question, Mr. Chairman, of the existence of suitable seed and of the possibihty of securing it. We are main- taining practically a day-to-day inquiry. We have men m the South now following up the reports of soy-bean stock with a view to bemg able to get it. There is urgency and the possibihty of effective action with reference to this crop. Six weeks ago $500,000 would have put in the ground 200,000 bushels of soy beans then available 104176—17 6 82 FOOD PRODUOTIOSr, CONSEKVATION, AND DISTKIBUTION. if we had had requisitioning authority; that would have planted 400,000 aicres of soy bea,ns/ A goodly proportion of that seed stock is not now available. Of course, some of it has been consumed for seed, but we do not know what proportion. Some of it has moved to the bakers. Baked soy beans with pork in cans have been on sale in this city during the last four weeks for the first tim^, so far as my observation has gone. It would be a question, primarily, of the ability to locate stocks of adapted seed that could be used to meet the requirement. In so far as our information goes, taking the country over, the seed is now on the farms where it is to be planted. There are not large stocks of any of the staple crops held so far as we have information. There is a marked insufficiency of soy beans, kafir, and the other sorghums to meet the planting desires of the farmers. There is a shortage in some sections in the spring- wheat States to meet the planting desires of the farmers, althou^ our information indicates that the acreage there will be at least normal, probably somewhat beyond normal, as the seeding condi- tions are reported very favorable and the shortage has been in sight there for a sufficient time so that seed stocks have been safeguarded. Qualities, however, are being planted that,would not, in an ordinary year, be selected for seed in the case of spring wheat. The Chairman. Have you made any estimate as to what portion of this sum you intend to use for present purposes ? Dr. Tatloe. No, sir. The question would be a question of date of availabUity. The seed stocks of the country are, in the main, already distributed. Mr. McLaughlin. You are doing something now, are you not, in the matter of helping the farmers in the northern districts to get seed ? Dr. Taylor. We are distributing information as to location of such seed stocks as we can locate, but we have no funds with which to secure and make the seed available. Mr. Haugen. What is being done in the sections struck by- black rust last year ? Dr. Taylor. As to the prospective acreage ? Mr. Haugen. The supply of seeds. Dr. Taylor. The supply of seed in general, as the information reaches us, is adequate for at least the normal acreage and probably somewhat beyond the normal acreage. And the seed is going in; the farmers are going full speed ahead in that territory in so far as we have information. Mr. Young of North Dakota; How much money could you have used iatelligently in 1916 if it had been available for the purchase of seed and distribution? Mr. Taylor. In the light of our present knowledge ? Mr. Young of North Dakota. In the light of your present knowl- edge of conditions in 1916. Dr. Taylor. I should say that probably we could have used $10,000,000 effectively had we known that we could use it and so have systemitized our inquiries and our locations of the stocks. Mr. DoOLiTTLE. How much did you have ? Dr. Taylor. None. Mr. Lesher. What method would you use ? Would you simply buy the seed and distribute it free to them ? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 83 Dr. T41YLOR. No, sir; that would not be our view-, For example, ooe thing that is in our minds at the present time is the question of, winter oats in the South which is, perhaps, the first cereal that will be harvested in any large area. We know that there have been heavy failiu-es due to the freeze in February and early March, which reached as far south as southern Florida. The oats that can be effectively grown throughout that territory are the winter oats in distinction from the spring oats that constitute our entire northern oat produc- tion. So that spring-oat seed can not take the place of winter-oat seed for that region. Should it develop that there is a marked short- age of the supply of winter oats for seed purposes, at the time of the harvest, which will be the latter part of June through those regions generally, our idea would be to purchase or requisition — tiie details are not worked out, but they are entirely capable of being worked out — suitable winter oats for seed purposes and sell them to the farm- ers for money at the average cost to the department in securing them, using the funds derived from that sale, which would be completed by October, to handle any later similar emergency that might occur during the season. Mr. Young of North Dakota. This fund of $7,500,000, then, would be a revolving fund for three years or for the period of the emergency ? Dr. Taylor. It would be essential that is should be a reVolving fund at least by years. . Mr. Young of North Dakota. And it would represent in the end, probably, a very small investment upon the part 01 the United States, because the money would practically be returned ? Dr. Taylor. Substantially the entire amount would be ev.entually returned to the Treasury. A free distribution is not in the mind of the department as a desirable thing in such a case unless there should be such an exigency as would be beyond what we have ordinarily experienced. Mr. Haugen. Would the policy be to sell it on time ? Dr. Taylor. Preferably not, if it is within the bounds of reason and of the currency supply of the communities to handle it as the ordinary seed supplies are handled, but to accomplish this vital essential, that the seed stocks that are required for the production of 1918 shall not be fed to cattle and shall not be fed to men, but shall be safeguarded for the use that is greatest in importance. Mr. McLaughlin. Someone will have to give the farmers assistance and advice as to how much shall be fed to cattle and how much shall be kept for seed, because the meat supply of the country must be kept up and increased. Dr. Taylor. Citing a typical or a possible instance, Mr. jVIcLaughhn, in the case of oats, the question that would have to be considered and decided would be. How shall these men get the oats-if needed ? There would have to be a shift of oats from Illinois and Iowa and the com- mercial oat territory, probably, to replace these that were held for seed in the winter-oat territory, but in some sections it would be a question, largely, of systematic authoritative advice. But advice by itself, we feel, would not be adequate to accompUsh the end. Mr. McLaughlin. It is barely possible that the gentlemen from the Bureau of Animal Industry would advise the farmer to feed his oats to stock and the gentlemen from your department would advise that the oats be kept for seed or for human consumption. Somebody 84 FOOD PEODUCTION, CONSEEVATION, AND DISTRIBUTION. must be able to make a suggestion to the farmer as to how much shall be used for each purpose. ' _ Dr. Tayloe. I think, in -view of the existing relations within the Department of Agriculture, Mr. McLaughlin, that such a difTerencfr would be so quickly reconciled that the department would speak with one voice in any recommendation it made. The Chaieman. Have you any further statement to make, doctor? Dr. Tatloe. That is all with reference to the seed. Now, there are certain other features which bear directly on crop production that I would Hke to mention. We recognize that under the condi- tions as they confront us there is the probability that plant diseases may, in one section or another, be of greater importance to the country dliring this crop season than they have ever been in the past, because of the urgency of the food situation. We feel that that being the case it would be highly desirable to have available for use — and that as promptly as possible, it ought to be within the next few days, so that the work can be dejSnitely organized on a basis sufficiently flexible to be effective — an addition in our plant-disease work. For instance, the question of the preparation for the seeding of fall wheat in the Pacific northwest, where smut of wheat is fre- quently an important and destructive disease. We regard it as wise to put men into that region, systematically and vigorously to prose- cute a campaign with the eiad in view of accomplishing complete seed treatment of the winter-wheat crop there. The Chaieman. How much do you need for that ? Dr. Tatloe. Our estimate with reference to black rust and smuts is $75,000. On the rust proposition I hardly know what to say. We are now prosecuting a survey study of the wheat rust situation from the south northward in order to get at what the wise course would be with reference to attempting systematic barberry eradication, particularly in the northern spring wheat territory. We have there a case, as you know, of a disease which is, to a large extent, dependent on this other plant, the barberry, for its perpetuation and spread. Denmark has apparently, vdih- very complete success, accomplished control of rust by complete eradication of the barberry. In this country our pathologists have been somewhat divided in opinion. Conditions are considerably different with them than conditions here. We have under consideration at the present moment the advising of the Secretary to request, under his existing authority, the States of Minnesota, A^orth and South Dakota, to undertake the complete eradication of their European barberries and that within the next four weeks, not because we can prove that this would control black rust but because there is reason to beheve that it would greatly reduce the destructive spread of the disease, in the event that the climatic conditions this season should be favorable for the disease. Mr. Haugen. Have you estimated the cost? Dr. Tayloe. The cost for smuts and rust ? Mr. Haxjgex. No; for the destruction of the barberries. Dr. Tayloe. No, sir; not further than to make a general estimate; it is not practicable to go into the details. Mr. Haugen. It runs into the millions ? Dr. Tayloe. No, sir; not that much. Mr. Haugen. It would have to be extended to the pubhc lands ? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 85 :\ Dr. Taylor. No, sir; no barberry is found there. The only bar berry that is under suspicion of responsibihty for this propagation of rust is the Eui-opean barberry which is planted for hedges and in gardens as an ornamental. The Japanese barberry, which is the one more usually planted as you get farther west in North Dakota, be- cause of its greater hardiness, apparently does not perpetuate the rust. Mr. Haugen. Would not all kinds of shrubbery have to be de- stroyed ? Dr. Taylor. No, sir. Mr. Haugen. Rose bushes and things like that ? Dr. Taylor. No, sir; however, you have there this human psy- chology to deal with, with the barberry bush in the garden in the edge of the village is close akin to the children of the family, and you have a problem that can not be worked out overnight. North Dakota has {)assed a barberry eradication law at the present session of the legis- ature. Minnesota and South Dakota have considered such laws, but have not enacted them. The Chairman. Take up another item. Dr. Taylor. We need $50,000 also for general pdant disease advi- sory work and $20,000 for potato and bean diseases, for which we estimate $20,000 to have a sort of flying squadron of pathologists — an enlargement of our expert force available for service against epi- demics in the important commercial production territory. Another feature which we are not able to say much about, but which potentially is of much importance in the event that the produc- tion of perishables, vegetables in particular, this year as a result of the increased plantings in home gardens should produce an excess supply in the commercial truck fields as is not unhkely, through reduction of demand from consumers in the cities who have hitherto been purchasing from the commercial growers, there is going to be an excess of such crops as onions, beans, potatoes, sweet corn, carrots, celery, and the other crops in some sections. The can situation, as was mentioned this morning, is critical with reference to the ability of the canners to secure the tin required to enlarge their pack beyond what they akeady have planned for, so that the other method of conservation that will have to be con- fronted and attacked vigorously is that of drying on a commercial scale a number of these products which in Anierica have not been dried extensively since the can took the place of the rack in the sun or the oven in the kitchen. There are possibilities there, which we know, as the result of such action as was taken by the French in western New York a year ago, where to meet their army require- ments for soup stock they stepped in and bought crops of these vegetables in the field and secured the use of the evaporators that existed in that section and constructed temporary evaporators of relatively low cost to supplement the equipment and converted large quantities quickly into a nonperishable and wholesome product. Mr. Doolittle. What product ? Dr. Taylor. Dried carrots, celery, turnips, potatoes, beets, and other vegetables. Much of it would" not be attractive in appearance to the American consumer, but the department has given enough attention, to that to feel confident that there are possibihties of im- provement; that it would be practicable to put into effect, provided 86 FOOD PRODUCTION, CONSERVATION', AND DISTRIBUTION, it becomes evident by the first or middle of June that we are going to have a surplus production of those perishables, but we would have to organize a force to make the drive in a practical way. That would be a: joint activity of the Bureau of Plant Industry and the Bureau of Cheinistry, and our estimate is that we should have $155,000 available. Mr. McLaughlin. What have you to say about the advisabiUty or feasibOity of these • traveling dErying plants that were spoken of yesterday ? Dr. Taylor. I did not hear that portion of the discussion. Was that referred to by Dr. A. E. Taylor?' Mr. McLaughlin. Yes, sir. Dr. Taylor. Unfortunately, I was not here. Was that plant on a railroad track? Mr. McLaughlin. I thought it was something that could be moved around on the road and be set up almost anywhere. The Chairman. I thought Dr. Taylor said it was a portable plant on a railroad track, which went from place to place to meet the vegetables that had been brought in by the farmers. Mr. McLaughlin. He spoke of it as going from farm to farm. The Chairman. A small plant that might be used on the farm. Dr. Taylor. It is possible that some apphcation of that sort could be made of the principles that have been fairly well worked out in experience. Our idea has been to concentrate a drive of this sort in the territory where the surplus, as determined by the Office of Markets through its service, is certain to occur, with a view to the construction of plants with a capacity approximately adequate for the requirements of the section. Mr. McLaughlin. Do you know anything about the use of the Mttle grinding machines that are so very cheap that almost any family could have one to grind its own wheat ? Dr. Taylor. I have not seen those machines in use. Mr. McLaughlin. So that each farmer or each farm family could prepare its own fiour from whole wheat? Dr. Taylor. I do not know about their use in connection with flour. They have long been used, notably in Chicago, for the prepara- tion of a home supply of breakfast food. Mr. McLaughlin. I understand there is a Uttle machine, something Uke the machine that is used for preparing breakfast food, and I was told that a company in Chicago was making those machines, and building them at a cost of $5. A family could have one of those machines and grind the whole-wheat flour, which is not only more nutritious, but it would be a great saving in the wheat supply. Dr. Taylor. The question there, I suppose, would be the prac- ticability of baking such meal into bread and its palatability. I do not know whether it would be practical. Mr. Haugen. Coffee grinders are used for that purpose? Dr. Taylor. Yes, sir; for breakfast cereal grinding. Mr. McLaughlin. In speaking of the palatability of the whole- wheat bread, I heard a story of something that occurred in a family where they were using what is caUed whole-wheat flour. There was some little disturbance in the nursery. It turned out that the nurse had given the chUd a piece of bread made of patent flour and it was makmg serious objections to it, because it had been in the habit FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION, 87 of having whole-wheat flour bread and the necessity of having what it had been accustomed to have, because it hked it better. 1 think there is iio question about it being more nutritious. I do not know whether that story is true or not, but it came to me in such a way that I credit it. Dr. Taylor. I do not know. Mr. .Young of North Dakota. A chemist stated yesterday that it was not as nutritious and that it could only use 82 per cent of the wheat. Mr. McLaughlin. I would not assume to say, but I have heard from other chemists another statement. Dr. Taylor. I should, perhaps, say a word with reference to the way in which the department has endeavored to assist in steadjang the crop production situation. The department has been flooded with proposals, with offers of land, gratis, with proposals for the enlargement of production on a large scale in various ways. The view of the department has been that under the conditions that have existed this spring and which continue to exist, the most effective method of crop enlargement is for each territory to enlarge the pro- duction of the staple crops, particularly nonperishables that are known to succeed, and to hold itself to the varieties of these crops that are known to succeed rather than to venture into large enter- prises of individual experimentation. Mr. McLaughlin. Have you been receiving reports and getting any information from the country indicating that tne farmers to any large extent have a misunderstanding as to the probable or possible action of the Government in the matter of fixing prices along the line of Mr. Haugen's questions and remarks, indicatmg that some of the farmers think the prices if they are fixed are to be fixed on a peace basis, on the idea that prices are too high — unnecessarily so — and if so, if anything is to be done; or do you think anything should be done to remove the impression and to give the farmers to under- stand that if prices are fixed it will be with war conditions taken into consideration ? Dr. Taylor. The only suggestion that that thought might be in the minds of some has reached me as a result of a discussion of maximum prices. As the representative of one of the large farmers' organizations said in a discussion a few days ago, "We have been urging the fixing of minimum prices for a long time, but we have not thouglit of fixing maximum prices; in fact, we had not thought that prices could go too high." It is quite possible in the discussion of maximum prices that may have arisen. Mr. McLaughlin. Has any report come to the department indi- cating that any section of the country has that idea ? Dr. Taylor. Not so far as I have the information. Mr. Haugen. Have you read the editorials in Wallace's Farmer? Dr. Taylor. No, sir. Mr. Haugen. That publication has a large circulation. Mr. Jacoway. Is there not a great desire on the part of the indi- ividual farmers all over the coimtry to cooperate with the depart- ment '>i 88 FOOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION. Dr. Taylor. Yesy sir; that is the experience. We are quite unable to keep up closely with the flood of letters from them. Mr. Jacoway. Is that widespread ? Dr. Taylor. Yes, sir. (Thereupon, the committee took a recess until 1.30 o'clock p. m.) AFTER RECESS. The hearing was resumed at 1.30 o'clock p. m., pursuant to the taking of recess. The Chairman. The committee will come to order. Dr. Brand, win you present your end of this appropriation to the committee, please ? STATEMENT OF DE. CHAEIES J. BRAND, CHIEF OFFICE OF MAEKETS AND EUEAL OEGANIZATION. Dr. Brand. I would hke to take up the major proposals in what I beheve to be their order of importance. The Chairman. Yes, if you please. Doctor ? Dr. Brand. It seems to me, first and foremost, that we hare got to have authoritative information as to our food supply and that we must have that as a basis for doing anything. Hence the biU as originally presented, and as I understand it is to be re-presented, contains a section particularly aimed at making surveys to determine the available food supply. We have anticipated a httle in this matter, I do not mind saying to the committee, and we have already gotten together our lists of the persons to whom we should go, although we are not through with it by any means, such as elevators, mills, canneries, the cold storages, the common storages, packing plants, creameries, cheese factories, and so on. So that when the Congress gives us this appropriation and this power we wUl be ready to proceed within six days, in my opinion, to the getting of this information. There are some 23,000 elevators, about 8,000 mills, 1,400 packing plants, 6,500 creameries, 4,000 cheese factories, and so on, that we have gotten ourselves in touch with now, so that we can begin to get reports and results on some of these matters within 30 days from the time we begin. We will make our inquiries immediately, and if the power is given, as suggested, they should be. certified reports so that there will be no question as to their accuracy, and we can begin to get reports on specific products in specific hands within a very short period. The thorough doing of the task will require, in my opinion, at least six months. Mr. McLaughlin. You would report, from time to time, as you got the information ? Dr. Brand. Yes; that is the idea. And having once gotten the fundamental information we would plan to continue monthly to secure the reports and have a bookkeeping account for our food supply. We now get from the railroads, with regard to certain products, complete reports of every car of the perishables that moves from every station, we have reports now from about 25,000 station agents in the United States as to a certain number of par- FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION, 89 ticularly perishable products, and we would extend that to include livestock and other products as well, so that we could keep an accoimt with our food supply. I think we ought to keep an account in this emergency just as we do personally with our bank accounts. We do not go on drawing checks forever and a day without making sub- tractions to determine what our balance is, and I think that we should work out our food supply in this emergency in just the same manner. I have tried to give some thought as to the cost of these various items of service, but it is pretty difficult to assign costs, Mr. Chairman. We are going into a field that has not been very thoroughly exploited. We will know more about it after we have gone along a few months than we do now. In my opinion such a piece of work would cost for a year, if the war should happily end in so short a time as that, as much as a million and a half of dollars. That includes the fimda- mental determination of our food supply, the monthly report and the monthly securing of information, so that we can keep up to date on it. Mr. Anderson. Do you think it can be done for that ? Dr. Brand. I hope it can. I may be too optimistic, but I always try to do everything thoroughly and I hope it may be done with that amount. The Chairman. Does the authority contained in section 4 of the original bill supplement the item carried in the sundry civil bill 1 Dr. Brand. Yes ; it supplements it very greatly. The item in the sundry civil bill is similar in some respects to the item of $50,000 carried in the appropriation bill of tliis committee. Mr. McLaughlin. What was that amount finally made ? Dr. Brand. $250,000, I believe. That item specifies — I do not recall the exact language — that the Federal Trade Commission shall investigate within its powers whether there be violations of the anti- trust laws. We have made a very careful study of that matter and have had it under discussion with the Trade Commission a number of times. It appears that their powers of iayestigation relate almost whoUy to such corporations as are engaged in interstate commerce. Now, that would reach such a small proportion of the instrumen- tahties of the United States that deal with food distribution that if you had all of their information reported you would not have enough to do any good. That is the conclusion, in a word, that we have reached. Mr. DooLiTTLE. Do you mean that after the investigation which is being imdertaken now by the Federal Trade Commission under the 1250,000 appropriation contained in the last bill is completed it wiU be of Uttle value ? Dr. Brand. It should be of very great value in so far as it relates to corporations engaged in interstate commerce. Mr. DooLiTTLE. Do you think that the investigation that is being conducted, or which is contemplated, looks only to the question of whether there has been a breach of the antitrust laws of the coimtry ? Dr. Brand. I am merely quoting the language of the authority itself. Mr. DooLiTTLE. I think it is certainly understood that the mvesti- gation they are to make is to go into the economic propositions involving production, distribution, and consumption. 90 FOOD PKODUCTION, CONSEKVATION, AND DISTRIBUTION. Dr. Bkand.' As a matter of fact, I am able to say that the Trade Commission has not yet perfected its plans, and that ther^ has ; been a conference on the matter during the present week. Mr. Jacoway. Would you not necessarily have to go into these problems in order to determine whether there had been a violation of the antitrust laws ? Dr. Brand. I can not say as to that. Mr. Young of North Dakota. Is it not a fact that there is some hesitancy about doing the work because they are in some doubt about what authority they have and whether it is advisable in this emergency to proceed with it ? Dr. Brand. I do not know as to that, Mr. Young. I only know that some of the men who have been at the conferences — and among them are officers of the Department of Agriculture who are stationed in the various States — ^have expressed the thought that most of the things that they were asked to investigate were things which were already under investigation by the Department of Agriculture. Beyond that I have no knowledge. I was only able to be at the conference during the presentation of two speakers, as I have been very busy. Mr. DooLiTTLE. Has it occurred to you that an investigation to find out whether there had been manipulations, unjust practices and illegal practices might result in success in the event that the Govern- ment itself would take over, for instance, the operation of the packing plants of the country ? Dr. Brand. In the event that the Government took over the oper- ation of the packing plants would it be possible, then, to determine whether there had been these manipulations and restraints of trade ? Mr. DooLiTTLE. Yes. Dr. Brand. That would afford an unusual opportunity for the gleaning of facts. My own opinion about this whole matter is this: That operating within its powers and supplementing the Department of Agriculture the Trade Commission, with this $250,000, ought to be able to perform a very useful service, particularly if the work is done in connection with our work. Mr. Haugen. Their power is so limited that it does not amount to anything ? Dr. Brand. I would not say that. Mr. Haugen. But their power is very slight ? Dr. Brand. I would not go that far. Mr. Haugen. That was the statement of the attorney who appeared before the committee ? Dr. Brand. I think its inquisitorial powers with reference to cor- porations engaged in interstate commerce are very comprehensive. Mr. Jacoway. You have data on hand giving you all the informa- tion desired except the actual food supply on the individual farms ? Dr. Brand. I do not believe I catch your question. Mr. Jacoway. I mean that you have all the information desired except the actual food supply on the individual farms? Dr. Brand. No; we have nothing but estimates on any of those subjects, except that we do get monthly, imder our regular appropria- tion, definitely and accurately, so far as persons are willing to give reports volimtarily, the stocks that they carry in only eight different commodities, which are reported to the trade every month, and which FOOD PRODUCTION, CONSERVATION, AND DISTBIBUTIOlir. 91 reports have been found of very great value. If the other information is of equal value this appropriation will be very well spent just for that purpose. Mr. Jacoway. Dr. Taylor said yesterday afternoon that the American Government was better equipped along that line than either Geimany or the other countries ? Dr. Brand. In our crop-estimating work I think there is no govern- ment in the world that equals it. That deals, however, with the estimates of crops, based on acreages and percentages, but does not deal with the distribution of actual supplies. Mr. Anderson. At the recent hearing connected with the railroad situation, car situation, particularly with reference to the shipment of flour and wheat, it was found that there was only one place where it was possible to ascertain definitely the stocks of wheat in elevators and the number of cars on the way, both going and coming, and that place was at Minneapolis. Dr. Brand. That is generally true all over the United States. We are lacking fundamentally the information we need in order to deal with the facts instead of guesses in our distribution. Mr. Hutchison. Can you not find out the information with regard to cold storage in the different States by going to the health depart- ments ? Dr. Brand. No; although in a few States the health departments are making those reports. Mr. Hutchinson. In our State you can tell very readily every pound of butter in storage and the number of eggs by just simply ask- ing for the information. Dr. Brand. What is your State, please? Mr. Hutchinson. New Jersey. Dr. Brand. The New Jersey law so provides, and we receive regularly monthly reports from the department of health of the State of New Jersey, and we are quite familiar with all the reports of that State, and it would be worth while for all of the States to have that same machinery. Mr. Hutchinson. Why can you not suggest that ? Dr. Brand. It would take too long. It has taken 19 years to get the uniform warehouse receipt act adopted by about 31 States; it has taken many years to get the cold-storage act adopted by about a half dozen, and I think we wiU all be dead before we can get it through the other State channels. Mr. Hutchinson. The same thing is true as to grain, that you can ascertain the visible supply of grain by simply writing for that information. Dr. Brand. In the State of Illinois the only reports on gram are those reports that are exacted by law from public warehouses but, as a matter of fact, the vast majority of the grain is held in private warehouses, so that the information about pubhc warehouses is not worth a cent because incomplete. . . Mr. Hutchinson. Then the Government is giving statistics ot the visible supply that do not amount to anything ? ^ Dr. Brand. The Government does not publish those statistics; the trade gets those up, and they are estimates. i, j. , Mr. Heflin: Your plan is to get this information from all ot the warehouses ? 92 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Brand. Absolutely; we intend to get a statement of facts fron£ every one of them and not an estimate. They know absolutely what is in their houses, barring the usual shrinkage. Mr. Young of North Dakota. You would not go beyond the dealers ? Dr. Brand. I should in this emergency. Ordiaarily I would not go beyond the dealers, but in this emergency I thiuk we ought to know the total supply as far as we can. Mr. Young of North Dakota. You mean you would go to the granaries ? Dr. Brand. I should go to the granaries, at least to the extent of getting very careful estimates in every township in the United States; I should at least go that far, and, if it were practicable, I might go further; but I certainly would go that f&,r. Mr. Heflin. What additional force do you think it would take ? Dr. Brand. I should say it would take two or three hundred people. The Chairman. Have 5^ou got them ? Dr. Brand. No. The Chairman. Can you get them ? Dr. Brand. We certainly can. There is not a day passes that we do not have offers of the personal services of at least 15 or 20 com- petent people, people who know us and whom we know, and many of them offering to render the service without cost in this emergency. Mr. McLaughlin. Would they have to be selected under civil- service rules ? Dr. Brand. All of our people are selected in that way, and if we were to utUize those people there would be no exception. However, the Civil Service Commission is very ready in dealing with these situations and holds examinations very promptly; they arrange the examination to determine the abUity of a person to do the task rather than proposing technical questions. So that when persons who are at all suitable present themselves we can get them through that channel and get them with relat)»ve promptness. Mr. McLaughlin. Is that what you propose to do 1 Dr. Brand. I would rather do it in that way where it is possible, in order not to interfere with the civil-service system. Mr. McLaughlin. With the understanding that the employment is to be temporary? Dr. Brand. Yes. The Chairman. You pay these men about $2,000 a year, do you not > Dr. Brand. It varies very greatly, ]\Ir. Chairman. Some of them we pay as low as $1,200 and some of them we might have to pay as high as §3,500 or S3, 600, depending upon the importance and re- sponsibility of the task. Mr. Haugen. Is not the Census Bureau the proper bureau to get this information? Dr. Brand. I should think so if it were not a matter with which we are in such intimate touch. We are in touch with all of these agen- cies. For instance, take the matter of the elevators, Avhich are of enormous importance in this matter. We are in touch with them constantly, daily and weekly. Mr. Haugen. I do not suppose these men would lock their doors against anybody who might oe sent there to get the information. FOOD PRODUCTION, COHTSERVATION, AND DISTRIBUTION. 93 Tou are going there to get the information and the Census Bureau will go there to get the information, and your men will be paid $3,500, while the other fellow wiU get about $2 a day ? Dr. Brand. No. Mr. Haugen. I am speaking of the enumerators ? Dr. Brand. My whole thought in this matter is that we have a lai^e machine which is in contact with the agriculture of the United States and with all of these agricultural industries, and that we can do it much more effectively, much more quickly, and at a more reasonable cost than any agency which is not in touch with them. Mr. Haugen. But it costs more to operate two machines than one. That is the idea ? Dr. Brand. But this a going machine; it is now in operation and is in touch with most all of these things. It is merely an extension of present activities. Mr. Haugen. When is the census to be taken by the Census Bureau ? Dr. Brand. Three years thence, and we have just appointed a committee to make plans for the next census, so far as it relates to agriculture. The Department of Agriculture assists in preparing those schedules, and the Secretary has just appointed a committee to work upon the schedules to be used in a census to be taken three years hence. Mr. Haugen. The Census Bureau is going to take that census in three years ? Dr. Brand. Yes. I might say that it is not my thought that we are not going to use every agency of government in this matter. The Chairman. You are authorized to do it in this bill ? Dr. Brand. Yes; and my thought is, and I am sure that Mr. Eogers will cooperate in doing it, that we will utilize their machinery just so far as the Census Bureau has surplus force and sufficient machines. Mr. Haugen. What is the advantage in utilizing your force over that of utilizing the force of the Census Bureau 1 Dr. Brand. What is the advantage of having a chemist try to deal with an agricultural matter when an agriculturalist knows all about it ? The answer to that question is the same as the answer to this one. Mr. Haugen. But there is not much agriculturally in taking the census ? Dr. Brand. There is a great deal; the evaluation of these figures, the getting out of them what is really in them, the facts and not mis- takes, depends upon a great deal of information regarding agriculture and distribution which ordinary clerical staffs can not handle. Mr. Haugen. I am speaking now of the investigation that you are going to make of the grains on hand ? Mr. Anderson. The advantage is just this, that you have a con- cern which is in touch with agriculture all the time. Dr. Brand. Yes. Mr. Anderson. While the Census Bureau only comes in touch with it more or less shghtly and inadequately once in 10 years ? Dr. Brand. Yes. Mr. Haugen. But one has the machinery and the other has not, or is not supposed to have it, I mean, for taking the census ? 94 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Dr. Brand. We are intending to use any availab^ machinery.. We get reports, every month from a very large number of theae^ agencies and it is simply an extension of that work. If it were turned over to the Census Bureau, we would stiU have to go on with our work and there would be a great deal of duplication. Mr. Haugen. I understood you to say that you are going to visit., every granary in order to get accurately how much they have there, and in order to do that you wUl have to weigh out every bushel in the granary 1 Dr. Brand. No; we are going to get certified statements from every granary and, therefore, it will not be necessary to go to every granary, at least to every elevator. Mr. Jacowat. Can you not get that by telegraph or letter ? Dr. Brand. We are already doing a great deal of that by tele- graph in our cold-storage work, and if you gentlemen wiU give us the money and power we wUl do the same thing in this situation. I think it is an emergency situation, and I think we ought to have the exact facts. The Chairman. There has been some complaint that section 4 con- fers very drastic powers upon the Secretary of Agriculture to send for people, take their testimony in writing, orally, or otherwise, and to examine books, letters, papers, and documents, require the sub- mission of reports, and summon people by subpoenas, and the like. What have you to say as to that power? Can you get along with- out it ? , Dr. Brand. We could get along without power in many, respects and we could do this task without that power, but when it was done it would be open to all kinds of doubt and criticism because it was not backed by that power, and I do not think we ought to go into this matter without adequate power, and if we have the power it will be only in the rarest instances that it wiU be necessary to exercise it. But I think we must have authority if we are going to get the facts and be sure of them. Mr. Jacoway. You think that the use of that power will be the ex- ception rather than the general rule ? Dr. Brand. Absolutely so. I can illustrate that by oiu- present experience. One thousand five hundred cold-storage houses report to-day voluntarily, and we have only found one case — and that was a pure mistake — where they have given us false information. But even at that we have found that from time to time the information, : has been suspected of not being exactly right, and people would not suspect it if there was power inherent in the department to get cer- tified information. Mr. Jacoway. Take a county as a unit and tell me how you would get this information. Take a county in my State and you want to get the information that this big bill seeks to obtain, what would be the manner in which you would go about it ? Dr. Brand. We have certain contacts in your county, at least two contacts; we wiU utihze those contacts at once, so far as we think it necessary, in order to get information as to who is holding, who is dealing in, handhng, and storing these food products. We will immediately send them schedules which, by the way, we are pre- paring, we believe this is an emergency matter and we are getting' ready for it; I do not know whether you approve it or not, but I FOOD PBODUCTION, CONSEBVATION, AND DISTRIBUTION. 95 think it is important to be getting ready and we are doing it. We will get those schedules out just as quickly as we can to every one of those agencies and then check up certain of them to determine accuracy. We can not put inspectors on to check up every one because it would take as many inspectors as there are counties and we can not do that. But this wiU let the people know that they are likely to be under inspection at any time and there will not be any trouble about the accuracy of their reports, especially if we have power to compel the making of accurate returns. Mr. Jacoway. Does the bill, accordin^g to your idea, include the certifying of each holding by each individual farmer in any county ? Dr. Brand. It might involve that if there was a suspicion of in- accuracy, but not ordinarily at aU; there might be one return in a thousand, I should think, that might ultimately require checking up. Mr. DooLiTTLE. But you do expect to get retvu-ns from individuals ? Dr. Brand. Absloutely; and that is why we ask for this power. I do not think they will withhold it unless it be through carelessness. It tunes up the man who is likely to be careless and the one who is Ukely to fail to make a return and the man who is apt to be careless in the accuracy of his information. Most of these concerns that have been mentioned are bookkeeping concerns, and my own idea is to require them, so far as possible, not only to give the stock on hand this year, which could be compelled under this power, but, so far as they can and as accurately as they can, to give their holdings at this time last year in order that we may begin to make comparisons, which are of very great iinportance at this time. The Chairman. Is it your idea that if you turn the hght on these various concerns the hght itself will drive out the holdings ? Dr. Brand. I thinii that will help a great deal. I think, though, that there should be specific power to prevent hoarding, in accordance with the suggestions made to this committee which, I believe, are included in another bill. The Chairman. But you think the very fact of the light being turned on would help a great deal ? Dr. Brand. Yes; a great deal. Mr. Jacoway. Does the biU provide that each individual shall give information as to what he is holding by letter, telegram, or how are you going to reach that? Dr. Brand. I should reach that by furnishing them a return, and require them to place it in our hands in great detail the first time, when we are getting the fundamental information, and then in abstract each month thereafter. Mr. RuBEY. You are going to reach these people through your county and township agents ? Dr. Brand. I intend to use all possible machinery, and we can use the Federal grain supervision offices under the grain standards act. You gentlemen are all familiar with that act. We are going to use those offices as gathering points for this information and utihze our present machinery in those ways. They are in touch with these economic units of the country and practically within four days we can get the return blanks out from those offices and into the hands of the people and then begin to get back reports on all of these matters. 96 FOOD PEODTJCTION, CONSEKVATION, AND DISTRIBUTION. Mr. McKiNLEY. Under this bill you provide that if there is a man in the State of Washington you want to see about some of these mat- ters, that you can have him come here, at his own expense, ask him a couple 01 questions, and then let him go back ? Dr. Brand. I do not understand, Mr. McKinley, that if witnesses are required to come here, there is not power in this section under which the Secretary of Agriculture could bear the expense of the wit- nesses, just as is the case now in aU the courts and other bodies that have the right to summon witnesses. Mr. McKiNLEY. Well, I remember one time being in the Yellow- stone when a summons came for a poor gmde to report at the other end of Wyoming, sonie 400 miles away, and testify. There was no provision made for the payment of his expenses and he had to go or be jailed for contempt of court. Dr. Brand. Are you quite sure he was not reimbursed? Mr. McKiNLEY. rerhaps he was reimbursed afterwards, and you might do that too. Dr. Brand. Except on extraordinary occasions, there would be no necessity for calling a man from California or Oregon or Washington, because we have representatives in those States. Mr. McKiNLEY. But you have that power ? Dr. Brand. Yes ; and it might be necessary to exercise that power. I think the power should be provided, and I do not think we ought' to anticipate the abuse of this power any more than we suspect that the tariff commission is going to abuse its power, which is practically identical with this. Tms merely provides the complete machinery for getting the information. Mr. Jacoway. When all of this information has been obtained, is it the idea of the Agricultural Department to keep that information private — or what is your idea along that line ? Dr. Brand. My own idea about that would be this: Until such an emergency arose as would make it necessary to conceal it, that it be made public, regularly and completely. That is the best thing in the world for the people's minds, and nothing keeps the speculators out of business so certainly as having a wide dissemination of the facts; then, if there is a sufficient shortage to warrant high prices, they would be a benefit and serve a very useful purpose, resulting in saving instead of wasting. Mr. Haugen. You have told us how you are going to deal with this in the cities and I wish you would now tell us how you are going to get to the granaries ? Dr. Brand. The first thing we are going to do, in my opinion, is to have from our own agents in every agricultural township in the United States practical estimates Mr. Haugen (interposing) . When you speak of ' ' our own agents " you have reference to all agents in the department or in your bureau 1 Dr. Brand. All agents in the department. This is a proposition where we propose to utihze every part of the machinery available. Mr. Haugen . That includes the county agents ? ' Dr. Brand. Yes. Mr. McLaughlin . Would you put into that enough power to con- trol such a situation as Dean Russell spoke of this morning, when he said he knew of one man who tad bought 18 barrels of flour, enough to last him two years? FOOD PRODUCTION", CONSERVATION, AND DISTRIBUTION. 97 Dr. Brand. That would fall under the inhibition of the other measure; that refers to hoarding. Mr. McLaughlin. Would you have this bill include power suf- ficient to control that situation ? Dr. Brand. I would like to, but I do not think it is practicable to go into aU those situations. I think we ought to have complete power. One of the great elements in the present high prices is this, that people are buying excessive stores, far beyond what they have any use for. I have a man in my office, for instance, who has been buying 10 pounds of sugar every day. Mr. Hutchinson. The gentleman referred to made that state- ment this morning, and from my own experience I know that people have been doing that sort of thing, in connection with the purchase of flour. Is it your purpose to go to every consumer and find out how much stuff he has ? Dr. Brand. Here is what the wholesale grocers are doing. When a man whose norm.al demand is for 75 barrels of sugar, orders 150 barrels, they send him the 75 barrels he is accustomed to having. Mr. Hutchinson. I know, so far as the flour business is concerned, there are people who are buying 1, 2, 3, or 4 barrels. Dr. Brand. You can not reach all of it. You can not possibly hope to get at all those situations. We do hope to get at a lot of them, and if we do that will help a lot. Mr. Hutchinson. The millers have no grain, and they are selling way ahead. Mr. Jacowat. Is not the suggestion you made in reference to the wholesale grocer only letting a man have 75 barrels of sugar, his normal demand, when he wants 150 barrels, exactly the same plan being followed by Germany, and which has been followed by Germany for several years ? Dr. Brand. I think so. I think you could let the people have a sufficient quantity for their reasonable needs for a reasonable time, and control the rest. The Chairman. You may take up the next item of expenditure, Mr. Brand. Dr. Brand. The next item relates to Mr. McLaughlin (interposing). Are you giving the amount of money asked for for each line oi work ? Dr. Brand. This proposition involves at least $1,500,000. I am not able to give the exact cost of these items, and I do not say that these figures represent the exact cost, reahzing that it may cost more. I think it ought to be done correctly and done well, rather than to have it done cheaply and not have any value whatsoever. Mr. McLaughlin. My idea is that the aggregate of these amounts you mention should be the total amount of the appropriation carried iathe bUl that we report. Dr. Brand. Yes. The Chairman. That is true. Dr. Brand. I will try to indicate as well as I can the amounts for each item and the aggregate, but I will ask that I be not held abso- lutely to these figures, -^^en it comes to working out the bill. I do not see how we can teU with great definiteness just what it will cost. It is not possible to do that as it is in the case of our regular appro- priation bills. It is not possible to make a careful estimate on a proposition of this sort. 104176—17 7 98 POOD PRODUOTIOlir, CONSEKVATION, AND DISTRIBUTION. The Chairman. You have a switch item here in this bill ? Dr. Brand. Yes. The next proposition is this, Mr. Chairman: There are, perhaps, three ways to get greater production, and to utiHze it properly when it has once been secured. The farmers want a guaranteed price. That would be one way. We believe that is a way that should be utilized only in the last emergency, when the oper- ation of the normal measures wiU not answer the purpose. The other two will be the assurance that there is a minimum of speculation, and that the speculation which takes place is not uneconomic with refer- ence to these products. If the farmer can be assured of that, it will go far toward encouraging him to produce. The third, in my opinion, is to take steps to bring about a proper and equitable apportionment of supplies between the markets, as far as it can be accomplished by proper and legal means. We have been doing work along that line through our Market News. I do not think it is too much to say that that work has been exceedingly successful, and that it has been of great value. I think Mr. Gamer, of Texas, put into the Record a statement made by some of his constituents regard- ing the handling of the onion crop in the Laredo district last year. That was a crop of about 5,000 cars, and it was the first year when they have ever handled a crop in excess of 4,000 cars without great loss. The information that was given them enabled them to distribute that 5,00C-car crop at a uniform profit throughout the season, , and onions were never so well distributed nor were they generallyiso reasonably and accurately priced as they were last year. These gentlemen said that by use oi the information we gave them they were able to save $1,000,000 to the producer. Such means of saving wiU encourage the producer to produce more than anything else you can do. We think a very considerable sum should be used in perfecting and extending this service. We are already, under the $40,000 avauable from our last appropriation, extending it in the modest limits of the increased appropriation. We now have two leased wires. We have our circuits set up; we began on them yesterday morning, and we are distributing more information more cheaply than ever before, on the leased wires, and we think that service should be extended to include a large number of products which are not now included and which can not be included under the present appropriations-. We are only able to deal with about 8 crops with the present funds, and there are 25 or more crops that ought to be dealt with naore thoroughly. Mr. McLaughlin. What are the eight crops ? ' Dr. Brand. They are onions, apples, peaches, cantaloupes, straw- berries, potatoes Mr. Lee (interposing). Watermelons? Dr. Brand. We did nave a little watermelon service, but that was an incident to our peach service. We had for two months a potato service and that ought to have been carried on for seven months. If that had been 'carried on, potatoes would have been distributed more evenly, instead of being held so largely at production points, and they could have been put where they were most needed. Asparagus was one of the crops. Mr. Jacoway. And cranberries ? Dr. Brand. We did not do so much with those. There are from 25 to 30 products to which that work ought to be extended to-day. POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 99 The Chairman. Would those include the staple products like wheat and oats? Dr. Brand. No. The proposals we are to-day making, however,. includes them as well as fruits and vegetables. Our present service has produced excellent results. We nave already 12 or 14 of our own telegraphers broken in to the use of our code. We have our own code, and we are able, in a hundred words, to transmit the informa- tion which normallv would require perhaps a thousand words. We have adopted aU tne methods possible to attain economy and effi- ciency in doing this work. The proposition we make to-day would include live stock and meats, on which we have already begun a service. Just before I came up here one of the men sent in a clipping which illustrates what the trade thinks of our report in reference to live stock and sheep, which was started out of the $65,000 appropriation which we received. This is an indication of what the trade thinks, and I want to read this because it shows the kind of work we are proposing to extend and perfect. It is taken from the Chicago Daily Farmers and Drovers Journal, of the issue of April 25, 1917. It says, under the heading "Government reports:" In many quarters there has been suspicion cast upon reports of the Federal Govern- ment as to crop conditions, and so forth. One agency of the Federal Government, the Office of Markets and Rural Organization, has not had this reflection put upon its work. We do not agree that there has been any such suspicion cast upoD the reports as to crop conditions. The latest endeavor of the OflSce of Markets is that of disseminating trade reports daily from the leadii^ distributing centers in Eastern territory. These reports, which were inaugurated only a few weeks ago, have the stamp of reliability and are accepted by the live-stock trade as a barometer of conditions having a direct bearing upon live-stock values. The Federal agents whose business it is to gather the market information are men who have had experience along the lines in which they are working, and their frank statements as to trade conditions must be accepted at face value. When the beef, pork, or mutton market is good, the report states this to be the case, and an evidence of their impartiality is the frankness of the reporters in describing a condition of demoralization in the trade when it is encountered. We have also a letter from St. Louis, asking that we give St. Louis the same attention that we accord other markets. The quotation which I read is an indication of what the trade thinks of this kind of work, and the same thing is true of our storage reports. We believe a very great extension of that work to other fruits and vegetables and live stock, butter, cheese, eggs, grain, hay, and seeds, etc., wiU do more to effect an equitable distribution, particularly if section 6 is left in the bill, than any other thing we can do, and if we can give the producers some assurance of an equitable distribution, so that they wiU know they are safe when going into the markets, we wiU encourage production in a very substantial fashion. The Chairman. How much do you ask for that? Dr. Brand. I should say about $2,000,000. I think it would pay returns on ten times that investment. The Chairman. That makes $3,500,000. Dr. Brand. I am just giving you these in a general way^ „ „ „y The Chairman. We understand that. ' LILSKAKI Mr. McLaughlin. Is Mr. Brand stating the amount that would aggregate the total contained in the bill ? j^j^ g j^g^g 100 FOOD PRODUCTION-, CONSERVATION, AND DISTRIBUTION. Dr. Brand. I hope they will. The Chairman. His total is $4,000,000, and he has accounted already for $3,500,000, leaving $500,000 still to be accounted for. Mr. McLaughlin. The mennsers of the committee appreciate the difficulties that may be encountered on the floor of the House, and I think these amounts ought to be given in detail. Mr. Heflin. You mean you thmk it will cost $4,000,000 to get the information you want in regard to the food supply of the United States ? Dr. Brand. That is one item; that is included. Mr. Heflin. How much did you say you allowed for that ? Dr. Brand. I estimated, I think, that would cost a million and a half, and 1 hope it can be done well for that amount. The Chairman. You have accounted for $3,500,000. Let us have a statement now in regard to the other half mUIion dollars. Dr. Brand. The other haK million dollars would go into the fol- lowing propositions : Conservation of food products in storage, trans- portation, and products held in stock, and the extension of our city market service. The home-garden movement has extended like a prairie fire over this country, and no one can tell what the effect is going to be when persons begin to harvest the product of some of these gardens. I figure that perhaps 25 per cent of the whole will come through. I tmnk that is perhaps conservative. It is going to dislocate our distribution machinery very greatly if as much, as 25 per cent comes through with reasonable production. Mr. McLaughlin. What do you mean by 25 per cent ; 25 per cent which wiU coine out of the groimd as mature products ? Dr. Brand. Twenty-five per cent of the gardens show at harvest a product that is worth while. Mr. McLaughlin. You do not account for the waste after it is grown ? , Dr. Brand. The purpose of this item is to try to avoid that waste. Mr. McLaughlin. After it is produced ? Dr. Brand. After it is produced. Take, for instance, some New England city, such as Providence, R. I., where the garden move- ment has been especially active. Providence is the center of a greajb market section, and it has a wholesale market gardeners' cooperative association which is very efficient. Suppose that Providence pro- duces its normal amount, and that these many home gardens pro- duce 25 per cent of their possibilities. The market gardeners are going to suffer disastrously if they produce the normal quantity of material and products which they ordinarily produce, and if these' gardens produce to the extent of 25 per cent. My proposition is to bring about a distribution from those centers to other cities that have not gone into this garden movement to so great an extent, to save the products from being wasted. Now, in reference to the matter of storage, we are trying experi- ments, Mr. Chairman, with various vegetables in storage unddr freez- ing. Unfortunately, a great deal of the talk about storage, a great deal of the criticism in reference to storage is resulting in less than the normal amount of food going in to storage, and it is regWttable that misunderstanding and pubhc criticism should have that result. The storage houses are not receiving their usual quantity of material. We are trying to bring about a condition that will result in a lot of S'OOD PBODXJCTION, CONSERVATION, AND DISTRIBUTION. 101 these product^ going into storage to be used in the winter; that is, these surplus stocks. We also want to do what we can to improve the marketing and distributing facUities of cities. We already have a good basis for doing a great deal more work along that line, to bring about a better distribution of these home-grown products. Mr. Lee. What do you think of the proposition of drying vege- tables ? Dr. Brand. We are very strongly in favor of that. There are only a few dryingplants. Mr. Lee. That would save ice. Dr. Brand. Yes. As I say, there are only a few drying plants. There is one in Oregon which dried over 20,000,000 pounds of fruits and vegetables up to the 20th of October. The number of those plants is small, and it is proposed to use the drying process all we can in this emergency. We are also working along the hne of straightening out the terminal facilities of some of the big cities. Railroad men know a great deal fl,bout operating railroads, but unfortunately they know woefully little about perishable products, and our men are working to have less waste and better distribution. That is one of the items for which we want to use the balance of the $500,000. We wish also to do something to extend our direct marketing activities in connection with the parcel post and express marketing, and we have been working on that matter for several years. Mr. Haugen. What progress have you made along that hne ? Dr. Brand. We have made good progress along that liue, a^^.d we are working with the Post Office Department now in that direction. There is a special item in the Post Office appropriation bill of last year, and we are directing the work under that item, in cooperation with the Post Office Department. We are not overestimating the possibilities of direct marketing, but we do believe there is far less direct marketuig iu the United States than can be developed economically, and we want to use a part of this fund for that purpose. Mr. Haugen. Is there any considerable amount marketed in that waj? Dr. Brand. Yes, in the aggregate, there is a great deal. Mr. Jacoway. Your experience last year shows that it has been a great success? Dr. Brand. Yes; it is never going to take the place of the wholesale distributing machinery, but it seems to be developing along economic lines. It can not be thought of as displacing the great wholesale distributing system of the United States. Not long ago somebody recommended or said that the ultimate marketing of cotton would be done by parcel post. I am not quite that far gone in this proposition, but I do believe there is the opportunity for extendiug it within economic limits very greatly. f Mr. Jacoway. The plan represents the shipping of products direct rom the farmer to the consumer ? Dr. Brand. That is what it amounts to. Mr. DooLiTTLE. Referring to the matter of terminal facihties, the other day I read in the press reports that there were 200 carloads of potatoes in Chicago, standing there in the yards and being allowed 102 FOOD PEODUCTION, CONSEEVATION, ANB DISTRIBUTION. to rot on the tracks. Do you have any information in regard to the rehability of that report ? ' Dr. Brand. I had a long-distance telephone call this morning from the largest dealer in potatoes in Chicago, and I am able to say that there is absolutely no truth in such a report. The first part of section 6, if such action should occur, would pre- vent that sort of thing, at least to a large extent, because the first part of section 6, as it appears, in the bill now before you, gives power to deal with that situation. They would not be allowed to waste it under that provision. Mr. DooLiTTLE. K a situation of that kind, or a situation similar to that, should hereafter occur and be brought to your attention imder the provisions of the bill that we have now before us, you could deal with anybody engaging in that practice immediately and effectively? Dr. Brand. The Secretary of Agriculture could issue an order for the disposal of those perishables immediately at the market: I have newspaper and other reports of a great many of such cases. At St. Louis, Dean Russell told about some cases he had heard of from time to time. They had been reported to him as occurring ia Wisconsin. He investigated them and he found there was no truth in them. But there is a large body of the public which believes them and the producer believes those stories, and the fact that there is that danger, particularly in the case of men who are compelled to sell on consignment, has its effect upon production. Hence we havie asked in this bill to have the power given us to deal with situations of this sort. A still further use for that balance, Mr. Chai man, relates to bring- ing suitable pressure to bear upon carriers to move perishable products in cars suitable for perishable products. It is regrettable to say that apples and potatoes do move in the winter-time in cars in which they are frozen, and hence they are very much deteriorated when they get to the market. That should not be permitted to happen, especiEuly under this emergency. We should not allow perishable products to be shipped in refrigerator cars that have a refrigerator lining of five or six thicknesses of tar paper. Mr. DooLiTTLE. What, in your opinion, is the motive behind such erroneous reports as I just mentioned, in reference to the 200 car- loads of potatoes in Chicago ? Dr. Brand. I should judge some one had a contract to fiU, and they wanted to jiggle the market down a little bit. A similar report was started in reference to eggs about 10 days ago. I had one of my men in Chicago investigating conditions at the time, and the cold-storage houses were fearful lest some malevolent person would try to destroy their houses, because of the false reports that were being sent out that they were holding out 200 carloads of eggs. At this season of the year there ought to be 200 carloads of eggs on track to go into storage. If they do not, we will have awfully high egg prices next winter, and we wiU have to do with l6ss eggs. The Chairman. Is there anything further you desire to present to the committee. Dr. Brand ? Dr. Brand. I have nothing further to present, Mr. Chairman. '"" The Chairman. Does any member of the committee desire to' ask Dr. Brand any further questions ? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUnON, 103 Mr. Young of Texas. This thouglit occurred to me in reference to the conservation of the meat supply. I think, independent of the war trouble, one of the most serious things that confronts the country is the conservation of the meat supply. Have you given any atten- tion to the proposition of marketing suckhng claves ? Dr. Brand. We have discussed that with reference to breeding stock. It is a very difficult thing to do anything with. We believe it wiU have to be handled not by compulsory power but by educa- tion, so that the people wiU become thoroughly conversant with the economic situation and save the animals that ought to be saved. Mr. Young of Texas. I had occasion recently to go down the Potomac River into the State of Virginia, and at practically every little wharf the boat stopped there was a fine specimen of a suckling calf led onto that boat. It just struck me that was one of the causes of the exhaustion of the meat supply. Dr. Brand. They will get as much for those small calves, without feeding th«m aiiy further, as if they fed them for almost a year. We were discussing that matter in some detail recently, and a friend of mine with whom I was talking about it told me he had sold a 6-weeks-old calf for $17, and it is (questionable whether he would have gotten $20 for it if he had kept it six months or more and fed it. It is a question as to whether we are going to have a sufficient milk supply or a sufficient supply of calves. Mr. Hutchinson. I would like to ask a question in reference to section 4. I understand you would want to get an estimate? : Dr. Brand. Yes; among other things. Mr. Hutchinson. You would want an estimate made under oath, and there is a penalty of $5,000 attached. Do you mean to say that you have got to say that you have so many bushels of grain ? Dr. Brand. No. Mr. Hutchinson. The bill says that. Dr. Brand. You have got to answer the question as it is put. Mr. Hutchinson. The bill puts a man imder a penalty. Dr. Brand. As a practical matter, my belief is that every elevator knows how much grain it is carrying. Mr. Hutchinson. Absolutely. Dr. Brand. That is the answer they wUl supply. Mr. Hutchinson. I have a large grain elevator, and I could not teU you to-day what is in it, because we are taking it out all the time. Dr. Brand. I think we can make the mathematical deductions and find what will be necessary to determine the amount. Mr. Hutchinson. You can guess at it. In this provision you are putting a man under oath. Dr. Brand. I do not think we ought to do less than that. There wUl be need, of course, for tolerances. I do not think that we ought to anticipate that persons are going to be held too technically on these propositions. Mr. Hutchinson. That is what I wanted to know. Dr. Brand. So far as the administration of these measures is put in the hands of the Department of Agriculture, they will talie into account the practical problems involved in dealing with the industries, and we know what the problems are. We know what the problem of the grain elevator is, and we know, relatively, how accu- rately the grain elevator and the miU must be in their returns. 104 FOOD PKODUCTION, CONSBBVATION, AND DISTRIBUTION. Mr. Hutchinson. You realize that every bushel of grain that 'goes in an elevator is cleaned and then it is recleaned beifore it comes out. Dr. Brand. Absolutely. The Chairman. If there is nothing further, Mr. Brand, we are very much obliged to you. The Chairman. Gentlemen of the committee, Mr. Carlin, of Virginia, desires to present a gentleman to the committee. STATEMENT OF HON. C. C. CARLIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA. Mr. Carlin. Mr. Chairman and gentlemen of the committee, I want to introduce to the committee Mr. E. B. White, of Virginia, who is one of the largest and most successful farmers in northern Virginia. He has some information which he wants to impart to the committee. If you will permit me, Mr. Chairman, I will take just a moinent to say that a condition is now beginning to arise which is interesting the farmers of the country, and that is the suggestion that this committee give to the Secretary of Agriculture power to fix maximum prices for farm products. At least the suggestion: The Chairman (interposing) . There is not any such suggestion as that at all, Mr. Carlin. Mr. Carlin. There is no such suggestion ? The Chairman. Not in the minds of this committee. Mr. Carlin. I just wanted to call your attention to this fact, that already the packers have stopped buying animals, advising the farmers that this power may be exercised, and that therefore they can not tell what the price may be, and the farmers are likely to be disturbed a great deal, even if such a biU is introduced. The Chairman. There is absolutely no such thought in the miiids of this committee. I do not think there is any such thought in the minds of the officials of the Department of Agriculture, in reference to the fixing of maximum prices of farm products. There is a propo- sition in the minds of the committee of fixing a minimum price, i minimum guarantee of profit to the farmer. Mr. Carlin. I understand that. The Chairman. We will be glad to hear Mr. White. STATEMENT OF MR. E. B. WHITE, OF lEESBURG, VA. Mr. White. Mr. Chairman and gentlemen of the committee, I de- sire to thank you for this opportunity, and to say I am a farmer, and am unused to making addresses, and therefore am somewhat em- barrassed in attempting to make any statement before a committee of Congress. I am a member of the Virginia Council of Defense, and spent last night in Richmond, where the council was organized yesterday afternoon and held a night session, and the impression prevailed at the meeting of the coimcil — I might mention that Assistant Secretary of Agriculture Vrooman was at the meeting at which the council was organized — the impression prevailed at mat coimcil meeting that Congress expected to pass, or would pass, a bUl putting a minimum price on all farm products, and the opinion of leading men in our POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 105 State is that if that bill goes before Congress pubUc clamor will de- maad that at the same time a maximum price be fixed on what farmers buy, or that power to fix a maximum price be placed in the hands of some Government ofiicial. Now, I believe that the farmers of this country are as patriotic as any other people in the country; perhaps no more so, but certainly as much so, in my judgnaent. In my section of the country, in my State, a strenuous effort is being made to tremendously increase the production of farm products, and the only thing that prevents that production from being doubled is the want of labor, the impossibUity of obtaining labor. Our farmers are putting two crops in now, aHhough they see very little hope, under present conditions, of obtaining sufficient labor to harvest the crops, but they are taking a chance on the situation improving when the time comes to harvest the crop. At any rate, they will put in the crops. Any set of men who organize to control the necessities of fife at the present time, or at any other time, but particularly when the country is to be sorely tried, should be found guilty of high treason, and there never has been any semblance, to my knowledge, of any organization of that kind on the part of the farmers to control any- thing that they sell. And certainly they have been unable to organize and control anything that they buy. If a maximum price is fixed, it would seem fair to me that it ought to be a maximum price with a provision that a man ought not to sell above a certain price, allowing that price to be a liberal price. It would appeal to a lot of people. But anything that is enacted into law that gives power to a man to set a price, and does not name that price, leaves an uncertainty in the minds of everybody, and gives the people who have the buying power a leverage to go to the producer and say, "We can not pay above a price that justifies a minimum while the market is so-and-so, because any day an order may come from the Secretary of Agricul- tm-e putting this price at the minimum."' In demoralizes the seller. I call your attention particularly to meats. The farmer to-day, under present conditions with the world at war for three years, is not obtaiaing as much as 33| per cent advance on his cattle on the average price of the last four years. That seems to me not an unrea- sonable advance in the price of meats obtained by the farmer. I know nothing about the percentage of advance to the consmner. I believe I would be wUhng to contract to dehver to any packer or any Government agent the cattle stock this summer and fall at a 33 J per cent advance over the average price for the last four years. Cattle is something that farmers can not hold. You need have no fear of that with feeds as high as they are now. When a steer gets fat it is a tremendous loss for the farmer to keep him. That is what the packer knows and is able to take advantage of. If we have grain we can store it, and the result is that the grain market is not con- trolled, and never has been except temporarily, by manipulation, which only lasts a few weeks or a few months, by any man or set of men. But when you take an article that the farmer has to sell, and the man who buys it is partly combined, if not entirely combined, and knows the time he has to sell it, he has a fair opportunity, for one reason or another, to lower the price of that article. I do not say that it is done, but it gives a fair opportunity to do it. 106 FOOD PRODUCTION, CONSEKVATION, AND DISTRIBUTION. The point that I wanti to bring to your mind is that there is no possibility, when you come to meat, m the farmer holding the meat. The only mta who can hold that is the man who puts it in cold storage. That is the only place it can be kept, without tremendous cost. I think you all know that everything the farmer buys he buys in the open mark:'t. Everything he bujrs nas advanced anywhere from; 33 to 100 per cent over what he had to pay before war was declared. , I said to Congressman CarUn that they have advanced even -the toUs on our pikes in the county in which I live because of the war, which they say has caused an increase in the cost of labor. . ; We are buying those things and we are not complaining. There is no use of out complaining, and furthermore we realize that conditions are changed and things are costing more. Labor is costing more, and, it ought to cost more. I advocated in the meeting of the Virginia Council of Defense yesterday that we should urge the farmers to pay more wages to their hands. Mr. Carlin. In reference to the fixing of a minimum guaranteed ; profit, what effect wiU that have on the farmer ? Mr. White. The only justification for fixing a minimum profit, or guaranteeing the farmer a minimum price on -his article^the only justification for that which I can see is the fact that you are asking the farmers to do something they, would not do in the ordinary conduct of their own business, governed as you would govern your business. They know that the war may stop at any time ; they know there may be an overproduction, and that prices may go below the actual cost of production. That is the only justification for interfering, with., prices, in my judgment. ,i Mr. Carlin. Do the farmers want the minimum price fixed ?,;, Mr. White. I do not know that they do. I think the farmers would be willing to take chances on the minimum as well as on the maximum, although I can not speak for them, officially. Mr. Haugen. I take it the farmer wants the matter settled ; if we are to fix prices, they want the prices fixed. , . , , Mr. White. The farmer feels that if the prices of his products that he offers for sale are to be arbitrarily fixed and fairly fixed, he should not be compelled to buy the things he has to buy in an open market, but that the prices on those things should also be fixed by the same source of power. Whatever is done, gentlemen, let it be done positively, and; let it be certain. There is nothing more disturbing in any line of business than an uncertain condition, or uncertain prices. I repeat this be- cause I think it is a very important matter ; the most important thing I have to say to you gentlemen, and that is, when you give that power to whoever you see fit to give it to, you made a maximum price, if it is done, set a price below which that maximum price must not go. The Chairman. Mr. White, as I said to Mr. Carlin, I do not think there is any proposition here to fix a maximum pi-ice that the farmer may get for what he sells. There is a proposition in the minds of the committee to fix what the newspapers have 'termed a minimum guarantee to the farmer, to fix a price below which he will not have to sell his product, and give him an open market to sell in above that price, for whatever he can get. What have you to say about that ? POOD PRODUCTION, CONSEBVATTON, AND DISTKIBUTION. 107 Mr. White. I think that is all right, Mr. Chairman. But, Mr. Chairman, when you get this bill into Congress, with the great in- fluence of the big daihes to-day, representing what they claim to be the consumer — it must be remembered there are about 37 per cent of the population in the country producing and about 63 per cent of the coimtrv consuming — if you get this into a legislative body, 63 per cent of the members of which represent the consumers and 37 Ser cent represent the producers, with all the influence of the great allies, you may have a runaway in Congress. The Chairman. I agree there is some danger in that, but we will try to take care of it. Mr. Anderson. As I understand you, your theory is this, that if we give the Secretary of Agriculture the power to fix a maximum price to the consumer, even though he does not use that power, those who' control the buying end of the proposition will use the fact that the power exists to beat down or lower the actual price which the farmer receives. They will go to the farmer and say the Secretary of Agriculture may at any time fix an arbitrary maximum price, be- yond which we can not sell this product; consequently, they will en- deavor to buy as cheaply as they can, and that will result in low prices and losses to the farmer ? Mr. White. That is my idea. Mr. Anderson. I do not quite agree with that proposition, but I wanted to get your idea in regard to it. Mr. White. That is my idea. The minute you put a minimum price on any particular article, that wiU be the tendency. I have been in business as well as having been a farmer. I was in St. Louis for four years, and I know what will happen. Any business man is going to use any leverage he can — ^we are all human beings — to buud up his business on as conservative basis as he can to make money. I know I did it when I had an opportunity, and I believe almost everybody else will do the same thing. Mr. Haugen. Do you not think it is absolutely essential there should be some minimum price for the farmer's product, so that he can figure what he is going to get? Mr. White. I think so. If you are asked to conduct your business in a way different from what the dictates of your own judgment would tell you to conduct it, the man who asks you to do it in that way should bear the loss, if it is disastrous. I was present at a hearkig held by the Judiciary Committee when they were considering Mr. Borland's bill in reference to investigating the packers and all other middlemen. The governor of our State is a large cattle grower. He owns 53,000 acres of land in our State, which he uses m the raising of cattle, and he appeared before that committee, and I think the stenographic report of the hearing will bear me out in this statement, that he followed a lot of cattle from his farm to the hangers in the retail butcher shop, and he showed, item by item, that the packers made $27 a head on those cattle. Mr. Anderson. Gross, or net? Mr. White. Gross, less their expenses of operating their business. What they paid for the cattle and what they got for the meat and offal left them with a profit of $27 a head. The packers were represented by able attorneys, and by one of the able representatives of one of the largest packing houses. He 108 POOD PRODUCTIOlir, CONSERVATION, AND DISTRIBtTTION. only disputed $2 of those items, and Gov. Stuart said, "Now, I think I am right in this, but if you want $2 I will let you have $25." He had kept those cattle for a year. He had fed them, I think he said — I know about what it costs to feed a steer, and at' the prices prevailmg he had fed them about $30 worth of feed, feed he cOuld have sold for $30. He had grazed them for six months and had made a profit of about $37 a head. Mr. Anderson. I would like to ask you a question in regard to the maximum price proposition. You referred to the fact that the farmer is obliged to sell his stock when it is mature. Mr. White. His cattle; all his live stock, except his horses. Mr. Anderson. Is there not the same necessity for those who ordinarily buy cattle to buy; in other words, the packer and every- body else who is in the cattle-buying business has large sums of money invested, and they want to keep their money working. Con- sequently, they are under the same obligation, with the same neces- sity of taiying continuously as the farmer is to sell when the product . is mature, and consequently there is not as much justification for your fear as would appear on the surface. I just wanted tb get your idea in regard to that. Mr. White. No, sir; I do not agree with you on that, and I will tell you why. The farmer has to carry his cattle from week to week. The packer can puU out of the market for two days or one day and lower the price. Why ? Because of the drift on the cattle- which is enormous, while the cattle are standing in the pens, and also the enormous cost of keeping them. That cost is also set by the packer. The packers own most of the stockyards, and the pack- ers seU most of the feed. They charge their own prices for the yard- ing and feed, which you have to have, in addition to that, and you have got to sell. You may hold for two days, but then your time is up, and you have to sell. Mr. Anderson. What advantage would there be when the packer forces down the price if he knew he was going to have to sell his product with reference to the price at which he bought the stock' in the firstplace ? Mr. White. There would not be any, if he knew he had to sell it. But, as I said before, anybody who has the power to do it; as these gentlemen — I am not accusing them of doing wrong, but I am telling you the power they have to do wrong; I would not accuse a man or set of men of doing wrong unless I could prove it — ^I only tell you what power these men have. When I was in the grain business m St. Louis, it was before the interstate commerce act was enacteid into law, and special rates were being given over the railroads to a favored few. I happened to be one of those favored few. I was operating over the Big Four and the Chesapeake & Ohio railroads to Newport News from St. Louis, and over the Missouri, Kansas & Texas to Galveston. Those rates were not given to very many; they were given to a few. Those few had some very nice dinners at the club, but there was no combination. There was a general understanding about what ought to be made on those products, and bids were sent out accordingly. I am telling you that myself. I am just like most people, and there are a whole lot of people better than I am, but I have never seen many men who had the power to make a price on FOOD PKODUOTION, OONSEEVATION, AND DISTBIBUTION. 109 ike thing they bought or the thing they sold who did nor utihze that power to liie full extent of their right — to the danger pojnt. Of course, you can go so far in the use of any power that is given that you will ruin yourself. We should not consider people other than as human beings, because they are all human beings. But that is a little bit oflf the subject. We are getting off to the subject of the control of packers. I am not in favor of control of anybody. I am not here to argue for control of anybody, but I am here to argue that it is unfair to pick out one class of people and legislate in regard to the price that they have to take for their articles, and not at the same time to legislate in regard to the prices of the things they have to buy, and legislate in reference to the profits of the middleman, in reference to what profits he should have. • Mr. Heflin. Your idea is that if the law is going to undertake to regulate the price of the produce which the farmer has to seU it ought also to protect him against the fellow from whom he has to buy? Mr. White. Yes, sir. Mr. Heflin. I think that is correct. Mr. White. And also a law that would regulate the middleman, to protect the consumer. Mi". Anderson. I want to ask you this question. Of course, I assume that if the Government fixed a minimum or maximum price, particularly a minimum price, that that price would be fixed with reference to what the farmer has to pay for agricultural machinery; what -he has to pay for his horses; what he has to pay for his feed; what he has to pay for everything — help, labor, and everything — that goes into the production of the articles which he sells. If that is done it seems to me that the argument that the price must be fixed iipon everything the farmer uses falls to the ground. Mr. White. I have no doubt it seems that way to you, but it does not seem that way to me. Mr. Andeeson. Why not tell us why ? I have no fixed opinion about it at all. Mr. White. Will you state it again? Mr. Anderson. My proposition is this: If a minimum price is fixed for the farmer's product, a guaranty of the price must be fixed with reference to what it costs the farmer for agricultural machinery, for his fertilizer, for his feed, for his labor and his twine, and everything else. If that is done, and the farmer gets a price based upon the price which he has to pay, it would not be necessary to fix arbitrarily the prices of the things which he has to buy which go into production ? Mj. White. Not u you are going to fix your maximum price it would not, but when you fix your maximum price that he shall get, just fix also the maximum price he has to pay for his things, and when you gentlemen fix the maximum price and give the power to somebody to fix the maximum price, the point I am going to make is that when you give that power to anyone to fix that maximum price, and do not name the maximum price, you are giving into the hands of the buyer a lever to hammer down the price of the products, if, at the same time, you do not give into the hands of some man the power to hammer the price of the things he buys. If you say at the same time that the Secretary of Agriculture shall set the price of the fertilizer, 110 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. that the power is given to the Secretary of Agriculture to fix that price, then it will be & fairer proposition. ■ '' Mr. Anderson. Have you seen any evidence, or do you know of anything tending to show that because it is generally known that the fixing of a maximum price may be contemplated by the Secretary of Agriculture, the price to the farmer has been lowered in the last few days ? Mr. White. I can only teU you what one of the largest cattle dealers of southwestern Virginia — and that is the big cattle icountij of our State; I am 40 miles from Washington, and that section is quite a large cattle country, too, but the great cattle section of our State is in southwestern Virginia, where people have from 1 to 1,500 head of cattle to sell annually — I was talking with the largest cattle buyer in Richmond yesterday, and he told me that the word had gone from the commission men not to contract for any cattle "pending this legislation. Mr. Haugen. So it has depressed the market ? Mr. White. These cattle buyers in that country generally contract for the July cattle about this time. We have two lots of cattle — one lot that we feed and keep in the stall, and another lot that we feed partly on grain and give them three months of grass. The* buyers were in the field untU this thing was suggested, trying to contract for July cattle. Mr. Haugen. Is it not also a fact that the smaller packers through- out the country have practically closed down ? ' Mr. White. I do not know about that. Mr. Carlin. Mr. White, do I imderstand your contention to be that the mere reporting of a bill providing for a minimum guaranteed price would start an agitation for a maximum price, and that will result in a broken market for the farmer and his products "i Mr. White. I think the agitation wUl result in that, but the actual legislation will certainly make it that way. Mr. Wilson. Do you believe in the regulation of the prices of all products? Mr. White. No, sir; I do not. I believe in aU of them being left to an open market, with the Government seeing that there is abso- lutely no semblance of combination of unnatural control. But if in the case of one industry representing one-third of the people of this country the principle were to prevail, if it. only represented 1 per cent, and if they are to be legislated for, then all industry should be legis- lated for. If it is 1 per cent, then 99 per cent of the people would simply take advantage of a minority; and if it is 31 per cent, it is the same thing. It is class legislation. If the markets are to be left open for one class of people, they should be left open for all classes of people. If it is deemed wise by Congress that the Government should control them, the farmers wiU willingly submit; but they want everybody else controlled by the same power if the Govemmeuit, fixes the minimum and guarantees the minimum price. Mr. McLaughlin. YoUr contention is that if the minimum price is to be fixed for the farmer the farmer should be protected by simi- lar legislation against the exorbitant prices charged by the makers of farm machinery ? Mr. White. Of course. POOD PEODUCTION, CONSERVATION, AND DISTEIBUTIOW. Ill Mr. McLaughlin. Is it not, in effect, regulating the price of every- thing — of machinerj' as well as of apples — which the farmer is con- cerned with 1 Mr. White. It certainly takes care of the farmer. It relieves the farmer of the risk of raising infcreased crops that are being asked of him and places the burden on the Government, and no farmer is objecting to that being done; no farmer is asldng that it be done, that I know of, but no farmer is objecting. What they are object- ing to is that the minimum or maximum is not governed by the law of supply and demand — that that is denied him not only in refer- ence to this country but in reference to the allies and in reference to the world, because any price you set upon his products is not only applicable here but to all the markets of the world. Mr. Haugen. The proposition is for a minimum-price guaranty, and that guarantees his profit, to that extent, and it also guarantees to the consumer that he has to pay that price. Now, then, you have the idea that whenever you guarantee a profit to the farmer the consumer wiU have to pay the price ? Mr. White. Yes. Mr. McLaughlin. What you have said in reference to the unde- sirabUity of the maximum price is interesting, but are you not getting away from the other question, getting into the question of the max- immn price. We were trying to direct your attention to the mui- imum-price proposition. Mr. White. I understood that. Mr. McLaughlin. When you talk of that you bring in the max- imum-price proposition, which is another proposition. Mr. WnrPE. I prefaced my statement with an expression of the fear and real belief that if any minimum price is to be fixed and is recommended by this committee, that Confess will be prevailed upon to fix a maximum price. That is the only extent to which I object to it. Then I do not object to it, to the fiixing of a maximum price, so long as the minimum of the maximum is named in the bill, so that no packer can come to you and say that your cattle are selling, that the market is now 12 cents a pound, but that the Secretary of Agriculture has the power to fix the price any time he wants to, that he can change it and he may fix it at a price that would compel us to buy the cattle at 6 cents a poimd. I do not mean to say that that is a possibihty, but give that as an example of what a great many people in my State, and people far more able than I am, are thinking in refereuQe to this matter. I talked last night to our governor until 12 o'clock on this particular subject, and the opinions I am expressing here coincide entirely with his. I think our Congressman, Mr. CarHn, will tell you that our governor is one of the most successful business men in our State, bar none. Mr. Anderson. I think there is some reason for the apprehension which you express, largely due to a doubt as to what legislation will pass, and largely due to a misapprehension of a great many basic facts, and also to an actual misrepresentation of basic facts with ref- erence both to legislation and the probable method of operation. Mr. White. By basic facts I suppose you refer to the probable legislation? , , , , • i x- j ±1. Mr. Anderson. I refer both to probable legislation and the probable supply and the probable demand. 112 POOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION, Mr. White. The probable demand and the probable supply can not be considered as basic facts, can they ? Mr. Anderson. It will become basic when it is definitely ascer- tained, of course. Mr. White. Of course ; as to the contemplated legislation I know nothing except what is in the papers, but I supposed this matter was under discussion and it woula simply, perhaps, be agreeable to you, and not only agreeable but desirable, and that all classes of people be represented here to properly express their views in relation to this matter. Mr. Anderson. I do not want to give you the impression that, as far as I am concerned, and the committee are concerned, that they are not very glad to have your testimony in regard to this proposition. Mr. White. You have not given me any such impression. Mr. Anderson. We want every angle of the subject presented. Mr. White. I may be entirely wrong in regard to it, but I am giving you the facts from my standpoint as I see them, and I feel sure that the farmers of the country do not want anything but what. is fair to them. Mr. Young of Texas. With reference to the question of the ex^ pense items in farm crops, what is your experience with reference to the increase in the prices of farm teams, wiring, and things, of that sort, during the past few years ? Mr. White. I could not answer that question intelhgently, because I have not bought any farm machinery for several years, except a couple of wagons bought by my foreman a few days ago, and I do not even know what they cost. But if you want my view, my guess, about what it would be, I can perhaps give you that. I would say in the case of wire fencing and farm machinery of all kinds that it would be about 50 per cent higher. So far as the labor on the farm, is concerned, we are paying now $1.75 for day hands, and they board themselves. Formerly we paid $1.25. So that there is an advance in the cost of the labor on the farm. I think we shall have to raise those wages for the labor. A great deal of labor is going out of our State, going to the factories. What they are paying in the factories I do not know, but the laborers say they are getting $3 and $4 a day. Whether or not they are telling the truth, I do not know. That is one of the serious problems we have got to solve, so far as the raising of agricultural products is concerned, and that is a very important problem. The labor is simply moving out. There were 300 negroes who went out of Eichmond yesterday on a train going north., Mr. Young of North Dakota. They are paying more than that for farm \labor in Iowa and South Dakota. Mr. White. They are getting more efficient labor than we get. Their labor is worth more. I have had on my place farmers from the West and Northwest, from Kansas and Nebraska, and, I have had them remark as they went through the fields that they had often envied us for obtaining labor at the price at which we obtain it, but they said they believed their labor is as cheap as ours. The reason is that it is more efficient. Prohibition has helped us and we are getting more efficient labor now than we had when we did not have prohibition. The Chairman. Mr. White, you have made a very interesting statement to the committee, and we are very much obhged to you. Mr. White. I thank you very much, Mr. Chairman and gentlemen. FOOD PRODUCTION", CONSERVATION, AND DISTRIBUTION. 113 The Chairman. At the bottom of page 7 of the committee print of the bill there is this provision: "For increasing food production and eliminating wastes and promoting conservation of food by edu- cational and demonstrational methods, through county, district, and urban agents and others, $6,000,000." Dr. lYue is here, gentlemen, and. Doctor, I presume you can give us some of the details in regard to that provision. STATEMENT OF DR. A. C. TRUE, DIRECTOR OF STATES RELATIOirS SERVICE, DEPARTMENT OF AGRICULTURE. Dr. True. I can do that, Mr. Chairman, to a certain extent. The Chairman. We do not expect you to give the exact details as you do ordinarily in presenting your estimates for the regular annual appfopriations, but we would like to have you give us the best information you can. Dr. True. The plan on which we have worked in making the estimates has been to take into account the county agent work, the home demonstration work in the counties and also in the cities, and the boys' and girls' club work. At present there are about 1,300 coimties of the United States which have men county agents. The new proposition is to put into all the other counties similar agents. That would mean that we would have to double, and perhaps a little more than double, the number of agents which we have at present. Mr. Thompson. Did you say 1,300? Dr. True. One thousand three hundred coimties at present. Mr. Thompson. Somebody here yesterday said it was 1,700 out of 2,850 comities. The Chairman. Secretary Houston made that statement yesterday. I suppose your figures would be more nearly accurate, would they, Doctor? Dr. True. I do not know what the Secretary was taking into account, unless he added on the women agents, which would make some such number as that. The Chairman. Under your present plan a part of the salary of these agents is paid by the Government, and a part by State and local contributions of tne counties, and so forth. Do you propose if this amount you ask for is allowed to keep up that condition precedent idea of the local community or the State putting up part of the salary, or do you go into it alone, in cooperation of course with the State agricultural colleges ? Dr. Irue. The work will aU be done in cooperation with the State agricultural colleges, and with the coimty organizations, but we do not know how far the comities will be immediately ready to cooperate in the way of funds. The Chairman. So that you are providing here in this amount of $6,000,000 to take the salaries of all of these additional agents out of the funds of the Federal Government; is that the idea ? Dr. True. Yes; that is the idea. The Chairman. What is the average salary and expenses of your county agents? I know it is different in different sections of the country, but what is the average ? Dr. True. Our estimate was based on an average amount of $2,400 for the salary and expenses of the county agents and super- vising ofiicers. 104176—17 8 114 FOOD PBODTJCTION, CONSERVATION, AND DISTRIBUTION. The Chairman. That includes the salary and all traveling expenses ? Dr. True. Yes. . ' ' The Chairman. Under the present plan about half of that is taken care of by the State and the other half by the Federal Government, approximately that proportion. You propose to take care of it all by this appropriation for the time being ? Dr. True. For the time being. Mr. McLaughlin. Is it divided in that way ? Did you want to correct that statement ? Dr. True. I should perhaps correct that statement. The county usually contributes about one half of the total expense, and thea the other half is divided between the Federal Government and the college. The Chairman. That is true. You pay a little less tBan one-half, a considerable less than one-half ? Dr. True. The proportion paid by the Federal Government is about one-quarter. The Chairman. There are 2,850 agricultural counties in the United States, so that you are providing for about 1,550 additional agents out of this appropriation? Dr. True. Yes, sir. The Chairman. At a total average expenditure of $2,400 a year , each ? Dr. True. Yes. In addition to that, those agents will require a certain number of supervisory officers, which we have provided for. The Chairman. Does that number include the lady demonstrating force ? Dr. True. No, sir. Mr. Lee. All the coimties now are cooperating. Under this new plan will they be permitted to come in, with the Government paying all the expenses; 1,300 counties pay half the expenses now ? Dr. True. Yes. Mr. Lee. You are going to add 1,550 coimties, the Government to pay the expenses. Dr. True. Our idea was to take the matter up with the States and with the coimties, to secure from them as much financial aid as we could, in the expenditure of this emergency appropriation, and in any case to give them to understand that it was a temporary arrange- ment and not to be taken as a precedent for the regular order of things. I . Mr. Martin. There might be some cases where there might be a reimbursement, in case you did advance the whole amount. Dr. True. It is possible that might be so. Mr. Haugen. You spoke of an average expense of $2,400. Is that excluding all you expect to get from the State, or is that the total expense? Dr. True. The total expense is the basis upon which our estimate was made. It was, of course, impossible to know what we could get from the States and the counties. Mr. Haugen. Will $2,400 cover the expenses of one man in each coimty ? Dr. True. On the average. Mr. Haugen. That is the total expense ? Dr. True. Yes. POOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION. 115 Mr. DooLiTTLE. Is your intention to disturb the present apportion- ment of the 1,300 agents in the different counties at all, so far as the pay is concerned ? Dr. True. No;, not for the present. The Ohairman. Doctor, the additional county men agents, l,55Cf of them, at an average of $2,400 would make a total expenditure of nearly $4,000,000. How many women demonstrators have you in mind to employ ? Of course, these are only estimates. Dr. True. At the present time we have about 500 counties organ- ized with women agents. It would therefore require some 2,300' additional agents if every county had a woman agent. The Chairman. Do you propose to put a woman agent in every- county now ? Is that your idea ? Dr. True. Only as far as it is practicable. The matter of finding" women who can act as competent agents is much more diificidt than in the case of men. Some of these agents may have to cover a larger territory than a county. The Chairman. What is the average salary of these lady agents ? Dr. True. Our estimates were made on an average of about $1,500^ I think, for the salary and expenses. The Chairman. Have you ever taken up the matter of cooperating' with the Federation of Women's Clubs of the United States, to try- to get your views before the public in that way ? Dr. True. We have had some dealings with them, and a commit- tee from the federation recently called upon me. We have had very cordial relations with the Federation of Women's Clubs, and desire- to work with them, as with all other agencies, as far as we can. The Chairman. If you employ a woman agent in every county at an expense of $1,500, that, together with the men agents you propose to employ, wiU make your total expenditure a good deal more than you have estimated for. Dr. True. I suppose that is so, in this rough statement of the figures. The Chairman. I take it, of course, that it would not be possible to find a lady agent for each of these counties ? Dr. True. No. The Chairman. It might be possible that you would not be able to find a man agent for each county ? Dr. True. No. The Chairman. If you get agents for three-quarters of the remain- ing counties, you would be doing pretty well, do you not think ? Dr. True. I should think so. Then we hope there will be a great deal of State aid and county aid. We know of a few States which have made appropriations, and there may be others. Mr. McLaughlin. How much is estimated for in this part of the work ? The Chairman. The estimate is $6,000,000. Is there any other item of expense you propose to cover in the $6,000,000 which has been allotted to this particular item, to your bureau ? ^ . . ' Dr. True. A certain Umited amount -for the boys and girls' club work. The Chairman. That would amount to $50,000 or $75,000 or $100,000? Dr. True. Probably more than $100,000; I can not remember the exact figures just now. 116 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. The Chairman. Is there any other item of expense ? Dr. True. No. The Chairman. I am just trymg now to get from the doctor the items of expense that are includea under the amount of $6,000,000. You have the county women agents. Dr. True. In speaking of the county women agents, you must take into account the fact that some of those women will be placed in the cities as well as in the country. Of course under the present arrangement we are working simply with the rural women, but this contemplates work with the women in the cities, but that is all in- cluded under the general term home demonstration agents. The Chairman. Then you have your amount for the boys' and girls' club. Is there anything else in the way of expenditm-e, except your overhead charges ? Dr. True. No, sir. Mr. Haugen. Do you think it is practicable to operate under two plans; is there any danger of going into a coimty and paying all the expenses of one county and only part of the expenses of another? May it not be that in a short time everybody wiU expect the Federal Government to foot the biU, and that you wiU ultimately drift away from the half-and-half plan ? Dr. True. I do not think there is any practical difl&culty in that feature, because, as I said, we will explain this matter fully to the States and the counties, and let them Wow that it is done with the understanding that this is an emergency appropriation for a tem- porary purpose. Mr. Haugen. The reason they do not have the service now is because they do not take any interest in it. If they do not take an interest in it and put up the required amoimt, why should we force it upon them, and what is to be accomphshed by doing that? Dr. True. In this matter we have considered what may be called the national aspects of the case as well as the local aspects, and from our point of view it is very important that the Federal Govern- ment, imder existing circumstances, should have in all the counties, if possible, representatives who will work on these matters and whq» will be able to keep the department here constantly informed as to what is going on in the coimties, what crops are being grown, and what the food supply is, and how that food supply is being utilized. We think that the extension machinery which is already in oper- ation, and which can be most easily expanded, furnishes a most excellent naeans of doing that work. I must admit, of course, that there wUl be certain incidental disad- ' vantages in the rapid expansion of this work which had not been contemplated until this war emergency arose, but from what study I have been able to give to this matter I do not see how we can proceed on any other basis. We shall try to conserve the funds which Con- gress gives us for the purpose, as far as possible and to impress upon people that it is an emergency appropriation and that it is desirable, as far as possible, that they should contribute and help in the work, and that if they desire agents permanently they should come in on the regular basis. Mr. McLaughlin. The c9,lculation I have made, based on what you have said, as to the number of coimties in which man county agents wiU be assigned, would require $3^720,000, if everyone was supphed, and to supply each county with a woman agent would take about FOOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION. 117 13,500,000, and that altogether would be $7,200,000, and your idea is that you wiU provide three-quarters of those counties, and on that basis it would require about $5,400,000, and then you want $100 000 for the girls' and boys' clubs, making about $5,500,000. Have you taken into account the fact that the Lever law, as it is maturing and the increasing amounts each year, will provide $600,000 from the Federal Treasury to each State and necessitate the appropriation of an equal amount, $600,000 by each State, and that would make 11,200,000, and that amount would be available for this very work« Is your estimate in addition to that $1,200,000 ? Dr. True. Yes, sir; we took that into account. The exact amount which will be available under the Lever act is $500,000 from each source, making a total of $1,000,000. Mr. McLaughlin. I was thinking the additional amount each year was $600,000. But there will be an additional amount next vear of $1,000,000? -^ Dr. True. Yes, sir. That was taken into account, and ought to have been included in my statement, which would undoubtedly diminish to a certain extent, the number of counties that would actually have to be supplied with this fund, so that I think that our estimates are ample to meet the situation. Mr. Haugen. Practically all the $6,000,000 fund goes for salaries and expenses ? Dr. True. Yes, sir. Mr. Hutchinson.^ Can you, Doctor, briefly, tell us what the duties of the county agents are ? ,, Dr. True. The county men agents are in the county to aid the farmer in growing his crops or his animals and in marketing his products. The usual method pursued to aid him, as far as that is practicable, is through demonstration. These demonstrations are accompanied by meetings, and also by the distribution of literature of various kinds which supplements the personal work of the agent. Mr. Hutchinson. They are not for the purpose of financing • any exchange or any farm loans, or doing anythmg in the way of financing ? , Dr. True. No, sir; we do not deal with thefinancing of the farm. The Chairman. Is there any other statement you desire to make, Doctor, as to the proposed expenditures ? Dr. True. No, ^ir. I will be glad to furnish the committee with details in reference to it. The Chairman. If you wiU furnish a few copies of that, I would like to have it for the members of the committee. I do not think you will be able to furnish it in time so that it can be printed with this hear- ing, but I would like to have copies of it for the use of the members of the committee. Dr. True. I will be glad to furnish that. (The matter referred to is as foUows:) United States Department of Agricultuke, States Kelations Service, rton, I>. C. plan to expand the cooperative agricultural extension work to meet the war emergency for increased production and conservation of pood. About 1,300 counties in the 48 States are at present organized to conduct agricultural demonstration and extension work by cooperation between the United States Depart- ment of Agriculture, the State agricultural colleges and the county governments 118 FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. and organizations. In each of these counties there is a man agent for agricultural work, and in 500 of them a woman agent also for work in home economics, poultry raising, gardening, etc., among the rural women. These county agents are assisted by about 1,200 extension specialisfB and supervising officers, both men and women, from the colleges and the Department. Many of these specialsits and supervisors, however, give only part of their time to extension work, the rest being devoted to teaching, experiment station work, etc., for which they are not paid from extension funds. ' The total cost of the cooperative extension work for the present fiscal year (1917) will be about $6,100,000. Of this amount about $3,100,000 will be spent for the salaries and expenses of the men county agents, $750,000 for work in home economics, $370,000 for young people's club work, $1,300,000 for specialists, $140,000 for publica- tions, and $440,000 for administrative and miscellaneous expenses. ^ For the fiscal year 1918 there will be $1,000,000 additional under the extension act of May 8, 1914 (Lever Act), of which $500,000 will be from the United States Treasury and $500,000 from sources within the States. This will permit the organization of about 250 additional counties on the present plan. There will then be about 1,250 counties still without county agents, and for these it is estimated that $3,000,000 (or an average of $2,400 per county per annum) will be required to provide men county agents, district agents, and other supervising oflScers, including salaries, travel, and pther expenses. In these ways 2,800 counties would be provided with men agents. These include all the agricultural counties in the 48 States, except a few with sparse population. For additional women extension workers in the counties and in the cities of over 25,000 population, it is estimated that $2,600,000 will meet present requirements as far as it is practicable to do so. On the basis of an average of $1,500 per agent per annum on full time for salaries, travel, and miscellaneous expenses, this would provide for an additional force of about 1,700 women. There will be considerable diflBculty in finding an adequate number of competent and sufficiently trained women to do this work, who can give all their time to this service. It will therefore be necessary to employ teachers and others on part time contracts in order to have representatives of this service in as large a num- ber of counties and cities as possible. In some cases well trained and experienced agents may be able to meet the immediate needs of more than one county, with the voluntary assistance of women's clubs and other organizations. It is also proposed to expand very greatly the boys and girls' club work by the employment of additional organizers and instructors in gardening, canning, etc. This work will be closely associated with the women's work, and with the schools: For the club work $400,000 is estimated. Total estimates: County agent work $3, 000,000 Work for rural and urban women 2, 600, 000 Boys and girls' club work .' 400, 000 Total 6, 000, 000 As at present conducted, the financing of the county agent work is on the basis of a contribution from the county of about one-half of the total amount required for salary and expenses of the agent, and the Federal Department of Agriculture and the State college each contribute about one-fourth of this total amount. In expanding this work to meet the war emergency, it is hoped that the States and counties will be able to contribute substantial amounts for this service, and they will be urged to do this as far as possible in order that the Federal emergency funds may be spread over as large a territory and time as possible. However, the immediate needs of this country and our allies require that every effort to increase food production and conservation in the United States be pushed as rapidly as possible. It will therefore be necessary to work rapidly in the expansion of the extension work with a view to having repre- sentatives of the Federal Government in this service in as many counties as possible, even though the States and counties are not able to contribute as much as is desirable. In all cases where the ^tate and county contributions are not at present adequate to meet their usual share of the county expenses, the arrangements for extension agents in such counties will be made with the understanding that they are on a temporary basis, with the expectation that the counties desiring perhianent county agents will use every effort to raise their contributions to the level now required in the ordinary cooperative extension work. (Thereupon the oommittee adjourned.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Committee on Ageicultxire, House of Representatives, Tuesday, May 8, 1917. The committee this day met, Hon. A. F. Lever (chairman) pre- siding. The Chairman. The committee will come to order. Mr. Pinchot, the committee desires to have your views on this situation. STATEMENT OF ME. GIFFORD PINCHOT. Mr. Pinchot. Mr. Chairman, as I said yesterday, I have no long statement to make. It seems to me there are three immediate neces- sities in the situation, the first of which is prompt action, if the food supply is to be increased. You gentlemen know better than I that if there is to be any considerable extension in the acreage planted this year the time that is left for planting is very short. We may say, I suppose, that from June 1 to June 15 will end it for the larger part of the area of the United States. If a farmer does make up his mind that he can plant a larger acreage this year the prehminary processes are unusually difficult. He has to get fertihzer, which is far from plentiful, and he has got to get it shipped in; he has to get seed, which is difficult to get in many places; and ne has got to get credit, and that in very many places at an in,creased rate of interest. In many places he must also get an addi- tional supply of labor, with the result that he can not make up his mind overnight to increase his production and then go at it. The farmer must spend a good deal of time in the necessary pre- liminaries, and therefore I believe that Congress, if it is going to act in this matter, ought to act at the earliest possible moment. The second point I want to make is one that was made by Mr. Hoover yesterday — the necessity for assuring the farmer that what- ever he does in the way of production wiU yield him an adequate return. He is faced, as you gentlemen know, with very greatly increased prices of seed, fertilizer, and labor, and, as I said, the rate of interest has increased in some places. Therefore he ought to be sufficiently assured that this year his common experience of less money for a larger crop will not be repeated. I gave you yesterday, an illustration of the cost of growing potatoes in southeastern Pennsylvania. Three years ago the cost was about $45 an acre; a year ago the cost was about 160 an acre, and the esti- mate for putting in a crop of potatoes this year in the same region is "10 an acre. Mr. Haugen. That includes the seed, does it ? 119 120 FOOD PKODUOTION, CONSERVATION, AND DISTRIBUTION. Mr. PiNCHOT. That includes the seed, yes, the whole thing. Mr. Wilson. What is the reason for this extra cost? Mr. PiNCHOT. The seed potatoes are higher, fertilizer is higher, and labor is higher; all of those three things have increased and the result is that in that particular region there are less potatoes planted than there were last year. Mr. Hatjgbn. The seed alone will cost about $40 this year ? ■ Mr. PiNCHOT. Yes; and I have been paying about $40 a ton for fertihzer. Mr. DooLiTTLE. You made the statement that the interest rate was higher ? Mr. PiNCHOT. In some places, yes; at least I am so informed, Mr. DooLiTTLE. Do you think that is general ? Mr. PiNCHOT. I am not sufficiently informed to know whether it is g-eneral or not. In the South I know that in some places the rate has actually been reduced where, for ^he sake of getting more crops, the men who have been carrying the, farmers are now carrying them at a lower rate of interest. Mr. DooLiTTLE. The interest rate in Kansas is less than it has been heretofore ? Mr. PiNCHOT. Yes; I know that. Mr. Wilson. You say the seed for an acre of potatoes is $40 ? Mr. PiNCHOT. I understand to be so; yes. Mr. Wilson. And the fertihzer $40? Mr. PiNCHOT. No; $40 a ton. Mr. Wilson. How many tons to the acre ? Mr. PiNCHOT. About 600 pounds to the acre with us. Mr. Haugen. That is $12 ? Mr. PiNCHOT. Yes. The Chairman. I wonder whether it would not be well to ask your judgment on several of the bigger propositions of policy contained in this biU. For instance, what is your thought about creating a special board on the order of what might be termed a food control board, to act with the President in exercising these extraordinary powers that we are giving him in this bill, H. R. 4125, or would you permit that power to be exercised by him through the existing estabhshed agencies of the Government that we now have ? I think it is important that the committee make up its mind on that proposition before it goes very far on this bill. Mr. PiNCHOT. My judgment is very clear that a new agency is re-, quired. I believe that it would be wise to create a fooa controller, rather than a food board, to exercise the powers, so far as they may be delegated to him by this bill. , The Chairman. Would you create a food board with the chairman of it the food controller or would you create a board consistiag of just one man? Mr. PiNCHOT. I have a long standing belief that a single-headed commission is always more efficient than any board, and it seems to me that is especially true in this case, where one man is preeminently fitted by his experience — I mean Mr. Hoover, of course— to handle the situation. Mr. Young of North Dakota. In your brief testimony yesterday you made reference to the feeltug of the farmers — ^the state of mind of the farmers — and I want to ask you whether you believe, that the FOOD PRODUCTION, GONSERVAnON, AND DISTRIBUTION. 121 farmers would have as much confidence in somebody outside of' the Secretary of Agriculture as in the Secretary of Agriciilture to pass on the price that should be paid for food products ? Mr. PrsrcHOT. That is a rather embarrassing question to ask and yet, as you ask me, I will answer it. I believe that Mr. Hoover is so well known to this country, because of the magnificent work he has done abroad, that the country has very great confidence in him. Mr. Haugen. And his large experience as well ? Mr. PiNCHOT. No other single man in the world has had the ex- perience to fit him so peculiarly for this particular job. Mr. Lee. Do you mean in Belgium or prior to that ? Mr. PiNCHOT. In the Belgian work. Mr. Lee. Had he any experience prior to that? Mr. PiNCHOT. Not in this particular line; no. He had large execu- tive experience but not in the matter of food, as I understand it. Mr. McLaughlin. In what line ? Mr. PiNCHOT. Mr. Hoover began as a miouig engineer in California and had become a mining engineer of great international reputation before this particular thing fell into his hands. It came to him, as I imderstand it, because he had shown such remarkable efficiency as the head of the committee which took care of Americans stranded in Europe, through London, at the outbreak of the war. His work there was so fine that when the various embassies were looking for a' man to put in charge of the Belgian relief work they picked him. The Chairman. Aside from the proposition of how we are going to exercise these powers as conferred in this bill, the next proposition that worries me most is the wisdom of guaranteeing a minimum price to the farmer, on the one hand, and fixing a maximum price to the distributor, on the other hand, and I would like to have your judg- ment as to that proposition. Mr. PiNCHOT. My judgment, Mr. Chainnan, coincides with that expressed by Mr. Hoover yesterday. As he said, the effort to fix a maximum price has been a uniform failure in Europe. The difficulty of fixing a minimum price without a maximum is that it leaves an opening for speculation,' while the determination of a fixed price of itself cuts out the possibihty of speculation and is fairer to both ends of the fine. I quite realize that a minimum price is more in favor of the farmer than a fixed price and I also realize that a minimum price is much less favorable to the consumer than a fixed price. Mr. Wilson. Would not the minimum price be the maximum price most always ? Mr. PiNCHOT. It has often worked that way. Mr. Anderson. It is more .true that the maximum price is the minimum price ? Mr. PiNCHOT. The mention of any definite figure is apt to carry with it the spending of money at that rate. Mr. Thompson. Uo you think that the farmers of this country are behind the fixing of a price ? Mr. PiNCHor. No. Mr. Thompson. They do not want it, do they? Mr. Wilson. But the consumers do. Mr. PiNCHOT. So far as I have talked with the farmers they want two things. One of them is a guaranty as to how much at the least they will get for their crop when it is grown, on the one side, and on 122 FOOD PHODUCTION, CONSEBVATION, AND DISTEIBUnON. the other side, they want no limitation at all as to the amount that they can get for it. In other words, tiiey want a minimum price and no limit on the other side. Mr. Thompson. The scheme that Mr. Hoover outlined here was that the Government would, through these agencies, fix a basic price. Mr. PiNCHOT. Yes. Mr. Thompson. And then, through its agents, the elevators would purchase at that price ? Mr. PiNCHOT. Yes. Mr. Thompson. And pay no more ? Mr. PiNCHOT. Yes. Mr. Thompson. Suppose a farmer refused to sell at that price, what would happen ? Mr. PiNCHOT. My own opinion is that the fixing of a price of that kind would be conclusive, just as the fixing of a price on the Liver- pool Exchange is conclusive for wheat. If a farmer did not want to sell at that price he would hold it for a while and then he would sell. It would work exactly as the fixing of a price in the Liverpool market works now. Mr. Thompson. In other words, the Government would simply take the place Of the speculator and fix these prices? Mr. PiNCHOT. Yes. Mr. Haugen. In case he should decide not to sell, then what ? Mr. PiNCHOT. Then I presume the passage of a little time would bring about a sale, just as it does now. Mr. Thompson. Suppose he stiU refused, what would happen? Mr. PiNCHOT. This bLU provides that the President can prevent hoarding, and force a sale. Mr. Thompson. Do you mean it would take a man's property without due process of lay^ ? Mr. McKiNLEY. We are going to make the law. Mr. PiNCHOT. That is provided in the biU. The Chaieman. Dr. A. E. Taylor's testimony before the committee the other day was to the effect that in Germany they had always failed absolutely to compel the farmer to sell. Mr. PiNCHOT. Yes. The Chairman. Is that the recollection of the committee ? Mr. Anderson. I think so^ and for this reason, that in Germany they have no way of taking it from the farmer because they have no transportation facilities. They can not go out to the farm places with wagons because they have no wagons, consequently they can not compel a farmer to sell unless he is willing to seU. But the great bulk of the grain would be sold in the course of time, as you suggest, because the elevator capacity of the farmers is extremely Umited anyway. The Chairman. Let me ask you about this proposition: If we can pass a law which will, in a large measure, prevent hoarding, which win control absolutely the operations of the boards of trade and grain exchanges, which will control the matter of warehouses, which will control the matter of preferential shipments, and things of that kind, and which will regulate, in a very minute way and a very effective way, the agencies of distribution, do you think it would be necessary to fix a maximum price? In your judgment would not the very fact FOOD PRODUCTION, oonsebvahon, and distribution. 123 of making the system of distribution economical and the preventing of hoarding give to the consumer that which the farmer produces at a reasonable figure ? Mr. PmoHOT. It seems to me you are exactly right. The advantage of a fixed price is, as Mr. Hoover explained yesterday, that once that has been decided upon then you can give the elevator man a fixed percentage, the miller a fixed percentage, and the baker a fixed per- centage, so that the products go to the consumer entirely unenhanced by any speculation and that at a price which makes the fixing of a maximum price entirely unnecessary. The Chairman. The difficulty about Mr. Hoover's proposition, as I see it, is that the moment you fix a basic price to the distributor you have thereby fixed a maximum price to the producer. That siirely follows, it seems to me. Mr. PiNCHOT. It is both a maximum and a minimum; it is a fixed price. The Chairman. Is it a basic price ? Mr. PiNCHOT. Yes. The Chairman. If we can do the things that I have described, clear up the channels of trade so that there is absolutely Mr. Young of Texas (interposing). Let me interject this sugges- tion — ^without fixing any price at all. The Chairman. Yes, having absolute freedom to cut out specula- tion and these various things which are cluttering up the channels of trade, regulate the railroads in the matter of furnishing cars and terminals, and things of that kind, stop the diverting of shipments and the sending of carloads of potatoes from Washington to Chicago when New York is perishing and Chicago has more potatoes than can be used — if we take care of things like that my judgment now is that the farmers of this country will produce enough to feed the people of this country and to supply the allies with shfncient to keep them going, and that our consumers will get these products at a reasonable figure. Mr. PiNCHOT. The initial difficulty, from my viewpoint, is that the farmer right now needs some kind of a guarantee as to what he is going to get. The G^ntMAN. I am assuming that we will fix a minimum guar- anteed price to the farmer; I am assuming we will do that, but not a maximum anywhere along the line. Mr. PiNCHOT. Not a basic price ? The Chairman. Yes. Mr. Haugen. You state that in your opinion the farmers need a guaranteed price ? Mr. PiNCHOT. I do. Mr. Haugen. What is your reason for that % Why is that neces- sary at this time any more than at any other time % Mr. PiNCHOT. The result of consultations with a niimber of leaders among the fanners, both North and South, is to the effect that the farmers are suspicious of the demand for a very large increase of production. They have clearly before their minds the fact that often in the past when they have had big crops they have received small money returns as compared with large money returns for small crops, and their disposition is not to increase their acreage very largely unless they can be guaranteed a reasonable return for it, 124 POOD PEODUCTION, CONSERVATION, AND DISTKIBUTION, having in mind the fact that they have to pay so enormously for seed, fertilizer, and labor. Mr. Hatjgen. You know Mr. White ? Mr. PiNCHOT. Yes. Mr. Haugen. He appeared before the committee the other day and he seemed to be a very practical man and a very good farmer. He represented the farmers of Virginia and other organizations there, and his contention was that the farmers should be let ailone, that they were opposed to this fixing of prices. Mr. PiNCHOT. That has not been my experience. Mr. McKjnley. That may be your opinion because of yoiar close personal experience with little farmers in the East. Mr. Haugen and myseK live iq the West, and I have not had a single letter from, a farmer on this subject, although I Hve in an absolutely farming coimtry. I know that every farmer in our country farms all of his land every year, because he does not know how much he is goiiig to raise. Mr. PiNCHOT. There are a good many regions where practically the whole crop is put in every year. Mr. Young of North Dakota. Do you not think it is about all in for this year ? Mr. PiNCHOT. I think a large part of it is, but we are facing an emergency which is so unusual and so very serious that it seems to me every possible means ought to be taken to increase the crop pro- duction.- ± do not know whether I exaggerate the situation or not but it seems to me that the result to us of failing to feed the allies is so obviously fraught with danger that I think every means ought to be taken to bring about that end. I believe that if England is starved the Germans will be over here. Mr. Hutchinson. You spoke about the price of fertilizer. Do you not know that it is almost impossible to purchase any fertilizer at all? Mr. PiNCHOT. No, sir; I do not know that. Mr. Hutchinson. Do you not know that there is no fertilizer to be had at almost any price? Mr. PiNCHOT. Well, there is a httle here and there. Mr. McLaughlin. I think Mr. Hutchinson is making his statement a Httle strong when he says fertilizer can not be purchased at all, because I have recently purchased a carload of it. Mr. Hutchinson. I know all about it, because I am in the business. The Chairman. You can not buy a ton of potash ? Mr. Hutchinson. No; you can not buy anything. Mr. Haugen. You were speaking of fixing prices. Now, in the end it really means confiscation, does it not ? if a farmer refuses to sell it means confiscation ; so that it really means, in the end, confis- cation, does it not, and that is what it amounts to in other countries ? Mr. PiNCHOT. It means the taking of a crop, at a price — — ^ Mr. Haugen (interposing). Fixed by the Government. Mr. PiNCHOT (continuing). Which wiU give the farmer a fair profit. But my own belief is that the Government can not afford to be any- thing but extremely liberal. I think the fixed price ought to be so generous that there will be no question whatever that everybody's needs will be met all over the country. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 125 Mr. Haugen. The trouble is that when you are liberal with the farmer you exact a whole lot from the consumer, so that there are two sides to be taken into consideration. A big price to the con- sumer does not really represent what the farmer gets out of his crops, on the average, because the figures of the Department of Agriculture show that the consumer pays more than twice what the farmer gets. So that if speculation can be eliminated, and unnecessary costs all along the line, the consumer ought to benefit as weU as the farmer. If we do away with speculation have we not accomplished the result desired ? Mr. PiNCHOT. We have accomplished a great thing; yes. Mr. Anderson. I would like to ask whether, in your opinion, it is possible to do away with speculation without either a basic price or the holding of a sufficient quantity of the commodity by the Govern- ment to maintain the price ? Mr. PiNCHOT. I think you have put your finger right on the answer. The best way, so far as I am aware, to eliminate speculation is this plan of a fixed price. At first, I was very strongly in favor of the minimum price, and I was in favor of it until I got it into my head that the fixed price eliminates speculation, and that is a sufficiently large consideration to prefer the fixed price to the minimum price. Mr. Lesher. Is it not the case that when prices soar they prac- tically put the speculator out of business, at least to a certain extent, and is not that the trouble to-day, that the speculator is howling more than anybody else ? Mr. PiNCHOT. I have the impression that the price of wheat now is not at all what the farmer has been paid for it, or anything like it, but that it has been almost doubled by trading of one sort and an- other after the wheat left the farmer's hands. Mr. Young of North Dakota. That is true. Mr. Thompson. The price of wheat is about 100 per cent more than it was and the price of shoes, boots, and so on, is about 100 per cent more than heretofore. Now, is it the purpose of the scheme you are proposing here to fix the price of what the farmer has to sell and then turn him loose to the tender mercies of speculators in what he has to buy ? Mr. PiNCHOT. As I have said before, the answer seems to me to be to fix a price so liberal to the farmer that whatever advances may come in the things that the farmer has to buy wUl be covered and more than covered. Mr. Wilson. Do you think we ought to fix the price of shoes, clothing, and machinery ? Mr. PiNCHOT. No; I think that is imnecessary. Mr. Wilson. Munitions, and other things? Mr. PiNCHOT. Mr. Hoover's answer to that yesterday would be my reply. I think he said that in England they take 85 per cent of the excess profits of munition makers and the big manufacturers. You can get that in, but you can not get it in from the farmers. Mr. Haugen. But this committee has no jurisdiction over that; that comes within the jurisdiction of another committee. Now, it seems to me that if we go after the farmers and jail the farmers, as we do in this bill, if he refuses to answer these questions, that we ought to go after the other fellows too. If a farmer is occupied with the putting in of his crop and he fails to entertain these agents and 126 FOOD PHODtJCTION, CONSERVATION, AND DISTRIBUTION. answer these questions he goes to jail and pays a $5,000 fine. Now, if we go after the farmer in that style would it not be well, to go after the other fellows too? ' •' Mr. PiNCHOT. I am in hearty sjonpathy with anything that will cut out speculation and monopoly. I have spent most of my time fighting monopolies for a good many years. Mr. Haugen. You have given this matter a good deal of thought, and I would like to get your views. Mr. PiNCHOT. I am in hearty sympathy with any movement that wiU cut out monopolies. Mr. Haugen. Would not the suggestions made by the chairman provide a remedy in this emergency ? Mr. PiNCHOT. My judgment is that a better remedy is this matter of a fixed price. I think the country, as a whole, would be better off with a definitely fixed price than with a minimum price for the reason that the fixed price eliminates speculation, and will do the consumer as much good as it wiU the farmer. Mr. Hutchinson. Would you fix the price for the whole year or season ? Mr. PiNCHOT. I think you have to know in advance over one har- vest what the price will be. Mr. Hutchinson. For instance, in the case of wheat, suppose! we fixed the price at $1.50. Do you mean that that price should stand for 1918 ? Mr. PiNCHOT. I would fix it up to a certain date, or until the next crop. Mr. Hutchinson. If you fixed it in that way the farmers would run their grain in all at once, and it could not be handled. - Mr. PiNCHOT. I do not get your point. Mr. Hutchinson. If you fix the price for that harvest Or imtil July or August at $1.50, how long do you want that price to rim? Mr. PiNCHOT. That I do not Imow. Mr. Hutchinson. We ought to consider that, because if you fix it for a year the whole yield wiU come in at once and it can not be handled. Mr. PiNCHOT. I am not an expert on that question. Mr. Heflin. You suggest a plan for fixing the price on what the fanner has to sell. Now, suppose the farmer has to buy meat and flour, who is going to fix the price that he must pay for that food supply ? Mr. PiNCHOT. Under the plan which Mr. Hoover suggested yester- day, meat as well as grain would have a fixed price. He suggested that a fixed price should be made for 8 or 10 commodities.' Onfe of them was meat, one pork, one com, one wheat, and so on. / Mr. Heflin. Agricultural implements, fertilizers, labor, and all those things are not accounted for at all in this plan ? Mr. PiNCHOT. No. Mr. Heflin. Do you not think that there shoidd be a power lodged somewhere to regulate those prices — the price that the farmer would have to pay ? Mr. PiNCHOT. The only answer I can make to that question is this. I believe that, outside of production from the ground, competition ought to come in. We are not in a situation in this country where we are compelled to force the production of additional agricultural FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 127 implements, for example, or additional shoes. But we are in a posi- tion where we have to force, if we can, the production of additional grain. The need is tremendous and unfilled for the whole world in the one case and in the other case it is adequately met, and the ordinary process of competition,'! think, will suffice to regulate it. Mr. Thompson. As I understand, you would not advocate a control of those products; that is, to have a minimum price. Why not enact that kind of a law and then let the competition take care of the distri- bution, as it does in other cases where there is a sufficient production ? Ml". PiNCHOT. To my mind it is purely a question of what is the best method. Mr. RuBEY. Suppose you fix the price of wheat at $1.50 a bushel ' and that is to extend during the crop period. Every farmer knows that he is going to get $1.50 a bushel for his wheat, no more and no less. He wants to get rid of his crop and get hold of the money. Wni not that result in every bushel of wheat being brought right into the market at once ? How can you prevent that, and how can you manage that, if it occurs 1 Mr. PiNCHOT. It is a question of the storage and transportation faciUties, and as long as the price is just that and nothing else, I do not see any difficulty about it. ^ii. Young of North Dakota. You might fix it this way, that the price on September 1, for example, for all grain coming in during this year will be given an amount plus the additional 6 per cent up to the time of delivery at any elevator in the United States. That would give the man who makes his delivery late as good a price as the feUow who dehvers early and would relieve the elevator capacity of the country and also the transportation facilities ? Mr. PiNCHOT. That might be done. Mr. Lesher. Just at the time when the farmer does not need any assistance they want to give him assistance that wiU not assist him, but hinder him ? i Mr. PiNCHOT. If any regulations were made that would hinder the farmer and not assist him, that would be missing the whole mark. Mr. Lesher. That is what you are going to do. The farmer did not get the benefit of this last price, it is true, because he was not awake, but he will get the benefit of the next price without any assistance. The farmer will get the benefit of the next price; th6 speculator is not going to get it. Mr. Young of Texas. It is an underlying thought in my mind that every country now finds itself short in the matter of foodstuffs, both for the human beings and for the animals. Mr. PiNCHOT. Yes. Mr. Young of Texas. And different propositions are being thought out as to the best method by which we can increase the supply ? Mr. PiNCHOT. That is the whole story. Mr. Young of Texas. That is the underlying question that we want to solve. Mr. PiNCHOT. Yes. Mr. Young of Texas. The farmer is pretty much of a man like everybody else ? Mr. PiNCHOT. Yes. . . Mr. YoxnsiG of Texas. I am giving you the farmer's viewpoint be- cause I do not know anything else but an agricultural constituency. 128 FOOD PRODUCTION) CONSBRVAnON, AND. DISTRIBUTION. He knows what you and I know, that this shortage exists. He knows that under the ordinary law of supply and demand he is going to have a crackerjack market for every crop, he can produce from the farm. He is suspicious, too. The suspicion is already in his mind that he is the first Hue of defense in this war that is on at this, time. When he sees that action is sought to be had in the way of a law fixing the price of his product and not fixing the price of anybod.y else's product, his suspicion is aroused. I baow that is what he is thinking about. He can not understand, neither can I, how this Government has a right to come in and exercise the power to name the price that he is to get for liis stuff, when that same power is not exercised in the case of the manufacturer who makes the implements and the wagons that he must have. He is going to rebel against it, and instead of it being an inducing cause to laake him exert every energy he has to make the earth produce all it can, it will be hke throwing a wet blanket on him. So far as the country is concerned, we know that no set of men have ever proven greater patriots than the farmers. Here is another thing. This goes back to the chief product which we grow, which is cotton, two-thirds of which is foodstuff. In 1914, when this war came on, the conditions were that 65 per cent of that product went abroad to, to Germany, England, France, Russia, and Japan, aU those countries. We found the machinery absolutely shot to pieces, and you could not send any of this product abroad. What happened ? We did not have any market for it, and the farmers had to take whatever they could get. We could not finance the crop. They sold their crop for 5, 6, 7, and 8 cents. It absolutely bankrupted that section of the country. It fell heavily on the men least able to bear it. A great many wild schemes were put forth in Congress show- ing the concition we were in. We were in a deplorable condition. It could not be avoided. The Government was impotent; no senti- ment was aroused at all for the Government to do anything,, They just said, "We have not the power to meet the awful conditibij. that confronts that whole section of the country." So we went bankrupt. Now, it seems they have found that the shoe is pinching the other foot. The farmer is in a good position to get a good price for every- thing he raises and the Government wants to exercise the power to fix the price at any price they may name. Here is another danger. More than two-thirds of the people of this country are consumers, and I would say that less than 30 per cent are actual producers on the farm, as I understand the figures. It is estimated that there are 66§ in the cities and the other 33 J are in the rural communities, which include the smaller towns. When you place in the hands of any man or any set of men the power to fix the price, which is the most danger- ous power on earth, it is most natural for them to take the viewpoint of the consumer and not the viewpoint of the man who must depend on his products. Personally, I can not make up my mind to say to these people, "We Avill fix your price," because I fear the price will be fixed to meet the demands of the 66§ instead of the 33^. I fear further, and I do not think there has been any intimation here con- trary to this, that if you take anj'^ one crop that has been over-- Eroduced, let it be any of the prime crops, the main crops, that has een overproduced to a sufficient extent so that the world wUl not consume it, no agency that you can create will ever undertake to put FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 129 a price on that crop and to say to the farmer, "It is seUing low enough, we will not fix the price," but let there be a shortage, and that agency- will ht once fix the price and say to Mr. Farmer, " You can not get any more than that." That is the danger. Mr. PiNCHOT. Permit me to tell Vou the way I see it. I see it quite differently. There is a world shortage of food, in the first place. We all Imow that; it can not be denied. In the second place, we are facing a situation where it is absolutely necessary to get food to our allies. If the submarines — and you gentlemen got the figures yes- terdaj^ as to the almost incredible amount of shipping being de- stroyed — steadily increase, and they succeed in starving England, then the very fkst condition of peace that the German Kaiser will make will be possession of the ships of the EngHsh fleet. If he starves England, that affects France, and he will have the French fleet also. If he has those fleets — this will sound to a good many like a fantastic tiling) J'^yt seems to me sound — there is no power on earth that can keep him from coming over here and getting the money and food and the machinery that Germany stands in need of. Mr. Heflin. I think you are right about that. Mr. PiNCHOT. Nothing is more certain in the world. If the Ger- mans succeed in starving out England, we wiU have them to handle on this side of the Atlantic. The best mihtary information I can get is to the effect that if they landed 150,000 or 200,000 Germans, with modern artiUery, it would take us nine months to produce an equip- ment that would enable us to drive them out. In that nine months they could land a great many more men. So the question is not only a question of doing what we can for the aUies, but it is a question of national seK-preservation. Mr. Young of Texas. I agree with you. Mr. PiNOHOT. If that is true, then the question is what is the best way, under all the circumstances, of attempting to meet the situation. We know now that we are not going to be able to meet it up to the level of the coxintry's needs, but we riave a duty to ourselves, to our allies, to civilization, and to democracy, to meet the demands of this present situation just as far as we possibly can. What is the best method? One of the best methods is to assure the farmer that he will get a satisfactory price for what he is going to raise. I have come in contact with a great many farmers, both individuals and leaders of farmers' organizations who say that that is the first neces- sity of the situation. For example, take my own State of Pennsylvania. The past head of the State Grange there and the present head joined with myself and two other representatives of the Pennsylvania Rural Progress Association to make a public statement (which was sent to the Council of National Defense) to the effect that the important need in Pennsylvania was the assurance that the farmer would get a reason- able price for his product. I understand from other farmers that the same sort of need exists, especially through the North and West. It seems to me that the question resolves itself into one of method. Is it the wise thing for the world at large, farmers and others, to fix a minimxim price or to determine a fixed price ? That question seems to me to be less important than the immediate assm-ance to the fanner that he will get a satisfactory price for ever3nthing that he can raise; in other words, just which kind of a price is to my mind a 104176—17 9 130 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. question of method ; whereas the assurance to the farmer in one way or another that he will get everything he ought to have for what he raises is a matter of national necessity. Mr. Leshee. What is the difference between guaranteeing him a basic price and a minimiim price ? Mr. PiNCHOT. As I imderstand, under a basic or fixed price what he grows will be paid for at that price, no more and no less; whereas under a minimmn price if he is not able to sell his crop at a higher price, at least he will get the minimum, and he ^l\ not get any less than the minimum price. But under the fixed price he will get that much, no more and no less. Mr. Young of North Dakota. Mr. IJoover stated yesterday that according to his notion there would not be any guaranty on some crops raised by the farmer, notably potatoes 1 Mr. PiNCHOT. Yes. He said that the potato crop would come in at so many different seasons that it would be difficult to fix a price. Mr. Young of North Dakota. If it is the purpose to increase pro- duction, why should there not be some guaranty on the question of potatoes ? Mr. PiNCHOT. Maybe it would be wise to fix a minimum price. Mr. Anderson. It seems to me that we are overlooking one propo- sition in connection with the increased production. Increased pro- duction does not depend altogether on increased acreage, it depends on cultivation, intensive meuiods, and depends on everything that goes to make a big crop, not only from the standpoint of putting a large acreage in, but to getting a big crop after the acreage is in. To that extent the fixed price or the minimum price would tend to improve methods of cultivation and to prevent waste, everythiiig of that kind which does go toward increasing the total production? Mr. PiNCHOT. There is no doubt of that. Mr. Haugen. I understood you to say that it was necessary to guarantee a profit to the farmer ? Mr. PiNCHOT. Most decidedly. Mr. Haugen. We are all agreed that Mr. Hoover is the man to fix the price ; I do not think there is any division of opinion as to that. Mr. Hoover stated yesterday that nobody in the United States should profit by this war ? Mr. PiNCHOT. That no man should make an excessive profit. Mr. Haugen. No; should not profit. Mr. RuBEY. He probably meant an excessive profit, bu.t he used the word "profit." ' Mr. Young of North Dakota. He does hot want anybody to get rich out of this war. Mr. PiNCHOT. Exactly. Mr Haugen. I beheve that he is a big, broad man and wants to do exactly what is right — a patriotic man who intends to do the right thing. Take the farmer. He has his crops in already, and he is about ready to buy his feeders for the pasture. They are not buying them. The pastures are not being filled because of this uncertainty. Nobody is going to invest $900 in a stocker or feeder at this time. That is exacting too much. I think the farmers are patriotic, but when you ask them to make a sacrifice to that extent, you are asking too much of the farmers. Mr. PiNCHOT. He ought not to be asked to make any sacrifice at all. FOOD PRODUCTION, OONSEKVATION, AND DISTUIBUTION. 131 , Mf . Haxjgen. You apoke, about shoes and that the shoes should not be included. Is it not a fact that there is just as large a shortage in hides and leather as in the crops ? Mr. PiNOHOT. I understand that Mr. Hoover's proposition was to fix prices on beef, which, I suppose, includes the hides. Mr. Haugen. If there is any necessity for fixing a price on 9 or 10 ■articles, why not fix the price on the other thousand and one articles ? Mr. PiNCHOT. Mr. Hoover's answer to that question was a double one. In the first place, it is physically impossible, and, as Mr. Hoover si^gested, there is no machinery and can not be any machinery in the country to carry it out. Mr. Haugen. Why should we undertake something that is physi- cally impossible? Why should we discriminate against one farmer and not against the other farmer ? If you are going to fix the price of wheat, why not fix the price of cotton ? If there is any benefit, why not extend the benefit to one as well as to the other ? Mr. PiNOHOT. If everything else was equal, and if we were not facing a great national necessity, we would not now be discussing this question. There is a great national necessity which has to be met. Mr. Haugen. It is just as important to supply the soldiers with shoes as with wheat. Mr. PiNOHOT. There does not seem to be any real danger that the soldiers will not have shoes. Mr. Haugen. A Member of Congress who manufactures 25,000 pairs of shoes every day when he has the leather told me that he could not get the hides. Mr. PiNCHOT. The lack of shoes is not going to be dangerous, but the lack of food is. That seems to be the whole answer. We are facing not a theory, but a condition, and we have to meet that condition. Mr. Thompson. Would you take into consideration the amount of production in fixing the price? Mr. PiNOHOT. The man who had that to do undoubtedly would. Mr. Thompson. One man might produce 75 bushels to the acre and the man on the adjoining farm would only make 10 bushels to the acre. The price that was fixed on the yield of 75 bushels an acre would not be just to the man and would not cover the expense of the man whose land only yielded 10 bushels ? Mr. PiNCHOT. The present arrangement does not take any account of that. Mr. Thompson. Under the present arrangement he takes his chance. You do not give him any chance at aU, but you fix the price. Mr. PiNCHOT. Yes; and guarantee him a profit. Mr. Lee. After this war is over do you think there will he a food shortage in the world that in all probabiMty wotdd insure the Amencan farmer a profitable price for his crops for at least one year ? Mr. PiNCHOT. I do. , . 1 i i. f Mr. Heflin. Your position is, as I understand it, that the cost ol production to the fariner during the war will be taken into considera- tion and that he be allowed a reasonable profit ? Mr. PiNCHOT. A big, reasonable profit. Mr. Heflin. A fair profit ? , i-i. i in. Mr. PiNCHOT. Better than a fair profit; a good hberal profit. 132 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Some questions were asked in regard to the bill. I want to make this suggestion. This bill seems to me to include two entirely sep- arate sets of fimctions, one set of functions which belongs to the Department of Agiculture and another set of functions which belongs naturally to the President to be exercised through a food controller. I want to raise the question, with your permission, whether it might not tend to clarify matters if the two could be separated so as to avoid the possibility of confusion hereafter. The Chairman. That would be a matter for the judgment of the committee. I thiak the judgment of the committee will be based largely on what happens to flie bill that we want to try to get up to-day. If the bill should provoke long discussion, then, in my judg- ment, it would not be wise to divide the bill, because we could have the discussion on it. If it is not going to provoke long discussion, then the question you raise is one for the committee to decided STATEMENT OF MR. H. H. SCHEITK, MEMPHIS, MO. The Chairman. Whom do you represent, Mr. Schenk? Mr. SchUnk. I am an actual farmer, farming the farm, living on the farm. I am also a member of the national legislative conomittee of the American Federation of Organized Producers and Consumers, composed of the large farming organizations and a great many labor organizations. The Chairman. Please name those organizations. Mr. Schenk. The Farmers' Union, the American Society of Equity, the Equity Union, the National Farmers' Association, the Grange, the American Federation of Labor (that is, several of its State departments), and several other labor departments. The Chairman. Have you been delegated by these organizations to appear before this committee? Mr. Schenk. Yes, sir. The Chairman. Do you represent their views ? Mr. Schenk. I do. Mr. Young of North Dakota. When was their last meeting ? Mr. Schenk. The resident of our federation has just stepped in, Mr. H. N. Pope, of Texas. He called a meeting of the officers of our member organizations to consider -these food regulation war measure bills at Kansas City on the 7th. He also had a call to' appear before the Senate Agriculture Committee meeting. We decided that in order to get here m time that we would have to come on and leave the convention. Mr. Haugen. Please state the attendance of this convention which was held at Kansas City. Mr. Schenk. It was only the officers of these different associations, and it was called for the 7th. We do not know how many got there. Mr. DooLiTTLE. May 7 ? Mr. Schenk. Yes, sir. Mr. Young of North Dakota. The executives of each organization ? Mr. Schenk. Yes, sir. Mr. Wilson. Please teU us the number of members on these various committees. Mr. Schenk. From three to five. POOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 133 Mr. Wilson. Not of the executives, but of the whole committees. How many members have you ? Mr. ScHENK. Of the organization ? Mr, Wilson. Yes, sir. Mr. Schenk. Of course, I do not represent the National Grange. I only represent a local; but the National Grange's ideas are practically the same. That organization has probably a million members.' The Farmers Union has, I think, a membership of between two and three million, and the National Farmers Association — well, the mem- bership is indefinite, because we are just organizing. But every farmer is a member. That includes practically every farmer in the United States. Our slogan is " Every farmer a member by virtue of his occupation." In other words, there are about 6,000,000 people represented in these organizations, the real food raisers and the real laborers of the Nation. The Chairman. In order to expedite the hearing I would like to have your views as to the proposition of the creation of a small body of men to control this whole situation and to exercise the powers that are set forth in this bill now pending before the conunittee. Mr. Schenk. Do you want it in a very few words ? The Chairman. Yes; as few words as you can make it, because the committee is quite busy. Mr. Schenk. The cause of this proposition is because the farmer has not got what is his in the past; that is, the price has been con- trolled by speculators, large buyers of raw food products, hke packers, and others like that. That is the reason we have a shortage of food products now. And when you appoint any body of men to set a frice we think it should be composed of farmers and consumers, believe that at this time of war crisis we should have a committee to control and set a price on food products especially, and other froducts, too. And this commission should be called "The National ood Commission," and it should be composed of producers and consumers. Mr. Young of North Dakota. You mean an equal number of each ? Mr. Schenk. Yes; of producers and consumers. Then they would regulate the price of these products. Mr. Wilson. You mean of the farm products? Mr. Schenk. Yes. The Chairman. That is your idea of that particulaa: thing ? Mr. Schenk. Yes. Mr. Heflin. What would you do in case this commission were composed of three producres and three consumers and they could not agree as to the price ? Mr. Schenk. Then you could give the secretary or chairman of it the deciding vote. The Chairman. You would make it an odd number ? Mr. Schenk. Certainly. Mr. Wilson. Do the farmers of this country believe that a fixed price for their produce would be desirable ? Mr. Schenk. Well, they believe in a profitable price. Mr. Wilson. Of course, we all believe in that. Mr. Schenk. They have never had a profitable price; the price of production has never been taken into consideration in fixing any price on their products. 134 FOOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION. Mr. RuBEY. If that price was fixed high enough to insure them a reasonable price, would that answer ? Mr. ScHENK. That is all we want, a reasonable profit above the cost of production, interest on investment, labor cost, and things like that. Mr. .McKiNLEY. What price would the farmer be satisfied with as to wheat ? Mr. ScHENK. He would certainly be satisfied with the present market price. Mr. McKiNLBY. But state the amount ? Mr. ScHENK. In the first place, there has been a tremendous failure in wheat, and the present market price is not a money-making price to the farmer because he is not getting the bushels to deliver. Mr. McKiNLEY. But you have not answered my question. State in dollars what the price ought to be. Mr. ScHENK. Under present conditions ? Mr. McKiNLEY. Yes. Mr. ScHENK. I should think about $2.50 a bushel. Mr. McKiNLEY. Would you have it the same in western Kansas and in southeastern Pennsylvania? Mr. ScHENK. Less the freight cost to market center. Mr. McKiNLEY. Then you would not have it fixed at $2.50 a bushel for the whole country? Mr. ScHENK. Well, I think that somebody ought to do that be- cause : Mr. McKiNLEY (interposing). What price would you have for each place? Would you have the same price? Mr. ScHENK. No; I do not think I would. Mr. Young of North Dakota. You have reference to those who put in winter wheat, and lost it? Mr. ScHENK. Suppose you put in winter wheat and it only turns out one-third of a crop, and in many places there is that condition. Mr. Wilson. Should a farmer, under those conditions, hav^ more than the man who had a full crop ? Mr. ScHENK. No ; you can not do that. Mr. Wilson. I thought you said that. Mr. ScHENK. No; I said the price ought to be $2.50 a bushel, and that there should be a profit over the cost of growing the crop. The Chairman. Your proposition is not to fix a basic price to the farmer at all, as I understood your statement this morning, but your, proposition is to fix a minimum guaranty to the farmer ? Mr. ScHENK. Yes. The Chairman. You are giving the committee an entirely wrong impression of your own views. Mr. Haugen. I understood you to say you represented the labor organizations and the consumers as well ? Mr. ScHENK. In a federation; yes. Mr. Haugen. That means consumers, does it not ? Mr. ScHENK. Yes; consumer and producer. Mr. Haugen. Would the consumers be satisfied with wheat at $2.50 ? Would they take kindly to a 10-cent loaf of bread? Mr. ScHENK. They pay much more now. Mr. Haugen. They are paying 10 cents a loaf here; that is the price here in town; $2.50 wheat means bread at from 8 to 10 cents a FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 135 loaf. Do you think they would be satisfied with that, and remember you are speaking for the two now ? Mr. SoHENK. If you kept wages on the present basis, or $1.25 for a section hand, I do not think he would be satisfied and he should not be satisfied. But they would be perfectly willing to give the present prices if they got wages so that they could afford to. Mr. Haugen. Would you fix the wages then ? Mr. ScHENK. No ; I do not think the food commission should deal with the wage proposition; I do not think that would be the business of this commission. Mr. Haugen. If the price is to be fixed on one product, wheat, for instance, should it not also be fixed on aU products ? Mr. ScHENK. This food commission should have the power to fix prices on all farm products. Mr. Haugen. But it is suggested that the price be fixed on 9 or 10 ? Mr. ScHENK. I do not thmk that goes far enough. Mr. Haugen. You would go further ? Mr. ScHENK. Yes, sir. Mr. Thompson. Would you take in perishable products, such as tomatoes ? Mr. ScHENK. Yes, sir. Mr. Thompson. And fruits ? Mr. ScHENK. Yes ; they are just as important, because they are all food products. Mr. McKiNLEY. Take com. What price would you fix on com for this year ? Mr. ScHENK. I think SI a bushel would be plenty. Mr. MoKiNLET. The farmers out in my country are contracting at $1.25. Mr. ScHENK. I think that is too high. Our com crop is not a failure like our wheat crop. The reason for wheat at $2.50 is because of the absolute failure in so much of the country and that there is not much wheat. Mr. Hutchinson. Corn is worse than wheat. We have in Chicago to-day less than 100,000 bushels under contract. Mr. ScHENK. But then the crop is to be planted yet. Mr. DooLiTTLE. You are speaking about this year's wheat crop, the crop now growing ? Mr. ScHENK. I am talking about the crop growing and to be produced this year. Mr. Haugen. What price would you put on stockers and feeders < Mr. ScHENK. I would say at least 9 cents or maybe 10 cents; 10 cents for sitockers and feeders. Mr. Haugen. Do you think the consumers would stand for that « Mr. ScHENK. Yes, sir; if they got a large enough price for then- labor. . , Mr. Haugen. You know they have been objectmg to a price much lower than that. . . Mr. ScHENK. My experience has been that the labor organizations and the consumers' organizations are perfectly willmg to allow the farmer a profitable return on his products. Mr Haugen. But there are many people outside of the organiza- tions. For instance, in the city of Washmgton there are m the Department of Agriculture alone 17,000 people; they do not belong 136 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. to any of those organizations, and they have no power to fix their wages; their wages are fixed by Congress, and they are not much higher now than they were 10 or 15 years ago; there has been a slight increase, but nothing to compare with the increased cost of living. Then the clerks in the stores, or a number of them, are not getting these high prices fixed by these organizations, and we have got to deal with all the people. Mr. ScHENK. That is true. Mr. DooLiTTLE. You stated that you would put stockers and feeders at $10 ? Mr. ScHENK. Yes, sir. Mr. DooLiTTLE. What would you say would be a reasonable price to be paid by the packer for the finished steer ? Mr. ScHENK. Possibly S13 or $14. Mr. DooLiTTLE. They are getting above that now, are they not? Mr. ScHENK. Yes. The Chairman. Is there anything further, Mr. Schenk ? Mr. Schenk. I would suggest that the commission have the power of organization. One of the best ways in getting this increased Production is to have organized bodies throughout the country, 'he farmers should have an organization so that they can increase their crops and also have a place in which to store those crops. What is the use of producing them if we have no means of storing themi As the gentleman said a httle while ago, if you set a price of ^1.50 on wheat all of the people would deliver wheat immediately. That is true, because they would not want the trouble of holding the wheat because of shrinkage; it gets less every day, and, of course, they will all want to deliver it immediately. Mr. McKiNLEY. But if they did not receive it they could not deliver it ? Mr. Schenk. No; of course not; but they could demand their right to dehver it, and the Government, or whoever bought it, would have to have great storage facilities. Mr. Haugen. You would insist upon payment on delivery, of course? Mr. Schenk. Yes. Mr. Haugen. Who is to pay for this grain ? Mr. Schenk. As I understand it, the Government would have to pay for it if the other fellow did not; that is, if the Government guaranteed the price. Mr. Haugen. Suppose we had a billion bushels of wheat at $2.50; that would be $2,500,000,000. Then suppose we had 3,000,000,000 bushels of com, a normal crop; that would represent $3,000,000,000 which would make $5,500,000,000. Then if we were to take care of the stockers and feeders, that would mean probably $20,000,000,000. Where are we going to finance this thing ? There is a limit on Uncle Sam's resources. Mr. Schenk. That is where you will need your storage; close to the farm. Mr. Candler. Would not organization be effected through the national defense boards that are being organized in the dmerent States and counties ? Mr. Schenk. The Agricultural Department already has the ma- chinery in existence now and they are doing this work. All we desire FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 137 is to put the farmer on a business basis and an efficiency basis. We have Deen producing under ef&cient methods but marketing under very poor methods last year, when we had a series of failures that made prices high. If we can put the farmer on a business basis, with a Dusiness system, throughout the country, and control our own business instead of letting somebody else do it, it will help a great deal. We are the only people in the world that allows someoody else to set the prices on our products absolutely. Mr. Wilson. There has been a good deal said here about regulating the price that the farmer shall pay for machinery, clothing, boots, shoes, buggies, wagons, etc. What do you think of that proposition ? Mr. Schenk. If you allow him to have a business system he will have something to say about that himself. Mr. Wilson. Then you do not think it necessary to regulate that feature of it I Mr. Schenk. Well, under present conditions it is; yes, sir. If you allow things to go along as they are now he will be no better off, and the other feUows will take his profit. Mr. Heflin. If you are going to regulate what he has to sell you think you ought to regulate what he has to buy ? Mr. Schenk. Yes, sir; if you regulate one thmg you have got to regulate the other. All that the general farmer demands is a square deal. Mr. Candleb. You said a whUe ago that you beUeved all prices on food products should be fixed ? Mr. Schenk. By this commission composed of producers and con- sumers. Mr. Candler. And you advocate the establishment of a commis- sion to fix those prices ? Mr. Schenk. Yes, sir. Mr. Candler. You say that comunission ought to consist of one member representing the consumers, one member representing the producers, and a chairman, who may have the deciding vote ? Mr. Schenk. Yes, sir; equal representation. Mr. Candler. He would have to represent one side or the other, and I do not know which side he might fall on. Now, would you advocate that this commission have the right to make a fixed price on all products, the price that the producer should receive for the products, and that they could not go above it nor go below it, and that that should be the basic fixed price, or would you advocate that they fix the minimum guaranteed price, guaranteeing to him a profit on his product and then give him the right to get that minimum price or get anything above it that he could obtain? Mr. Schenk. The way I take it, the fixed price wiU be the minimum price or the minimum price wUl be the fixed price. Mr. Haugen. It would be a maximum price as well ? Mr. Schenk. But if you gave this commission the right to fix prices they could change the prices according to conditions. Mi-. Candler. If you had this minimum guaranteed price the farmer would certainly get that price, and then if conditions were such as to make a higher price possible he could secure that price if he had the opportunity to do so ? Mr. Schenk. Yes, sir; and the fixed price could be changed. Mr. RuBEY. How often would you change your minimum price ? 138 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. ScHENK. As often as necessary. Mr. RuBEY. Would you make one minimum price for the entire crop period or change it during the crop period ? Mr. ScHENK. In case of a calamity, through floods or otherwise, they should be changed. I have seen wheat have the promise of turning out 35 bushels to the acre at cutting time; then a series of raiQs came along and we did not get anythmg ia whole sections of country. Mr. RuBET. But that would be local while you are fixing this price for the entire country ? Mr. ScHENK. If that damage was done over the whole coimtry, I would change the price, just Eke last fall we did not think there was going to be such a terrible shortage of snow and such an awful loss of wheat during the winter; when we sowed this wheat $2.50 would have been entirely too high. Mr. Hutchinson. If you are going to fix the price for the pro- ducer, where is the consiuner to come in ? Mr. ScHENK. The same commission will fix the price to the con- sumer, which should be the producer's price plus cost of distribution. Mr. Hutchinson. But if you had a flood, or anythiag like that, and the price went up, that would not help the consumer ? , Mr. ScHENK. Certainly it would; the consumer would then have to pay according to real supply and demand. Mr. Hutchinson. Let me illustrate. In out part of the country we have an enormous crop of hay; it is selling at as low as $11 while in the West it is selling for $40. How would you fix the price on that? Mr. Schenk. As I said, the fixed price plus or less the cost of transportation to central markets. The Chairman. Is there anything further, Mr. Schenk? Mr. Schenk. No. (Thereupon the committee recessed until Wednesday, May 9, 1917, at 10.30 o'clock a. m.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Committee on Agriculture, House of Representatives, Wednesday, May 9, 1917. The committee met at 10.30 o'clock a. m., Hon. Asbury F. Lever (chairman) presiding. STATEMENT OF MR. HENRY N. POPE, FORT WORTH, TEX. The Chairman. Gentlemen, the committee has met this morning to give an opportunity to representatives of the farmers' organiza- tions to make their views on this situation known to the Congress through this committee, and I will ask Mr. Pope, or whoever Mr. Pope desires to have go on this morning, proceed. Mr. Pope, will you state your name and address and the organiza- tions you represent, please, sir ? Mr. Pope. Henry N. Pope, Fort Worth, Tex., president of the Farmers' Educational Cooperative Union of Texas; of the Associa- tion of State Presidents; of the Farmers' Educational Cooperative Union of America; and of the American Federation of Organized Producers and Consumers. Mr. Chairman and gentlemen of the committee, I represent the farming class, and I might say quite a number of the producers of America by virtue of being president of three organizations, two National and one State organization. Mr. Young of North Dakota. Where are the members principally of the farmers' union located — ^in what States ? Mr. Pope. They are scattered over 27 States or rather 29 States, because we have just recently organized two States. They are scattered throughout the length and breadth of those 29 States, and we are constantly organizing other States, getting ready to organize them into state organizations. Mr. Young of North Dakota. That is your own original organiza- tion? Mr. Pope. Yes; that is my original organization. We as producers have been called on by our president and representatives and officials generally to enter into a cooperation for the purpose of making an effort to produce this year and for the next few years, if possible, a neater quantity of products than we have ever produced heretofore. We are only too glad to enter into this cooperation because we realize that cooperation is necessary and indispensable in all demo- cratic forms of government, or in all governments, so far as that is concerned. We are wUling to do our part in this cooperation. We feel like we are in a position through our organizations to do that because we are very well organized throughout the Nation. We 139 140 FOOD PRODUCTION, CONSEKVATION, AND DISTEIBUTIOIT, have got to do the producing. You can plant all the war gardens and afl the vacant lots in all the cities if this Nation and it will amount to but very little. You have got to appeal to the 6,000,000 of farm- ers of America to do the producing and bring about the results that you have started out to get. I expect most of you understand the farmer very well; but I think I know him about as well as any man in America. You have got to reach him in some way and give him an incentive that will cause him to come into this systematic cooperation and try to carry out the plans that have been outlined for him and to perform the duties that you have requested or required of him. If he is to do the producing, the greatest incentive to him is a price for his products. Now, it IS a very well-known fact that the farms of this country have been producing btmiper crops in the past and the more we have produced the less we have received for our crops. When we produce 16,000,000 bales of cotton we get around $100,000,000 less for it than for a 12,000,000-bale crop. When we have producied 13,500,000 bales of cotton we have got $95,000,000 less for it than a 10,000,000-bale crop. There is no incentive and no inspiration to the farmers of this country to go out and briog about tnese great productions when in every instance, and in almost every crop, cereals, cotton, and others, we get around $100,000,000 less for it than we do for the small crops. Mr. OvERMYEK. Was that true last year ? Mr. Pope. Not this past year. We got more for our cotton and our products this past year than we have probably received in any previous year. Mr. Heflin. And they had a small crop of cotton then ? Mr. Pope. Yes; a small crop of cotton. Mr. OvERMYER. You are not speaking just of the cotton crop if Mr. Pope. No ; not of cotton especially. Mr. OvERMYER. But of all the agricultural products generally? Mr. Pope. Yes; and we have decided, in discussing these questions throughout our organizations, that it would be to our interest to reduce and restrict our output of products because we could get more for them. Mr. Wilson. Do you mean you have decided to do that this year? Mr. Pope. No; we have been discussing that all the way along in »jur organizations for the last several years when we were facing these conditions. Mr. HaugeNv The Department of Agriculture has advocated that, have they not ? Mr. Pope. There never has been anybody to advocate the reduc- tion of our cotton. We can not keep off of cotton in the South. Mr. Haugen. I mean of production in general to bring up the price ? Mr. Pope. They have advocated growing more on a less number of acres and intensive farming, and so on. Now, gentlemen, I want to be brief, and I do not want to detain you long, because it is not necessary. The marketing question is the treat question with the farmer. We know how to produce and we ave produced in abundance in the past and will continue to pro- duce in abundance if you wiU give us the price. I do not mean you gentlemen here in the ordinary way and I do not mean Congress, but FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 141 if we can get a market that will bring us a price the farmers will pro- duce the crops, because the price a man receives for his product, his labor, his goods and chattels: determines the scope of his prosperity in this world, and without that price no man can ever hope to ob- tain prosperity and build a home and surround himself with the necessaries and comforts of life. We are now in a crisis, and our country is at war, and that is the reason the farmers of America have been appealed to to contribute their part and make an extra effort to produce a bumper crop here to feed the world of mankind. The price has always been fixed by somebody, and it is going to be fixes now for this present crop by somebody, and the question that is in our minds is. Who is going to fix the price. Is the farmer going to fix the price? He never has done it. Is the consumer going to fix the price? He never has done it. Is the business world in this country going to fix the price on the raw material ? It never has had but very little to do with it. Is the speculator going to fix the price ? He always has, and if you leave it to him he is going to continue to fix the prices on the products of the farms of this country, and we will always find the condition that the more we produce the less we get for it. Now, we like to "see an abundance of production because every- body can have plenty, but we want to see the farmer prosper. Now, who is going to fix the price on our product this year ? That is what you gentlemen and that is what Congress has under advisement now, whether or not you shall fix a price on the products of the farm and fix a profitable price, thereby giving an incentive to the producers of this country to go out and put forth their labor and their industry for the purpose of producing what the world needs in the way of the necessaries of life, food, and clothing. Now, we have been meeting together and I am just from a meeting of our executive board of the American Federation of Organized Producers and Consumers, and we have come to a conclusion on this question. ' Looking at it from every angle and from every stand- point, feeling that we ought to do everybody justice, wanting to be fair to everybody, we have decided that Congress has done the right thing in making a move to have the Government fix a price on our products and any staple articles of the finished product. We feel that this should be left Mr. Young of Texas (interposing). Eight in that connection, Mr. pOT)e, that is a conclusion reached by your organization ? Mr. Pope. That is what I just stated. Mr. Young of Texas. You do not undertake to say you are now speaking for the farmers I represent in my section of the State, and that they have reached any such conclusion as that ? Mr. Pope. I stated that 1 was just from a meeting of our executive board, and we decided Mr. Young of Texas (interposing). I am asking you if you are speaking for the farmers I represent ? Mr. Pope. I am not talking about the men you represent or that Mr. Heflin represents or that anybody else represents; but I am talk- ing about the farming class, and I do speak for a number of farmers that are not organized, and I know that that is the sentiment of the great number of farmers I have come in contact with and conferred with who are not organized into any of our various organizations. 142 POOD PRODUCTION, OONSEBVATION, AND DISTBIBUTrON. and our American Federation comprises about six or seven farm organizations, all the. farm organizations in America. MTi MoKiNLEY. Do I undiarstand you would be satisfied if Congress fixes a definite price which you shall get for your products ? Mr. Pope. If they fixed a profitable price. ' Mr. Wilson. What is a profitable price ? Mr. Pope. I was just coming to that. Mr. Wilson. Yes; I would like to hear that. The Chaieman. Mr. Pope, let us see if we can get at just what you mean. Do you mean that Congress ought to fix a maximum price beyond which the products of ^he farm may not be sold; or do you mean that the Congress should fix a minimum guaranty of a price on farm products? Mr. Pope. I am opposed to a maximum price lest you might put it too low and do an injury to somebody. The Chairman. Then when you say fix a maximum price,! you reaUy mean fix a minimum guaranty price to the farmer ? Mr. Pope. Yes; and a profitable price. I mean that the minimum price oiight to be a profitable price. Mr. IO.UGEN. Or do you mean a fixed price ? Mr. Pope. I mean a fixed price, and I will show you why. Mr. Haugen. You advocate neither a minimum nor a maximum, but a fixed price ? . ■ Mr. Pope. Yes; a fixed price, and I will tell you why I favor a fixed price. Mr. Young of North Dakota. The gentleman who testified yester- day morning said you would.be satisfied with a profitable price and a few minutes ago you made the statement that you would be satis- fied with a profitable price ? Mr. Pope. We hope that this fixed price will be a profitable price. Mr. Young, of North Dakota. I would like you to relate'what you think the Government ought to adopt in view of that statement which you have just made and which your associate made ? Mr. Pope. I am coming to that, and if you wiU let me get through I think you will understand just what I mean. The Chairman. Suppose we let Mr. Pope finish his statement before asking him any questions. Mr. Pope. If you will let me finish my statement I will theli answer any questions I can. We are in favor of a commission being provided for by Congress. Now this commission ought to be in continuous session all the time and I think it ought to be empowered to fix the prices. We producers can not do it. It would not be satisfactory probably to the rest of the country. The consumer could not fix the price and have it satisfactory to the producers or the rest of the country. The business man can not fix the price, and I do not believe any man or any set of men in this country could successfully sit down and fix the price on the products of this country and on the staple articles of the finished products which would be satisfactory and do justice to all parties concerned. But I do beheve a commission, a fair, conscientious coinmission, can go out and work out the details and get all the facts in the case and all the surrounding circumstances and the general conditions of every class — producers, consumers, laborers, and everybody else — and fix a price on those products under POOD PBODUCTION, CONSERVATION, AND DISTEIBUTTON. 143 this emergency and in this crisis which we are in and let it continue during the term of the emergency. Now, I do not see how it could be done in any other way. I belieYe the farmers ought to be repre- sented on that commission. I believe the consumers ought to be represented on that commission. I believe the business man and every class and profession, so far as that is concerned, ought to be represented, and I would even go so far as to give the speculator a hearing. This is a free country and I beUeve in everybody having a square deal and a fair chance, and at the same time I believe Sie speculator is responsible for the industrial conditions that prevail in this country to-day. I think our marketing system makes possible the speculator and his operations. Mr. McLaughlin. How large a commission would you make it? Mr. Pope. Make it large so that you can subdivide it and put men to this liae of work and to that line of work in the different sections and keep the whole thing going along at once. Mr. Young of North Dakota. You mean you would put speculators on that commission ? Mr. DooLiTTLE. Would j^ou favor a commission of ICO? Mr. Pope. Well, 100 would be rather a large commission; you ask would I put speculators on it ? Mr. Young of North Dakota. Yes. Mr. Pope. T would favor giving them representation. I would let everybody be represented. Mr. Young of North Dakota. It would be like the Congress if you got it that big? Mr. Pope. But we want to reduce it and get a smaller number. Congress would be an unwieldy body composed of three or four hundred men, and they could not possibly sit here all the time. If you could sit all the time and appoint your committees to go out and do this work, then Congress could handle it all right. Mr. Hutchinson. Mr. Pope, will you define a speculator? Mr. Pope. He is a man who buys and seUs for profit and gain. Mr. Hutchinson. How about the families who hoard flour and sugar and things like that? Are they speculators? Mr. Pope. You could not call them speculators because they are not buying to sell. They are just looking ahead and providing for a rainy day. The Chairman. They are hoarders ? Mr. Pope. Yes; they are hoarding up the products, and it is wrong,. and some of our brethren have been doing that. Mr. Hutchinson. They have been doing more of that than any- thing else? , Mr. Pope. Yes. The Chairman. Gentlemen, suppose we let Mr. Pope complete his- statement, and then ask him any questions we desire ? Mr. Pope. I think, as I said, this commission — I do not care what you call it, a food commission or a national counsel of defense or whatever you please to call it — I think this commission ought to b& provided for by the Congress and let them take this matter entirely mto their own hands; give them the authority and the power to go out and fix the price on the products. I beheve that is about the extent of my statement, and I wiU now answer any questions I can. 144 FOOD PEODUCTION, CONSERVATION, AND DISTUIBUTION. Mr. Wilson. You were to make some statement about yphatyou thought would be a fair price for the products ? ; Mr. Pope. No; I do not think we oven ought to suggest, that, because I do not think we are in position to say what woutd be a fair price and do justice to all parties. Mr. Young of North Dakota. When you say that this commission ought to fix l^he price, do you mean that that ought to be both the maximum and the minimum price, in other words, the price for a reason ? Mr. Pope. If you fixed what you call a minimum price and put it below cost of production, of course, that would not be right. If you put it up to a profit and caU it a minimum price, that leaves it open above, and the speculator can go in and buy up the products of the ■country and can put a price on the product that he has bough;t up and store it away, just like they are doing to-day and have done ip the past. Mr. Young of North Dakota. Then you are in favor of a fixed basic price ? Mr. Pope. Yon have got to provide a fixed price from which they can not deviate, and then nobody can come in and put a higher price •on it. i. Mr. DooLiTTLE. What if we should be able to put through a bill "which would entirely eUminate the speculator? Mr. Pope. That is what we want in this country and what we have needed all these years worse than anything else. Mr. DooLiTTLE. You consider that the paramount proposition at this time ? Mr. Pope. To get rid of the speculator is a paramount proposition all the time. There are certain Kinds of speculations, and I have my own ideas about speculation, and this character of speculation which is preying upon the products of the country and the toilers of the country is carried on by a class of people who ought to be gotten rid of in some way. Mr. Young of North Dakota. A fixed basic price would put the speculator out of business ? Mr. Pope. Yes; a fixed basic price would put him out of business, and, I believe this commission wUl do that. Mr. Jacoway. Do you mean a fixed price in dollars and cents ? Mr. Pope. Yes; that is the only way to fix prices, in dollars and cents. Mr. Thompson. After you fix the price who would buy these products ? Mr. Pope, If you fix the price, it is my personal opinion and belief that it would be necessary to give a small legitimate profit to the business men of the country, if they wanted to buy the products; that is, after you fixed thej)rice, give them a very small profit and let them handle it, but the Government guarantees the fixed price. Mr. Thompson. When you fix this price, who do you contemplate is going to take the products ? Mr. Wilson. Who is going to handle it? Mr. Thompson. Who takes the product and pays for it ? Mr. Pope. The business interests of the country wiU take it. Mr. Thompson. Suppose they do not take it ? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 145 Mr. Pope. If they do not, then it is up to the Government, if they fix this price, to advance to the producer, or the man who has the product to sell, the money on it. He will place it in an elevator or warehouse or somewhere and get a negotiable certificate and the Government wiU advance him the money through its regional bank system or through the banks of the country, and he can take that certificate and go and get the money from the banks. Mr. Wilson. That would take over $20,000,000,000 a year, would it not ? Mr. Pope. I do not know whether it would or not. I do not see why it should. Mr. Wilson. At least, it might take that much, and very likely would. Mr. Pope. I do not think it would take any more than it takes to transact the business of the country now. Mr. Hutchinson. Would he not be speculating then ? Mr. Pope. Who ? Mr. Hutchinson. The man who did that ? Mr. Pope. Not if the Congress provided a reasonable profit for the business men to operate on. I do not mean any profit he could hoard up gain with. Mr. McKinlet. Suppose he did not think it was a reasonable profit and did not buy? Mr. Pope. He need not do it, and the Government can take it. We are voting billions and billions of dollars to-day just like water running downhill Mr. McKinlet (interposing). For instance, where is the Govern- ment going to put that wheat, assuming that they have to buy the wheat ? Mr. Pope. In the warehouses and elevators. Mr. McKinlet. But the Govei-nment has not the warehouses to put it in. Mr. Pope. But there are elevators in the country and the farmers' unions have more than 300 warehouses in Texas, and we can store our cotton in our warehouses and can build warehouses, and will build any number we need to store our product, and the Government could go out and build warehouses and elevators for the people to store their products in. They are building warehouses to store whisky and things Hke that in, and why not build warehouses and elevators and cold storage concerns to put the products of the farms of this country in? Mr. McKinlet. Are you sure that the Government has built warehouses to store whisky ? Mr. Pope. They have the warehouses to store it in and they advance their money on it. Mr. Jacowat. It has been suggested by some of those who have appeared before the committee that the best way to provide a fixed price is on the bais of percentage; that is, find out the cost of pro- duction and then add to that a certain percentage which would be a profitaole price to the farmer. Mr. Pope. Gentlemen, it is impossible for .even the Agricultural Department, with all their scientific efforts and resources, to arrive at a correct estimate of the cost of production. I can show you right on two farms just across the lane from each other where the cost of 104176—17 10 146 POOD PEODUCTION, CONSERVATION-, AND. DISTRIBUTION. production will vary from 11 to 25 cents on cotton, and the same thing is true on other farms. You can not get at the cost of produc- tion oecause it varies too much. You can arrive at the averagfe^ cost of production. Mr. Young of North Dakota. Realizing that on a commission, such as you speak of, the farmer, being in the minority throughout the country, would probably be in the minority as represented upon the commission, would you Mr. Pope (interposing). I would not expect the farmer to be placed in the majority on that commission and I would not expect any other one class to be placed in the majority. Mr. Young of North Dakota. Yes. Now, then, realizing- that the farmers on a commission such as you speak of would be in the minor- ity, I want to ask you whether you would be willing to trust the commission to do justice to the farmer at the time of fixing the prices ? Mr. Pope. Absolutely. That is what I am in favor of — juSt leaving it to the commission, which Congress provides, and let them' fix the price. Mr. Thompson. Now, Mr. Pope, just one other question. You said you wanted the Government to fix this basic or fixed price and that you would then expect the Government to take it at that price. What would the Government do with it — would it sell it to the con- sumer at a small profit or at the fixed price ? Mr. Pope. Now, gentlemen, if the Government has made the cor- rect statement to the farmers of this Nation, there is not going to be any trouble about finding a market. The demand is so great that there will be no trouble about getting a market for our product, because the world is waiting for it. The only trouble is now that they are scared to death for fear they are not going to have enough to keep everybody from starving to death. Mr. Thompson. I am. not going into that matter, but I want to know your theory about the fixed price. Do you think the Govern- ment ought to sell the product at the fixed price ? Mr. Pope. They ought to seU it at the price they purchase it at. Any expense for handling would be borne by all of the people by taxation, and I do not see that anyone would be hurt worse by it than anyone else. Mr. Thompson. Then you think they ought to purchase it at the fixed price and sell it at the same price ? Mr. Pope. Yes. Mr. Young of North Dakota. You advocate this simply as an emergency war measure ? Mr. Pope. Yes; as an emergency measure. Mr. Heplin. Mr. Pope, as I understand, you advocate the fixing of the price to be paid to the farmer by the Government ? Mr. Pope. Yes. Mr. Heflin. That is to say, he shall receive so much per bushel for wheat, so much for com, and so on ? Mr. Pope. Yes ; that is it. Mr. Heflin. But you do not understand that the Government is to buy aU of these products, but the Government is to see that he gets that amount. FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 147 Mr. Pope. No ; anybody can buy it; it does not make any difference who buys it. Mr. Hbflin. Anybody who wants to buy wheat or anybody who wants to buy corn can do so and the Government stands in the position of seeing to it that the farmer gets that amount? Mr. Pope. That is it exactly. Mr. Heflin. And the farmer will be encotiraged to do all he can, knowing that speculation can not deprive him of a fair profit? Mr. DooLiTTLE. Of at least a fair profit. Mr. Pope. That is 6xactly the point I made. The question was asked a while ago as to who would buy this stuff. The business interests of the country or anybody who wanted to would buy it. Mr. Thompson. Now, right in that connection, if the production was very small then the demand would be very great and the price might be far beyond Mr. Pope (interposing). I am just coming to that. Mr. Thompson (contmuing). And the price might be far beyond what the Government fixed. Now, under those circumstances pri- vate individuals would go in and purchase, would they not ? Mr. Pope. They would, if you left it open so that they could do that. Mr. Thompson. Well, that is your theory ? Mr. Pope. Well, let them buy. Mr. Thompson. Now, suppose the yield is large and there is no demand for it by private individuals, then the Government would have to take it all over, under your theory, would they not ? Mr. Pope. They could take it over; yes. Mr. Thompson. Then the Government would compel the pur- chaser to pay far beyond what they could go into the private markets and buy it for, if they compelled them to pay what the Government had paid for it if there was a great over yield ? Mr. Pope. I look at that in this way Mr. Young of North Dakota. There is a big "if " there. Mr. Pope. Yes; that is a big "if." I look at that in this way; we are acting under an emergency. I do not care if we make 20,000,000 bales of cotton or 25,000,000 bales of cotton, I think the price ought to be the same in this emergency as it would be if we only made 10,000,000 bales. If we make 10,000,000,000 bushels of wheat, I think wie ought to fix the price the same, because the consumption is going to be the same. We are going to consume so much anyway, and this question of consumption is not what a great many people think it is. There never has been a crop in the world that has not been con- sumed in all the ages of the world, and there is not going to be. We have consumed it all, and we have managed to get along with the small crops we have had, and I do not think the question of con- sumption and the question of supply and demand enter into this question, especially under this emergency. Mr. Thompson. Would you fix prices on aU classes of perishable products, such as watermelons, tomatoes, and the fruits ? Mr. Pope. Well, yes; you could fix a price on perishable products but you would have to grade them, because on decayed stuff and things that were not worth anything there should not be any price fixed 148 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Thompson. Your idea would be to fix a price on everytlung that grows on a farm ? Mr. Pope. Yes; if you have them in cold storage or in a marketable condition a price could be fixed on them, and you could let this com- mission do that. Mr. Thompson. Would you fix a price on eggs ? Mr. Pope. ^ Yes, sir; and everything else. Mr. Jacowat. Do you thiak the people you represent would be satisfied to have this minimum price fixed by sonie administrative branch of the Government as opposed to a committee of 100 or a commission of 100, as mentioned by you ? Mr. Pope. All farmers will be satisfied with a minimum price if you will put the minimimi price at such a figure as to be a profitable price, so that the farmers can get some profit out of it. If you fix a minimum . price and guarantee that we shall get it the f amiers are going to be perfectly satisfied with it; they will be satisfied if you leave the way open so that they may get all the increase there is ia the price. However, I do not want to advocate that, because I want to do justice to the other fellow and be fair and square. Mr. Young of North Dakota. That is not what you are advocating to-day ? Mr. Pope. No; but we would be satisfied with that. Mr. Haugen. And in that event the maximum would be the sky? Mr. Pope. Yes; if you fix it that way the maximum would be the sky. Mr. Haugen. And that would leave the speculator to do as he wished ? Mr. Pope. Yes, sir; and that is what he would do. Mr. Young of North Dakota. And the minimum price fixed would be all the farmer would ever get if the speculators are free to act ? Mr. Pope. They would not get any more because, as you know, there is a certain class of products that a farmer must have go on the market, products that he nas no way of holding for the market. He has no money with which to finance himself and when the time comes for him to pay his debts he has got to put his products on the market and sell them. Then the speculator takes advantage of him and grinds the price down, that is, at the time he knows the farmer must put his products on the market. Mr. Heflin. Mr. Haugen suggested what the speculator would do. Would not the danger be, along that line, that if you fixed a minimum price with no maximum price, that the speculator would hammer the market so as to get the products at the minimum price and then hold them untd he could sell them at the maximum price ? Mr. Pope. Yes; he would hold them until he could get his price. Mr. Heflin. Until he could get a tremendous price out of them ? Mr. Pope. That is right. Mr. Heflin. So that the man who produced the products would be deprived of the profit ? Mr. Pope. Yes. Mr. Wilson. And the consumer would pay the bUl? Mr. Pope. Yes; as they have always been doing. • Mr. Haugen. We will assume that this commission is organized and called upon to fix the price at the present prices. Now, would you suggest paying the present prices ? rOOD PRODUCTION, CONSEKVATION, AND DISTEIBUTION. 149 Mr. Pope. Not on some things, because I think they are a httle to high. You take wheat at between $3 and $4. a bushel, the consumers can not stand it, and they are going to go hungry if that price con- tinues very long. Mr. Haugen. Suppose a miller bought yesterday 1,000 bushels of wheat at $3 and a commission should fix the price at $2. Would not that be confiscation ? Mr. Pope. I have been thinking about that question, and Mr. Haugen (interposing) . It is a big question ? Mr. Pope (continuing). You have got to protect that man. Mr. Haugen. That is, fix it at the present prices? Mr. Pope. We wiU say that froiji now on you can pay only such and such a price, and that the producers can go out and sell at that price, which maj^ be the price paid in the past. Mr. Young of North Dakota. But that is a detail for the commis- sion to settle ? Mr. Pope. Yes. Mr. Haugen. But there is always the question of justice and we must deal with that. We can not sit around here and confiscate property, and there is no use talking about that. Mr. Pope. No; we do not advocate that. I have studied that question and I believe in making some provision for protecting that man. Mr. Haugen. On the other hand, if the price was fixed and many should contend that it was too high, how would you adjust the matter of fixing future prices ? Mr. Pope. That question can Mr. Haugen (interposing). Many contend that the price is now too high and that it would be unjust to guarantee that price for all grain ia storage and to be produced ? Mi. Pope. Well, I think so too. I think the price ought to be set below some prices; I would not set the prices that are prevaiUng now as the minimum to the farmers of the country, the men who produce the wealth of the country, because they are speculative prices. Mr. Haugen. You have not solved that question. Now, you said a minute ago that a commission should be appointed of 100 men? Mr. Pope. No, I did not; you misunderstood me. Mr. HLaugbn. Well, you suggested it ? Mr. Pope. No; I do not suggest it, but somebody else suggested it. Mr. IIaugen. Well, a commission composed of 10 or 100, what- ever it may be ? Mr. Pope. Yes; that is aU right. Mr. Haugen. You suggested that they should be in session all the time for the purpose of fixing prices. Now, would you have them fix prices from day to day or fix prices for the crop ? Mr. Pope. I mean in session all the time until they get this matter in hand and know where they are and what they want to do. Mr. Haugen. In fixing prices would you fix them for the whole crop or for a certain period of time ? Mr. Pope. I think the price ought to be fijced for the crop, for the season, and not for the next year's crop, but this year's crop. Mr. Haugen. Then suppose the fixed price is $1 a bushel for wheat, or whatever it might be — ^because that is too low — ^and, in 150 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. the opinion of a number of farmers, that price was beheved too low and that they coidd not afford to go on aind produce wheat at that price. If that situation should arise there is no way by which you could make them get up at 4 o'clock in the morning, hitch up their teams, and go out in the field and produce a crop ? Mr. Pope. No. Mr. Haugen. ,And there is no way of keeping them on the farm if in their opinion they can do better by pursuing some other Une of activity. If they believe they can make more by entering the munitions factories they are going to leave the farm and take up that work ? Mr. Pope. Yes. You can not drive the farmer to do these. things; you have got to give him some incentive which Will cause him to go out and do those things; you have got to give him a price that wlU be profitable and that is the thing which is going to fontrol his action. Mr. Haugen. I understood you to say that if we did away with speculation and manipulation of prices that would solve the problem ? Mr. Pope. Yes; I think so. Mr. Haugen. Would not that be the better way and can we not trust to the patriotism, industry, and intelligence of these farmers in doing their bit in this matter ? Mr. Pope. By fixing a price on their products ? Mr. Haugen. No; leave the fixing of a price out entirely; droj) this whole problem and announce to the country that we are not going to meddle with their affairs, but are going to depend upon their patriot- ism, intelligence, and industry in doing their bit. Mr. Pope. Well, it would not amount to a row of pins; they would go ahead as they have been doing in the past, and really it woxild be worse right now in this time of a crisis in this country. Mr. BUuGEN. But we are going to cut out speculation ? Mr. Pope. How are you going to do it ? Mr. Haugen. They are not doing as they have in the past. If you were informed on the matter, you would know that Mr. Pope (interposing). They will tie you up in the courts until this war is over. Mr. Haugen (continuing). You would know this: That the De- partment of Agriculture and aU of our colleges throughout the State and aU the people in all localities — not all of them, but in many localities — are doing everything in their power to stimulate produc- tion. . One man came in yesterday and said that in one county ^'hey had held 30 meetings in the schoolhouses. Mr. Pope. The Agricultural Department is a scientific department, and it is teaching the people and educationg the people oh produc- tion, but they have never touched the question that really appeals to the farmers of this country — ^the marketing side of the question; that is what appeals to the farmer — ^the marketing side. He can pro- duce, and he has done it, and they tell him very often that he is pro- ducing too much. Mr. McLaughlin. $1,750,000 was appropriated for the Bureau of Markets in the last Congress. Mr. Pope. But we have not fotind any assistance, and they have not rendered us any assistance along ma,rketing lines. FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. 151 Mr. Yqung of Texas. You lose sight of the fact that the onion peo- ple down, in the irrigation belt, of our State sa,y that they have, oeen, saved a great deal of money because of that bureau. The Chairman. They say that they have been saved several milhon dollars during the last year? Mr. Pope. Do you refer to the 15-cents-a-pound men? Mr. Young of Texas. Their statement is that in their country the marketing .bureau has saved them millions of dollars. Mr. Pope. Was that the 15 cents a pound that the $1,000,000 was saved on ? Mr. Young of Texas. Last year's crop ? Mr. Pope. That is the 15-cents-a-pound onion. Mr. Haugen. When you do away with gambling you have solved the marketing problem to a large extent, have you not? Mr. Pope. If you can do away with speculation you have-. Mr. Haugen. Then you have solved the larger part of the market- ing problem, have you not, outside of transportation, and so on? Mr. Pope. When you stop speculation under present conditions, then you leave it in the hands of the farmers to fix the prices. Mr. Haugen. You leave it to the consumer and the farmer, and the law of supply and demand would govern. Mr. Pope. That would leave it in the hands of the farmer and he has got to fix the price the same way as the price is fixed on every other commodity. A merchant fixes the price on his goods, and if the speculator is eliminated and the matter is left in the hands of the farmer, and the speculator did not have anything to do with fixing the price, then the farmer has got to fix it. Mj- Haugen. No; you leave it between the farmer and the con- sumer, the producer and the consumer, if you ehminate specidation and manipmation of prices? Mr. Pope. What has the consumer got to say about it ? How is he going to have anything to say about fixing prices on farm products ? , Mr. Haugen. You can not force a man to buy. Mr. Pope. But it is not up to the buyer to fix the price. Mr. Haugen. You can force him to buy or starve. Mr. Pope. But with speculation eliminated you would have to leave the price fixing to the farmer, and human nature is the same amongst the farmers as it is amongst any other class of men, and I would not be willing to leave anything of that kind in the hands of any class of men; that is, to say how much they should have, even my own class. Mr. Young of Texas. You say you have just come from a meeting of the organizations you named? Mr. Pope. No; from a board meeting. Mr. Young of Texas. Of these organizations ? Mr. Pope. Yes, sir. Mr. Young of Texas. How many men were at that meeting ? Mr. Pope. At that board meeting I think there were six or seven. Mr. Young of Texas. What States were represented in that meeting? Mr. Pope. Well, Texas, Wisconsin, and Missouri. Our board is scattered over the countrv. 152 FOOD PRODUCTION, OONSEEVATION, AND DISTRIBUTION". Mr. Young of Texas. I am getting your viewpoint of the con-: elusions of a certain board and I want to know what States were represented and whose conclusions you are giving to this committee. Mr. Pope. I am giving the conclusions of this board. Mr. Young of Texas. I know, but I want to know the personnel; ■ Mr. Pope. Wisconsin Mr. Young of Texas (interposing). This is a serious matter that we are dealing with. Mr. Pope (continuing). And Texas and Missouri. Mr. Young of Texas. That makes three ? Mr. Pope. Two from Wisconsin — ^the president of the National American Society of Equity, and also the secretary and treasurer, Mr. J. Weller Long and Mr. D. O. Mahoney. Mr. Young of T^xas. You have mentioned three States. Mr. Pope. Kansas. Mr. Young of Texas. That makes four States. Mr. Pope. Four or five States. Mr. Young of Texas. You came direct from Texas to this board meeting? Mr. Pope. Yes. Mr. Young of Texas. I want to know how many farmers you actu- ally came in contact with before you came from Texas and in what sections of that State ? Mr. Pope. I could not tell you just how many, because I am trav- eling constantly, visiting coimty imions and locals and lecturing and talking with the people. I could not keep in touch with the num- ber of people I have come in contact with. But we had our State meeting in February and we had our national meeting in December. We are always getting together. Mr. Young of Texas. But that was before this emergency arose This emergency has only been on us within the last week or 10 days- and this suggestion of price-fixing has come up within the last 10 days. Now, what I am after and what this committee wants to know is the viewpoint of the people who are going to be affected by this legislation if we make such legislation. I want to know what percentage of the farmers you have come in contact with in Texas since the agitation of this price-fixing proposition ? Mr. Pope. If I were just here representing the views of a certain number of farmers that I have met throughout the country I would not be here. You are assuming that the ofiicials of these various organizations do not know anything about what the sentiment of their people is in the several States and districts and the country where they hye. Mr. Young of Texas. I am assuming that they do not know one bit more about it than the representatives of those agricultural districts who are in touch with them every day, and that is what I am trying to get at, whether we have been misiaformed. Mr. Pope. I am assuming that I do know something about what the sentiments of the people are on this question, because I am a farmer, have been a farmer aU my life, and my ancestors were fanners before me, and I know. They talk freely to me and tell me that they believe, what they think and what they want, and I know what their sentiment is. POOD PRODUCTION, COWSEBVATION, AND DISTEIBUTION. 153 Mr. Young of Texas. I am asking you this: Within the last 10 days, since this price fixing Mr. Pope (interposing). I told you that if I were only here to represent a certain number of people I would not be here. 1 have not talked to enough farmers and gotten expressions from them directly to give you an idea of what they want, but I do know what the senti- ment is; I know what they want; we have discussed this question time and time again; we have discussed it and had it up in our organization and, therefore, I think I know the sentiment of our people. Mr. Young of Texas. Mr. Pope, two-thirds of the people of this country are consumers, are they not ? Mr. Pope. I suppose they are. Mr. Young of Texas. And less than one-third are actual pro- ducers on the farms ? Mr. Pope. Yes. Mr. Young of Texas. Do you think it is the farmer's point of view that he is willing, where two-thirds of the people want his products and are depending upon his products, under a representative form of government, to put up to a body of men, the majority of whom represent the consuming class, the fixing of the value of the stuff that he grows on his farm when it is in the interest of the consuming public that it be made as low as it is possible to make it ? Is that the viewpoint of the farmer ? Mr. Pope. Yes, sir; and I will tell you why: The farmer has got his product to sell, and when you fix a profitable price to him he has got no complaint to make; he has no right to make a complaint. Mr. Young of Texas. I grant you that, if it is a profitable price; but would not a body of men representing the viewpoint of the con- sumers, two-thirds of the people, look at it from only one point of view? I am a farmer and I am looking at it from another point of view, and I am not willing, as a farmer, that a body representing a majority of the people, the comsumers, shall say that my price shall be fixed according to their viewpoint. ' Mr. Pope. I see you are assuming that this commission will place the price on all products below the cost of production. If that is true, I win teU you that I am with you, and that the farmers will not go on and produce what the Government is asking for now. Mr. Young of Texas. I am assuming that any body of men going into the price-fixing business are just human beings, and they are going to fix it according to the viewpoint of the people they repre- sent and from the viewpoint that they have as human beings. Mr. Pope. Well, I thmk this, Mr. Young, that they must realize that the farmer must do the producing, and that there is a great demand for it, and that if they do not give hhn a price that will justify him in producing that he will not produce. Mr. Young of Texas. Now, just a step further: The agitation at this time is for one purpose alone; only one suggestion is made, and that ST^gestion is to fix the value of the farm products. Mr. Pope. No ; I said a while ago Mr. Young of Texas (interposing). That is aU that is before us, the only suggestion before us for legislation. The men who have appeared invariably say that we should not go into price-fixing as to 154 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. shoes, collars, elevators, wagons, and things that a farmer must have and things which you and I know the farmer is paying a big price for at this time. As you know, the farmer to-day is paying for a wagon that cOst $65, when you and I were boys something like $125y and yet they say we should not go into the question of fixing prices on those .things that the farmer must have, and for the first time in the history of the coimtry they undertake to fix the price of farm produetg. Here is the proposition I am putting up to you: The farmer is an intelligent human being and he understands that the world is shorti of farm supphes, does he not ? Mr. Pope. Yes. Mr. Young of Texas. He reahzes that here is the opportunity of a lifetime for him to produce everything he can because there is the consuming world to take it. He is going to get a good price for his products. Now, understanding that, and when he is doing every-i thing on earth he can to get big crops, do you think he wants you to throw a wet blanket on mm by having a commission or a set of men take what he grows and fix the price on them ? Mr. Pope. You have got to give him an incentive by fixing a price, at which he can afford to produce. Now, I suggested a while ago that there ought to be a price fixed on staple articles, that is, on the: finished product. Plows that sold for $38 when this war started are now selling for $55 and notice has been served on the farmer that there will be a 10 per cent increase on all implements. That is a condition that you ought to take cognizance of and try to remedy, as well as fixing prices on farm products. I do not think you could afford to go into price-fixing on cold drinks, candy, cigarettes, cigars, and things like that, but you should take up the substantial staple articles. I think you ought to take that into consideration and give this commission the power to fix those prices, too. Shoes that we were paying $4 and $5 for a year ago are now worth $8, $10, and $12. Mr. Young of Texas. Do you think that in the ordinary handling of things of that kind a sufficiently large body of men could be gotten together who could ever reach a just conclusion on price .fixing ? : ' Mr. Pope. Yes; I think they can; I think a commission of 15, 20, or 30 men could reach a just conclusion. Of course, you have got to let a majority rule; you can not get the consent of every man but let the majority rule, just as you do in our other democratic insti- tutions. Mr. Haugen. If the price is to be fixed on one article, why not on a.11 ? If we fix the price on farm products, why not on munitionsiand everything else, and when you fix the price on all, you fix the price on labor as well. i Mr. Pope. I think the Government should take those over and manufacture them, but to fix the price on munitions if private manu- facturers are to continue making them. Mr. Leshee. Do you think that the price of wheat will be below $2 in the next two years? Mr. Pope. It wiU not be below $3 if conditions continue. Mr. Lesher. The farmer knows that, and he is going to produce aU lie can, because he knows the price wiU not be below that within ther next two or three years. FOOD PBODUCTION, CONSEKVATION, AND DISTRIBUTION. 155 Mr. Pope. The farmer will produce all he can at $2 the same as he will at $3, because he knows ne is getting a good price. Mr. Lesher. But in the next two years wheat is going to be $2 and corn likewise away up, as well as oats, so that all production will be stimulated. Mr. Young of Texas. Do you think it is fair to the farmer, in time of war, when every other business in the world, every manufacturing business, munitions business, hardware business, and every sort oi manufacturing business are rolling in wealth by reason of high prices — and they have been getting them for several years — when the farmers suffer a great financial loss, as we did in Texas in 1914, when cotton dropped — do you think it is fair to the farmer to say to him, "We have let these other people make their wealth, but now we are going to put the iron hand oi the law on you and say to you that you have got to be guided by a commission, but we do not intend to guide anybody else by it" ? Mr. Pope. I would not be in favor of it if you put his price down below what would be fair, but if you give him a profitable price I think it would be all right. Mr. Young of Texas. Do you not know that the proposition involved in this agitation is that the people are absolutely scared to death because prices are going to be so high that they do not know where they are going to. get the money to pay them? Mr. Pope. Suppose that condition prevails? What will be the outcome of it in this country ? Mr. Candler. Do you not beheve that where two-thirds of the people are consumers and one-third producers that the ordinary rule of supply and demand will furnish to the producer a reasonable and in fact a large profit, and would not that be a sufficient induce- ment i Mr. Pope. That may be, but supply and demand have ordinarily never had anything to do with prices m this country. Mr. Young of North Dakota. Especially at the time the farmer is obliged to sell. Mr. Pope. Yes; speculation and manipulation have controlled prices. As Mr. Young was discussing here, if you leave this matter open, and with these war prices on, the specmator will manipulate matters so as to take away the farmer's product at harvest time at a small profit and then the speculator will get the 13 or $4 for wheat, the price at which they are selling it now, and the farmer will not get the benefit of it. Mr. Young of Texas. We are thinking of organizing a great piece of machinery, under your proposition. If speculation is the means of enhancing these prices and the farmers do not get the benefit of them, is it not true that if Congress should enact legislation to drive the speculator out of business it would help the farmers ? Mr. Pope. If you can absolutely put the speculator out of business in this country and leave it to the farmers of this country to fix prices it is all right with the farmers. Mr. Young of North Dakota. I would like to ask just one question. Something has been said by one of the members of the committee that a commission which would fix this price would be composed of just human beings and that if they represented the consumers, two- thirdsof the people, they would not do justice to the producers? 156 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBUTTON. Mr. Pope. Yes. Mr. Young of North Dakota. I want to suggest this: Do you not think that any ordinary commission, selected by the President or selected in any other way, would be composed of men of suflaoient experience and breadth of mind to know that if they put these prices too -low for the crop of 1917 that they could not get the farmens. to put in a big crop for 1918? Mr. Pope. Yes, sir. Mr.. Young of North Dakota. So there would be at least that safe- guard for the producers, that the commission would want to make the price for 1917 sufficient to encourage a big crop in 1918. Mr. Pope. I think a fair-minded commission would certainly take into consideration the emergency and the incentive that it is necessary to hold out to the farmers to have a big crop. Mr. Haugen. Suppose they fixed the price so low that the farmer could not pay off the big mortgage on nis farm, together with the taxes he has to pay; will he simply let his farm be sold by the sheriff or will he try and produce even at the sacrifice ia price ? So if the price is too low you put him out of business; that is all. Mr. Heflin. So far as I am concerned, if Congress is going to fix the price on the farmer's produce, I think it ought to be a fair, reasonable price, one that will give him a good profit on what he pro-' duces, so as to encourage him in the making of his crop, and to assure him, while he is making it, that come what will he is going to get that price and that profit. At the same time, I believe if Congress is to fix the price on what he has to sell, it ought to fibc the price on what he is going to buy, because if Congress onij fixes the price of what he has to sell and permits other people to fix their price on what he has to buy they will take that profit away from him that the Govern- ment hks guaranteed, and he will come out at the little end of the horn. Mr. Pope. The farmers are assumiag that the Government will do just what you say. Mr. Heflin. I am satisfied that if Congress goes into one it should go into the other. Mr. Lesher. The only man who needs this assistance is the poor farmer, who is compelled to sell ? Mr. Pope. Yes, sir; he is the man who needs protection. Mr. Lesher. If we have warehouses and issue warehouse receipts,, is not that going to help him ? Mr. Pope. Certainly. Mr. Lesher. If we would go that far and have the warehouse issue the warehouse receipts and allow him to get his money and not be forced to sell, do you not think that would help the situation ? Mr. Pope. Let the Government advance him the money on the warehouse certificate, without any interest. Mr. Lesher. Then, you would not have to fix the price. Mr. Pope. You need to fix the price of what you will advance to him on his wheat and cotton — advance him so much. Mr. Lesher. Loan him so much money ? Mr. Pope. Yes, sir; that will fix it all right. Mr. Jacoway. All the havoc that has been wrought has been due to the speculator ? FOOD PH.OBUOTION, OONSEEVAHON, AND DISTEIBUTION. 157 ^ Mr. Pope. The speculator is responsible for it. Mr. Jacoway. What do you think of closing the exchanges durinff the war? s s Mr. Pope. The present war ? Mr. Jacoway. Yes, sir; the New York and New Orleans cotton exchanges. Mr. Pope. We have worked so long under the exchanges that it ifiight work a hardship to close them. Mr. Jacoway. You think it would be well to let them run ? Mr. Pope. Yes, sir; for the present. Mr. Young of Texas. But you think they should be regulated « Mr. Pope. Yes, sir; I think everything should be regulated. Mr. Hutchinson. You saw the report of the Department of Agri- culture on the winter wheat crop ? Mr. Pope. Yes, sir. Mr. Hutchinson. And the number of acres which have been abandoned ? Mr. Pope. Yes, sir. In my State, for instance, we wiU probably plant it in cotton. Mr. Hutchinson. Is not that the cause of the high price, the number of acres abandoned, the poor groimd ? Mr. Pope. Yes, sir. ! Mr. Hutchinson. Is not that the cause ? Mr. Pope. I suppose it is. We have been going on the theory always that the demand and supply control prices. While they do not do it, in my judgment at this time, that is a great factor. Mr. Doolittle. As a matter of fact, you and the people you rep- resent have absolute faith in the Government to do the right thing at this time ? Mr. Pope. Yes, sir; we have faith in this Government and this food commission doing the right thing by the farmer and giving him a price at which he can afford to produce. I do not think that the Government could afford to do anything less. Mr. Doolittle. You did not tmnk that the Government would do anything less ? Mr. Pope. I did not think they would. ' The Chairman. Mr. Pope, the committee is very much obHged to you. STATEMENT OF MR. PETER RADFORD, MANAGER WARE- HOUSE AND MARKET DEPARTMENT OF TEXAS. Mr. Radford. Mr. Chairman and gentlemen of the committee, I wish that you were not pressed as you are. However, I know that time is valuable to you and to us all. This is one of the most serious questions, in my humble judgment, that we have undertaken to deal with, when we are dealing with the economic questions of this coun- try of ours. I want to see, first, if I understand just exactly what we are here for. Now, I understand this, that the President of the United States called on the American farmer as a patriot to change Ms entire system, if necessary, and to put it in the condition whereby it can be used to serve this country and the products be used to sus- tain the army in foreign countries, in defense of this country of ours, and in this country here, and to support the people at home — asked him to change his policy that he had adopted and been working 158 FOOD PEODUCTION, OONSBEVATION, AND DISOTRIBUTIGIT. under, some of them for 50 years, to change everything' and place it all under and in the hands of the Government in some way or other or subject to it, whereby the farmer could be induced to produce the necessaries of life for the Army and Navy, for the people at home, and to feed the foreign countries. That is, to some extent,' agreat sacrifice for the farmer —to ask him to change his manner and his customs. I want to say to you that I know Texas and I knorw. what 1 am talking about. In one case in Texas — there is one representative of the Depart- ment of Agriculture here representing Mr. Houston, a, department that we are all ia favor of, who said in a public address at Fort Worth and at other places that if a man did not quit cotton or let cotton ■ alone and raise feed which could be used for the Army and the people that they would put him in the Army; that they would draft hun; that he would be the first to go. I do not understand that. Farmers are Hke others — some are speciaMsts, some have machinery that is adapted to certain thiags, and when you ask him -to change his method ne has to change his machinery and he has to do a great many things. I understand, if I have not beffli misled, that there was a bill pending here — there had been at least^that if a farmer did not produce and did not carry out instructions given him by those in authority that he would be subject to pains and penalties, even to the penitentiary. These things are asked of the' farmer. We are representing farmers and we are asking Congress to protect the farmers and not compel them to make this sacrifice, but to set a price on all they produce. That wiU enable the farmer to tal^ care of himself; that will enable him to take care of his famUy and do his part, and not do any more than what woidd be just and right. Mjc. Young of Texas. Would it interrupt you if I asked you a question ? Mr. Radford. No, sir. I want you to feel free, each and every one, to ask me any questions, because I know just what I am talking , about. Mr. Young oi Texas. Is it not a fact that the Texas farmers are doing their very level best at this moment to make the earth produce everything that it wiU produce ? Mr. Radford. No, sir; that is not the fact. It has never been true and I do not think that it ever wiU be true. There is a certain class of farmers who are absolutely being forced to do things they do not want to do. , i Mr. Young of Texas. I wiU ask you if the farmers in Texas are not exercising more than ordinary diligence to produce everything that it is possible to produce ? ■ = Mr. Radford. No, sir; I do not think they are exercising as much diligence. Mr. Young of Texas. From what part of Texas are you ? Mr. Radford. I am from just as good a part of the country as you are. Mr. Young of Texas. I know that is true of my section of the country. The farmer is doing everything in his power at this moment. Mr. Radford. I think I Imow just as much about the farmers of Texas, and if you do not believe it, you can make your appointments down there and I will agree to meet you at any time and go before the people. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 159 Mr. Young of Texas. I am not looking for a joint debate; I want to get your point of view. Mr. Radford. The farmer is not doing everything he can do along every line, because he did not get paid for what he did do. Mr. Young of Texas. Is he doing less this year than heretofore ? Mr. Eadford. He is not doing any less. He is doing this. He is doing what he thinks he can get the most for. Texas can produce everything necessary, if the Congress of the United States will get behind it, to feed the armies in the foreign countries and to feed the people at home. Texas can do that, and you know it. You know that when Texas is half developed and the farmers produce what they can produce that Texas can feed the United States, if they can get paid for it. Mr. Young of Texas. Do you think that when the farmers of Texas planted this year's crop they expected that any governmental agency would fix the price ? Mr. Radford. No, sir; they did not think the President of the United States would ask them to place everything in his hands to help him carry out the purpose of this Government in this war and ia the conditions that exist. They did not think that; neither do I. The farmer is perfectly satisfied right now with the prices. He has no kick coming, but here is the trouble, the consumer is not satisfied. This is no new question. I recollect about 10 years ago or 7 years ajgo, the heads oi the departments decided that eggs were too nigh; they were 90 cents a dozen. The heads of the department would not use any more egffi. They struck on the egg producer and they struck on the hen. What was the trouble? Congress appointed a committee to inquire into the situation. The price has advanced all the time. I want to tell you that they are going higher. If you wiU just give the farmer his way he will take care of himself, the organized farmer of to-day; he has learned how to do it. Mr. Young of Texas. For that reason you think that we should put it in the iron hand of the Government to control the price of his product 1 Mr. Radford. The President says that it is up to the farmer to produce the necessaries to sustain the Army in this country and in Europe, and to do that the farmer may have to change and raise wheat, change his farming system entirely, and he ought to know what he is going to get. Mr. Haugen. You stated, as I understood you, that your State could feed the Army ? Mr. Radford. Yes, sir. Mr. Haugen. You have the land to do that? Mr. Radford. Yes, sir; we have the land and we have the intelli- gent farmers. Mr. Haugen. Have you the labor necessary to do it? Mr. Radford. Not right now, but we could get it mighty quick. Mr. Haugen. Is not this the trouble, that the farmer is now in competition with the munition factories who are paying 80 and 90 cents an hour ? Mr. Radford. If you pay the farmer enough for what he produces, he can pay enough for anything he buys. He is not a buyer, he is a seller. 160 FOOD PKODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Haugen. But he has to have the price? Mr. Radford. Yes, sir. If you give him the price he will compete with anything. I hope I am not misunderstood. I am a veiy plain man, as a matter of fact. I want to say this much, if you wiH bear with me. This system involves more than the farmers can take hold of imder the new conditions. That is aU. That is why we ask these prices, and ask that the prices be fixed or arranged by a commission in some way, just as Mr. Pope has said. I want to say that Mr. Pope is clearly the representative of the farmers of Texas. He knows the farmers of Texas. He can talk to you about this situation, and he is authorized to do so. He attended a meeting on the 23d of this month in. Houston where over 1,000 farmers expressed the sentiment which has been expressed by Mr. Pope this morning. The farmer does want a prace for his product that will enable him to go ahead and do that which this Government demands of him. Mr. HefliNv Is it your idea that the farmer wUl be better pleased with a fixed price, one that gives him a fair profit and ehminates the speculator, rather than to leave him to drift in these times with the speculator to maintain the price ? Mr. Radford. A fixed price. Mr. Heflin. a fair price. Mr. Radford. The feUow who puts more on the market than the market is able to take makes speculation possible. Somebody has to take the surplus up or else that surplus puts the price down. If the Government comes in and takes that surplus and guarantees, as Mr. Pope has said, by warehouse receipts to finance it, there wLU be no speculation and the law of supply and demand will settle the question of price. Mr. Heflin. You think that would be better because the farmer gets the fixed price, whereas if speculation were allowed, the spe&Ur lator might reduce the price while it was in the hands of the farmer and then let it go up afterwards 1 Mr. Radford. If the Government fixes a price that will protect the farmer and finances the surplus, speculation will have little to do with it and neither the farmer nor the Government would suffer. Mr. Young of Texas. Do you not think that the farmers in Texas are perfectly wilUng to take the price for their cattle and wheat and cotton that the present world shortage indicates they wiU get this fall, without some commission naming it for them? Mr. Radford. Yes, sir; I feel so myself. I have some cattle. If it becomes necessary for the Government to take my cattle, I am ready to turn them over. I was talking with Mr. McFadden, who is one of our largest cattlemen, and he is very uncertain as to prices; he is very uneasy. Mr. Haugen. You propose to fix the price to the farmer. Do you also propose to fix the price to the consumer ? Mr. Radford. I think that this committee or any committee which might be appointed would be competent to adjust this entire condition between the producer and the consumer. The trouble has not been so much between the consumer and the producer, but that the producer has been getting too httle and the consumer paying too much. It is just like Mr. Pope said. (Thereupon the committee took a recess until 2 o'clock p. m.) POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 161 AFTER RECESS. The committee met at 2 o'clock p. m., pursuant to the taking of recess, Hon. Gordon Lee presiding. STATEMENT OF MR. PETER RADFORD— Resumed. Mr. Lee. Gentlemen, Mr. Lever has requested me to call the committee to order. I am afraid we will not have a very full repre- sentation of the members this afternoon, because we have an im- Eortant bill under discussion in the Hoiise. Mr. Radford, we will e glad for you to continue with your statement. Mr. Eadford.- Gentlemen, I appreciate this very much, and I am sorry that conditions are such as to disappoint or inconvenience you. Ikfr. Lee. We are here for that. Mr. Radford. I want to say to you gentlemen who do not know me — you may have heard of me and you may have formed some conclu- sions about me in your minds, and your minds may be made up about me — ^but I want to say that I am a practical farmer, and am so understood, of 43 years' experience in Texas, following the plow and using the hoe. I have been a few years in public life, a very few years, but I know the farm. I know the stockman's business, and I know the different phases and elements connected with farm life in Texas. As to that, I do not yield to any man. Now, while I say that, I do not boast of any extraordinary achievements or of any extraordinary ability over and above that of other average men along those lines. Now, these questions that we are dealing with now, or that the Government is undertaking to deal with, are questions that havfe been considered for a long time. They are such new questions. The farmer has never been taken into the confidence of the Govern- ment and protected and had his product protected in the same way that other interests have been protected, and an account of that there has been an appeal made both to the State and Federal Governments, and especially to the Federal Government, on different lines to assist agriculture. Of course the AgricXilture Department was created on account of that sentiment throughout the United States. They are doing a commendable work in that department; it is a valuable work, and a work that we appreciate. It is a work that each and every one of us know to be important and want to see carried out to a successful conclusion. The money that has been appropriated for that purpose until about five years ago was for productive purposes, but about five years ago money began to be appropriated by the Federal Government for marketing purposes, and very recently a number of States have taken that question up. Up to that time, however, all the money expended by the Government, by agricultural organizations, by chambers of commerce, etc., was on the productive side — that is, it was intended to teach the farmer how to produce more, how to better conserve his soil, how to more intelligently farm, and in every way to bring better results and bring more food and bring more of every kind of product that coidd be produced by the farmers into existence. But, with all that, for the last 10 or 12 years food prices have been increasing, and the high cost of living has become a question, a terrible question— 104176—17 — -11 162 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. a question that is not only confronting the people of this country but also an the people of Europe. Now, every thinking man who will study the question for a single moment wiU see that that is the great momentous question of the day. Now, then, why, with all the intelligence that can be brought to bear on the question and aU the money that has been expended by. the different institutions to encourage agriculture, should that condition exist ? Why is wheat to-day selling for $3, $4, and even $5 per bushel? Is it because the American farmer is not able to produce the wheat? Is it because they are not intelligent enough to do it? Why are cattle, so high? Why is it that every kind of farm product is high to-day ? You say that it is because things have been tmusual for the last few years. Well, that may be true to a certain extent, but it does not explain it in its entirety. Now, these are things that we should look at and study. We should inquire. Why do these things exist ? It is not because the American farmer is not an intelligent farmer. That is not the reason. He knows his business just as well as any other class of men know their business. The bankers, in my humble judgment know no more about banking than the farmer knows about fanning, or his line of business. The farmers understand their business just as well as other people. Mr. Lesher. Suppose you give us your opinion as to why those high prices exist to-day. Mr. Radfobjd. It is because the products have not been produced. Take the man who is on the farm to-day, and you might put every one of them to work and everything of that kind, and they wiQ pro- duce anything and everything that they can sell for a profit and make something out of and have something left over for a rainy day or old age. 1 Mr. Jacoway. Your argimtient seems to be that the farmers have been taught to produce but not how to market their products. Mr. Radford. Why, the first address that Secretary Houston de- livered after becoming the head of the Agricultural Department was to the effect that the farmer already knows how to produce, but that we must now teach him how to market his product. Why is that.? It is because it is essential now to teach him how to sell and get a profit for his products, or he will not produce them. Mr. Young of Texas. Mr. Radford, this committee reahzes fuUy that they are up against a very serious proposition. There are quite a number of gentlemen on this committee and they were selected by Congress for this service. I can say to you that this committee is patriotic; there is not a man on this committee who does, not waiit to do the right thing under the conditions that now confrontf us. Now, the only question that we have up before us is the qiciestion of procedure. Of com^e, there are other things in the bill, but the central proposition in this bill is the question of fixing prices for farm products. That is the main thing in the biU beforp.the coin- mittee. Now, those who appear in the interest of the price-fiapng principle come from the different sections of the coimtry, and, of coiu-se, they understand the conditions that confront the wWe world as to the food supply. Each man is giving his individual views, or he is appearing in a representative capacity for some organizatioR. That is my understanding of it so far. ., POOD PRODTTOTION, CONSEEVATION, AND DISTRIBUTION. 163 Now, if we fix the price of farm products, that will be done by some select bunch of men. That is the only way it could be done. They would take in the field and fix the prices. I know that you are running a farm down in Texas, and you have been ever since I can remember, and I do not know of a man in the State who is better informed on agricultural conditions, especially in that section of the country, than you are. Now, leaving out of consideration what might happen in the future, men have got to constitute the machin- ery for doing this work if this law is carried into effect. Of course, it is a human proposition, and human entities are involved in it. Human beings must compose that machinery. Now, taking you, Mr. Radford, with the information that you now have, suppose we should say that you are to fix those prices at this very moment Mr. Radford (interposing). That is not the proposition Mr. Young of Texas (interposing). Let me put the question first. Let us take the great product of the South, cotton. With the knovd- edge that you have from planting that crop, how would you fix the price, taking into consideration the conditions as they now exist, that cotton to be delivered in August and September, when the harvest season comes in? Suppose you just take that crop. Mr. Radford. Taking that crop with all the conditions surroimd- ing it Mr. Young of Texas (interposing). As you now imderstand it. ■ Mr. Radford. Let me get your question exactly. You see, I want to imderstand you. You say that all there is involved just now is this price-fixing feature, but, at the same time, you ask questions that lead away from that. Mr. Young of Texas. Then let me change the question. Suppose a law to fix prices is in effect, and you are the commissioner to fix the prices. Suppose you have got to act now. You have as much information as any man on the subject, and we will suppose that you have got to act now. You have got to fix the price of cotton to be delivered during the harvest season, in August and September, under these war conditions. Now, what price would you fijc per pound for cotton at this moment ? Mr. Radford. I will answer that question, but I do not want to answer it as being a question that ought to be submitted in connec- tion with this bill under consideration, because I do not believe that that power ought to be placed in the hands of any one man. I be- like that that is something too great and powerful for any one mind to determine. Mr. Young of Texas. Then let me change the question again. We will suppose that you are on that commission. We will say that you are on a commission composed of, say, 12 men, and each one has got to express his individual views on the subject. Now, bringing it down to' you as one of the commissioners, how would you fix the price of cOtton, acting as a commissioner ? Mr. Radford. I would not put that power in the hands of any one man. ' ' Mr. YbUNG of Texas. That has been suggested here — creating a commission to fix the prices. Now, acting in that capacity, what would you fix the price of cotton at, under the conditions I have mentioned ? 164 PaOD PRODUCTIOlir, CONSEEVATION, AND DISTRIBUTION. Mr. Eadford. I would certainly put that price high enough to pro- tect me and my family and aU of my neighbors and friends. I would certainly do that, but I would like to say this Mr. Young of Texas (interposing). Just name the price that you would fix in view of the present conditions. Mr. Eadford. In view of the present conditions, I would say that 25 cents per pound would be a fair price to all the interests in the country, and that it would not b)e too much for the farmer. Mr. Wilson. Twenty-five cents for cotton? Mr. Eadford. Yes, sir; 25 cents per pound. That would be a fair price, and would not be too much for the farmer under the con- ditions that now exist. Mr. Wilson. Did you ever get that much for cotton ? Mr. Eadford. In war times we got more than that. We have got as much as $1.91 per pound in war times. Mr. Young of Texas. You understand that I am not combating your conclusion. Mr. Eadford. That would protect the man and his family, but I will tell you that I am representing people who are not that selfish. All we want is a fair deal. Mr. Young of Texas. You understand what our viewpoint is. We want the viewpoint of the country, because we have got to vote oq this matter, and all of us want to reach correct conclusions. Mr. Eadford. That is all right. Mr. Young of Texas. You are a stockman? Mr. Eadford. A small one. Mr. Young of Texas. You understand the five stock situation throughout the United States and the world ? Mr. Eapford. No, sir; I do not. Mr. Young of Texas. But you know what the conditions are in our section of the country. Now, suppose you are a commissioner, at what would you fix the price of cattle to be delivered in the summer market at St. Louis ? At what would you fix that price, at this moment ? Mr. Eadford. I do not believe that I would like to answer that; I could only answer it from a personal standpoint, and I am not here for that. Mr. Young of Texas.. But we have got to get at that question. I would like you to undersatnd what I am trying to arrive at. What I am trying to arrive at is to ascertain how the human mind will act on those questions. I want to see how this system will wcirk,out, I am askiiig you wh^t you would do as a member of that commission, because 1 want to see how the minds of commissioners would act on such a subject before we give them that power. Mr. Eadford. Well, if you insist on those questions being answered that way, it is up to you and not to me, because I am not representing that class of people. I am not representing a class of people who would be that selfish^ — or selfish enough to fix tne price on their own prod- ucts (without considering the welfare of others in war times). Mr. Young of Texas. This is what I am asking you to do : Just, con- sider all of the conditions that we are up against. Mr. Eadford. I am not willing to answer those questions from a selfish standpoint. POOD PEODUCTION"^ CONSEBVATION, AND DISIMBUXION. 165 Mr. Young of Texas. But suppose you are a commissioner, and that you are taking into consideration tlie whole situation as you now understand it, not only from the producers point of view, but from the consumers' point of view, and in view of the world war that we are engaged in. Suppose this price must be fixed by a specific date, and that this is the date on which you must fix it. Mr. R.vDFORD. I have not investigated that sufficiently to teU. I do not know what the food production for stock for beef purposes has been. I do not know what it has been seUing for for the last 30 days. I do not know how things have changed. I can tell j^ou aliout one hog all right, because I handled one hog in the last 30 or 40 days. I was offered 12 cents per pound for one hog. I tried to get a butcher to take it and kill it, but he could not do so because it had to be iuspected. He told me to sell it to a packing house. I tried that, and they wanted to pay 12^ cents per pound for it. I said, "If I sell it to you, what would you charge for the hog back," and they said, "twenty-five cents per pound." That was the butcher. I •would put a price of 25 cents per pound on that hog. Beef has been selling for from 6 to 12 cents per pound in the stockyards, on foot, but I do not know what price they would pay now, but if it sold in pro- portion to that hog, the price would be twics as much. Mr. Young of Texas. If you were fixing the price, at what figure would you fix it ? Mr. Radford. I would fix it as the other feUow does — as high a price as I can get. Mr. Young of Texas. I mean leaving out the selfish point of view. Mr. Radfoed. If you will ask a hrie of questions that I can answer Mr. Young of Texas (interposing) . I want to know Mr. Radford (interposing). I see what you are after. I know what you want. You want to get an idea of what I believe these prices should be, or what these prices would be fixed at. Mr. Young of Texas. I want to know how the human mind would act on that subject. Mr. Radford. Well, let me go through them and investigate them. Mr. Young of Texas. Take wheat, for instance : Suppose you were called upon as a commissioner to fix the price of wheat, not from the selfish point of view, but you are to fix it in view of the entire situa- tion, taking into consideration the producer, the consumer, and the war conditions. Mr. Radford. With conditions Uke they are ? Mr. Young of Texas. Yes; with conditions hke they are to-day — not like they may be next week. How would you fix the price of wheat ? • Mr. p,ADFOKD. I do not know what wheat is seUing at to-day. I do not know what it is. Mr. YotJNG of Texas. What would you say would be a reasonable price now ? Mr. Radford. I wiH say this, that wheat is seUing at an unreason- able price now. But the farmers do not own the wheat. It is in the hands of speculators. If I was a farmer and had wheat to sell, yoji would have to pay me about $3 per bushel for it. That is, taking it from the farmer's point of view. 166 FOOD PRODUCTION, CONSEEVATION, AND DISTOIBUTION. Mr. Young of Texas. But I am trying to get your point of view as a commissior er. ' Mr. Eadford. But I am not a commissioner, and I do not think that that is the proper way to get at it. Mr. Young of Texas. You do not ? Mr. Radford. No, sir; I do not. 1 think this Mr. Young of Texas (interposing). The machinery must be human. Mr. Radford. I want this statement to go into the record, that I do not believe that that is a proper inquiry to be made of me on this question when I am asking for a committee of not less than 7, or from 7 to 25 men, to settle those questions, they considering them from every standpoint. Mr. Young of Texas. I want you to get it straight in the record. Now, you are supposed to be acting as one of the commissioners to fix prices, and of course you wiU endeavor to fix them from the commissioner's point of view, under the conditions as they exist. Now, that is the machinery that you say we ought to create here:- Mr. Radford. I would not undertake to do that if I was a member of that coEomission untU I had consulted with every member of the commission. I would not undertake to do that until we had had a meeting and discussed it from every standpoint, taking into consid- eration the , producer, the consumer and the war conditions, the ability of the consumer to buy, and what the producer had to sell. I would not undertake to answer it any other way. Mr. Young of Texas. All right. There has been the suggestion made that one man hava-tbat power. Now, suppose you are in the position of that one man thstt has that power : suppose you take into consideration the conditions as you know them to exist to-day, and suppose you are that one commissioner and that the responsibility is upon you — at what would you fix the price of wheat at this moment ? Mr. R.A.DFORD. I do not believe that you could get that man to answer that question right now, because he would not be prepared. I know that 1 would not answer it if that power were put in me until I had inve'-tigated everything connected with that whole business. I would not do that until I had seen what quantity of wheat there was on hand, how much was needed for consumption, and what the crop was likely to be. Mr. Young of Texas. But you gentlei^ien are asking us to give that power to some man or to some set of men. Mr. Radford. No, sir; we are not asking that in that way. Mr. Young of Texas. Then I have misunderstood them. Mr. Radford. You certainly misunderstand us. We are asking for a competent commission composed of unbiased men, unprejudiced men, and intelligent men. We are asking that such a commission be created to examme into every phase of tms question, both of produc- tion and consumption, in order to meet the requirements of the emergency, as demanded by the President of the United States, to produce food enough to support this country in its hour of distress. " Mr. Young of Texas. Well, we wiU pass away from that. It has been suggested by some gentlemen who have appeared here that this power should be given to some central board somewhere. Mr. Radford. I say give it to a board or commission, but not one of the kind you have suggested. FOOD PRODUCTION", OONSEEVATION, AND DISTRIBUTION. 167 .Mr. Young of Texas. It has been suggested that this power be lodged either in a commission or some sort of board, and it has also been suggested by some that they did not have in mind the exercise of this power as to all of the crops by any means. A very learned gentleman suggested that. It was suggested that they did not have in mind the exercise of the power given to fix prices as to all crops grown by farmers by any means, but that they would use their judg- ment and only exercise that power as to such crops as they saw fit under the conditions. Do you partake of that view of the matter? Mr. Radford. Will you put that question over again? Mr. Young of Texas. Some gentlemen have stated that they want this power to be given to a board or to some commission, to be known as a food commission; but, whether a commission or a board, they suggested that they would not be in favor of exercising that power as to aU agricultural products, but that the commissioners would use their own judgment and exercise their price-fixing power on such crops as they thought the situation in each particular case would demand. Now, do you partake of that view, or would you have this price-fixing board fix the price of all agricultural products ? Mr. Radford. I would have this board to fix the price on every- thing that this committee was created by the Government to do — that is, on everything that this Government required the farmer to produce. Now, if this Government goes to the farmer and directs him to change his crops, then that price should be fixed. We will say that he is a cotton farmer, and that the committee wants him to plant corn instead of cotton, then they should set the price. If they want him to plant corn, then set the price of that product, and let them set the price on any other product that might come in line with that. That would be this committee deciding it, and it would not be the farmer. I want to adjust this matter to meet the condi- tions that we have got to meet. Mr. Young of Texas. I think I catch your point of view. If I understand it, it is this: If the Government says to the people in your commtinity or mine, "I want you to plant 50 acres in corn," then the price should be fixed, but there is no such proposition as that before Congress. Mr. Radford. You certainly are not informed Mr. Young of Texas (interposing). I am informed about that. Mr. Radford. It was said out there, as we read the biU, that if the farmer did not do it, they could put him in jail. Mr. Young of Texas. Well, whether I am misinformed about that or you, does not matter. Your point of view is that if the Govern- ment says to the farmer, "You must plant so much corn," but does not say anything to him about cotton, leaving him to do as he pleases about cotton, then the Government ought to fix the price of the corn,. because the farmer is acting in obedience to the request of the Government, but the Government, according to that point of view, ought not to fix the price of the cotton. Mr. Radford. I do not take that view. I would say that that is a matter for the committee or the Government to deal with. I am taking the question as it comes up. If the Government asks the farmer to produce — Mr. Young of Texas (interposing). Let me put this concrete ques- tion : What would you fix the price on ? 168 FOOD PRODUCTION, CONSERVATION', AND DISTRIBUTION. Mr. Radford. On what would I fix it ? Mr. Young of Texas. On agricultural products ? Mr. Radford. I would fix it on the product, and I would base the price Mr. Young of Texas (interposing). On what products? Mr. Radford (continuing). On the cost of production. Mr. Young of Texas. On what products would you fix the price ? Mr. Radford. I would fix it upon any products involved in this war emergency condition. Mr. Young of Texas. That means every agricultural product. Mr. Radfoed. On every one that becomes necessary. That is a matter for the committee or Congress to decide — ^not for me. That is not a question for me, as I understand it. Of course, because I am talking plain, I may appear to be harsh, but I do not so intend. Mr. Young of North Dakota. Would you include also potatoes ? Mr. Radford. Yes; I would include potatoes, because I under- stand potatoes to be one of the main crops for the soldiers. They tell me they are absolutely essential in preventing disease, and so on. Mr. Haugen. How about cabbage and lettuce and sweet potatoes? Mr. Radford. In some places they want cabbage, and that is a food product and one of the most valuable food products there is, at times. Mr. Haugen. Would you stop at the farm products or would you extend it to the farm implements ? Mr. Radford. Well, of course, that is a matter that ought to be controlled, and I want to say that it has been discussed and there has been a good deal of confusion about it. That is a matter also that is up to the committee and up to Congress to settle. Mr. Haugen. But we are getting your viewpoint about it ? Mr. Radford. Well, I think it ought to be. Mr. Haugen. Would you stop at that ? Mr. Radfoed. No; I would not stop at that. Mr. Haugen. How far would you go ? We want to get your point of view. Mr. Radioed. Well, take the labor conditions. There is certain elements of labor that is not able to pay for the necessaries of hfe to-day under present prices. Mr. Young of Texas. You are correct about that. Mr. Radford. And the laboring people of the country, organized or unorganized, ought to be protected. Mr. Haugen. Absolutely. Mr. Radford. Both classes ought to be protected, and there ought to be some way to do that, and if it was necessary to increase the expenses, as a matter of course, that would go with it. In our State we have got what they call section hands on the railroads and they are a useful class of labor and can not be done without, and they are only getting $1.25 a day. They can not Hve and maintain their families at that rate. They ought to have increased pay. There is other labor of the same kind which is in the same position. Now, then, if it becomes necessary to increase freight rates, that is a matter to be considered with the railway commission. They have got that question up now. And I want to see these things handled fairly, and if it is necessary to increase freight rates to pay the labor POOD PRODUCTION, OONSEEVATION, AND DISTRIBUTION. 169 of this country whatever is right, then the freight rates ought to be increased. If you will give the farmer of this couiitrj- a price for his product-i, he will pay the freight all right. Mr. Haugen. How far would you go ? Where would you stop in fixing prices ? Mr. "Radford. I would stop when I got to the illegitimate specula- tor and the gambler. Mr. Haugen. It appears to me that many of the witnesses who have appeared before this committee are most delicate about reaching out to get the speculator. Mr. Radford. Most delicate ? Mr. Haugen. Yps. 4s I understand you, you would fix the price for everybody except the speculator. That is your statement. Mr. Radford. I mean the gambler. Mr. Haugen. Yes; he is th"e fellow. Mr. Radford. Every man who speculates is not a gambler; that is, every man who makes a profit on the use of his money is not a gambler. Mr. Haugen. No ; we are not going to discuss that. Mr. Radford. There is legitimate business and illegitimate busi- ness. Now, I do not mean to say that this committee should have charge of aU this matter, and it might be necessary to appoint a com- mittee large enough and with enough men on it, so that you could appoint subcommittees and even t&e up the labor side of it to see that the wage-earner got a fair show and take up the factory side of it and every element of it and deal with it justly. I think that is the way it ought to be done. Mr. Young of Texas. Now, let me go back to a line of thought which I have had in mind in view of the different viewpoints of the gentlemen who have appeared before us, and we are considering all of the testimony. I recall in particular that one gentleman said he would not be in favor of using this power in fixing the price on every farm product, but he would only use the power on such crops as the necessity existed in his mind and called for its exercise. Now, that puts this conclusion in my mind, and I would like to see if I am right about it. You are a farmer ? Mr. Radford. Yes. Mr. Young of Texas. Take wheat, for instance. The power has been given now to fix prices, unlimited in its scope as to crops, and the power rests with tms commission to fix these prices on any or no crop as they might see fit. Now, let us assume a case where there has been an enormous acreage of wheat planted and it is in flourish- ing condition and the prospects are there is going to be a bumper wheat crop made. Mr. Radford. Are you speaking about this year ? Mr. Young of Texas. I am assuming a case and am not stating the facts- as they actually exist. Now, assuming that the prospects are that there is going to be a bumper wheat crop and therefore the world need not be alarmed over its bread supply, now from the gentlemen's point of view who say they will taTse just such crops as they see fit, would they not let wheat alone, and the farmer would be up against it to find somebody to buy, having made an over- production. In other words, the commission failed to exercise the 170 FOOD PRODUCTION, CONSERVATION, AND DISTREBUTION. power in that they did not apply the price to wheat becuase there was too big a crop made. Would not that be very dangerous? Mr. Eadford. No, sir; not in this situation, as we understand it^ You have not given that the thought that you might think. If you will just study a little bit, you will see that here is a war condition. I want you to keep that in mind. We are not talking about times' of peace. We are talking about war times, and keep that in your mind, if you possibly can, because that is absolutely necessary. The condition now is that we are preparing for the maintenance of an army for at least three years. That is the consensus of opinion everywhere. Now, then, a bumper crop of wheat should be no terror even at $2 a bushel. Why ? Because we sl^ould ^tore that bumper crop because the next crop may be a very short crop, and we do not want to take chances in war time of a short crop coming on us and finding our Army unfed. Mr. Young of Texas. Now, right in that connection Mr. Eadford (interposing). Hold on one minute. Then we should use the elevators and Duild more elevators if necessary and take the farmer's wheat or cotton and advance him money as a loan at the very price set by this commission, so that he can put it in the ware- house or in the elevator and keep it until it is needed for consumption, and there never has been a period of three years in the history of this country when it was not needed at a normal price. Mr. Young of Texas. Now, then, I think I get your viewpoint. These gentlemen would not be in favor of fixing the price on a bumper crop, but if I get your viewpoint, you would fix the price on that, even though it was a bumper crop, and then let the Government Mr. Radford (interposing). No; you do not get that from my statement. ,Mr. Young of Texas. Then, let me ask you a plain question. There is a bumper crop made ; it is in existencej and the world can not use it this year, now you are on that commission Mr. Radford (interposing). But we are in war times. Mr. Young of Texas. Now, would you or would you not fix a price on that bumper crop ? Mr. Radford. Yes, sir; and I would fix a price, too, that would be an average and so high that it would protect the farmer so that this Government would he sure it would have the wheat at the time they needed it, when the shortage came. Mr. Young of Texas. Did you know that Germany had made an effort at this price fixing, both a maximum and a minimum, and that it had been a rank failure ? Mr. Radford. No ; I did not know that, and by the Eternal, we are going to try to whip Germany. We are not going to follow after Germany and that is why we are doing what we are doing now. Mr. Young of Texas. Your idea is we do not want anything^ — — Mr. Radford (interposing). If we can not make an improvement on Germany we might as well quit now. Mr. Young of Texas. I agree largely with what you say about that, because my sentiments naturally are along that line, but Ger- many has fixed both a maximum and a minimum price, and it has been a failure with a one-man-power Government, and then you come here and other gentlemen with your liae of thought and ask us to do what Germany has done. FOOD PRODUCTION, CONSKRVATION, AND DISTRIBUTION. 171 Mr. Radford. No; I do not do any such thing and you need not try to make that stick, because it won't stand. I am not trying to do that at all. We are in an American Government. By golly, we are in a democratic government and we are not in a one-man gov- ernment, and I do not want the two to be compared and I do not want any such thing set up in this Government in my presence. I want it to be at home, and everything be by home folks. If you are driven to the point that you have got to go to Germany to defeat my ideas here, you are in a hard way. Mr. Young of Texas. But I am saying to you, Mr. Radford, that Germany has done the very thing you are asking the committee to do. Mr. Radford. It has not done any such thing, I will say that. Mr. Young of North Dakota. Does not minimum and maximum price fixing leave room for the speculators to play with the market as they want to, practically, at least allow a wide lattitude for specula- tion? Mr. Radford. A minimum and maximum price would, but a fixed price would not. Mr. Young of North Dakota. In Germany they have at least attempted to estabhsh the minimum and maximum pric6. Now, if we were to do the same thing here, do you not think it would leave a wide latitude for speculation upon the part of the speculators and dealers; that is, if we attempted to maintain two prices or two levels ? Mr. Radford. Do you want me to answer that and say whether I am advocating that or not ? Mr. Young of North Dakota. No ; not whether you are advocating it, because I understand you are not. Mr. Radford. I am not. Mr. Young of North Dakota. I understand you are advocating the fixing of one price. Mr. Radford. I am not advocating the minimum and maximum reposition at all. I say this: A minimum price would be aU right or the farmer if you fix it high enough. Mr. Lee. Mr. Radford, I wUl have to ask you to suspend now because there has been a call of the House and we will resume your hearing to-morrow morning at 10.30. (The committee thereupon took a recess until 10.30 o'clock, Thursday, May 10, 1917.) E Committee on Agriculture, House of Representatives, Thursday, May 10, 1917. The committee met at 10.30 o'clock, a. m., Hon. Asbury F. Lever (chairman) presiding. STATEMENT OF HON. CARL E. MIIIIKEN, GOVERNOR OF THE STATE OF MAINE. The Chairman. Gentlemen, Gov. Milhken, of Maine, is present, and desires just a very few minutes of the committee in which to read some resolutions. Gov. MiLLiKEN. Mr. Chairman, I wish about three minutes in which to read some resolutions in connection with the action taken 172 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. by the Federal Council of Churches day before yesterday,^iid |,will file this copy Avith the committee and ■will read, without commen^, the resolutions, which are very brief : , :> ,]/ The Federal Council of the Churches of Christ in America, officially represenlapg 30 denominations with a communicant membership of more than 18,000,000, in special session assembled, desires to record its conviction that the immediate proliibition of the liquor trafBc as a war measure is essential to the conservation of the economic resources and latent power of the Nation. Five eminent economists estimate on basis of the latest positive figures, available that 7,000,000,000 pounds of food materials are annually used in the pioduction of fermented liquors and distilled spirits. Two university professors of physidrogy estimate that eliminating the amount necessary for the production of denatured alcohol, the fuel value of the remainder would supply the energy requirement of 7,000,000 men for a year. The Brewers' Year Book declares that it requires the toil of 75,000 farmers for six months to furnish those foodstuffs. If the labor of these men could be used for food instead of liquor, it would measurably relieve the situation produced by the present scarcity of food. There are employed in the manufacture of liquor 62,920 wage earners. These men are needed in legitimate industry and they should be transferred to such occupations as will make their labor a blessing to the people instead of a curse. In the face of the Nation's need to conserve all its man power and every bit ofits foodstuffs, we urge the imperative necessity of at once stopping this waste of them in a traffic whose destructive effects upon the national life and well-being is .generally acknowledged. > These economic considerations increase the moral and religious conviction with which the churches urge the abolition of the liquor traffic. i eommittee of Federal Council for presenting these resolutions to appropriate cp5f- mittees of the United States Senate and House: Hon. Carl E. Milliken, Governor of Maine. Rev. Charles Soanlon, D. D., Pittsburgh, Pa., Secretary Department of Temperance, Presbyterian Church. Rev. Charles Stelzle, New York, Associate Secretary, Federal Council of Churches. Rev. James Cannon, Jr., Richmond, Fa., '■ Methodist Church South. I Rev. Samuel Z. Batten, Philadelphia, Chairman Social Service Commission, Northern Baptist Convention. Bishop F. J. McCoNNELL, Denver, Colo., Methodist Church. Judge John S. Candler, Atlanta, Oa. Howard A. Bridgman, Boston, Mass., Editor CongregationaHst. Hon. GiiTORD PiNCHOT, Pennsylvania. Mr. McLaughlin. Where was this meeting held ? Mr. Milliken. Here in Washington. STATEMENT OF MR. PETEE RADFORD— Resumed. The Chairman. When the committee recessed yesterday afternoon I understand Mr. Eadford was still testifying. Had you completed your testimony, Mr. Eadford ? ■ ' Mr. Radford. I do not know whether I had or not. I do not know whether the gentleman was through asking questions or not." The Chairman . Are there any further questions of Mr. Radford or any further statement you desire to in,ake, Mr. Radford ? Mr. Radford. The only thing is that I notice there are a great many here this morning who were not here yesterday afternqon, and I wish to reiterate just what I said yesterday. We ask for a fbod commission of some kind to be appointed to set a price on the farm- er's products, a fixed price that wUl give to him some reasonable profit for what he does, because of the extra effort he is called on to make in this matter; and that is all. FOOD PEODUCTTON, CONSERVATION, AND DISTRIBUTION. 173 The Chairman. Mr. Radford, your testimony will be printed and we will all ^et a chance to read it. Mr. Haugen. Are we to understand you are in favor of fixed prices ? Mr. Radford. Yes, sir. Mr. BLaugen. AU along the line ? Mr. Radford. All along the line where that committee decides they should go. I take it, when Congress or whoever it is appoints this committee Mr. Haugen. I understand that, but how far will you go with this fixkig of prices ? Mr. Radford. I will go this far: I believe those boys who are in the Army are entitled to everything and to every comfort and luxury that can be furnished to them. Mr. Haugen. But we are talking about fixing prices. Mr. Radford. And I believe whatever is produced on the farm that is necessary for them Mr. Haugen (interposing). Would you go beyond the farm? Mr. Radford. Yes, sir. Mr. Haugen. How far would you go ? Mr. Radford. I would go far enough to reach every honest interest affected by this war or on account of the war conditions. Mr. Haugen. Every interest affected by this war? ; Mr. Radford. Yes, sir; and I believe this Mr. Haugen. One minute; let us get this question cleared up first. That Would include the munitions factories and all ? Mr. Radford. It would include everything that is called on to render service for the Army in this crisis. Mr. Haugen. Now, then, when you fijx the prices, you fix the price to the consumer and you fix the price to the producer, and you also fix the price to the laborer ? Mr. Radford. That ought to be done; yes, sir. Mr. Haugen. And that is the purpose of your argument? Mr. Radford. That is my view of it, as far as I understand it. Mr. Lesher. Mr. Radford, have you any credentials showing who sent you here ? Mr. Radford. Me ? Mr. Lesher. Yes. Mr. Radford. I have, some from my associate, Senator Minist Warrick, but they are in my grip. I am on record here as a repre- sentative and one of the managers of the warehouse and marketing department of 'Texas, a State department, and I am representing Texas on this question so far as marketing and so far as the farmers are concerned. Mr. Lesher. The only thing I wanted to know was who sent you here and who is paying your way. Mr. Radford. The State of Texas is paying my way here on this trip; the warehouse department. Mr. Lesh!er. What organization ? Mr. Radford. It is a department within the State. The State created a warehouse and marketing department, and I am one of the managers. We have about 11 people in our department. Mr. Hutchinson. Mr.: Radford, you are in favor of fixing prices. You have read the l^eport that there are 14,000,000 acres of wheat 174 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. abandoned. Now, those farmers have plowed that ground and sowed the wheat and are not going to get anything for it. Do ydunot think they ought to be paid for it by the Government ? Mr. Eadford. That is a question that that committee would be prepared to pass on better than myself. Of course, I hate= to see anybody lose anything. If they were induced to plant that wheat and they planted it under instructions, and they are now in bad condition, they ought to have some help; but I would not hke to answer that, because I think the committee would be better able to pass on it. Mr. Young of Texas. I want to ask you a question with reference to being sent here in an official capacity by the State government of Texas. I want to know what part of that State government induced you to come up here and advance the proposition you are now mak- mg, that our farmers shall be handled by the iron hand of the law? Mr. Radford. If you want to know about it you can go and wire to the governor, and he will tell you I am here representing the ware- house and marketing department. I do not need to get any creden- tials from anybody. I am authorized to go anjrwhere in the United States that I want to go and represent the warehouse department of Texas. I do not have to get any credentials from anybody. You can get that information yourself, and I can show you my credentials ia the office. I am authorized to represent the State of Texas, the warehouse and marketing department, where the farmer's products and everything that pertains to what I am testifying here is affected. Mr. Young of Texas. I know all about the warehouse department of Texas, and I am very much interested in it. Mr. Radford. I am sure you are. Mr. Young of Texas. But I do controvert the stS-tement that you. speak authoritatively as a part of the official organization of Texas, as to their point of view with reference to fixing prices or as to the farmers point of view. Mr. Radford. I have a letter in my grip right now to see Mr. Houston with my associates. I have authority from the governor and the agricultural commissioner of the State of Texas, and they have authorized me so that I can go anywhere in the Ignited States. I want to go without saying anything to anybody and I can spend the State's money, but, of course, I have got to render an account for it under oath and state that I have used it judiciously for the purpose for which I was sent. Mr. Young of Texas. I am not controverting your authority to gO' here and there, but I am controverting your authority to commit Texas and the people of Texas to the proposition of prices for farmer's products being fixed by a commission on the part of the Federal Government. Mr. Radford (interposing). I commit Texas to everything I have- said here, both yesterday and this morning, and what I will say to-day. I will commit Texas and I will stand for it, and if you want to put it to a test you can do it, so far as I am concerned, and I will go right with you. The Chairman. Are there any other witnesses who desire to be heard ? Mr. Radford. Mr. Chairman, I want to thank you gentlemen for the courtesy you have extended me, and I want to say to you that FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 175 if you do not believe I am representing Texas you can send represen- tatives down there to investigate the matter and you will see. I thank you. The Chairman. We are very much obliged to you, Mr. Eadford. Mr. CuUinan, did you want to be heard briefly this morning ? Mr. CuLLiNAN. I did want to be heard, but I would prefer to file a written statement. If you will permit me, I will submit my name and credentials to the secretary, and then submit my views in writing, unless you are going to hold another hearing. I must say that I hope you will not hold another hearing and that some action will be taken on this biU, because I think it is most imperative. Mr. Young of North Dakota. Whom do you represent ? Mr. CuLLiNAN. My name is J. S. CuUinan. I am a member of the National Agricultural Society; I am president of the Chamber of Commerce of Houston; I am representing the Texas Industrial Con- gress, which for the past six or seven years has been advocating this question. I want to plead guilty, Mr. Chairman, to being one of the men who has been mentioned here on several occasions as having agitated this question. We have been agitating this question for about seven years. The Chairman. Can you be here to-morrow morning, Mr. CuUinan ? Mr. CuLLiNAN. I will be very glad to be here to-morrow, Mr. Chair- man. I have been here now for 30 days and I am willing to give you all the time necessary, whether it is 30 days or 3 years. The Chairman. Then we will take. a recess until to-morrow morn- ing at 10 o'clock. (Thereupon the committee recessed untU Friday, May 11, 1917, at 10 o'clock a. m.) FOOD PRODUCTION, CONSERTATION, AND DISTRIBUTION. Committee on Agriculture, House of Representatives, Friday, May 11, 1917. The committee met at 10 o'clock a. m., Hon. Asbury F. Lever (chairman) presiding. STATEMENT OF MR. J. S. CULLINAW, OF HOUSTON, TEX., REPRESENTING THE TEXAS INDUSTRIAL CONGRESS. The Chairman. Now, gentlemen, before the witness begins, let me request the members of the committee to permit him to proceed to make his general statement, and when he has completed, then the members ask such questions as they desire. We must expedite these hearings, and in addition to that, this wiU give the witness an oppor- tunity to present his thoughts in a logical and connected way. Mr. CuLLiNAN. I thank you, Mr. Chairman. I have made a few notes, and I do not want to take any more of your time than is abso- lutely necessary. I may say here that it seems out of reasoA for a man who has sat and listened to all these hearings to present any- thing. I have followed the Senate hearings and the House hearings as closely as possible up to this time. I would Hke to say, as to the Texas Industrial Congress, that it was organized in the year 1910 by Mr. Henry Exall, of Dallas, Tex., who had probably given more study to the question of increased production and soil conservation than any other man of his day. That organization has not been very active within the past few years. We found that the campaign of increasing production was apparently directly in conflict with the interests of our farmers and our farm prganizations. I suppose that all of you gentlemen from the South mil agree that we have had an excess of production, and as Mr. Radford very aptly stated, the larger crop brought the small price, and therefore we foimd that advocating this policy was out of line with what seemed to be the best interests ^of our own people. I have here a speech dehvered by Mr. Henry Exall at Atlanta six years ago to-day on this question which is now confronting you gentlemen. I should like to put that speech in the record, if I may. I will read a few extracts, which will show you the character of reasoning which he followed. The Chairman. How long is the speech, Mr. Cullinan? Mr. Cullinan. It is very short. 104176—17 12 177 178 rOOD PKODTJCnON, CONSEEVAHOlir, AND, DISTBIBUTION". The Chairman. Without objection, the speech will be printed as a part of your remarks. (The paper referred to is as follows:) [Address of Col. Henry Exall, of Dallas, president of the Texas Industrial Congress, delivered at the third annual session of the Southern Commercial Congress, Atlanta, Ga., March 8-10, 1911.] The Aghicttltural Life op the Nation Depends Upon the Conservation op THE Soil. Mr. Chairman, ladies and gentlemen, I deem it a great privilege to address the chosen representatives of the people of the South and Southwestern portions of this great Union, gathered for the laudable purpose of celebrating the marvelous results of the tremendous material and intellectual recuperative powers of the manhood and womanhood of the South. The spirit that has inspired the South is too holy, too lofty, too full of the highest type of unpurchasable patriotism for any man to attempt to describe. The growth of the world m high achievement far transcends the wildest dreams of even a distorted imagination, and the miracles of old fade into insignificance when compared with our everyday business transactions. But yesterday San Fran- ciscov whispered, and Tokio answered in the same breath; an extra heartbeat in Threadneedle Street sets all the world agog. One touch of wireless tells the secrets of the universe; birdmen ride the fleecy clouds; railroads bind the continent with bands of steel; great ocean liners plow the mighty deep — they annihilate space, carry- ing at lightning speed bread from the fields of plenty to the haunts of the destitute. In transportation, communication, and invention, as well as in rarest love for human- kind this age and this country are supreme. By far the largest part of this mighty progress is Jbut of yesterday. The world is not larger to-day than the State of Georgia was 50 years ago, but in our mighty flight some crucial factors in the perpetuation of these transcendent happenings have been woefully neglected, and it is to the vital necessity of considering these that I shall briefly call your attention. They aptly apply to the people of to-day as well as to the people of all time to come. Under proper conditions tms great Nation can support hundreds of millions of people in the enjoy- ment of the manifold blesainga of the exalted civilization of this enhghtened age and that wide, more comprehensive, and elevating uplift that must be the outgrowth of the lofty intelligence of the present time. I pray that you will not condemn me without a hearing when I declare to you that in my opinion every other material question pales into insignificance when compared with the crucial, vital necessity of conserving the essential fertilizing elements in the soil and perpetuating its produc- tivity. This is true of all the agricultural lands in the Union, but it is doubly true of the land already in cultivation. RECKLESS EXTRAVAGANCE. This great Nation has grown rapidly rich, recklessly extravagant, and woefully wasteful. We are destroying the land as we did the buffalo — for the robe. More than one-half of our merchantable timber has been cut and destroyed. The great bulk of this devastation has taken place within thepast 50 years. We are destroying timber more than three times as fast as it grows. We cut, cut, cut, always and never plant. The population grows and the timber decreases. If the mining and the destruction of the coal increases at the same ratio for the next 250 years that it has in the past. 10, at the expiration of that time there will not be enough in this Union to heat a stove. The Agricultural Department of the United States estimates that in the short hfe of the Nation, there are already over 4,000,000 acres of lands that have been so destroyed by bad cultural methods and erosion that their usefulness is gone forever. It also estimates that more than 50 per cent of all the agricultural lands in cultivation have abeady markedly deteriorated in intrinsic value from the same cause. In a majority of cases we have taken everything from and returned nothing to the soil. It has been stated by the best authorities that the people of the United States have been more profligate in the destruction of their natural resources and especially of the fertilizing elements in the soil, their most valuable material asset, than have any other people of any time. Lands in many of the older States that 40 or 50 years ago were productive and would sell for $100 per acre, have befen robbed of the vital elements of fertility and will not now sell for what Ihe improvements on the land have cost. We have occupied the lands too rapidly; they have been too easy to obtain. We, therefore, have millions of acres in partial cultivation that should have remained untouched, except for the grass FOOD PKODTJOTIOIT, OONSEEVATTON, AND DISTRffiUTION. 179 and timber that grew upon them, for 100 years to come. We have failed to realize that when their fertility and productivity are gone that the agricultural life of the Nation must cease. The only hope for the prosperity of the thousands of generations that should inherit what we have so badly misused, is that we now make a most posi- tive, radical, and immediate change in our present devastation and impoverishment of .the soil and adopt intelligent methods by which the fertility of the earth and its fruittulness will grow greater as it grows older, so far as such a consummation is possible. The time is therefore at hand when we should take an inventory of our stock in trade and look well to our mooring lest our marvelous prosperity be the forerunner of our disastrous undoing. But we hope and believe that education and publicity will, like the open air cure, make the dark places light and ventilate and purify the individual and the Nation alike. It is true that in rare instances, in the older States of the Union, large crops per acre have been raised on small tracts of land, but this has been done by very heavy fertilization, and the amount so raised is infinitesimal as com- pared with the needs of the country that it should supply. For instance, it has been said that the corn crop of Illinois equals the total com production of all of the Gulf States, east of Louisiana, combined with the original thirteen States. There are instances in England, Germany, and other European countries where very large crops per acre of wheat and oats are raised, but these lands are heavily fertilized by the manure from cattle that are fed on the corn and oil cake imported from America, and the crop and the area thus fertilized are so small that the product is minor as compared with the needs of those countries. Another factor in the extraordinary crops they have, in some instances, raised is that the European farmers cultivate with the greatest care, save every ounce of fertilizing matter, stop waste by erosion as far as it is possible to do so, and allow no noxious weeds to take from the earth any nourishment that should go into the growing crop. LAND SPECULATION. We have been to a great extent a race of land speculators in contradistinction to a race of permanent home builders. Land has been so cheap, apparently 50 boundless in quantity and eternal in fertility, that we have failed to reaUze how vatal it is to the life of the Nation and the prosperity of its people that we should conserve its fertility and treasure it as a thousandfold our greatest material asset. INCREASED COST OF LIVING. While certain monopolies, the outgrowth of a discriminating and, therefore, unjust tariff, have been and are great factors in the higher cost of living, we must not lose sight of dianged conditions affecting supply and demand that are powerful moving agencies in our increased expenses. Thirty years ago milhons of cattle were raised on free grass and fattened on 10 and 20 cent com. Beef and hog products were produced at a very slight cost and were therefore cheap to the consumer. Millions or acres of the richest agricultural land in the world, located in what is known as the great prairie plains, probably the largest area of hke fertihty on the face of the earth, could be bought at from $5 to $20 per acre, and as it was rich, virgin soil, would produce larger crops than land that is now worth from $100 to |200 per acre. It will be noted that the interest on the investment is ten to twenty times what it was then. The consuming population has grown at a wonderful rate and the soil has grown less pro- ductive. We must therefore change these conditions if we hope to change the results. We must curtail the waste of food products in the homes on the farm, and in transit, for every pound of food that is produced is already needed, as fully one-half of the people in the world g;o to bed hungry every night. The lofty human thought that suggested and the helping hand that has furnished the means to bring together the august ambassadors of all the nations, in conference at The Hague, to form compacts for international and permanent peace is worthy of the moat exalted praise of this enUghtened age, and Gfod forbid that its edicts should not be perpetual and everlasting, but I warn you that no parchment yet manufactured will be strong enough to make a treaty binding when the cry is for bread. POPULATION. In many instances we have grown population mad. Not only do we strive to move the people of other nations to this Nation, but we are using our utmost efforts to move the people from one section of this country to another. When this is profitable to those whose avocations, homes, and lives are changed, it is commendable and well; but when we have knowingly induced the move to the detriment of the movers. 180 FOOD PRODirCTIOSr, COKSEEVAnON, AND DISTEIBXJTION. we have criminally wronged them, and in the last analysis, damaged the section to which we have brought them — a selfidi short-sighted policy, bad for the country now and unfair to coming generations. The population of the United States has grown in the last 50 or 60 years by leaps and bounds. In 1860 we had 30,000,000 people, almost all of them east of the Mississippi River. That vast country known as the Northwest was a cattle range with free grass from Montana to the Rio Grande. It looked as though there were not people enough in the universe to occupy the vast areas of open land in this comitry. The population to-day is over 90,000,000, and the great Northwest is almost as thickly settled as Indiana and Ohio were before the war. Every country on the face of the earth is a breeding ground for this country. It has been said that the English morning drum-beat can be heard around the world . Certain it is that the freedom of our institution, the prosperity of our country, the fact that in almost all of the past there has been a home practically free for the asking, a home that a poor man could call his own and from which he could not be evicted, has caused teeming millions from all the civilized countries on the face of the earth to hope for the time when from their meager savings they would have a steerage passage and enough money to pass the customs house and come to be a part and parcel of this great ' ' land of the free and home of the brave. ' ' With our increasing knowledge of the laws of health and hygiene, the adults will Hve longer and the babies will be saved; there- fore our population will increase in the next fifty to one hundred years at a greater ratio than it has for the last 50. God forbid that we should so neglect our opportunities to conserve the forces of the earth that with these teeming millions there shoUld ever come in this great nation a wailing cry for bread. The increasing multitudes are headed this way, and nothing under the sun but a pestilence can stop them. The line of march to the South and Southwest is 2,000 miles long. I hear the echo of their footsteps; I see them on horseback, in covered wagons, in immigrant cars, in parlor cars with bank rolls — coming to occupy this great country. At the same ratio of increase as in the last 50 years we will have in this Union almost 280,000,000 people in 1960. The time is therefore here when it is useless longer to spend our energies in a further attempt to increase our population, as the word has been passed along the line and the multitude is already in motion. It behooves us now rather to improve the condition of those who are already with us and to set an example that will help to make the thousands who are to come useful and happy citizens. PRINCIPAL FERTILIZING ELEMENTS. We have, in the majority of instances, raised the same crops year after year, without any rotation, thus taking out annually an unfair proportion of the special elements that produce these crops. We have failed to plant cover crops of ground peas, soy beans and other leguminous plants that would enrich the soil with humus and also draw nitrogen from the atmosphere and replace, to some extent, the terrible annual drain upon the nitrogen, potash, phosphorus and other necessary fertilizing elements by the grain and other crops sold from the land. There are very valuable phosphates mines in the Carolinas, in Florida and in Tennessee, but it has been estimated that, if the ratio of consumption for the last 35 years is continued for 40 years more, every pound of high grade rock will have been mined. Very large deposits have recently been discovered in Montana and the Dakotas, but this must be ground and hauled great distances before it can be used by the sections of the United States that need it most and at best, it is meager as compared with the constantly increasing necessity for its use and it is a matter of easy calculation as to how soon it will be consumed. Phosphate rock, is so limited as compared to the constantly increasing demand for its use that its exportation should be prohibited by law. NO SUBSTITUTE FOR PHOSPHORUS. For nitrogen and potash there are many sources of supply, but the amount of phos- phorus in the mines and in the land is easily estimated and is very limited, but posi- tively essential, and for it there is no known substitute. The upper crust of the earth that is known as soil and is valuable for agricultural purposes, vanes in thickness from four to five inches to as many or more feet, but the great majority of such land in use would average from six to 12 inches in depth. This shallow rim of earth is composed of certain essential mineral elements that are exhausted annually to a certain degree by the crops that are grown upon it and also be erosion, the waters washing much, of these essential fertilizers into the streams and down to the sea. The crops that, are grown upon this land are partially consumed direct by man and indirectly by him in the consumption of animals of every kind that feed upon the products of the soil. FOOD PRODTJCnoif, OONSEKVATION, AND DISTBIBUTION. 181 The first seven or eight inches of the virgin top soil of an acre of land is supposed to weigh about 2,000,000 pounds. A large number of experiments in Wisconsin, Iowa, Illinois, and other states have shown that in this eight inches of top soil there are from 1,500 to 3,000 pounds of phosphorus. It has also been shown by careful scientific experiments that the average yearly crop of grain takes from the soil from one-half to three-fourths of 1 per cent of this meager supply. It is, therefore, easy to calculate how soon the major part of this positively essential element will be consumed, if none is returned in the shape of manure, phosphate rock, and other elements containing this life-giving substance. Phosphorus in proper combination with other fertilizing elements of the soil with scientific cultural methods, means great crops and healthy, buoyant, vigorous animal life to whatever feeds upon them. But its absence in proper proportions means gradual starvation and the positive loss of vitality. The great Mississippi would soon empty its flood of waters into the gulf and be a mighty canyon if its tributaries should cease to flow. War and pestilence may devastate the country and the cost in blood and treasure may be far beyond all calculation, but peace will come and new generations will thrive and prosper, traveling the even tenor of their way, almost forgetful of the frightful past. Great floods may come and for a time cover disastrously large areas of the country, but these waters will recede, and the lands will produce again; great cities will be burned to ashes, and forests destroyed by consuming flames, but houses will be builded again with a great variety of better material, and the trees will grow and cover the land and shade the generations soon to come; protracted drought will bring temporary disaster to large sections of the country and high prices and suffering will ensue, but the genial rays of the sun will evaporate the waters of the seas, the fleecy clouds will fill again, and the shifting winds will carry the life-giving showers to the thirsty earth. But when by prodigality and waste, phosphorus — this subtle substance which it has taken millions of years to create, accumulate, and distribute — has been taken from the mines and leached from the soil to such an extent as to destroy its productivity, the end will have come. Neither all the gold, nor all the silver, nor all the precious stones, nor the piteous cries of the starving multitudes will bring back this mysterious elixir of life that we have so wantonly destroyed. SOIL DEPLETION COMPLETE IN LAST ANALYSIS. In the last analysis, man consumes the entire product of the soil, and the waste frcm his body, as well as other wasteful users of these food products, finds its way to the bottom of the billowy deep, never, never to be returned. His body, and the bodies of all the myriads of people who have lived and died for unknown ages, have been mummified, petrified, and buried deep down in the bowls of the earth, making this soil depletion complete. CONSERVATION IMPERATIVE. In this country comparatively little attention has b een paid to conserving the fertility of the earth ; straw stacks and other rough forage, that should have been used to bed the stables, pens, and lots where stock is fed, that they might act as absorbents, saving all the liquid, as well as the solid manure to go back into the soil and add to its mineral fertility and humus, have been wantonly burned and forever destroyed. In fact, in the best small grain sections of the country, the smoke from the bumirg straw stacks at times almost obscure the sun and forms a mighty pillow of cloud — a monument to the waste and prodigality of the people. Millions of dollars in instrinsic value, that should have been returned to the soil, have been wantonly destroyed. Dead animals of all kinds, from rats to horses, that should have been put into the compost heap and gradually incorporated into ferilizers of the greatest intrinsic value, have been allowed to decay, polluting the atmosphere, and returning almost nothing to the soil. The sewage of the cities and towns and a large part of their garbage, dead animals, etc., must be converted into fertilizers, the waste matter must be distilled and all valuable mineral substances separated and returned to the soil instead of being allowed to pollute the streams and poison the atmosphere. TENANT SYSTEM SHOULD BE CHANGED. One of the greatest troubles with the farmers of this State, as well as those in the majority of the other States of the Union, has been that they attempt to cultivate too much land. If it is possible to convince the tenant farmers that they can make a Uving on a small amount of land which thev can now buy cheaply and on almost any terms they can afford to offer, we are confident that thousands of them will become 182 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. small landowners and that the methods and tendencies of their lives will be per- manently changed for the better. They will then feel that those dependent upon them will literally reap the fruits Of the trees that they plant and all the benefits that come from the protection of the property, its increased fertility and a thousand and one things, to which all the members of the family can contribute, that will help to make the home, lowly though it be, really and truly a happy home, and make life worth living. The cmldren from such homes will make prosperous, happy and useful citizens in a constantly increasing ratio in all the generations that are to come. There are in the United States about 2,600,000 tenant farmers, the great majority of whom change localities from year to year. It is positively impossible to estimate the terrific vaste in hope, human energy, time and property caused by this annual change. This farm-lease system is of the gravest interest to the present and future propserity of the whole country. Landlords should be willing to give longer and more libetal' leases with better houses and more comforts and conver'ences for their tenants. As a com-- pensation for these betterments, tenants should take more interest in the cultivation of the soil and the protection of the property that gives them even for a few years a comforatble and homelike place in wliich to live. If these two classes can be made to feel that their interests are identical and that the prosperity of each is indissolubly connected with and controlled by the prosperity of the other, a great step in advance mil have been made. The burning question, and perhaps the most important ques- tion before the people of the world to-day, is "How can we reach the landowning farmer, the landlord and the tenant farmer, and what can we do to impress upon these people the vital necessity of increasing rather than dimirishing the fertility of the soil?" The country has been so rich and prosperous, the soil in anything like fair seasons has produced so bounteously, that the people in their enthusiasm have grown to believe that its fertility is eternal and its productivity everlasting, but they forget that we are constantly milking without feeding; subtracting without adding; taking absolutely everything from and returning nothing to the land. They have failed to remember that there is but a specific amount of these essential fertilizing elements in the soil, and that each crop takes out a certain definite proportion of these elements and that if they continue to take out, year by year, a specific amount and return nothing, that we will soon reach the limit of its productivity. The fertihzing ele- ments have been likened unto a bank accoimt. If you continue to draw the money out, putting nothing back, it will soon be irretrievably gone; it matters not what the original deposit. Let the people all over these United States join hands and inaugurate a campaign of agricultural education that will cause our 6,000,000 farmers to reaUze the necessity of conserving the fertility of the soil and increasing the productiveness thereof. Recently an agent of the Agricultural Department was sent to Japan for information that might be valuable in this country along the lines of more intelligent and intensive farming. He says that a Japanese farmer, owning two and one-half acres of land, supported a family of five, kept a cow, raised two hogs and was happy and contented witli his lot. At Denison, Tex., and Raleigh, N. C, last year more than two bales of cotton were raised on an acre of ordinary upland, well fertilized and care- fully cultivated. Many of the boy com growere in the South last year rafsed four times as much as the average crops of their respective States. These things demon- strate that the agricultural possibilities of this country, under approved methods, are perfectly marvelous, but we must not forget that 100 bushels of com per acre take from the land four times as much of the essential fertilizing elements as 25 bushels do. If we, therefore, expect to receive more, we must in turn give more to the soil. This is probably the most important fact for every tiller of the soil to remem- ber. The Agricultural Department of the Nation and the States, many colleges and universities. State and county fairs, farmers' institutes, com growers' associations, thousands of enterprising citizens and many great journals have done invaluable work for conservation. When this tendency becomes practically universal, then instead of the world growing thin and gray and hoary with age, it will grow green and more buoyant with the everlasting bounty of its fields and the joyous prosperity of its myriads of people. THE TEXAS INDUSTMAL CONGRESS. The Texas Industrial Congress believes that this question is so vital to all of the interests of the great State of Texas, as well as to every other State, that every possible effort should be made to induce scientific cultivation of at least a small tract of land in every agricultural neighborhood this year and every year hereafter. To show by ocular demonstration that it is infinitely more profitable to cultivate a small tract of land scientifically, with careful seed selection and constant conservation than to cultivate larger tracts by our present M-asteful agricultural methods and to induce POOD PRODUCTION, CONSEBVAOTION, AND DISTBXBUTION. 183 imnpediate action that will, to some extent, demonstrate the truth of this belief the congress will give to the men, women, boys and girls of Texas prizes aggregating $10,000 for the largest and best yields of com and cotton raised in the State Qiis year. The prizes are classified as follows: Six thousand five hundred dollars will be given for the largest and best yields from 10 acres of corn and 10 acres of cotton divided into 15, cash prizes as follows: First prize, $2,500; second prize, $1 500; third prize, $750; fovu-th prize, $500; fifth prize, $250; and 10 prizes of $100 each for the next ten best results. These prizes will be awarded regardless of the ages of the contestants. Three thousand five hundred dollars will be given to contestants, either boys or girls, not over 20 years of age, for the largest and best yields from 2 acres of corn and 2 acres of cotton, divided into 14 cash prizes as follows: Pu'st prize, $1,000; second prize, $750; tnird prize, $500; fourth prize, $250; and ten prizes of $100 each for the next ten best results. While the congress hopes that the men and boys entering the contest will do as much of the actual work as possible, it does not mean by including women and girls that they are required or expected to do more than manage and supervise the culti- vation of their crops. There are absolutely no fees or charges of any character whatso- ever to the contestants for any of these prizes, the sole object of tKe congress being to help the farmers all over the State to help themselves. The prizes are given simply to arrest attention and stimulate investigation, so, when the truth is known, the people will, with one accord, protect, save, and conserve the vital forces of the earth as a price- less heritage to the myriads of people who are to come after us. Every thought that has actuated the congi-ess in its work has been for the betterment of the people at large, and so imbued is it with the idea that the vital questions herein mentioned should reach the ears and the hearts of not only the men and women of the country but also the children that we have mailed to about 20,000 school-teachers in our State a copy of the prize offer to the farmers, showing the prizes and the reasons for giving them, and have requested these teacher? to read this article to the children in the schools, , and to reread and discuss it at such times and in such manner as they may deem best. At, first the children will probably be anxious to tell their parents about the prizes. Later they will learn some of the reasons that have actuated the congress in offering the prizes, and by degrees they will imbibe enough of this in- formafion to cause them to be interested in and to read such articles on conservation and better agricultural methods as may from time to time appear in the newspapers that find their way now into almost every household and bring life and light and in- telligence with their coming. The congi'ess hopes that the legislatures of the various States will not endeavor to find out how little money their educational institutions, their universities, their agricultural and mechanical colleges, and their schools can get along with, but will rather investigate their needs and deMght in providing every dollar that can be judiciously and profitably used in the education of all of the people. HOPE FOR THE FUTURE. The time is past when ignorance can succeed in any vocation, and especially is this true of the great profession of farming. Intelligent farming means profitable farming. AMien this end is attained then the cry "back to the farm" will have been answered, for when the farmers are really and truly prosperous they will naturally sur- round themselves with all of the comforts of the present age; country home life will then be the happiest, most attractive, and independent on the face of the earth. Let us all, Aith one accord, from the Atlantic to the Pacific, and from Canada to the Gulf, join hearts and hands in one mighty effort to conserve the vital forces of the earth as an eternal heritage to our children's children for all the generations that are to come. Mr. CuLLiNAN. This is exactly, gentlem,en, it seems to me, the argument that ought to be before you now, and one that will guide you in the conclusions that you must ultimately come to. This great Nation has grown rapidly rich, recklessly extravagant, and woefully wasteful. , We are destroying the land as we did the buffalo — lor the robe— I am reading only extracts from the speech to give you an idea of the tenor. of it. ■ The Agricultural Department of the United States estimates that in the short life of the Nation there are already over 4,000,000 acres of lands that have been so destroyed by bad cultural methods and erosion that their usefulness is gone forever. We have failed to realize that when their fertility and productivity are gone that the agricultitfal life of the nation must cease. 184 FOOD PRODUCTION, CONSEBVATION, AND DISTEIBUTION. There are instances in England, Germany, and other European countries where very large crops per acre of wheat and oats are raised, but these lands are heavily fertilized by the manure from cattle that are fed on the com and oil cake imported from America, and the crops and the area thus fertilized are so small that the prod- uct is minor as compared with the needs of those countries. We have been to a grent extent a race of land speculators in contradistinction to a race of permanent home builders. lAnd has been so cheap, apparently so boundless in quantity and eternal in fertility, that we have failed to realize how vital it is to the life of the Nation and the prosperity of its people that we should conserve its fertility and treasure it as a thousandfold our greatest material asset. Those are just a few of the thoughts that are expressed throughout this speech, and they were never better put by any one than by Mr. Exall, who has made a life study of this subject. Mr. Young of Texas. Pardon me just a moment. I have not seen the speech. Does he touch on the matter of price fixing of farm products at all? Mr. CuLLiNAN. It does touch on the question of the necessity for establishing some uniform basis that will protect both the producer and the consumer. The proolems before you gentlemen, as I understand it, may be resolved down to four — production, transportation, distribution, and consumption. I think they will cover the full field of aU of the problems that are before you on this question. The Chairman. If you will permit me, let me suggest that I think the problem before this committee is not a detailed discussion of the problems of transportation and production and distribution and the like of that; but the one big problem before this committee is the necessity for conferring upon the President the very plenary powers contained in this bill — the necessity for doing it now. Should we do it? That is the question before the committee, as I imder- stand it. The other propositicms, if we confer these powers, will be worked out and decided upon by the agency which we clothe with this authority. That seems to me to be the situation. Mr. Cullinan: I agree with that absolutely. The Chairman. Then if you will confine your discussion to that phase of it, we will expedite consideration of the measure very much, in my judgment. What is the thought of the committee in that respect ? Mr. Lesher. I think you are right. Mr. DooLiTTLB. I think you are right. The Chairman. I do not think this committee is now being called upon to decide whether or not there should be prohibition in this country or whether there should be a Jarger milling content for flour, but the question is whether or not we are going to confer upon the President these very extraordinary powers; and if so, why? That seems to me to be the problem. Mr. Cullinan. I have not expected, Mr. Chairman, to disduss any of those matters. I simply mention them as the fimdamentals that are back of and necessary for the consideration of this proposition, in my judgment. I would like to mention one phase of the transportation problem that it seems to me is absolutely essential for your consideration, and that is consolidating in some manner the freight equipment of this country: that is, the freight cars. It is very important, it seems to me, in connection with the movement of the crops. If you raise a POOD PRODUCTION, OONSEEVATION, AND DISTEIBUTTON. 185 tremendous crop next year, you may find, as was the case in 1906, that we will be unable to move that crop. If, in connection with your problem here, some means are found for consohdating all the freight cars and operating them as the PuUman cars are now being operated, under one directing head, I am sure you will find a very great increase in the efficiency of the freight equipment, which is something that is fundamental to the farmer. Mr. CttiRLEs D. BoYLES. May I interrupt a moment to say that new rules have just been issued by the American Eailway Association permitting the loading of any empty cars in any direction just so it is toward home, and the rule says that all other rules in conflict there- with are abolished. I therefore think the first step toward accomp- lishing that has been taken. Mr. CuLLiNAN. If that step is big and broad enough, I wiU assure you gentlemen it will increase the efficiency of our freight equipment anywhere from 10 to 25 per cent, and you all know what that means in connection with the problem before you. I want to say here as to distribution that any plan to meet the present emergency that fails to take into account the economic law that unrestricted production is the only means of insuring reasonable prices in future will fail of its purpose. Your problem, as I under- stand it, is to consider the producer and the consumer. There is no hope for the consumer, gentlemen, unless you can substantially increase production. That is so simple and so fundamental that I beheve it is impossible to controvert it. You must increase produc- tion, and that, as I understand it, again is what you are leading up to in your commission and price-fixing problem. I would hke to say a word here in regard to the speculator, who has been discussed. Unless you gentlemen can find some way to replace the speculator by governmental action, I beheve you will do the pro- ducers of this country a very serious harm. Mr. E.UBEY. What do you mean by that ? Mr. CuLLiNAN. I mean by that, as we are situated at present there are certain assured markets, and those markets are largely governed by so-called speculators. Mr. RuBEY. You mean to say, then, that the speculator is a good thing for the producer ? Mr. CxJLLiNAN. Absolutely no. I want to see him eliminated just as quickly as it can be done, but you must find a facility first for taking care of your producer before you undertake to eliminate the speculator, and in my judgment there is only one way in the world that can be done, and that is by the National Government. Mr. RuBEY. I confess I can not see your point. Perhaps I may be duU. Mr. Young of North Dakota. Well, explain it a little bit. Mr. CuLLiNAN. All of our cotton, for instance, is moved and han- dled and purchased by what we would term speculators — every pound of it. Am I right about that ? Mr. Pope. That is correct. Mr. CuLLiNAN. In order to insure the money to raise the crop, it is necessary to have a fixed market, whether that market is hign or low. Jhere is no other source where cotton can be handled, as we are situated, to-day, except through the hands of speculators. 186 FOOD PBODUCTION, CONSEBVATIOlir, AND DISTKIBUTION. Mr. RuBEY. You then could not do without the boards of trade You can not get rid of these boards of trade and exchanges ?|. Mr. CuLLiNAN. Yes; we might get rid of the boards of trade if the manufacturers at home and abroad were to send their buyers direct; that might eliminate all the boards of trade, and I hope it wUl elim- inate the boards of trade; but situated as we are to-day we must find, in the first place, a stable market and a marketing source m some way in order to justify the banks in making loans, and that is absolutely essential to the development and growth of cotton. Mr. RuBET. WeU, take the other kind of speculator, the man who buys wheat or buys corn and holds it for a higher price, and gets great combinations together in order to hold it up, and then puts up margins, etc., do you think that is a good thing for the farmer and especially for the consumer ? Mr. Ctjllinan. Absolutely, no. I do not think that situation shoidd be allowed to exist any longer than is necessary for you gentlemen to pass a bUl. My point is that you must pass something that is substantial and find a f acihty under which the producer may be protected, and then ehminate the speculator. Mr. Young of North Dakota. In other words, you want to estab- lish something to take the place of what you would tear down? Mr. McKiNLEY. Mr. Chairman, I think perhaps quite a number of the members of the committee have come in since you laid down the rule this morning. The Chairman. Yes; I did not want to restate the rule because I was afraid it naight be too pointed, but I will restate it now. We agreed before some of you gentlemen came in that we would permit the witness to complete his testimony and then ask questions. We must expedite this hearing. We also want the record to appear a little bit more logical and connected than it can possibly appear if we interrupt the witness at the end of almost every sentence. Mr. CuLLiNAN. Then, Mr. Chairman, I will proceed, if I may, to make specific recommendations. The Chairman. If you please, and make them as brief as you can, because there are a number of witnesses here this mbmnig of whose coming I had no knowledge. Mr. CiiLLiNAN. My recommendation is to organize a conunission to act directly imder and be responsible to the President; of the United States, at the head of which wiU be placed a food controller; or in lieu thereof, create a department of food production, conserva^ tion, and distribution, such commission or department to be specifi- cally authorized to fix maximum, minimum, and fixed prices on staple foods and feed products and meats. Now, those are the recommen- dations that I was leading up to, and I will now be glad to answer any questions as to what my line of reasoning may be. Mr. DooLiTTLE. You stated that this commission working; imder the President and being responsible to him direct, should have the power to fi:x maximum, minimum, and fixed prices. Mr. CuLLiNAN. Discretionary; yes. Mr. DooLiTTLE. Would you set a maximum ar d a minimum; or would you set one fixed price ? Mr. CuLLiNAN. I would unquestionably set a fixed price, i Mr. DooLiTTLE. Which would be the maximmn and the mini- mum — that one price ? FOOD PRODUCTION, CONSEKVATTON, AND DISTRIBUTION. 187 ■Mr. CuLLiNAN. Ordinarily, yes; although I think in providing a commission for an emergency purpose such as is before us now, it ought tO' include the power to set the minimum on the one side and the maximuin on the other, although the basis should be for all of our staple products a fixed price. Mr. DooLiTTLE. WeU, if you had a fixed price as a basis, then would not that price be the maximum and the minimum ? Mr. CuLLiNAN. Ordinarily, yes. Mr. DooLiTTLE. Would it not at all times ? Mr. CtTLLiNAN. There might be some particular commodity where you would want to place not a fixed price but a maximum price ; or, on the other hand, a minimum price. I think it would be very hard for a commission or Congress to foresee, and therefore I would advo- cate giving and granting to that department or to that commission the power to &x either, expecting practically at all times that it would be a fixed price for all staples. Mr. DooLiTTLE. You stated in your testimony that in order to help the consumer an increase of production is absolutely necessary? Mr. CuLLiNAN. Absolutely. Mr. DooLiTTLB. And you went further, I think, to say that that was the only hope for the consumer ? Mr. CuLLiNAN. That is my personal judgment; yes, sir. Mr. DooLiTTLE. Now let me ask you if you do not believe that by eliminating the speculator even with our present production, the producer would receive as good return for his product and the price to the consumer would be materially less than it is now ? Mr. CuLLiNAN. I think that is absolutely true. Mr. DooLiTTLE. Then it is not necessary absolutely to increase production in order to relieve the consiiimer? Mr. CuLLiNAN. I think it is. I think oxir production is whoUy inadequate to meet American needs, to supply a sufiicient surplus such as ought to be carried, and supply our allies in order that they may proceed with the war. Mr. DooLiTTLE. I think we should increase production as much as possible, but I wanted to see if I got your idea, that the only way we could help the consumer would be by increased production. Mr. CuLLiNAN. It is not the only way, but it is the biggest and broadest way to meet this emergency. You may help immeasureably along the fines you state, but you won't help him, in my judgment, adequately. Mr. Thompson. Mr. Cxfilinan, fixing the maximum and the mini- mem price means the ehmination of the speculator, does it not? Mr. CuLLiNAN. Absolutely. There would be no more incentive for speculation then than there wotdd be for speculation in the sale of postage stamps. Mr. Thompson. If you do that, that means that the Government takes over the matter of the distribution of the product, does it not ? Mr. CuLLiNAN. Yes; to a degree it would control the distribution of products, not take over them. Mr; Thompson. It would be absolutely necessary for the Govern- ment to take them over if they ehminate the middleman or the speculator. 188 FOOD PB.ODUCTIOlil', CONSERVATION, AND. DISTRIBUTION. Mr. OuLLiNAN. I do not understand it would reciuire any actual physical work. I think that it would mean controlling, and directing the distribution of those products at a price and under given rules. Mr. Thompson. Through certain governmental agents. Mr. CuLLiNAN. Not necessarily through governmental agents, because orders might be issued. Mr. Thompson. Who would handle this stuff as between the pro- ducer and the consumer ? Mr. OvEKMYER. How would you bring the producer and the con- sumer together ? Mr. Ctjllinan. May I answer this question ? Mr. OvERMYER. That is the same question. Mr. Cullinan. Through the miller, through the elevator, through the packer, through the wholesaler and the retailer, just as you are doing now. Mr. Thompson. And you would fix his profit, would you ? Mr. CuLLiNAN. Sir? Mr. Thompson. You would authorize him to act and fix his profit? Mr. Cullinan. I would limit the profit. Mr. Thompson. That would be fixing it, would it not ? In other words, the elevator man who bought the wheat from the farmer, you would limit the amount of profit he might make ? Mr. Cullinan. Absolutely. Mr. Thompson. Then, the miller who purchased from the elevator man, you would limit the profit he might make ? Mr. Cullinan. Yes, sir. Mr. Thompson. And then the wholesaler who purchases from the miller or the retailer who purchases from the miller, you w . By the power of his office. He drove them out of existence because he issued an order that the business associations or business corporations of Texas should not be permitted to contribute to that organization, and, therefore, they had no further resources. Mr. Young of Texas. That question of issuing this kind of strmgftwt order grew out of the fact that pubhc sentiment had been aroused all over Texas as to the conduct of this association. Mr. CuLLiNAN. That public sentiment of Texas was confined to the attorney general's department, as far as I know. It was entirely within the capitol at Austin. Mr. Young of Texas. But this organization has gone out of exist- ence, has it not ? Mr. Cui.LiNAN. It has gone out of existence, but he has refused, ab- solutely to try the case. Mr. Young of Texas. You were a member of that organization, were you not ? Mr. CuLiJNAN. Yes; I am glad to say I was, and I will contribute to any charity in Texas $5,000 if he wiU proceed to try that case, and show any acts of that institution that were unwarranted. Mr. Young of Texas. I am not going into the details of that, because that does not interest the committee at this time. What I want to know is something with reference to this organization that Mr. Henry ExaU organized. That was an industri^ organization, and I think that was very valuable work. I will say that. A great man he was. Now, I want to know whether or not that industrial organization that you now represent here is assuming the functions or undertaking to do things in hne with the things that were at- tempted and were being done bj"" the Commercial Secretaries' Asso- ciation of Texas ? Mr. CuLLiNAN. I never heard that it was. Mr. Young of Texas. Now, I want to get back to the main ques- tion. I am simply asking this for information. Mr. CuLLiNAN. I am sure of that. Mr. Young of Texas. Now, coming back to the question, which all of us realize is one of the most serious questions that any body of lawmakers was ever called upon to deal with Mr. CuLLiNAN (interposing) . Anywhere in the world. Mr. Young of Texas. Yes; anywhere in the world. I do not think there is a shadow of doubt about that. Now, I reahze fuUy the responsibiUty that is resting upon me as a lawmaker representing a part of the great State of Texas. I want to do the right thing here, and every other man here wants to do the right thing. But we must argue out all of these details, because Congress is liable to follow this committee. In aU probability Congress will follow this committee in whatever recommendations it makes, and we must not reach wrong conclusions about it if it can be avoided. Now, your viewpoint, as I get it, is that you are in favor of creating a commission that shall have authority to fix prices on staple farm products. Have you in mind now whether you could use the Agricultural Department for the purpose of carrying out this work, or would you name some outside men, or create a commission com- posed of outside men not connected with the Government at all, as FOOD PRODUCTION, CONSERVAHON", AND DISTRIBUTION, 195 a food commission ? Would you have on that commission a bunch of men outside of the present governmental organization and make a new organization of it ? Mr. CuLLiNAN. I would have the President to use the Agricultural Department to the fullest extent possible in meeting this situation, with the aid of an additional department of Government, if need be, which would have charge of the production, conservation, and dis- tribution of our food. Mr. Young of Texas. The main point I am trying to arrive at is this: What men, what commission, or what body of men would you clothe with that power to fix these prices of farm products ? Mr. CuLLiNAN. We are working at this situation as you would on circus day. We have a circus coming to town; it gives its perform- ance and it leaves, and all you see is the ring and sawdust. Now, if you are looking at this strictly as an emergency measure, then it should be a commission under a food controller looking to this emergency only. . Then, when the war is over and the period of need is passed you could abolish it, and the American people then free of this tremendous expense that would follow the creating of an additional department or of adequately enlarging another depart- ment Mr. Young of Texas (interposing). Your viewpoint is that you would create an organization outside of any of the regular organized departments of the Government, which would be an emergency organization or commission for this particular emergency? Mr. CuLLiNAN. You could do it either way, either through a com- mission for the emergency or through a department for permanency. You could do it either way. Mr. Young of Texas. I think I have your viewpoint on that. Your viewpoint, further, is that the reason for this emergency action consists in the fact that we are at war, and that we have all been aroused to the condition or fact that the world is short of food sup- plies, and this legislation is sought for the purpose of giving an addi- tional incentive to the farmer or producers to plant great crops in order that- the world may be kept from starving to death. That is the only justification for it. Mr. CuxLiNAN. There seems to me to be two fundamental ques- tions back of and preceding this war, and those questions are very ably brought out in that article I mentioned. The first is our waste and the second is that since 1860 our population has been reversed from a minority being in the cities to a majority in the cities. In other words, the producers to-day are only one-third of the popula- tion, and they have two-thirds of our population to support. But the first great trouble before the war was and is the fact that we have too many automobiles. We have too much joy riding, and we have too many people who are not engaged in productive pursuits. There- fore, we would have had to meet this very question whether the war came or did not come. Now, beyond that it is a war matter and an emergency. Mr. Young of Texas. You agree that the greatest incentive jou could offer to the farmer now on the farm to increase his productive capacity and the greatest inducement that you could offer to the man not now on the farm to go on the farm and become a producer is 196 FOOD PEODtJCTIOlSr, CON'SEEyATION', AND DISTETBtTTIOSr. for Mm to know that he is going to get a good price for the stuff that he prodiices. You agree to that as a sound principle; do you not? Mr. Ctjllinan. A fair price, or an adequately profitable pncd, and an adequately profitable and fair price to the consumer also. Mr. Young of Texas. Now, don't you beheve that the farmer knows at this time, just as you and I and everybody else knows, that there is a shortage in the food supply, or in the staple food products, all over the world, and that tmder the ordinary law of supply and demand he is sure to receive a magnificent price for everything he produces under the present circumstances? Mr.'CiiLLiNAN. I think we all know that. Mr. Young of Texas. The farmer knows that ? Mr. CuLLiNAN. I think we all know that. Mr. Young of Texas. Well, the farmer is just a himian being, ajad you know it just as I know it, and when Congress comes in or when anybody else comes in and asks that Congress create a body of men, under the conditions that the farmer knows to exist — that is^ that the world is short in its food supply — if under those conditions — and the farmer knows them — Congress is asked to create a body of men or a commission to say to that farmer in advance, "We are going to give autocratic powers to some man or to some half dozen men to say what you shall get for your products," don't you think that the farmer would at once become discouraged ? He would see that the manufacturer, the munitions maker, the manufacttu-er of cultivators, the clothing maker — that aU of them had been unlimited in the matter of getting war prices for their products. Then, for the Government to seek by means of this drastic power to limit the farmer — ^would it not discourage him ? Mr. CuLLiNAN. The farmer, as I know him, is first a citizen and ^next a patriot. He has been called upon by the President of the United States to do certain things, and I think he is ready to go as far as any other man or set of men to meet the emergency conditions, and although he might know that he could get $5 or $10 per bushel, perhaps, for his wheat, he would be fair enough to sell it at the price that was fixed, even if it were $3. That is the farmer. I have been carrying on this campaign in Texas for a long time, and the only protest that I have met with on this question was from a banker, and the only thing that he would protest against was making lands available that were inadequately used. He said that that was a step too far. That is the" only protest I have found iu all my experience in Texas, and we have been carrying on this campaign for months. I have been carrying it on for several years. I want to get' it on the record as a fact that for seven years we have been conducting this question in Texas ajong this line. Mr. Young of Texas. Conducting the question of creating a com- mission with autocratic powers to fix the prices for the farmers ? Mr. CuLLiNAN. No, sir; conducting the question of increased pro- duction and meeting the situation that is now before us. Mr. Young of Texas. Is it not this more than that question that you and the farmers have had up for discussion, and tha,t is the ?[uestion of arriving at some conclusion on the problem of how the armer could get a reasonable profit on what he is producing; that is, on his crop that has been largely in many cases sacrificed by him because it sets into the hands of speculators and middlemen who FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 197 charge the, consumer e?;orbitant prices? Is not that the proposition you have been, seeliing to solve, and is not that the proposition that Congress has been seeking to solve, to save the waste between the producer and the consumer, and not the proposition of the Govern- ment exercising this drastic power and making the farmer a slave, and saying to him, "You mu&t work at this price and no other?" Mr. CuLLiNAN. I think the farmer and the producer have come to the conclusion that there is but one power in America that can accompHsh this result, and that is the Federal Government. Mr. Young of Texas. You have reached, first, the conclusion that you are ready that this Government, with less than one-third of the population, as you stated a moment ago, producers, and the other two-thirds consumers-^you are ready that this representative Gov- ernment, with Representatives on the floor of Congress based upon population, and numbering, in proportion to the population, 2 to 1 in favor of the consumers- — as I say, you are wiUing that the Government shall exercise this power. Now, are you willing that this Government, through Congress, when that Congress is composed of two men representing the consumptive capacity of the country to one man representing the producing capacity of the country — are you wiUing that this Congress, under those conditions, shall create an agency to act under the authority of Congress, which agency, in all human probabihty," would have the consumers' point of view ? Would you have created that commission and give them autocratic power to say to the farmer, " We will make you serve this two-thirds of the population?" Mr. CuLLiNAN. He has been made to do that aU his hfe with some- body else fixing the price, and I would rather trust the President of the United States. Mr. Young of Texas. Don't you think that that comes with rather bad grace right now? Don't you think that it would come with rather bad grace now for Congress to clothe a commission or any other body with that autocratic power, when the farmer knows that he will get a tremendous price for his product ? Mr. CuLLiNAN. I know the farmer, and it will greatly surprise mp if he will not do all in his power to prevent the starvation of the people in this country and in other countries. That is what will happen unless you gentlemen come to his aid. ; Sfr. Young of Texas. Don't you think that in Texas, for instance, when the wheat crop comes in that it will go on the market ? Don't you know that when the farmers' wheat comes in, it will go on the market in August, so far as Texas is concerned? Don't you know that the farmer turns his product loose immediately, with rare exceptions, and that he will do it this year ? He has got to do it. Mr. CuLLiNAN. I think that is true. Mr. Young of Texas. Don't you know that that is true as to cotton? Don't you know that it is the rare exception where a farmer is able to hold it? Don't you know that he turns it loose immediately, as a rule ? You know that he will do that now. Of course, I know that there is a weakness in our present system, and that is somethmg that this committee has been trying to deal with. We have been trying to deal with that question and cut down this tremendous waste between the farmer and the consumer. We have had warehouse legislation, legislation affecting cotton exchanges, and 198 FOOD PEODUCTION, OONSEBVATION, AND DISTEIBUTION. legisMtion affecting storage, elev^tbrs, etc. We have done the best we could to stop that Waste and cut out the unnecessary machinery.' We know, of course; that we have got to have some machinery between the farmer and the consumer. We are bound to have more or less machinery, but what I want to do is to cut out this useless machinery and this leech on society that exists between the farmer and the consumer. I agree with you thoroughly ia that line of work, and I believe that is the kind of work that ought to be done. I agree with you entirely in that line of work, but -the important thing, in my judgment, is to try to reach some conclusion along the line that we are now considering, and I think we will be takmg a false step if we go back and hit the farmer first by having a commis- sion to undertake to fix the price on his stuff. I think that Would be one of the most disastrous things this Congress ever did, and I wotild not do it. I have reached the conclusion that I have reached with every drop of blood m my body in sympathy with the farmer. All of my sym- pathies are with the farmer; my ancestors as far back as i know were farmers, and all my near kinsmen are farmers. Every dollar that I will have when I go out of public Hfe — every dollar that I will have to hve on will be what 1 can get from the farm. That is the blood in me, and that is my point of view. I am as firmly con- vinced of that as any man can be convinced about anything, and I would resign my official position here rather than clothe any com- mission or set of men, whether in the Department of Agriculture or not, with that sort of power. I would not vest that power in any commission or in the President himself. I would not cloths any man with the power which you gentlemen say we should clothe this commission with. ' Mr. Anderson. I would like to ask one or two questions: Suppose, for instance, there should be a very short crop of wheat this fall, and wheat should go to $5 or SO "a bushel, do you suppose that this Con- gress could help to do something to relieve that situation ? Mr. CuLTjNAN. If there is any possible chance to do it, it should be done in some way. You must do something now, or be called together again before the next session. Something must be done to feed our people and to help feed our allies in this condition of war. Mr. Andeeson. If I understand your position, your idea is that the only way that speculation can be economically controlled is by a system of price fixing ? Mr. CuLLiNAN. That is the only way I know of. I do not say that that is the only way, but it is the only way I know of. That is the only way I know of for eliminating speculation. • Mr. Andeeson. It is true that the State legislatures and Congress have been trying for a great many years to control speculation in one form or another, by prohibiting conspiracies in restraint of trade, by prohibiting monopolies, and in various other ways, but we have not been successful in that. Is there any reason to believe that if we attempt to control speculation now by prohibiting it and imposing drastic penalties, it wiU be any more successful than the efforts made heretofore ? Mr. CuLLiNAN. If you fix the price, there is no basis left for specu- lation. You do not have speculation in postage stamps because the pidce is absolutely fixed, and neither would you have speculation in any commodity if the price of it was absolutely fixed. POOD PRODUCTION, CONSEKVATION, AND DISTBIBUTION, 199 , Mr. Anderson. I quite agree with you. I was trying to eliminate if I could, the idea that we can deal adequately with the proposition by trying to deal with the speculator in the same way that we have been dealing with him heretofore — that is, by prohibiting conspiracies in restraint of trade, prohibiting monopohes, and prohibiting specula- tion in one form or another under drastic penalties. In other words, we must do something else. Mr. CxTLLiNAN. I think the experience of the world ought to teach us that we have not been able to reach criminals, and we never will be. You have no more power, and, indeed, much less power now. In other words, you have less power now to enforce your laws and penalties than you would have ordinarily, because we will be under military rule, and there will be a great many factors to enter that wiU disturb and upset the ordinary processes of law. That being true, some other basis should be adopted. Mr. Haugen. You believe, then, that it is not possible to enforce law in this country ? You do not beheve that it can be done, and, therefore, we should throw up our hands? Mr. Young of North Dakota. He has not said that. Mr. CuLLiNAN. I think it can be measurably done. Mr. Haugen. You take the position that the law can not be enforced ? Mr. CuLLiNAN. I think it would be very difficult. Mr. Haugen. And for that reason we should throw up our hands. Mr. Cxn^LiNAN. I think it would be very difficult to enforce a law regulating such a large subject and carried over such a tremendous area. That is my idea. Mr. Haugen. AU I have to say about that is that I trust your posi- tion is not well taken. I personally hope we have not come to that stage. I beheve we live m a country where laws can be enforced; and if some people neglect enforcing them, the time wiU come when some one else will enforce such laws. Mr. Lesheb. Mr. Cullinan, is it true that Germany has attempted to fix prices and that she has failed ? Mr. Cullinan. I understand so. I know very little about Germany now. Mr. Lesher. But that is the understanding ? Mr. Cullinan. That is the understanding. Mr. Anderson. Now, Mr. CuUinan, I do not want that answer to go in the record in just that way, because I do not understand it is an accurate answer to the question. Do you mean to say that the whole system of price fixing in Germany, both the minimum price and the maximum price, have been failures? Mr. Cullinan. I understood his question to relate to a maximum price. Mr. Lesher. No ; I said price fixing. Mr. Anderson. The question was not so limited. Mr. Cullinan. That is the way I understood it. They undertook to fix a maximum price and absolutely failed. I do not know that they have failed in other respects; but according to the reports we get from the other side, and I have talked with a number of gentle- men who have been over there, the record is that they have failed absolutely in their maximum price because the stocks were held in 200 FOOD PKODTJCTION,, CONSERVATION; AND DISTRIBUTION. the hands of the growers. That is the way I undertook to answer the question. I did not undetstand it. ' Mr. DooLiTTLE. That is correct. The Chairman. If there are no further questions, we are very- much obhged to you, Mr. Cullinan. Mr. Cullinan. I thank you, Mr. Chairman. STATEMENT OF MR. EDWIN C. DINWIDDIE, OF WASHINGTON, D. C, REPRESENTING THE ANTI-SAIOON LEAGUE OF AMERICA, THE NATIONAL INTER-CHURCH TEMPERANCE FEDERATION, NATIONAL GRAND LODGE OF GOOD TEMPLARS, COMMITTEE ON PROMOTION OF TEMPERANCE LEGISLATION IN THE NATIONAL CONGRESS, INDEPENDENT ORDER OF RECHABITES, AND CORRESPONDENT NATIONAL TEMPERANCE SOCIETY. Mr. Dinwiddib. Mr. Chairman and gentlemen of the committee, I do not think we will ask to take your time, because you are ex- ceedingly busy. You have some dreadfully hard propositions to face and solve in connection with this whole food situation. I think/ if it is satisfactory to the committee, unless you want to catechize us, we will ask to file a brief touching two or three points in connection with the food situation and the war situation as related to intoxicat- ing hquors. I do not hesitate to say that the organizations which we represent, the constituency, church and temperance bodies all over the country, are exceedingly anxious to have prohibition obtain during the period of the war for two specific reasons: First, the con- servation 01 the food supply of the Nation; and we are tied up now with our aUies across the water who are in a worse situation than we are and whom we must succor; and second, for the development of the highest possible efficiency all along the Mne. I do not mean to indicate that we are as bad off as they are in some other countries. We are not as sodden and drunken a nation as some of the others are who happen to be our allies now. Just the same, the very highest degree of efficiency, in my judgment, is absolutely requisite if we are to win this war. That means it is requisite in the mills and in the mines and in the factories and on the farm. Unless, you want; to ask questions, we wOl simply reserve the right to file a statement with the committee in support of the prpposition I have named, and in support of the question of the power of Congress to pass legislation, of this character during an emergency, period of this kind. Mr. Anderson. In speaking of prohibition, Mr. Dinwiddle, do you- mean prohibition in the sense in which it has heretofore been used, the constitutional amendment, or prohibition of the use of grain in the making of alcohol for beverage purposes ? Mr. DiNWiDDiE. I referred especially to the prohibition of the use of grain and the prohibition of the liquor traffic during the war, not with reference especially to the constitutional amendment, which is not before your committee, and which, I do not hesitate to say to this committee, if this Congress is meeting purely on an emergency basis, we are not expecting to press. We have rather taken the position you can not count a constitutional amendment which has to be submitted to the States for ratification and ratified by three- fourths of the States, as a strictly emergency proposition. It takes rOOD PRODUCTION, COKSEEVATION, AND DISTEIBUTION. 201 too long for that, and many of the States will not have their next legislative session, unless they are called in special session by the governors, for several years to come. I am referring to war-time prohibition. I would Uke to call the attention of the members of the committee to this book. It does not bear solely on food. We have reprinted an American edition of this very remarkable book which has been sent, I am sure, to all of you gentlemen, under the title of "Defeat or Victory." This book was WTitten by Arthur Mee, a very well known English writer who has written oftentimes for the London Ghronicle, but who is regularly connected with the largest publishing house in the world, the Harmsworth Press of London. This book of 96 pages gives England's experience with drink during the war. The book has been sent to you, and I would like the members of the House and of the Senate to read this publication. It will give you some ideas and show that we are not asking for your consideration of any frivolous proposition in connection with the emergency which the country faces. I think that answers your question, Mr. Anderson. I was not referring to the constitutional amendment. Mr. Andeeson. Now if you have reference to the prohibition of the use of grain in the making of alcohol for beverage purposes, is it your view that this committee ought by legislation to estaljlish that prohibition or empower either the food controller or the President of the United States or some one else to either limit or prohibit the use of grains in the making of alcohol for beverage purposes ? Mr. DiNWiDDiE. I will answer that question frankly by saying that if we had our way and if we could determine the matter we should say that this particular matter is very different from any of the other propositions in this bill and is a matter on which Congress has quite as much information as the President or anybody else, and we think that prohibition would be stronger before the coun- try — and I think the coimtry is ready for it — if the Congress were to pass it instead of simply passing it over to the President and letting ' a single individual, although he may be the President of the United States, proclaim it and pass it; or have any food controller do it. Mr. Anderson. Now I want to ask you this question Mr. DiNWiDDiE (interposing). May I go further and say that I reahze there are a great many details in the other features of the legislation that Congress is not prepared to pass on, and the action to be contemplated and authorized is based or will be based upon information wiiich, I take it, it will not be possible for Congress to secure in time to pass such legislation; but I think this particular proposition is on a little different basis. We know the facts about the alcoholic Hquor traffic and the use of grain for making alcohol •for beverage purposes. Mr. Anderson. Now, is it not quite possible that if the food con- troller or the President were given the power to limit or prohibit the use of grain for making alcohohc liquor, it could be done through that means with less business or industrial disturbance than if it were done by an act of Congress and cut off squarely at some point ? Mr. DiNwiDDiE. Well, I imagine that would depend upon how they would do it. They could do it the same way precisely that Congress could do it if they were given the power. Of course, we are_ assum- ing, and we believe, that Congress in this emergency has that power. 202 FOOD PRODUCTIOlir, CONSEEVATION^ AND DISTHIBUTION'. and I presume it could authorize the President or a food controller to do it. Mr. Anderson. I think it has the power, too, and the only ques- tion in my mind is which is the most advisable method, in view of the obvious fact that we ought not to disturb productive industry any more than is necessary in view of the additional fact that we must have all the production we can get. It is merely a choice of methods. Mr. DiNwiDDiE. I am ready to answer that by saying that I can not see that there wlQ be any great difference in the effect upon the coimtry of the use of either one of the two methods. What do you have reference to ? The time in which the thing should take effect or the manner in which it would be done ? ' ■ Mr. Anderson. I do not have reference to any time in particular. Of course, time is one element, but under a food controller it might be possible to do it more gradually, perhaps, and it would be possible, I take it, to make better provision for the men employed m those industries and matters of that sort. Mr. Dinwiddie. Let me say that I think these facts are probably about as well known to the committee as they are to us. I do not claim to be an expert along the line of manufacturing intoxicating liquors. I am certainly not an expert ia its use; but a great many of the distilleries are being put to other uses now because of the peculiar conditions in the distilling industry. They have been curtailing production because there has been a diminution of demand. They have been overstocked. They have agreed among themselves in tne last several years to curtail production because there is so much liquor in bond. Those plants could be immediately utilized without any waste at all, and they are now being utilized in many of the whisky centers for the production of a prime necessity in a emergency like this, industrial alcohol; and. the breweries could be converted into other uses very promptly with very small expense. (The committee thereupon took a recess until 2 o'clock p. m.) AFTER recess. The committee met at 2 o'clock p. m., pursuant to the taking of recess. The Chairman. Gentlemen, I want to make it plain in the record, in reference to some matters that happened this morning, that mem-, bers of the committee are not only justified in developing but it is their duty to develop the viewpoint of witnesses who appear before the committee. It is hardly fair for witnesses appearing before the committee to send out press stories as to whether a particular witness • did or did not make a favorable impression upon the committee. That is a matter for the committee, and not for those in attendance upon the committee, to decide. The question arose in connection with certain telegrams that are going into the record with the con- sent of the committee as to whether certain witnesses did or did not make a favorable impression on this committee. The committee will decide that matter itself, and it is hardly proper for those who' are here byjthe courtesy of the committee to assume to inform the public as to the impression made by any individual witness upon this com- FOOD PKOIKJOTION-, CONSERVATION, AND DISTRIBUTION. 203 mittee. I feel that this statement ought to be made in justice to the members of the committee. - Mr. Leshee. That was my object this morning in stating that the fentleman did not make a favorable impression upon me. I did not now about the rest of the committee. The 'Chairman. I did not hear the testimony of the gentleman, «xcept in: very small part, as I was on the floor of the House trying to obtain consideration of the biU. STATEMENT OF MR. EDWIN C. DINWIDDIE— Resumed. The Chairman. Before you begin, Dr. Dinwiddle, I wish to say that we would hke you to make your statement as brief as you can, and I also wish to say to the committee that I would like their ques- tions to go to the heart of this proposition so we can make progress. We have got to conclude these hearings some day. Mr. DiNWiDDiE. Mr. Chairman, I rather got 'the impression you gave permission for me, and I included in my own mind permission to our council, to file a brief on the legal side of the proposition as to the authority of Congress to pass legislation of this cnaracter. With the imderstanding that that is satisfactory to the committee, I really liave no desire to take a minute of the committee's time further unless you desire to ask questions. The Chairman. We appreciate that. Dr. Dinwiddie. Mr. Dinwiddie. I realize how busy you are. The Chairman. When the committee recessed Mr. Thompson desired to ask you a question. Mr. Thompson. Mr. Chairman, I desired to ask a question before Mr. Anderson asked his question. The answer to the question Mr. Anderson asked answered the interrogatory I was going to propound, which was whether or not he wanted prohibition provided in the bUl, or was wiUing to submit it to the President like the rest of the provisions of the bill. He has already answered that question. The Chairman. Dr. Dinwiddie, the briefs you refer to are not very long? Mr. Dinwiddie. No, indeed; not over seven or eight pages at the most. The Chairman. I think the committee would be very glad to have a brief of the legal authorities. I think that will be very helpful to the lawyers on the committee, but the committee does not want the record encumbered with a lot of matters we have already gone into. Mr. Dinwiddie. I think you will find we will regard the wishes of the committee along that line and will not encumber the record. The Chairman. If that is aU, we are very much obMged to you, Doctor. STATEMENT OF MR. JOHN A. MoSPARRAN, OF FTJRNISS, LANCASTER COUNTY, PA., MEMBER LEGISLATIVE COM- MITTEE OF THE NATIONAL GRANGE. The Chairman. Gentlemen, Mr. Wilson, president of the National Orange, was here this morning prepared to testify, but I understand from Mr. McSparran, , who represents him now, that Mr. Wilson is ill this afternoon. 204 FOOD PRODUCTION, CONSERVATION,. AND DISTRIBUTION. Mr. McSpabkan. He is in his room at the hotel. The Chairman. Mr. McSparran, who is one of the legislatiye repre- sentatives of the Grange; is present, and I would like to have his views- on this subject. Mr. McSparran, may; I submit this thought to you: The details of this bill, of course, will have to be worked out. I think the committee desires to have you address it largely upon the proposition of whether or not the organization which you represent IS willing, first, to confer these large powers either upon the President himself outright or upon the President acting through some agency created by him; and second, whether or not your organization has any views on the proposition of fixing a minimum guaranty price to the farmer on the one hand and a maximum price to the consumer on the other. I believe those are the two vital propositions involved in. this bill. Mr. McSparran. I will say right here that we have not been able to hold a meeting of the National Grange on this proposition. You understand that this question has come up since our November meeting, very largely, the question of commandeering the food, amd so on. All that proposition has come up since then. We have made an effort to get as nearly as we can, without having a general meetmg of the Grange, the feehng of our people upon these subjects, ana therefore the executive committee of the National Grange and the legislative committee of the National Grange, coming from the several different States, have been called together and we have gone over these questions carefully, besides getting some correspondence from the States themselves. I wanted you to know that we have made an honest effort to try and find out what our people think on these new questions, because the last meeting we had last November did not cover the propositions except certain general principles whiok underhe all this matter. We feel that there are certain principles outlined in these bills that are faulty and possibly dangerous, and I want to call your attention to some of those propositions. In the first bill, No. 4188, there are some $18,000,000, as I take it, to be given over for the development of agriculture, and a good many of those general classifications, as we have been able to understand their meanmg, are very largely a ques- tion of jobs and an enlarged Department of Agriculture; or, as some choose to call it, putting the Department of Agriculture on a war footing. The Chairman. Mr. McSparran, if you will permit me, that is not an issue before the committee. That bill has received practically the unanimous support of the committee and is now on the calendar of the House with a favorable report. Mr. McSparran. It has passed your committee ? The Chairman. Yes. Mr. McSparran. Then the biU is 4125. The Chairman. Yes; 4125. Mr. McSparran. There is in No. 4125, section 3, the estabhshment of general standards. Now that proposition as a general proposition we feel is very delicate because we have found this to be true, in State legislation and in National legislation, that the fixing of the size of containers and aU that setting up of standards have a very great tendency in shutting out the Httle fellow. .FOOD PRODUCTION-, CONSEEVATION, AND DISTRIBUTION. 205 The Chairman. If you will permit me in that connection, because we want to save time, I think it is safe to assume that the redraft of this biU as I shall present it to the committee later wiU not contain that section at all. Mr. MoSparran. I am very glad to hear it. Then that brings us to the question The Chairman (interposing). Of course, that would not control ihe action of the committee, but that will be my suggestion to the committee. Mr. McSparran. If that is the feehng of the chairman of the com- mittee, I wiU just simply caU your attention to the fact that we feel that that is a dangerous proposition to go into, and we hope you will aU concur in strilorg it out. Mr..IlAUGEN. What section is that? Mr. McSparran. Section 3, which refers to containers, and so on. In reference to section 4, on the question of licenses, we have found that in the development of the question of license that while it seems a proposition that ought to work out for the welfare of the general public, yet it has a tendency to crowd out the little fellow, and the fellow who is not in the business as a specialty or as a particu- lar proposition is pretty nearly always compelled, when the Govern- ment comes in, either State or Federal, and lays down a lot of restrictions and compels him to take out a hcense to be recognized as being in that particular business it has a tendency to crowd him out. ' "flieref ore we feel at this time that it is not a wise proposition for the Federal Government to go ahead and attempt to license these people, and that follows right on what I intended to say about that other bill, and I. was of the same impression, that it had been referred out. Mr. Young of North Dakota. You mean this biU, H. E. 4188? Mr. McSparran. Yes; that that had been passed upon by the committee and referred out, and therefore it was needless to speak -of it. That is a matter which will require a great lot of machinery, and surely the- time is here now when the farmers of this country do not need any more machinery. I want to say for the intelligent farmers of the United States that we are getting sick and tired of being served out education whenever we come to a Congress or a legislature for justice and for an equal show before the law. The farmers of the United States can grow stuff and can attend to their own business, and they very largely know how. There may be certain sections where that is not true, but, as a rule, there is some- body in every section who knows the business of farming and the people of his immediate neighborhood have more confidence in him than anybody the Government at Washington or the governments in the capitals of the several States can send into that community; and we are getting a Uttle restive under this infernal information business. We have been swamped with information, and we have been ruined by lack of adequate legislation to give us a fair chance on the markets of the world and in the general social status of the world with regard to taxation and all those affau-s. Therefor^ I want to call your attention to the fact that we do not feel at this time that it is a wise thing to Utter up the industry of this country with a lot of high-paid supervisors and people standing over us and telling us what to do. 206 FOOD PEODTJCnON, CONSEBVATION, AND DISTEIBUTIOM-. The fact is we can not make a living out of our business. It' is a. difficult problem to-day to get our business in such shape that we can keep it together. We can not keep our own boys and girls who have been bom and raised on the farm and aU of whose associations of childhood are there. We can not keep them and it is not hard to see why. Eight in Pennsylvania, I can go into Mr. Lesher's district— I just happen to think of a case or two I heard of yesterday-^-and there are farms actually lying idle and there will not be a furrow turned this year because the whole family has left and gone to mu- nition plants where they can make eight or ten dollars a day. They have a mortgage on their home and they are in the munition plants, leaving the farms, and expecting to hft the mortgage on their home with the munition plant's wages. Now, we are up against that situation, and we are largely up against it because of the fact that there are so many things that have been heaped upon real estate in the way of direct taxation and indirect taxation that it is very difficult to get the people to take up the business. Then there is this proposition which you must not forget and that is, the American farmers do not have to farm. Just as quick as the conditions are made such that he can not make a living, he will go into 'the cities and crowd the city boy and girl off the bench. He has been doing it generation after generation, and he can continue to do it and he will do it just as soon as conditions do not pay on the farm. They are not paying now, and they have not paid, and therefore in all your consideration of this question of agriculture you must bear that in mind. We do not ask for class legislation. We do not want the Government to make pets of us. We do not^want the Government to put us on a plane by oui selves, and we have in certain cases resented some attempts on the part of the States and the Nation to do that to a certain extent. Mr. Haugen. You mean that you do not want to be treated as wards ? Mr. McSpaeean. No: we do not have to be. Mr. Haugen. We have treated the Indians as wards, but have recently released them. Now, then, the white people ought to have something to say about it, also. Mr. McSpaeran. The very fact that the farmers of this country have sent into the cities of this country generation after generatioit the boys and girls who have been the vital lifeblopd of the industry and the commerce of this country is evidence that they have got the brains; they have got the common sense; they have got the- education; they have got everything that is needed to take are of themselves in the hie of this Nation. But they have not been fairly treated, and the reason they have not been fairly treated is because of the fact that they have been so careless. A lot of people think it is because they have not any better sense and because they do not know how to defend themselves; but the real reason is that they have been careless about their industry, because they know the moment they choose to lay down that industry they can go and crowd the other fellow out of his business, and that is just what they are doing and have been doing for generations. Mr. OvERMYER. Do you think the campaign of education which you complain about might not have resulted in many instances in improving the comforts and conveniences of farm hfe, and that that. FOOD PRODUCTION, CONSEBVAHON, AND DISTEIBUTION. 207 probably has helped to keep at least some of the young folks on the farms? . Mr. McSpaeran. Well, I think that the conveniences of the comi- fcry have not been brought there because they did not know any better. A great many of the farming people have been to town once or twice and they know what an up-to-date water-closet is; but the trouble is they have not had the money to put in those things, and the ones who have had the money have put them in and are contin- uing, just as they are able to do so, to put such improvements on their farms. Mr. OvERMYER. Farm hfe is not as imcomfortable to-day as it ^as years ago, is it ? Mr. McSparran. Oh, no.. Mr. OvERMYER. Do you not think that this campaign of education has helped to bring about that condition to some extent ? Mr. McSparran. Very shghtly. I think that that is due to the application of machinery and things of that kind. Mr. OvERMYER. Do you not call that education ? Mr. McSparran. Not education which has been handed to us. It is possibly education in a way. Mr. Young of North Dakota. AU kinds of people hve better to-day than they did 10 or 20 years ago. Mr. McSparran. Oh, yes. I think if a comparison was made it would be found that the farmer is going a little slower than other people. Still, that is just a guess. Then there is another provision here which we have fought con- sistently as a general principle, and that is the effort to make legal- ized adulterations. If you will turn to section 7 you will find you have provided there for mixed flours to be sold under brand. Now I need not explain to you that that is a very dangerous proposition, because now, of all times, we need to keep our foods pure. It is aU right for the Department of Agriculture to send out bulletins to the houswives of the country that they can safely mix so much corn meal with their flour or so much rye meal or rye flour or whatever it is, but to allow manufacturers to do so is another proposition, es- pecially when we realize that our big milling interests are to-day dominating the situation to an extent that is out of all reason to the proportion which they had to pay for their wheat, and it seems like a very unjust proposition to now allow them to come ia with adid- terations. Mr. Anderson. May I ask you a question right there ? Mr. McSparran. Yes, sir. Mr. Anderson. Do you know of any large wheat milling concern which is not objecting to this provision just as strongly as you are? Mr. McSparran. Well, I guess you are right about milling con- cerns. I was not thinking just then of the milling concerns. There are other large interests that are not objecting to it. Mr. Anderson. Quite so. Mr. McSparran. I guess you are right about the strictly rnilling interests. I will not differ from you on that, but the proposition as outlined there we consider a dangerous one. Mr. Anderson. It is dangerous in this way, you will estabhsh all over the country mixing concerns which will, hj mixing corn products with wheat products, dominate the whole situation. 208 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. McSparran. Yes, sir. Then we come to section 11. which brings up the question of potable alcohol. Now I think^upon that question our policy is so definittely and clearly outlined that we can speak for practically every one. There could not be a vote taken anywhere from the Atlantic to the Pacific that would not have the one result on the question of potable alcohol. They are against it from Maine to California. In our estimation it is not a question of simply diverting so many hundreds of millions of bushels of gram for the making of potable alcohol. I think you understand our position, because we have appeared before you before on the question of indus- trial alcohol, and it does not destroy to any large extent the food value of a bushel of grain to take the alcohol out of it. It simply takes a certain portion of the carbohydrates; nor is it true that the highest quality, as a rule, of those food products go into the making of alcohol. For instance, you can make alcohol out of food which is more or less rotten, corn that is more or less moldy and diseased, and fruits that are more or less rotten, and which are practically, or to a certain extent, unfitted for human food, and therefore the con- tention that by simply taking away these bushels of grain of different kinds that are going into alcohol you will relieve the country from the burden of potable alcohol, I think can easily be shown to be a fallacy. In the first place, there are tremendous quantities of liquors already made and in the bonded warehouses which would possibly last the length of the war. Mr. Anderson. Do you know whether it is a fact that an agreement has been made between the distilleries to limit the production of distilled liquor because of the facts you have just stated? Mr. McSparran. Well, there are lots of them that have had to go out of business. I know in our own State we had quite a number of them, and a lot of them have simply gone clean out of the business, and I think they have gone out of the business 'for good. There is not any doubt but what theif business is being curtailed. But the point I want to leave with the committee on that proposi- tion is this: Here we are with not enough labor to do the necessary work on the farms and in the shop and in the factory. At the same time we are maintaining a situation by means of potable alcohol that prevents our labor from ever coming up to the full measure of effi- ciency. There is not any doubt about that. That is the fact, and nothing is so plain. The question of efficiency has been worked out scientifically, and there can not be any difference of opinion about it. The man who is drinking whisky is not an efficient man or worker. The Chairman. What is your objection to this section? Do you want to give the President power to close down these breweries and distilleries whenever he wants to do it ? Mr. McSparran. The particular objection is that the constitu- tional problems — and that is the reason I can not make a specific answer — the constitutional problems that come in there make it so that we can not say to you, "We want to pass a certain kind of law." We could do that, if we had the constitutional end of it, or if we had the constitutional end of it fixed thoroughly in our own minds, we could do that, and we would make such a recommendation; but at this time we know that there is a wide difference of opinion, and, of course, as you know, we farmers are not lawyers. Mr. Young of North Dakota. What is your suggestion about that? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 209 Mr. McSparran. That you keep it away from these people during this emergency. . .The Chairman. What is your objection to section 11? I under- stand that your objection is to the language, "or nonalcoholic beverages." Mr. McSparran. I wondered what that was in the bill for.' Now, I do not think that that question should be put up to the President! I say this in all courtesy, because I am a great admirer of Mr. Wilson, and I say it without the least feeling of desiring to cast any slur upon him; but I do not think that the Czar of Russia has half the power that the President of the United States has. He is the Commander in Chief of the American Army- Mr. Anderson (interposing). He certainly has more power than the Czar now. Mr. McSparran. I Imow, and we look upon Russia- The Chairman (interposing). It is a democratized Russia. Mr. McSparran. Yes, sir. It has gotten to be the fashion or custom to delegate everything to the President. Now, I do not like that. I think that you gentlemen were given certain powers in this most wonderful Government that the world has ever seen, and that there was a coordination of power and responsibility. That was done very wisely, and it was done for the purpose not of de- stroying the influence of a good ruler but of preventing the dictation of a bad one, and whenever you set up this precedent of giving over to the President the control of anything outside of the control of the safety of the country, you are doinga dangerous thing. It has always been recognized as a fact that the President must be the Commander in Chief of the Army, but when it comes to the control of the food supplies of the United States, and things of that kind, it seems to me that, inasmuch as he must give into the hands of subordinates the absolute control of this proposition, because he can not personally see to all of these different thin^ Mr. Anderson (interposing) . Do you think that the idea that you have just expressed apphes with the same force during the present emergency that it does to ordinary times of peace ? Mr. McSparran. Well, we have found this, I think, to be true in our coimtry, that many times a so-called emergency has been the excuse for the inception of a principle that could not have been established in times of peace. For instance, if you will look back to every war that we have ever had you will find that at the conclusion of the war we have had saddled upon this country a larger military establishrhent than we thought was necessary before the war. Now, ossibly the conditions of war are partly responsible for that, yet, think it is true that sometimes there are certain closely organized interests that want to put certain things over on the coimtry that they would not dare in times of peace to come out for and make a propaganda among the people for; they would not in times of peace apjieal to the people on the question of the advisabiUty of adopting their propositions, but they say, "we will get it in time of war and stress." For instance, when there is a big strike among the laborers of the country, or when there is war in the country, or when there is a great money panic, or something of that kind, they will try to accomplish their purpose. They wiU take some form of stress, and by reason of that form of stress" they will get an entering wedge and 104176—17 14 r 210 FOOD PRODUCTION, CONSEEVATTON, AND DISTRIBUTION. establish a policy that they would not be able to establish but for that time ol stress. Surely you gentlemen will be called upon m this time of stress to cull out a big bunch of bad propositions that will be submitted, not with any idea of aiding the country, but for the purpose of serving some special privilege. Mj. Young of North Dakota. Is it your idea to-day, then, not to confer on the President that authority in section 11? Mr. McSpaeran. Yes, sir. Mr. Young of North Dakota. But to settle it by congressional act ? Mr. McSparran. Yes, sir. Mr. Anderson. There is a section in this bdl w;hich limits opera- tions to the period of the war and one year thereafter. Do you thiuk that the objections which you have just stated apply with their full force in view of that fact ? Mr. McSparran. Yes, sir. For instance, if I am correctly in- formed, without expressing any opinion upon it one way or the other, the big high tariffs that have been saddled on this country during the last 60 years were put there as war emergency measures during the Civil War. I have been informed time and again that that was true, and I think I am correct about it. I am informed that certain con- dition3 were held forth there, but when the war closed and the people went back to their ordinary activities, there were certain people who were directly interested in the development of that proposition who saw to it that Congress did not take action immediately upon the close of the war, and doubtless there were certain conditions estab- lished that were difl&cult to get rid of. I think that also refers to what I was saying about the military conditions after every little scrap that we have had. Mr. Young of North Dakota. We did not have any big army when we started this war. Mr. McSparran. Tt works down, of course, between times. Mr. Anderson. We had the smallest militar;^ establishment we ever had soon after the Revolutionary War, and a small one after the Civil War. Mr. Mc'^PARRAN. Yes; because the fact is, I think, that you wiU find that the law gave you wider latitude than you used. I admit that you had good legislators and good people in ofRce who did not go to the limit of the law. Mr. Haugen. The fact is that the authorized army has been main- tained at only about half strength,. and the reason that we did not have an army is because the people did not enlist in it. Mr. ^Ic^PARRAN. The law was there. Mr. Haugen. '^o the military people got their work in; they did their part of it, but the people did not respond. Mr. McSparran. Now, I want to say in reference to that potable alcohol question, whether it is a question of preventing raw materials from going into use or a question of taxing it to death, or whatever it may be, certainly we are the people who are suifering most from scarcity of labor. That is true, because the people who are paying $8 and $10 per day in wages will get their labor, but the people who have to depend upon wages of 11.75 per day, as we have to pay our labor, can not get it easily. Therefore we will have to take what is left. If you people are going ahead now and allow the laborers of this country that the farmers use — if you are going to allow these FOOD PEODUCTIONj CONSERVATION, AND DISTRIBUTION. 211 people who ought to be held free from this temptation and from this curse in this emergency to be exposed to it, the conditions will be bad. You should do something, imless it is true that you can not find a constitutional way by which it can be encompassed. If you can not do that, then you will have to carry the responsibility of telling us to go into this emergency and through this emergency handicapped with the curse of liquor. There are just a few suggestions that I want to make upon this certain proposition. I want to say that whatever regulation you to make, whether you put them in the hands of a commission or put them in the hands of the Department of Agriculture, or wherever you put them, there are certain things that we feel you will have to ob- serve. In the first place, you will have to encourage storage. You will have to in some way provide it, or get somebody else to provide some place by means of which these products will be kept, because it is a sad fact — I do not know that I will qualify it that way — I will not say that it is a sad fact, but I will say that it is a fact that the farmers put the great bulk of their products on the market very soon Mr. Anderson (interposing) . May I interrupt you there to say that just before I came up here I looked at those figures, and I learned that about 58 per cent of the wheat that comes into the primary market comes in during the period from September 1 to January 1. Mr. McSparran. Yes, sir. It is out of all proportion to the total crop, and that is the reasonable way. Farmers as a rule must sell their crops as they make them because they can not afford to hold them. They must market their crops, and, therefore, some pro- vision must be made for taking care of these products. Now, there has been a great stimulus in the matter of perishable products — potatoes, garden truck, and things of that Mnd — and it is really possible that when fall conies there will not be found a system of distribution that will give to the people of this country as producers rehef from the situation of having perishable products spoiling on their hands, and that will give those products to the consumer in a form fit to eat. That is really the proposition that is serious. It does not require much effort in this country for us to slump the perishable products market tremendously, and you can not make a substitute of perishable products for staple products. Therefore, you ought to know where the storage is and how much it is. Testimony was given here before the Federal Trade Commission the other day by the Department of Agriculture to this effect — I can not quote it correctly, but it was to the effect that the Department of Agriculture could find out how much was in storage in the storage warehouses that would tell them, but that they could not find out under the law how much there was in the warehouses that would not tell them. It was found that the packers were the ones that did not tell them, and they are the ones that are manipulating the whole proposition. As a consequence, the Department of Agriculture has published the amount that was held by the feUow that was on the outside, but as to the feUow that was on the inside who was really doing aU the devilment, they did not know what was m storage. He was the one that was manipulating the prices. Mr. Anderson. We tried to remedy that in a bill that was reported the other day. Mr. McSparran. I see you have done that. 212 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. The Chairman. Are you in favor of that provision? Mr. McSparran. I am in favor of. the United States findmg out how much food there is in storage, because we have felt for years, so far as we have been able to obtain the figures, that there is not anything like the storage in this country that there ought to be,; we feel that there ought to be every year a great deal more of the products of this country taken up and put into storage than is being done to-day. We find that it is true, not only here, but in the States, that the tendency is oftentimes to manipulate the length of time of keeping them in storage so that it militates against the annual dis- tribution of the crop, and we feel that storage ought to be based on taking care of the crop through a 12-month season, and th^t everybody ought to know how much there is in storage. The Chairman. As a practical proposition, how would you do that ? Mr. McSparran. In the first place, I think if you make it com- pulsory, or make it so that you can go into every storage warehouse of every person in the United States who pretends to nave storage and make him show his books, that will give you what we have now. Then it will be up to you to determine whether or not that is suffi- cient, or up to the authority in whose hands you put it. It will be up to them to determine whether it is sufficient to take care of the supply that will answer the needs. The Chairman. Assuming that it is not sufficient; that is, that the storage is not sufficient, what would you do ? What is the next step you would take ? Mr. McSparran. I think if you put every storage man on the same ground, many would go into the storage business. I do not feel that ' the Government would have to do it directly. I hope not. The Chairman. I was trying to get your viewpoint. Mr. McSparran. Whether the Government should go into it The Chairman (interposing) . Well, that or otherwise. Suppose a farmer himself is not storing it; suppose he does not take his grain to the elevator or his cotton to the cotton warehouse and store it, and you need it. What will you do ? WiU you commandeer it, or not ? Mr. McSparran. You want to find out how wiU you get at what is held on the farm ? The Chairman. Not necessarily on the farm, but anywhere else. Mr. McSparran. So far as holding on the farms is concerned, the fact is that the fanner does not hold enough. The Chairman. I appreciate that. Mr. McSparran. When you go outside into those public institu- tions, where they work under licenses or under charters or under some form of public service inspection, then you ought to have the right to go in there and see what they have ; and in war times, while you have the power to conscript men, it seems to me that you ought to have the right to conscript every other kind of stuff that is required. I was told yesterday that the Government has not the authority to con- script property. If that is true, then our Constitution or something else ought to be changed, for surely we can not allow the men of this country to be conscripted while at the same time you can not go and take a rag from anybody as a matter of property. The Chairman. We can confiscate property. Mr. McSparran. I thought so, but I was told yesterday by a well-informed person that the Government could not do that. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 213 The Chairman. I am not a lawyer myself, but I think the lawyers on tne committee will take that view. Mr. Anderson. You may conscript property for the Armv Mr. McSparran. That is the point. Mr. Anderson. But it seems to me that your proposition goes further than that. In a situation such as we are in now we can probably have conscription for this civil population. ' Mr. McSparran. Tt is recognized nowadavs that the handhng of the war is not simply a question of having an Army in the field For instance, you must have people on the farms who will grow crops on the basis of the war emergencv. That is required, not only to take care of the army, because Uncle Pam can buy all the thin(4 for the Army m the field for a good many vears, but it is a question maintaining the weKare of the whole people and maintaining the war conditions that will back up that Army. Then, if we are weak on legislation, that wiU enable the authorities to conscript these things or that will enable them to adopt the necessarv means to get those things, then that legislation ought to be seen to" Mr. Anderson. Let me get your idea on that subject. If I under- stand you, you take the position that if Congress has the power tO' authorize some one to control the food supply of the country, it ought to do it; that is, that we ought to mobilize it, see that it is properly distributed, and everything of that kind. Mr. McSparr.\n. I do not see any other way out of it, if it is a necessity. Mr. Anderson. I want your idea. Mr. McSparran. I said that our people would agree to that as a necessity, but we do not recognize it as a necessity yet. I think if we have to fight this war for three or four years it would become a question of going clean down to the very limit. Mr. Anderson. We are up against this difficulty: It is not always possible to g?t through Congress in a hurry a bill to do something that you ought to do, and we have got to forestall the conditions that we think we can foresee in the future. Consequently, if we are going to give anybody authority to mobilize the food supply of the country and prescribe its distribution; that is, to say how much any particular European ally may have from our general food supply, we must give that authority to somebody now. Mr. McSparran. Maybe you must. Mr. Haugen. You spoke of making a survey of the packing houses. Now, then, after you have finished the investigation and you have located the criminal, are you in favor of punishing that criminal ? Mr. McSparran. I do not see how you could avoid it. Mr. Haugen. Well, I ask you the question. If you will examine this bill, I think you will find that there is no such provision in it. There is no such provision in it, is there ? You declare it to be an Unlawful act in this bill, but there is no appropriation and no fine to be imposed upon the criminal. Now, what I want to get at is this: Do you think it is necessary to punish the criminal or the offender ? Mr. McSparran. I do not feel that it is at this time, because I believe the thing for you to do now is to find out the real conditions. Personally I have felt for years that you will find on investigation 214 FOOD PRODUCTION, CONSEEVATIOK, AND DISTKIBTJTION. that there is not storage enough to be a menace to the welfare of our people. • t . - Mr. Haugen. But we are referring now to the manipulator ot prices. I am referring to the fellow that puts artificial prices on food products, and who, under the law, is supposed to be guw of violating the antitrust laws. The trouble is that someone has held out the proposition that the laws are not being enforced. That may be true to some extent, but the real trouble is in the making of the laws. The trouble is due to these jokers that have been slipped in. For instance, the Federal Trade Commission has authority to investi- gate; they may investigate corporations, but when it comes to companies and individuals, they go scott free, and we have the companies and individual doing. the dirty work while the corpora- tions do the nice work. The companies and individuals split ship- ments, market shipments at sacrifice prices, and all along the line adopt the thousand and one ways of doing those things, but they go scot free because they are not corporations. Now, the trouble is not so much in the enforcement of the law, but the trouble is in the law itself, or in the way in which it is written. We are undertaking here to write a law that leaves the same loophole. They can violate the law, and manipulate prices and put them four times as high as they ought to be, and go scot fj-ee. Some Senator said the other day that they ought to be hung to a lamp post for doing that, and I agree with him. No"', the question is should there be some provision in this act to look after them ? Mr. McSpakban. My feeling in this is that speculation and dealing in margins have a great deal to do with price fixing. Mr. Haxjgen. In my district to-day potatoes are selling for $2 per bushel on the farm, but the feUows who are manipulating the prices are selling those potatoes to the consumers at $4.50 per bushel, and it costs only 25 cents per bushel to handle them. That is what I want to get at — the manipulation of prices. They control the prices absolutely. The same thmg is true here in Washington. They can go into a room here and fix the price of bread for to-morrow, or thej can decide what the price of beef shall be to-morrow. They have it in their power absolutely to say whether it shall be up as high as 50 cents or down to 30 cents, and they are the fellows I would like to go after for once. Mr. McSparhan. I would, too; but if a fellow buys a thing for 12 and sells it for $4 and the other fellow is fool enough to pay him $4 Mr. Haugen (interposing). He is compelled to do it. Mr. McSpaeran. Not if you have a proper system of distribu- tion Mr. Haugen (interposing) . What is the system ? Mr. McSparran (continuing) . Or else it is due to a lack of intelli- gence on the part of the fellow making the purchase. Mr. Haugen. It is not due to any lack of intelligence; because they are forced to do it. For instance, I will cite one instance. There is a place where potatoes are selling to-day at $4 per bushel, while within 20 nules of that place they are selling for $2 per bushel. The farmers and shippers undertook to ship potatoes into that place and made apphcation for cars, but the railroads would not supply the cars. They claimed that it was not possible to unload them, FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 215 and that the potatoes would rot before they could get to them. Those are the things that we are up against. i, Mr, McSpaeean. Of course we all recognize the fact that the rail- roads have absolutely fallen down on their jobs. Mr. Haugen. Are you in favor of punishing those people — the manipulators of prices ? Mr. McSparran. Yes, sir; if you can segregate them; but here is the difficulty that we see in the matter: In Pittsburgh, day before yesterday, potatoes were selling for $2.70 per bushel, while at Wilkes- Barre they were selling at S4.10 per bushel. Now, that was not a case of price manipulation as between Pittsburgh and Wilkes- Barre people, because Wilkes-Barre has more potatoes close to it than Pittsburgh. . Mr. ,Haugen. How much does it cost to get them there ? Mr. McSparran. They do not get any potatoes from Pittsburgh. They are both great consuming sections, one occupied by the United States Steel Corporation and the other by the Anthracite coal inter- ests. They are both consuming sections. Now, there is something desperately lacking in the distribution when potatoes are going from Michigan, New York, and Maine to Pittsburgh at S2.70 per bushel and to Wilkes-Barre at $4.10 per bushel. The Chairman. Is it due to the fact that there is no central control over shipments in this country? Have you not a glut of potatoes in one of, those markets to which you have referred and a scarcity in the other market, because nobody has the power to say, "You can not ship any more potatoes to Pittsburgh, because you have too many there, but you must ship them to Wilkes-Barre, where they have not an adequate supply"? Suppose you had some such central control as that. Mr. McSparran. When you have a control hke that over the potato crop, then you wiU be up against that in all other things, all along the line The Chairman (interposing.) Suppose you do ? Mr. McSparran. Then you will have a very strongly centraUzed Government. The Chairman. Did you ever hear of a war being won by any country except an autocracy ? Mr. McSparran. No, sir; and the war proposition The Chairman (interposing). We are considering this bill from that standpoint. I say this to you, because I have great respect for your good judgment, and I know that you are thoroughly in earnest about this matter. I will say to you that we are not con- sidering this bill as a peace proposition, but we are planting in the bill the seed for its own destruction. That was suggested by Mr. Hoover when he appeared before the committee the other day. 'We are considering this as a war measure, and there are certain phases of this legislation that do not represent our peace views at all. I would not stand for some of the provisions m this bill for half a second in peace times, although some of them are all right in pieace times, I think. We want to consider this proposition in the light of the war emergency. So far as the constitutional objection is con- cerned, we wifl take care of that. Mr. McSparran. WeU, I do not find much in the bUl that covers anything but the food situation. I do not see anything, for instance, 216 FOOD PKODUCTION, CONSERVATION, AND DISTBIBUTION. to prevent 8-cent gasoline from selling for 25 cents; I do not see anything that -would prevent Farquar from selling farm machinery m South America cheaper than he does in Pennsylvania, somethmg he ' has been doing for a generation. The Chairman. The bill covers foods, feeds, shoes, clothing, fuel, and other necessaries of hfe, and articles recLuired for their produc- tion. The language "necessaries of life" might be defined to cover anything from the sky to the bottom of the sea. Mr. McSpaeran. I understand that, but section 3 provides that' "the Secretary of Agriculture may"; section 4 provides that "the Secretary of Agriculture shall"; section 6 provides that "the Secre- tary of Agricmture is authorized"; section 8 provides that "the Secretary of Agriculture is authorized," and so on all the way down the line. You talk about that in your preamble; in the preamble you talk about the whole proposition, and then make your machinery for only one side of it. Now, we are not disposed to submit to these stringent regulations that you seek to impose upon the farmer unless you put the screws to all of them. The Chairman. I think 1 will be safe iii saying, and I think I am not violating any confidence in saying — if I am, it may be stricken out of the record — ^that our judgment is that there ought to be some such central control for practically all of the things necessary for the life of this Nation. Is that violating any confidence ? Mr. Haugen. It is a discretionary power. It is a discretion to be lodged in a certaui commission or board. Mr. McSparean. Of course this bill has been out but for a few days, and I have only looked at it hurriedly. The Chairman. This is the Agricultural Committee, and we do not have jurisdiction over certain other things. For instance, the Military Affairs Committee or Naval Affairs Committee would have jurisdiction of munitions. Mr. Haugen. I understood you to say that it should be more than discretionary, and that it should be mandatory upon the commission to do these things. You do not want to be hung up in the air; you do not want to have a club hanging over you, but you want to know in advance what is going to be done. Mr. McSparran. It ought to be done as carefully as you can, because it is done as an emergency measure and it is compulsion all the way through. I do not Imow that our people will kick about it any more than anybody else, but we do not want to be singled out. Mr. Haugen. You see the Secretary of Agriculture might do certain things, or this board, or whatever it may be, might fix a price, for instance, but the farmer does not know in advance what that price will be. It may bo 30 cents for wheat or $4. The farmer is up in the air, and he does not know what will happen. He wants to know defuiitely in advance what will be done so he will have a line on it entirely. Mr. McSparran. Then, you are bringing up the subject of mini- mum price. Mr. Haugen. It applies to all of them. Mr. Young of NortTi Dakota. You have not discussed the price question. Mr. McSparran. No, sir. FOOD PEODUCTTOK, CONSERVATION, AND DISTEIBUTION. 217 Mr. Hatjgen. You would want to know in advance what is to be done, and you do not want to leave it in somebody's power to con- fiscate your property. You want to know what you wiU get. That is, the price should be fixed definitely at this time. It should be done, that way or we should determine not to interfere with prices at aU. If the price is fixed definitely, then the farmer wiU know just what to expect. I take it that farmers in buying stockers and feed- ers at 9 cents per pound might fear that they would have to sell them at 5 or 6 cents per pound. The farmer ought to have some definite information about it. Am I right ? Mr. McSparran. On the question of price fixing, our people are not by any means united, and, therefore, I hesitate to speak as a representative of our people on the question as to the advisability of fixing minimum and maximum prices, but I do want to say this in connection with it, on the question of a minimum price — and I sat here this morning and heard that question discussed a good deal — I do not think there is any particular relation between a min- imum and maximum price. The minimum price is no more nor less than the contract the Government would make for so much goods at a certain price. Mr. Haugen . A guaranteed price ? Mr. McSparran. Yes, sir. Now, the question of a maximum price is whether or not, in the natural development of business and the speculative tendency in the operations of middlemen, boards of trade, speculators, and all that — ^whether or not the consumer shall be charged more for a commodity than a proper amount over what the producer receives. That is a police regulation, as I see it, while the other is a mere contract regulation. We had a conference a few weeks ago with the Secretary of Agriculture, and there were several big farm organizations that were represented in that con- ference. The question of fixing a minimum price was brought up, and the statement was made that there was some actual shortage; that they had made an investigation, and that there reaUy was an actual shortage of food supplies and that there was danger of the the people starving to death. Now, we could not find anybody who was willing to take responsibility for that statement. The Chairman. They did not have the facts nor the authority for getting the facts. Mr. Haugen. Then, why did they make that assertion? The Chairman. They did not assert it He said Mr. Hatjgen (interposing). I understood him to say that they stated that there was danger of starvation. Mr. McSparran. I said the statement was made. According to the newspapers and general sentiment there was a great shortage, and we were called here to consult with the Department of Agricul- ture on the subject of this shortage. Then, when the question as to the actual condition arose, there did not seem to be anybody who was willing to stand iip and say that this Nation was in danger. Mr. Haugen. I was informed by gentlemen here that they said so in an official communication from the department. Mr. McSparran. I do not think there is any doubt about that, but I do not remember. Mr. Haugen. They certainly asserted that there was a shortage in the supply. 218 FOOD PRODUCTION, CONSERVATION, AND .DISTRIBUTION. The Chairman. No one doubts that the world's reserve supply of food is very low. Everybody admits that proposition, but nobody anywhere in this Government, so far as I know, has either, the author- ity or the money at this time with which to get the actual definite facts. They may express their opinions about it, just as we do. Mr. McSparran. Here is the point: Do you know of any particular data or facts upon which that proposition is based ? For instance, I sold my wheat for $1.41 per bushel, and the great bulk of the wheat in my neighborhood was sold for a good bit under $2 per bushel. Potatoes in car lots went out of Lancaster County under $1 per bushel, and when you find products on the farms at those prices Avhy would you look into every cuddyhole on the farm to see what they have there ? The Chairman. No sensible commission would undertake to do it. Mr. McSparran. There have been some pretty elaborate systems made out, because we have had them put up to us-r— systems that are going to need a tremendous amount of machinery in the Govern- ment. I heard Mr. Houston discuss it, and I think I can safely say that there is a tremendous amount of machinery involved in it, if it is to be attempted to be established along those lines. Now, if the farmers were getting on the farms in this country $4 for wheat and f4 for potatoes, etc., then it would be a very proper thing to look into, but there is something desperately wrong with it after it leaves the farm. The Chairman. There is no doubt about that. Mr. McSparran. There are several propositions involved in the general proposition of getting food from the producer to the con- sumer. It IS not altogether a speculative proposition. You take our raihoads, for instance, to-day, and you will see that they are paying milhons and milUons of dollars into the treasury of the Pullman Car Co., instead of giving it to their stockholders; they can give millions of dollars to the express companies instead of giving it to their stock- holders, and they can give large sums of money to the Union News Co., which is selling newspapers and oranges to the travehng public for three times what they are worth, whue the stockholders of the railroad companies should get that money. Yet the railroads are here crying for a 15 per cent increase in freight rates. They are to- day giving away all of that business, and then they ask the people of the United States to pay them rates of that kind. We can not handle our business in that way. If you will take a proposition of that kind and look into this question for a moment, you wdl see that it is not altogether a question of food speculation. For instance, the railroads have raised the carload standard for ■wheat. We used to ship 500 bushels of wheat to the mUl as a car- load, but to-day they require 744 bushels for a carload. That cuts out a whole lot of farmers who used to raise carloads of wheat, but with that increase to 744 bushels, they can not do it now. As long as we allow the railroads to give away their business and then come before the Interstate Commerce Commission and get rates on what they choose to keep for themselves, of course, we ■yvill have a break- down in our system of transportation. I had some information just the other day on this question of food storage. A member of our executive committee is a Scotchman; he came from Scotland, and iie has many friends and relatives in Scotland. He got a letter from FOOD PEODUCTTON, CONSERVATION, AND DISTRIBUTION. 219 over there showing that food is selling cheaper in England to-day than it is in Wilkes-Barre, Pa. The Chairman. In view of that statement, and that statement also appears in the London Times, because a friend of mine showed it to me — and your statement is true according to the London Times — now, in view oi that statement and that statement being true, don't you think that the time has come when some drastic measures should be adopted to control that situation in the interest of the American people ? Mr. McSparran. Yes, sir; if you can provide for it. If you can get a machine that will do that, it should be done, but here is what we find: We have provided a Department of Agriculture over here; and yet when we come in here on the question of oleomargarine, we do not get any help out of that Department of Agriculture; when we en,onefurtherquesti^on:^^ what effect, if any, has manipulation or speculation through boards 246 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. of trade and grain exchanges at this time upon the price of wheat and grain ? , Mr. EiKENBERRY. That is a very difficult question to answer from the fact that wheat practically is at the same level throughout the country. I do not gather that there has been very much evidence of undue influence by manipulation. The Chairman. Is it your idea that the price of grain is largely determined by the conduct of boards of trade, wheat pits, and the like of that ? Mr. EiKENBERRY. Oh, no. The Chairman. Your proposition is that the law of supply and demand governs ? Mr. EiKENBERRY. I think the law of supply and demand will assert itself. Mr. Lever, while we are on that point The Chairman. I would like to have your opinion, because you are in the trade and understand this business. Mr. EiKENBERRY. My optaion is that a large part of this seemiag manipulation of grain is brought about this season by poor distribu- tion. Now, that is just my private opinion, and I am not binding the association to that opinion. The Chairman. Just what do you mean by that ? Mr. EiKENBERRY. I mean our distributive facilities have not been as good as they might have been on account of the car shortage, we might term it. The Chairman. What effect, if any, do you think the competitive buying, or I will say the unrestricted competitive buying, by our allies of grain is having upon the price at this time ? Mr. EiKENBERRY. It has a tendency to enhance the price of grain; in other words, ' the law of supply and demand is asserting itself; that is all. The Chairman. Do you think the law of supply ard demand is responsible for the fluctuation in the price of wheat within the last week, within two or three hours, of from 25 to 30 cents a bushel ? Mr. EiKENBERRY. I am not capable of arswering that question; but I do think a readjustment of prices or of certain conditioES might come about by which such a change would be produced. The Chairman. What effect, in your judgment, upon the grain trade as represented by you gentlemen here, who are in the business and in direct contact with the farmers, as I understand^ Mr. EiKENBERRY (interposiug). Yes. The Chairman (continuing). What would be the effect upon you of the closing absolutely or the very close regulation of the operations of the boards of trade ? Mr. EiKENBERRY. You put two qucstious to me in one. The Chairman. Well, I will put one question at the time. What effect woidd the closing of these boards of trade have upopthe handlir g of the grain business ? Ml". EiKENBERRY. Demoralize it entirely. The Chairman. What effect would the close regulation of the grain exchanges have upon the business, with this thought in mird, that r o con tract shall be made except as a legitimate hedge agijhst the actual sale of flour or the actual purchase for future delivery of grain ; in other words, that the operations of the grain exchanges, be confined to legitimate hedgirg against actual stuff? POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 247 Mr. EiKENBERRY. I do not believe it would make any difference to the ordiaary grain dealer. Ttie Chairman. It would not make any difference to them ? Mr. EiKENBERRY. No, sir; not in the long run. The Chairman. On the contrary, would it not have the effect of very largely stabilizing the situation? Mr. EiKENBERRY. That is problematical, Mr. Lever, and these are theoretical questions. It might have and it might not have. I am not capable of answering that, and I do not believe anyone else is. The Chairman. You are aware of the fact, I presume, that the Liverpool Cotton Exchange during this war has been confined by governmental regulation to dealing in such contracts as represent hedging only, and I understand it has worked rather successfully. You thmk such a regulation would at least not demorahze the trade ? Mr. EiKENBERRY. No ; it would not demorahze the primary grain trade, the collecting of the grain and the country marketing. The Chairman. But you think the closing of the exchanges which would prohibit hedging transactions would demorahze the trade ? Mr. EiKENBERRY. XJndoubtedly. Mr. Wilson. If you closed them, in what way would that demoral- ize trade? Mr. EiKENBERRY. I Can best answer that question by citing you to the effect on the cotton proposition when the war broke out and the cotton exchanges were closed. You all remember the buy-a- bale movement and the panic which resulted from the fact that there were no fixed quotations. Under such conditions nobody has a basis on which to buy or sell, and that must be regulated. Mr. OvERMYER. If there was a shortage of wheat in this country, the price of wheat would not go down like the price of cotton went down at that time. Mr. EiKENBERRY. Not uecessarilyj and it might go up. It might have just the opposite effect. Those things are very difficult to figure. Did any of you anticipate that wheat would go up in Chicago 30 cents on the May options after the closing of the trading in May options ? Mr. Haugen. The cotton market was not the only one demoralized by the closing of the exchanges. Mr. EiKENBERRY. The grain market was not demoralized because the grain exchange, stayed open. Mr. Haugen. You claim to represent the elevator people through- out the country and you also claun to be a friend of the farmers and the consumers and you deal with them. Are we to imderstand you to say that a corner does not effect the price of grain ? Mr. EiKENBERRY. A comcr does. Mr. Haugen. Well, that was the first question asked you by the chairman. . Mri EiKENBERRY. No; he asked about the unrestricted trading m graiQ. What do you mean by a corner ? ' „ i, Mr. Haugen. I think you understand the term weU enough to understand the question. Speculation makes corners, does it not ( Mr. EiKENBERRY. There may be speculation in cash or in options. Mr. Haugen. Leiter says that such a feUow should be hung to a fence post, and he has had experience in corners. Mr. EiKENBERRY. That is true. 248 FOOD PRODUCTION, CONBEBVATION, AND DISTRIBUTION. Mr. Haugbn. Now you come here to vindicate every speculator and gambler, is that the idea? Mr. EiKENBEBEY. No ; I am not figuring on speculators or gamblers. Mr. Haugen. Well, we are talking about boards of trade and every- body knows what a board of trade is for. Mr. EiKENBERRY. Let me draw this distinction: I figure the board of trade is useful in so far as its transactions contemplate the actual delivery of the grain. I have no brief either to defend or to condemn spesulation as speculation, only the legitimate transactions. Mr. Haugen. We are all agreed about legitimate transactions, and that is not the question. Mr. EiKENBERRY. That is all I have to say about it. Mr. Haugen. Now we are going beyond that. How about the other proposition ? That is the question I asked you. Mr. EiKENBERRY. I Say I have no brief either to defend or to condemn speculation. Mr. Haugen. Are you here to condemn it ? That was the question asked by the chairman. Mr. EiKENBERRY. I did not understand the chairman to ask me if I was here to defend speculation pure and simple. I am not here to defend speculation. Mr. Haugen. What do you think about gambling and manipula- tion of prices ? Mr. EiKENBERRY. ' I did not want to take your time to differentiate between gambling and speculation, but I will do it if you desire. Mr. HLaugen. You have defended the other. I thmk we under- stand what gambling is. Mr. EiKENBERRY. I will defend it so far as to say that I do not think they gamble. Mr. Haugen. You do not think they gamble on the board of trade ? Mr. EiKENBERRY. A gamble is an absolute chance. Men who operate on the board of trade probably have information on which they operate, and there is a certain process of reasoning which.inducea a man to take this side or that side in a purely speculative deal; but I am not here to defend such a deal, understand that. But I do draw that distinction between gambling and speculation, as you use the words. Mr. Haugen. I understood you to defend that. Mr. EiKENBERRY. I do uot defend it. Mr. Haugen. What was the average price paid the farmers for their wheat ? Mr. EiKENBERRY. We started in in southern Ohio, the territory where we operate, at around $1. Mr. Haugen. I am asking the average price paid the farmers. Mr. EiKENBERRY. I prcsume our farmers averaged from $1.60 to $1.75 for their wheat. Mr. Haugen. I think the testimony here is that they averaged less than $1.35. Mr. EiKENBERRY. You Understand we are in an older country,. and our farmers hold their wheat longer. Mr. Haugen. What is the gambler getting now for wheat ? We can then get at the difference, because it is in the hands of the gambler now. FOOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 24 & Mr. EiKENBERRY. No; I beg your pardon. Mr. Haugen. Pretty much all of it is in their hands. Mr. EiKENBERRY. There is as large a percentage in the hands of the farmers as in the hands of the gamblers. Mr. Haugen. You say you do not know how many bushels you own m your own warehouses ? Mr. EiKENBERRY. Oh, I know how many are in my own ware- houses, but not the amount in the entire country. Mr. Haugen. But you claim to have no knowledge. of the number of bushels of wheat in the hands of your association or the capacity of the warehouses. Mr. EiKENBERRY. It is not necessary for me to enter into any argument with j^ou on that question. Mr. Haugen. There is no argument about it. I am just asking you the question. Mr. EiKENBERRY. But Still I Can prove my statement is correct by the statement of the press made in the last few days that there is less than 200,000 bushels of contract wheat in Chicago, actually owned wheat, available in public elevators, to fill the contracts. Mr. Haugen. And as a practical man you believe that statement ? Mr. EiKENBERRY. That is not a larger percentage of the total crop than the normal holding in the farmers' hands, so I think the farmer probably has as large a percentage as the speculator. Mr. Haugen. Members of the boards of trade and members of the exchanges are also members of your association? Mr. EiKENBERRY. Ycs ; most of them. Mr. Haugen. Then you are really representing the exchanges as much as you are the others ? Mr. EiKENBERRY. I am representing the entire organized grain trade. It does not contemplate, however, the speculative features of it. Mr. Haugen. None of them are speculators according to your state- ment. I guess that is all. Mr. Young of North Dakota. How many bushels have you m your own elevators in vour own town ? Mr. EiKENBERRY. We have about 3,000 bushels, I presume. Mr. Young of North Dakota. How many bushels are m the hands of the farmers in the sections where you are buying wheat 1 Mr. EiKENBERRY. Not over 3,000 bushels in the radms of country we deal in. ^ , i x • Mr. Young of North Dakota. Are there any farmers elevators m your association ? . , Mr. EiKENBERRY. No, sir; the farmers' elevators have a national association of their own. We have a few farmer members, but not °^mJ' Young of North Dakota. So you have not attempted to speak for them ? Mr. Eik:enberry. Oh, no. ,.,.,•. , ■ t,„„„ „ Mr. Young of North Dakota. Will this high price of gram have a tendency to reduce the quantity of flour and bread consumed m the country ? Mr' frN'TNorth Dakota. You think there wiU be just as much bread eaten under these high prices of wheat and flour < 250 FOOD PBODUCTION, CONSEBVAMON', AND DISTRIBUTIOIir, Mr. EiKENBEEEY. Because of the fact they can not buy anything else. Bread is probably as cheap food as anything else. Mr. Young of North Dakota. So it is. Mr. McKiNLEY. But a little later on the vegetables will come in. Mr. EiKENBERRY. Yes ; when vegetables come on that will proba- bly be true. Mr. Young of North Dakota. But your opinion is that, generally speaking, high prices will not conserve food supply ? Mr. EiKENBERBY. NaturaUy, it cuts in to a certain extent on con- sumption, and if other things were not so high it would have more effect; but there is nothing else to go to. You understand, of course, that is out of my line entirely, and I am just expressing a personal opinion. The Chairman. Are there any others to be heard, Mr. Reynolds ? Mr. Reynolds. I think that is all we have to offer, Mr. Chairman. There are several other members here who could speak very briefly, but we want to make the hearing just as short as possible. The Chairman. If the gentlemen who have spoken represent your views, then there is no use to accumulate the evidence. We are try- ing to get the judgment of the various organizations in the country. Mr. Reynolds. I will say that there is a divergence of views among grain men, but the general idea is that we all want to cooperate in every way and do the best thing for the country, just as you men want to do. Mr. McLaughlin. What part of the country does your organiza- tion cover? Mr. EiKENBERRY. The entire grain trade. We have members from Washington to Maine. Mr. Wilson. You mean the State of Washington? Mr. EiKENBERRY. Ycs; the bulk of our membership, of course, is in the large grain-producing States. Mr. Wilson. Do you have many members in Minnesota and in North and South Dakota ? Mr- EiKENBERRY. We have a number in Minnesota, but not so many in the Dakotas, because they are largely farmers out there. Mr. CoRNELisoN. Mr. Chairman, I think this hedging proposition ought to be brought out a little more clearly. The Chairman. Does the committee desire any further testimony on that problem from this organization? Mr. Haugen. I am satisfied the way it stands. He told us what he represents. Mr. McKiNLEY. I would like to ask the gentleman a question or two about that. STATEMENT OF MR. WILIIAM T. COENELISON, PEORIA, ILL., REPRESENTING THE PEORIA BOARD OF TRADE. Mr. CoRNELisoN. Mr. Chairman, the Peoria Board of Trade is one of the important but small exchanges of the country. We are the second handlers of corn in the United States. The only thing- 1 \Y?int to take your time to discuss is the question which has come up heria as to the hedging proposition and the speculative end of it. I just want to say that if we did not have the opportunity at Peoria to hedge our grain in the Chicago market I believe we would handle not FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 251 more than one-tenth the business we are now handling. It would drive all of that business into the hands of two or three firms of the country who have unlimited capital and could afford to speculate on their stuff. We are smaller dealers at Peoria, and I think I speak for all the small exchanges of the country when I say we are able to do a large volume of business because we can insure ourselves by hedging and selling our grain and securing a small profit. We are sure of the small profit. We buy the grain in the country in the fall. Mr. Haugen. I would suggest that the question you are talking about has not been raised at all. Everybody recognizes that as a legitimate transaction. We are talking about the manipulator and about the gambler. Mr. CoENELisoN. AH right; I will come to that. Mr. Haugen. I am talkmg about the fellow that Leiter says should be hung. Mr. Cornelison. I go to the country and I buy from the farmers. Say I have a mUlion-bushel elevator in Peoria. Mr. Haugen. Oh, we are not talking about that. Mr. McKiNLEY. I want this brought out, because we have heard a lot here about speculation. Mr. OvERMYER. Yes; I want to hear it, too. Mr. Cornelison. I buy, say, a million bushels of oats in the country. Without some opportunity to hedge that or insure my profit, I could not afford to do it, because I would not have capital enough, and nobody except a few firms would have. Now, somebody else — he may be a speculator or a user — takes the other end of that hedging proposition and buys it, either as an insurance proposition or he may want to buy, expecting an advance in the price. The coming in of the aUies, not together but separately, has put the price of wheat up. But I do not care whether it is the speculator or who it is takes the other side of the proposition. If a man thinks oats are going to be worth 50 cents in May he is entitled to buy them and I am entitled to dehver them to him and make my profit. The Chairman. Mr. Cornelison, have you finished your general statement ? Mr. Cornelison. Yes; I think I have. The Chairman. I think I have a fau-ly good idea of' the operations of boards of trade. Your proposition is that no matter how you regulate it, there must always be some speculation for the reason that even if your confine your operations to hedging pure and simple, the other end of the hedge is boimd to be a speculator. Mr. Cornelison. That is not bound to be the case. It might be that you want some oats to use in May, or you might take the other end of my proposition as a hedge for yourself, but speculation does have to enter into it. > i j xi. The Chairman. Let me put it in this way: In other words, there must always be mixed in as a filler, as it were, a speculator to take the other end when you can not make your transactions meet ? Mr. Cornelison. Yes, sir. tt- i j The Chairman. Then let me ask you this question: Would you favor such a regulation of the exchanges as to confine their opera- tions to legitimate hedging transactions pure and simple ( 252 FOOD PEODUCTION^ CONSEBVATIOSr, ANI> DISTRIBUTION. Mr. CoRNELisoN. Yes, sir; I would; but I would like to know how you would get over the other end of it. I might be a legitimate hedger, and how would you control the man who took the other side of it ? The Chairman. I think that can be worked out. Mr. CoRNELisoN. That would be all right if it would not restrict me and make me run from man to man and say, "Here, I have some oats I will have to sell in May; will you buy them?" That might restrict it so that it would not be possible to do the business. The Chairman. I appreciate that difficulty, but I imagine that if the Government puts its hands on the proposition and the trade is cooperating as it says it is willing to do, they can work out a prac- tical plan by which practically all of the illegitimate speculation, as I am pleased to term it, would, be wiped out, and transactions would be confined almost whoUy, if not wholly, to legitimate hedging. Mr. CoRNELisoN. If that can be done, it would be a very good thing. My only object was to explain how we smaller dealers would be virtually wiped out of the business it there were no opportimity to hedge. The Chairman. I certainly appreciate that viewpoint myself. We are very much obhged to you. STATEMENT OF ME. JOHN BALIAED, OF ST. LOUIS, MO. Mr. Ballard. Mr. Chairman, I am here iudividually. I came here principally in regard to waterways, endeavoring to get barges on the river again. You are all famihar with what has happened in Chicago on May wheat. I am an officer of our merchant's exchange, and the mojming following the action iu Chicago a meeting of our board was called. We were able to get all the information in regard to contracts on May wheat and in most cases found out not only who the agents were but also their principals. We found that in our markets there were just 105,000 bushels of open contracts on May wheat, which, as you know, is a very small amount; 80,000 bushels of that wheat was owned by one miller, and he had been holding on very tena- ciously. There had not been a turn in May wheat for several days, and the man who wanted to buy it could not buy. It was not speculation. There was no evidence that there were any specula- tive trades in the market. One man who had 10,000 bushels had bought it for a country shipper who had taken in wheat in the fall on storage and had shipped it out and had bought this May wheat to replace it. He declmed to sell, stating that he had to have the wheat. We adopted a resolution preventing the further trading in May wheat, and called all of these agents and, so far as we could get them, the principals together and insisted on their getting together and settling the matter up; and when I left most of the trades had been settled up. That will give you an i'dea of the situation with us. Mr. McKiNLEY. They were legitimate trades, in other words 1 Mr. Ballard. Yes ; it did not develop that any of the trade stand- ing open were of a speculative nature. Mr. Wilson. There was one man who was holding on to 80,000 bushels of wheat in your market. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 253 Mr. Ballard. He was a miller and he either had the flour sold or he needed the wheat. And, remarkable to say, the largest short was . another miller, a southern miller, who was short 75,000 bushels, and he had sold it against his cash wheat. He was not in position to deliver it because he may have had a different variety of wheat from what was deliverable, and, of course, was located in another part of the country. He was located below .the Ohio River. The Chairman. Have you anysuggestion to make as to how to meet a situation of that kind * Mr. Ballard. No; I have not. We only wish you to know that we are patriotic and are willing to do anything we can in this crisis. The Chairman. Would you be unwilling for the Government to step in with its strong hand and take charge of a situation of that kind in the interest of the general public ? Mr. Ballard. No; not if it were in the interest of the general public. Mr. McKiNLEY. Did you understand the question ? Mr. Ballard. Yes. The Chairman. I asked you if you were unwilling, under circum- stances such as you have described, for the Government to come in and take charge of the situation and handle it in the interest of the general public ? Mr. Ballard. We are wiUing for them to do that if it is for the best intrerests of the general pubhc; yes. The Chairman. In other words, you do not believe that any one body of men should be permitted to manipulate the food supply of this country in such a way as to get complete control of it ? Mr. Ballard. No; and I do not think such has been the case. Mr. Wilson. Is it not a fact that your miller who owns this 80,000 bushels of wheat in your locality is doing just that ? Mr. Ballard. No, sir. In a way, it would look like that, yet 80,000 bushels of wheat is an insignificant amount. If it had been much more than that, it would look that way. He had the flour sold, and he had to have Something to protect himself. . Mr Wilson. How much wheat would he ordmarily use m a year j Mr Ballard. That miUer would use several thousand bushels ot wheat a day, and that was a very small amount for hma to have, it simply shows the scarcity of the article. Mr. Haugen. Whom do you represent? a^ ;<, Mr. Ballard. I am appearing here mdividuaUy. My hrm is Ballard & Messmore Co. j i +•„„„ Ar^^-ntr Mr. Haugen. And yoii say the exchange passed resolutions domg away with the exchange ? . Mr Ballard No, sir; with trading m May wheat. mJ: hIugen Then we are to understand that even the exchange itself reaUzes the importance of closmg the exchanges, is that the "^Mr Ballard. It had gotten to the point where it seemed impos- sibk 'to have any translctions in May wheat, and we deemed ^ advisable to close up the transactions in May wheat owing, pnnci pally, to the scarcity of the cash article. , Mr. Haugen. Now when you spoke of contracts, you have reter ence to the contracts for May 1 254 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Ballard. Yes; there were existing contracts- . Mr. Haugen (interposing). Does that include the contracts for' June, July, and so on 1 Mr. Ballard. No. Mr. Haugen. You are aware of the fact that the May contracts are settled up before this time, and that there would not be any out- standing ones ? We are now in the middle of May. Mr. Ballard. But the contract does not mature until the last day of May. Mr. Haugen. But most of them have settled up, have they not? They are generally settled up on the 1st of the month, are thoy not t Mr. Ballard. Oh, no. Mr. Haugen. 1 think there was testimony before this committee two or three years ago that will substantiate my statement. I will ask the representatives here if it is not a fact that the contracts are settled up before the first of the month. Mr. EiKENBERRY. Oh, no. They have the full month. Mr. Haugen. I know they have the full month, but I am speaking of the operation of the contract. Mr. EiKENBERRY. No; that is not the case. The Chairman . Is there any further statement you desire to make, Mr. Ballard ? Mr. Ballard. Yes, sir. I can not see where manipulation has entered into this, because cash wheat and cash com prices have for a long time been driven up by bids. Contract wheat at St. Louis has sold for 28 cents above the cash price, and corn at 10 cents above the cash price. It is an imusual and abnormal condition, for which no one Mr. Haugen (interposing). It is due to a manipulation of the actual value of the grain, is it not ? Mr. Ballard. No, sir; the cash price was above the contract price Mr. Haugen (interposing). The cash price of wheat has been above ? Mr. Ballard. Yes, sir. STATEMENT OF MR. J. RALPH PICKELL, SECRETARY COUN- CIL OF GRAIN EXCHANGES, CHICAGO, ILL. Mr. PicKELL. Mr. Chairman and gentlemen of the committee, the Council of Grain Exchanges is an organization composed of the lead- ing grain exchanges of the United States, such as the Chicago Board of Trade, the MinneapoMs Chamber of Commerce, the Mlwaukee Chamber of Commerce, and practically all of the leading exchanges of the United States. The Chairman. Before you begin your statement, I would like to ask you a question, because I want the gentlemen of the comnaittee to understand it: Do you have any relationship with the gentlemen who have already spoken ? Mr. PiCKELL. There is no relationship so far as the organizations are concerned, but members of our institution are also members of the Grain Dealers' National Association. The Council of Grain Ex- changes is an organization of the grain exchanges and not of indi- vidual members. This organization, the national organization, is an FOOD PBODUCTION, CONSERVATION, AND DISTBIBUTION. 255 organization composed of individual members, and that is the differ- ence. I represent an organization composed of grain exchanges, 16 in number, and the men who are members of these exchanges are the men that Mr. Haugfen has in mind. Now, I want to say, first, that the exchanges are fully aware of the fact that we are in the midst of a great war, and, in order that the services of these exchanges might be available to the Congress, to the Department of Agriculture, or to the President, we met in an unofficial meeting on May 4, and appointed a committee which is to represent the grain exchanges of the United States in Washington. Those men who were appointed members of this particular committee are Mr. Julius H. Barnes, a large exporter of New York; Mr. M. H. Houser, a large exporter of Portland, Oreg. ; Mr. D. F. Piazzek, of Kansas City, representing the West and Southwest; Mr. Alfred Brendeis, of Lomsville, Ky., representing the South; Mr. Frederick B. Wells, of Minneapolis, representing the Northwest; and Mr. Eobert McDougal, of Chicago. I was appointed the secretary of that committee. We met and tendered our services to the Secretary of Agriculture, and those services were accepted as of the accredited representatives of the grain exchanges of the United States, and we have been cooperating with the Secretary of Agriculture in formu- lating plans so far as helping to have a food survey of the country is concerned. I think that is all I wish to say, except that we have considered the bills which are pending before this particular committee, and this committee representing the grain exchanges of the country heartily indorses the bills as they have been introduced in the House. We beheve in the regulation of the exchanges if it is necessary even to the sacrifice of our business, in order that this war may be carried to a successful conclusion. We beheve that transportation has had a great deal to do with this condition, as has been suggested here. For mstance, I represent a firm at Chicago that has over half a milhon bushels of wheat, it has about 2,000,000 bushels of oats, and 1,000,000 bushels of corn, every pound of which was purchased lor dehvery in February, but we have not been able to have it dehvered. Now, in connection with the purchases of the allies in the markets, I think you remember that instead of going to the farms as they might have gone, to purchase their wheat, they have gone to the pits m Chicago, and thev have bought up enormous quantities ot wheat. Nobody disputes that. I do not loiow how many milhons oi bushels they have bought, but if it were possible, through legislation or otherwise, to get the aUies to seU out their July wheat which they have purchase! in the pit in Chicago from the men ^^o^^^e^oj^,,!^ and wait until the new crop comes in I have no doubt but wliat tne price of wheat would decline 25 cents, 50 cents 75 cents, or, perhaps $1 per bushel. Now, that is the trouble, so far as we see it, with the present high price of grain; that is, it has been m consequence ot the purchase by the alhes in the face of a very sliort crop^ Mi- Wilson. Do you thmk that the allies are holdmg most ot the ^t pltl^L^ThS^are not holding it, but they have bought some- thS^ thardoes not^ exist. Consequently as ^tiese men who sold aaitiSpated that we would have a very much l^^S^^^^J^^^^^^^i^P *X we have, the wheat does not exist. It looks now as if nature would 256 FOOD PEODUCTION, CONSEEVATION, AND DISTRIBXJTIO]Sr. not favor us and that we will have a smaller crop than last year, which was a small crop, and we will not be able, therefore, to get the grain to dehver on those contracts in July. They have stopped the trading in May wheat, because of the very acute shortage in wheat. Now, this point should be presented to your minds, and that is that in the exchanges they do not deal in wind, as has been so often stated, but it is absolutely necessary to have the cash article, and simply because they did not have the cash article, they have had to discon- tinue trading in May wheat. We thought on Saturday in Chicago that the market would go down, inasmuch as they stopped trading in May wheat, but it had exactly the opposite effect on wheat. I never have seen it rise so fast in price. That was simply because those who sold became alarmed. They could not imagine where they would get wheat to deliver in July, and they endeavored to close the trading by purchasing. I sat in a large wheat pit myself and bid for 10,000 bushels of wheat, and brought the market down 2 or 3 cents. Now, why is it that the absence of speculation makes for high prices ? At the present time it is not speculation that is responsible for the high prices. It is when you have thousands of people speculating and thousands of bushels are being sold that you have the minor fluctua- tions, but in the absence of the actual wheat to deliver and in the absence of a large number of speculators you have the extreme fluctuations. Mr. Wilson. Would you argue from that that the allies do prac- tically control the wheat maiket of the country. Mr. PicKELL. The allies have simply bought — I do not know how much Mr. Wilson (interposing). Are the allies buying now? Mr. PicKELL. I would not say so. I think that this has been brought to their attention in such a forcible way that they have ceased for a part of the time to purchase. I think that they under- stand, unofiicially if not officially, that it would be the part ol wisdom to wait until we can get the cash article in sight. When the July wheat crop begins to move and to pour into the terminal markets, if the transportation facilities are adequate, these men who handle grain will see that large quantities coming in in July, and psychologi- cally it will have a depressing influence, but at the present time they contract to purchase m a market where there is really no wheat to sell. I think that practically all the wheat in this country is sold for delivery for export. I think that this committee might well consider the question of controlling exports. I think it would be the part wisdom to have a food-control commission who would, so far as exports are concerned, have the absolute control and who would allow grain to go out only by permit. That is my personal judg- ment, and I am not representing the Council of Grain Exchanges in expressing that opinion, but I think that it would be the part of wis- dom to consider that question. I think that if this committee will provide for a Federal food control commission, with a big man at its head, who will, imder authority of the President, allow grain to go out only by permit, that will control the situation. I think that is the only way to control the matter. I think that they should also regulate the Argentine situ- ation, and make provision down there for taking care of the crop which will be grown this winter, or during our winter. We should POOD PRODUCTION, CONSERVATION, AND DISTR3UTI0N. 257 build storage down there, if necessary, because there is a tremendous shortage in the world's crop of wheat. However, I am not in sym- pathy with the alarming statements which are made. I do not think that anybody will starve in this country even if we do not raise a bushel of wheat. We have a plenty of corn and oats, both of which are nutritious, and we will have lots of kafir corn and milo maize. We could let our allies have every bushel of wheat here, if necessary. I am not in sympathy with the alarming reports which have been sent out. Mr. Wilson. From your statement, it appears now that the allies have complete control of the wheat market, or have bought up all the wheat; that the people from whom they have purchased it can not deliver it, and that they are now in a paniqky condition trying to buy wheat to deliver. Mr. PiCKELL. Yes, sir; that is what is back of it. That is the situation that is responsible for the high price. Mr. Wilson. It looks to me hke they have control of the market. Mr. PiCKELL. Yes, sir; in my opinion they have. Mr. Wilson. And they are making a great deal of money on the board of trade at this time ? Mr. PiCKELL. Yes, sir. Mr. McKiNLEY. You have read this bill, H. R. 4125 ? Mr. PiCKELL. Yes, sir. Mr. McBoNLEY. And as I understand it, you, representiag the graia exchanges, are satisfied to have this bill enacted ? Mr. PiCKELL. Yes, sir; and I want to go on record to that effect. Mr. Wilson. You do not represent in any way, do you, the Chi- cago Board of Trade ? Mr. PiCKELL. Only so far as the Chicago Board of Trade is a member of this council of grain exchanges and in so far as Mr. Eob- ert McDougal, who is a member of the Chicago Board of Trade, is a member of this particular committee. Mr. Wilson. But you are not spealdng for the Chicago Board of Trade ? Mr, PiCKELL. I would not say I do, although I know some of the opinions that prevail there, and if you want to ask me any questions I will try to tell you what they think. In so far as the purchases by the allies are concerned, I have reflected the opinion of a ma- jority of the men who are there. Mr. Haugen. Legitimate transactions on the board of trade are as commendable as the growing of grain; there is no question about that. Mr. PiCKELL. That is true. Mr. Haugen. And you have men in the board of trade of as high type of character as can be found anywhere. Now, a certain amount of these transactions are absolutely legitimate and necessary, and there are a few that are not. What have you to say about those that are not strictly legitimate — the manipulation of prices— and of course that is not confined to the exchanges. There is more manipu- lation of prices outside of exchanges than in the exchanges, and when I speak of manipulation I have not any reference to the board of trade particularly, but I am speaking of all the manipulations gomg on throughout the country, and it matters not whether the manipu- lation is m the board of trade or here in Washington or in some room of a hotel. What have you to say about such transactions ? 104176—17 17 . 258 FOOD PRODUCTION,. CONSERVATION, AND DISTRIBUTION. Mr. PicKELL. If you are certain that there are manipulation of prices, it ought to be stopped. Mr. Haugen. That is all I am getting after; that is all. The Chairman. There is one difficulty which has been expressed by one of the witnesses here, that in undertaking to confine opera- tions on the exchanges to hedging pure and simple, there always has to be an admixture of some httle speculation. Mr. PicKELL. Always; yes, sir. The Chairman. Could that be controlled under any practical sys- tem you have in mind '; Mr. PicKELL. I think if you will allow the domestic business to take care of itself, utilizing machinery which we have on the exchanges at the present time, and control the export business, allowing only the export business to be done in the cash article, in the spot wheat, and say to the exporters, "Do not sell any wheat except what you have in your bins, and allow it only, to go out by permit, and if you will stop the allies from purchasing enormous quantities of wheat for future delivery, I think all this domestic business will take care of itself, and you might well leave the system of exchanges aldnfe. I think, of course, the present system is admirable for handling the business, and if you can control the export business, the domestic business will take care of itself. Mr. Wilson. Is there any way you could ascertain how much wheat the allies have purchased for this season? Mr. PicKELL. I should ask the Wheat Export Co. of New York, and if they would tell you, then you would probably know. I doubt if they would give you the information. Mr. Wilson. I was wondering if there was any way by which it could be found out. Mr. PiCKELL. There is a gentleman representing the British High Commission in Washington now who came over with Mr. Balfour, Mr. Anderson, and he possibly has that information, but I do not know that they are making it public. Mr. Wason. If the purchase of wheat or other -products was con- fined to what was actually in existence, for instance, Mr. A has wheat and he sells it, would that eliminate the, trouble you speak of about future buying % Mr. PiCKELL. If you confined the grain business to the actual grain, then this would result, in my opinion: It would concentrate it in the hands of people who have a large amount of capital. For instance, the firm which I represent in Chicago is a $2,000,000 cor- poration, and we would have no trouble in doing business on that basis, but the smaller man in business would, simply because he would then be unable to make his hedges to protect his purchases. If he had, as I have said, only a small amount of capital, the probabiU- ties are he would go out of business, and it would have a tendency to concentrate the business in the hands of the larger dealers, such as Armour & Co., and the larger firms in the various markets would have control of the grain business. But if you will control the export business — and these are ideas of my own based upon an intimate relation with the men engaged in the business in all parts of the United States — ^if you can control the export business and confine that to the cash article, then I think you need not worry about the domestic business, because it will take care of itself. FOOD PEODUOTTOK, CONSBRVilTlON, AND DISTKIBUTION. 259 Mr. Wason. Has not the selling in the market of that which a purchaser does rot own always had a terdency to create in times of stress panicky coiditiors^ Mr. PicKELL. In times of stress, if there is a "shortage of that com- modity which is sold; yes, sir. If there is rot a shortage, then, of course, the natural effect is to depress the prices. Mr. Haugen. Have you any suggestion to make as to the fixing of prices ? Mr. PicKELL. I should assume that if an intelligent method of con- trolling the export business, as I have emphasized ard reemphasized, were put into practice, prices would then be estabhshed in a more normal way, and supply and demard would come very rear to establishing the proper price. Fur damer tally, I am naturally opposed to the fixing of prices and to tempering with the law of supply and demand or with the law of production, unless it seems necessary. But if it is necessary, the opinion of the committee which I repre- sent is that Congress should take the step, even to establishing a maximum or a minimum price or fixing the prices, if in the wisdom of the President or the Secretary of Agriculture the public welfare de- mands it. The Chairman. In other words, you are willing to go the limit; is that the idea ? Mr. PiCKELL. If the public welfare demands it, yes ; we are. Mr. Young of North Dakota. In normal times the buyers for export to other countries are conddered favorable to better prices for the producers ; in other words, that is an element of competition from abroad which favors those who have grain to sell; is not that ordi- narily true? Mr. PiCKELL. You will have to pardon me; I did not just get the fuU import of your question, and did not understand whether it was a question or a statement. Mr. Young of North Dakota. Let me put it in another way: I think there is an impression out through the Northwest, at least, that when we have grain to sell we are hkelv to get a better price if there are foreign buyers present in the United States buying grain for export at the various markets. Mr. PiCKELL. Naturally; yes, sir. Mr. Young of North Dakota. So that that competition durmg nor- mal times is beneficial to the producer 1 -i i i_ j i, Mr. PiCKELL. Durmg normal times such as prevailed before the war, I think it would be impossible to conceive of a better system for handling grain than we have m this country, but these are abnormal times. X xi, J Mr. Young of North Dakota. And you want to cut out the loreign competition now as far as possible ? i ^.u Mr. PiCKELL. It is absolutely necessary if you want to keep tne price within lunits, it seems to me. I should assume that ^ongress would want to place the purchasing of food for the allies m the hands of this Government, so they can come nearer to controUmg it, msteaa of having the representatives of the foreign governments gomg into our pits and contmuaUy buymg, and what is more, those particular representatives, when they know they are gomg to make purchases for the foreign government, probably buying a million or so for them- selves. You can see that. 260 FOOD PBODUCTION, CONSERVATION, AND DISIEIBUTION. Mr. Haugen. You mean pooling and buying ? Mr. PiOKELL. I mean pm-chasing. Suppose a representative of a foreign Government had an order to buy 1,000,000 bushels of grain, and he would buy 500,000 or 1,000,000 bushels for himself. You see how the purchases are accentuated because of the knowledge he has of the other purchase. Mr. Haugen. You favor the elimination of the competition and the placing of it in the hands of one man to do the buying? Mr. PiCKELL. Yes, sir; that is my opinion and the opinion of many others engaged in the business; but I would not give it to you as by any means representing the opinion of the wholesalers of the country. Mr. Wason. Then if this New York concern, the name of which I did not catch, was controlled the same as the Interstate Com m erce Commission is supposed to control the railroads, that would eliminate the diflaculty? Mr. PiCKELL. If it was properly regulated or controlled, although I had not thought of it in that particular way. I had assumed you would proceed m another way. Mr. Wilson. I judge from your remarks that you believe that if this country would regulate the export business, it would go a long way toward regulating Mr. PiCKELL (interposing). The whole business of the country, absolutely; yes, sir. I am thoroughly convinced of that. Mr. Wilson. You think the export business should be regulated first of all? Mr. PiCKELL. Yes, sir; that is my opinion. The Chairman. I notice by the press statements that there is a proposition under consideration by which the allies would pool their purchasing power and concentrate it in one man so as to eliminate this competition of which you complain with reference to exports. Would you think it wise that the United States should join in that pool ? Mr. PiCKELL. I should think that the United States should be in the pool. The Chairman. You think that the buying for export to the allies should be left in the hands of the United States itself Mr. PiCKELL. Absolutely. The Chairman (continuing). Rather than in the hands of any representative of the aUies ? Mr. PiCKELL. Yes, sir; absolutely. The Chairman. I think you are right about that. Mr. Wason. That means the Government proper or some agency which the Government regulates ? Mr. PiCKELL. Yes, sir; that is it exactly. Mr. Thompson. This pooling which you suggest, or this noncompe- tition by foreign governments, or agents of foreign governments, or regulation of the export, is a suggestion all in the interest of the con- sumer or the purchaser, and not in the interest of the producer or the seller? Mr. PiCKELL. At present prices the producer is certainly being well cared for. Mr. Thompson. He has no kick coming now, has he ? Mr. PiCKELL. Absolutely not; no, sir. FOOD PKODUOTIOIT, CONSEEVATION, AND DISTEIBTJTION. 261 Mr. Thompson. And these suggestions which you are making are all m the interest of the man purchasing the grain and not in the in- terest of the producer of the grain ? Mr. PiCKELL. In the interest of the consumer, 90 per cent of them ^ The Chairman (interposing). You predicate your statement upon the proposition that all of the people of the United States, producers and consumers, are interested in the United States winning this war« Mr. PicicELL. Yes, sir; absolutely. Mr. Thompson. But the farmer ought not to be compelled to carry more than his just part of the burden. Mr. PiCKELL. Certainly not. The farmer should be encouraged, and at the present price of grain and with the present prospect for grain he is encouraged beyond anything that has ever happened before in this country. Mr. Thompson. But these are abnormal times. He is not en- couraged any more than the munitions manufacturer or the manu- facturer of shoes, is he ? Mr. PiCKELL. I think not. Mr. Thompson. And there is no suggestion to control their exports, is there ? Mr. PiCKELL. To control the exportation of what? Mr. Thompson. Of munitions. Mr. PiCKELL. I can not say. I do not know, but I think so, however. I judge from what I read in the newspapers that the Secretary of the Navy is practically saying about what profit some of these munitions makers shall make; but we need not have any alarm concerning the profits of the farmer. I can not imagiae how he needs any sympathy whatever. Mr. Thompson. Not right now, perhaps, but for 10 years back of this he has needed it. Mr. PiCKELL. For the last five years he has been prospering very much indeed. Previous to that time Mr.. Thompson (interposing). Do you mean to say that the pro- ducer of wheat and corn down in Oklahoma has been prospering for the last five years ? Mr. PiCKELL. I think so; according to my knowledge of the grain prices that have been paid. Mr. Thompson. The highest price they got during the previous five years was 96 or 97 cents for wheat. Mr. PiCKELL. I think that is too high. I think it was nearer 75 or 80 cents. Mr. Thompson. During the last five years ? Mr. PiCKELL. Yes, sir. Mr. Thompson. The highest price they got during the last five years was about 97 cents. Mr. PiCKELL. Yes, sir. In my travels through Oklahoma and Kansas, I have been unable to find any distress among the farmers. Mr. Thompson. You think they can make money with 75-cent wheat? , , Mr. PiCKELL. Unquestionably, if nature is kind to them and tJley get a good crop. , , , ■, x f The Chairman. Mr. Pickell, we are very much obhged to you tor your statement. 262 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. We are hearing this morning from people who represent the grain trade in all of its phases, and. I am going at this time to ask Mr. George Summerville Jackson, president of the Grain Exporters Association of the United States, to testify.. STATEMENT OF MR. GEORGE STJMMERVIILE JACKSON, PRESI- DENT OF THE GRAIN EXPORTERS ASSOCIATION OF THE UNITED STATES. Mr. Jackson. I have been listening to the gentleman who was wanting to put the export trade out of business from the point of view of the domestic consumer, but it seems hardly fair to stop sup- plying other parts of the world with grain. I do not think it can be done unless the Government takes into its own hands the entire con- trol of purchases in this country. Then, you are going to take away the farmers' chance to get his good price, because you wiU settle the price immediately from the point of view of the domestic trade, and you are not going to allow European competition to come in and make world war prices affect this country. Now, the grain for the allies has been bought by a commission representing England, France, and Italy. There is no competition in that. They buy that wheat by buymg options in Chicago. They buy wheat options in Chicago,' and they exchange those options with firms in the export trade who give them the actual grain m exchange for the options. Now, the TVhole export trade is based on the options business. For instance, you have an order which must be executed for 200,000 bushels or 2,000,000 bushels of wheat in ten minutes. Now, you can not go to the country and get that wheat right then, but you have got to buy it in Chicago. There is no other place where you can handle it. When the aUies want to buy wheat, they buy it ahead of time in Chicago, and exchange their options for cash grain. Then, there are. other coimtries, Norway, Sweden, Denmark, and Holland that have got large grain purchasers in this coimtry also. They "have millions of bushels of grain that have not been shipped yet. Now, this whole situation has arisen because there is not enough wheat in this country to supply all of those people. It is not speculation that has put up the price, but it is the shortage in the world's grain supply. The most of these other countries I have mentioned have bought grain in the same way, and the Government must regulate the ■vmole business if it regulates any of it. The Government can not regulate just a part of it, because these other countries are in the market every day for grain. While the exporters are perfectly willing that the Government shall take any steps that it should take, they say still that it is not a proposition based on the domestic price because there are other parts of the world that must be suppHed with food. Mr. McKjnlky. Does the Grain Exporters Association indorse this biU? Mr. Jackson. Yes, sir. Mr. Young of North Dakota. Will you be good enough to give us an example of an actual transaction, if you can, or one that has occiirred m yoiu- own business ? If not, let us understand by illustra- tion or example just what course you take when you get aft order, say, from England to buy 5,000,000 bushels of grain. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 263 Mr. Jackson. In normal times, before the war, I went out and ■boiight it up anywhere I could buy the options. I would buy the options, but now the export companies in New York say, "We will give you, say, 98 cents for Chicago July for 2,000 bushels of wheat, delivered f. o. b. steamer at Baltimore." When I buy it it is based on that nrice of Chicago July. Mr. "ipuNG of North Dakota. In what way do you use the options on the market in executing your order ? Mr. Jackson. They give me a July option and I give it to the man who seHs whfeat to me. Mr. Young of North Dakota. Of course, we are not very well acquainted with the export trade, and I would suggest, therefore, that you make it plain. Mr. Jackson. In normal times this is done by getting bids for grain at fixed prices delivered on the other side, but at this time it is ooly sold f. o. b. steamer at Atlantic or Gulf ports. We go into the country and buy grain in anticipation of the demand, and hedge it by s^Umg Chicago options until the demand comes in. Then, when the demand comes in for it, and comes at a fixed price, we unhedge it, if it comes in at the price fixed in the option. The grain export business is based entirely upon the Chicago market. That is true at aU times, and even now it is based on the Chicago market. We could not do export trade unless we had the Chicago market, because we have to handle such large quantities of grain in such a short time. Mr. Thompson. The Chicago exchange dosed its May options the other day at 3.18. Now, in discussing the question of closing July options, the exchanges usually do that when they are on the losing side, do they not ? Mr. Jackson. I would not like to say that, because they are as honest as the average person. Mr, Thompson. As long as they are making money out of it Mr. Jackson (interposing). I can not believe that they would take that position. They do it because it is the best thing to do. I can not believe that they would take that position. Mr. Thompson. They think that wheat is worth more than 13.18? Mr. Jackson. Yes; but the man who had sold it would be out of pocket that much more. Mr. Thompson. They are trying to protect the fellow who has been speculating on the market? Mr. Jackson. Well, under your theory, they are trying to protect Mr. Thompson. They are trying to help the fellow who sold short and who has not the goods to deHver ? Mr. Jackson. Yes, sir. Mr. Haugen. Of course, they are looking out for their particular interest. , t i Mr. Jackson. Not the Chicago Board of Trade. Its members may be. The members are probably evenly divided. Mr. Haugen. They do that for their own protection. Ihey are only looking out for their own interest. • ^ j Mr. Jackson. I do not think so. I have been m the gram trade for 30 years, and I have never seen any sign of that. ■ Mr. Haugen. I have been in the gram trade longer than you Have. I have been in the grain trade more than 30 years. Now, you say that the supply of wheat is short. How do you know that i 264 FOOD PRODUCnON", COKSEKVATION, AND DISTRIBUTIOlir. Mr. Jackson. I get it from all records, including those of the Government. Mr. Haugen. I believe the Government claims that we have 100,000,000 bushels. Mr. Jackson. Including Canada. Mr. Haugen. They draw on the supply of both countries. Mr. Jackson. Yes, sir. The aUies have the Canadian crop bought. Mr. Young of North Dakota. That statement has been contra^ dieted by other witnesses. Mr. Jackson. They have got the contracts bought under which somebody must deliver the wheat. Mr. Haugen. Is it not a fact that the abnormal prices to-day are due to speculation? Mr. Jackson. No, sir. Mr. Haugen. Is it not a fact that somebody has been selling something that they did not have ? Mr. Jackson. That would put the prices down. Mr. Haugen. These high-minded men have been forced into the situation of saving themselves by settling up on the basis of $3.12. Mr. Jackson. No, sir; I did not say that at all. I said that the cash grain is short. I can sell wheat to-day at 50 cents per bushel over the price that Chicago May wheat was. Mr. Haugen. But, according to your own statement, you would be selling something that you nave not got. Mr. Jackson. No, sir; I would not sell what I have not got. 1 buy the options, and the man I buy the option from must give mc the grain. Mr. Haugen. But he has not got it. Mr. Jackson. Then he must make a settlement. Mr. Haugen. He is dealing in something that does not exist. Mr. Jackson. The aUied Governments do not want to make set- tlements but they want the actual grain. Mr. Haugen. I do not think there is any difference of opinion about legitimate transactions, but I think that some of these tran- sactions are not legitimate. Mr. Jackson. I think so, too, but these people make the market. If there were not people speculating every day on the Chicago mar- ket — that is, people who have no connection with the actual grain — there would be no market. It is these men coming in and gomg out of the market and speculating, who make the market, because those operations stabilize the price. Mr. Wilson. Do you buy for the allies ? Mr. Jackson. Yes, sir. Mr. Wilson. How much have you bought for the allies during the year 1917? Mr. Jackson. About 2,700,000 bushels. Mr. Wilson. At what average price ? Can you tell us what was the average price ? Mr. Jackson. No, sir; I can not. I sold them some at $3.52 on Friday. Mr. Wilson. How much ? Mr. Jackson. Forty-eight thousand bushel^. Mr. Wilson. What did you pay for it? Mr. Jackson. I paid $3.46 for it, I think it was POOD PRODUCTION", CONSEEVATION, AKD DISTErBUTION. 265 Mr. Wilson. You bought at $3.46 and sold at $3.52 ? Mr. Jackson. I had an order from them and went to the country and bought the actual cash grain and delivered it on their ship Mr. Wilson. You paid $3.46 for it and got $3.52? Mr. Jackson. I got my normal profit out of it. Mr. Wilson. That is the usual profit ? Mr. Jackson. No, sir; that is two or three times as great. We figure 2 per cent as the normal profit, and 2 per cent on $1 wheat is 2 cents per bushel for bringing it from the West and shipping^ it. Now, that profit of 2 per cent would be 6 or 7 cents per bushel. The grain business in this country is handled so much cheaper than it is m any other country by means of this option business that it would make the dea,lers make as much as 20 cents per bushel, but we have to hedge on it. We can not take so much risk. We have now, I suppose, 2,000,000 bushels of grain open upon our books. We can not take the risk of being long or short that much, but we do not mind trading in a million bushels when we can get it either by purchasing or sellmg it. The average export business is done six months in advance of the time when the crop is ready to ship. Mr. Wilson. Do you know about how much grain was bought for the allies a year ago, or in 1916 ? Mr. Jackson. I would say about 5,000,000 bushels. Mr. Wilson. You are one of the many concerns purchasing grain for the allies in this country ? Mr. Jackson. Yes, sir. The Wheat Export Co. will give you the exact figures. The Chairman. About 170,000,000 bushels, is my recollection. Mr. Jackson. I am sure they will give them to you. Mr. Earl is the president of that company, and he is representing the British Government. Mr. Haugen. In handling this business do you buy future con- tracts ? Mr. Jackson. I buy them when the order comes in, and then I exchange them for the actual wheat with the man who does the oppo- site thing in the West. Mr. Haugen. Have you had any wheat delivered on those con- tracts ? Mr. Jackson. Often. Mr. Haugen. How are they graded ? Do they come up to standard ? Mr. Jackson. Certainly they come up to standard. Mr. Haugen. I mean the Government standard. Are they graded by the Government? Mr. Jackson. Corn is now and wheat wiU be after June. The Chairman. Mr. Jackson, I want to ask you two questions. One is. What effect would it have upon your business as an exporter if the grain exchanges were so regulated as to permit only hedging transactions ? Mr. Jackson. I think it would be very bad for our business. The Chairman. Why? . Mr. Jackson. Because there would not be any market m Chicago then. I think they either ought to be closed up or let go just as they are. The Chairman. What effect would closing them up have on your business ? 266 FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. Mv. Jackson. Then we would all be dealers in cash grain and the man with the best judgment in buying cash grain would be tli|B ulti- mate winner. The Chairman. Would it be a matter of the best judgment or the best capital ? Mr. Jackson. I think the judgment will beat the capital. The Chairman. You do not agree with Mr. Pickell's statement ? , Mr. Jackson. I think the big man can buy enough to make the market go his way. The Chairman. And he would probably buy the judgment, too, would he not ? Mr. Jackson. He would probably buy both. The Chairman. So you think either the regulation or thp closin,g up of the exchanges would be bad for your business ? Mr. Jackson. I can only speak from a personal standpoint., We could not deal in millions of bushels unless we had this .optional market, because we mu-st deliver at once. ; , Mr. Wilson. You do not have the cash ? Mr. Jackson. We do not have the cash until after we make the trade. Mr. Thompson. Yours is a legitimate deal imder the definition of the chairman, and you would nedge by selling or purchasing the actual number of bushels you either have to deliver or dispose of ? Mr. Jackson. That is all. Mr. Thompson. Would making that legitimate under a law which prevented anything else interfere with your business? Mr. Jackson. Yes, sir; because there would not be any market for me to do that in. It is the speculator who makes the market. There is no question of that. Now, I am not opposing it. Do not put me in that position. We are perfectly willing to trade in cash prices and cash grain, but you will make the grain trade work on a 10-cent profit whereas it has been working on a 2-cent profit. Now, that is what will happen. The farmer or the buyer will have to pay 10 cents for the handling of the grain instead of 2 cents. The Chairman. There is one other question I want to ask you, Mr. Jackson, because I think you can give us more information on the proposition Jfchan probably anyone else. The statement was made here the other day that one of the dif&culties in this whole situat^ofli was due to the fact that transportation facilities in a large measure had broken down in this country, and that exporters of grain who made engagements for their ships to meet certain shipments at port found that the transportation companies could not keep their engagements and therefore the whole transportation system, both domestic and international, had thrown itself out of adjustment- Is that true? Mr. Jackson. That is absolutely true; We have got the grain bought in Chicago to go to Baltimore, bought last November, and we can not get it to the seaboard, and we have had to buy local stufE to fiU that ship when it came in, and we have stiU got the grain which was bought in Chicago. The Chairman. Do you happen to have any idea of how much grain there is on sidetracks which has already been bought and which is ready for shipment if it could be gotten to port ? Mr. Jackson. I do not think the trouble is on the sidetracks.; It is in the elevators in these country stations and at 'Chicago and places like that, and they can not get the cars to load. FOOD PRODUCTION, CONSEEVATION, AND DISTMBUIION. 267 The Chairman. Then I wiJl broaden my question 'to include elevators. Mr. Jackson. I attended a meeting of some grain people not long ago and the testmiony was that $1 had been added to the price by reason ol the mabihty to get it to the place where it was needed JNow, these were people talking with each other, and they were not trying to fool themselves. For instance, take our own buying We have had 500,000 bushels of wheat bought in the West, and we had sold It to the allies and to the Dutch people, and we could not get it to the seaboard and had to go in and buy another supply in order to fiU those ships. The Chairman. Ordinarily, how long would it take you to get that shipment to the seaboard ? Mr. Jackson. It ought to run there in eight days. The Chairman. How long did it take. Mr. Jackson. It has never come yet. I do not know when we will get it. I bought it last November, and I have got grain which was bought in Kansas City and Minneapolis last September, and I can not get it. It is there waiting, and I am paying charges for car- rying it in those markets. The Chairman. As a business man, have you any practical sug- gestions to make as to how that situation may be handled ? Mr. Jackson. I think it is being corrected now by reason of the fact that you can load a railroad car now in any direction. Up to about a month ago a car that came into your mill or elevator had to be routed back empty. Now you can take that car and reload it and send it to any destination. That is going to help this situation. But the railroad companies are not handling food as preference articles. The Chairman. Would you favor Mr. Jackson (interposing). I would favor that all foodstuffs have the preference in railroad movements during this time of stress, and that is what we need. A business man in Indiana testified that in his town they could handle whisky bottles and could always get cars for automobiles. His brother is the governor of Indiana,. He had to close down his elevator because he could not get a single car. In this time of stress, with wheat worth $3 a bushel, the rail- roads should handle foodstuffs in preference to anything else. The Chairman. Then you are strongly in favor of the proposition in this bill which provides for that ? Mr. Jackson. Yes. Mr. Wilson. Food and fuel you would consider in the same situ- ation ? Mj. Jackson. Yes; anything that helped to the immediate relief of distress in this country, because we wiU have distress. You can not have $17 flour and the people have all they want to eat. The Chairman. Mr. Jackson, have you considered the proposition of increasing the miUing per cent of wheat in order to stretch this supply ? Mr. Jackson. I think it is a very wise thing to do. The Chairman. Have you thought of the proposition of suspend- ing the mixed flour law to attain the same result ? Mr. Jackson. I reaUy have not given that much thought, but I should think that ought to be something that the people would do 268 FOOD PBODUCTTON", CONSERVAHON, AND DISTEIBTJTIO». in their .own homes; otherwise you will never get the exact quantity of flour. I think the law we have had has improved the flour. Now, as some miller testifled this morning, if you simply make them use 87 per cent, ybu will get more flour, and then if anybody wants to get it cheaper, they can mix it in their homes, and they can learn the art of blending those two things together. The CHArBMAN. You have expressed yourseK as being in favor of this bill. There is a provision in the bill which seeks to control hoarding, and in doing so would give the Government the power to confiscate, under the law, of course ; is that going a little far for you ? Mr. Jackson. I think so. Take my case, for instance. I have got wheat in Chicago, in Kansas City, and Minneapohs. I have hoarded it since last November at an expense of about 25 cents a bushel, and I can not get it. If you went out there and investigated somebody's books, you would have me down as one of that class. You could not tell who was legitimately doing it and who was illegitimately doing it. The Chaieman. I think that could easUy be determined. You would prove by your own testimony that you could not get the cars. But suppose you had 500,000 bushels of wheat in the elevators of the West which you were clinging on to hke death to a dead darkey and refusing to sell, and the people in Chicago were perishing for want of bread, then would you think the Government ought to have the power to make you disgorge ? Mr. Jackson. Absolutely. Mr. Wilson. Do you have warehouses ? Mr. Jackson. No, sir; we store in railroads and pay so much a day for storage. Mr. Wilson. What is the name of your concern ? Mr. Jackson. Gill & Fisher, of Baltimore. Mr. Haugen. You said you paid 13.46 per bushel for 47,000 bushels. Was that cash wheat ? Mr. Jackson. Yes, sir. Mr. Haugen. How did that compare with future contracts ? Mr. Jackson. The allies were bid!ding 40 cents over May that;day, f. o. b. Baltimore. Mr. Haugen. A premium of 40 cents ? Mr. Jackson. Yes, sir; for cash wheat. . Mr. Haugen. Now you say it costs 2 cents to handle the business under normal times under the present system ? Mr. Jackson. Yes, sir. Mr. Haugen. And that on a cash basis it would take 10 cents ? Mr. Jackson. Yes, sir. Mr. Haugen. Now, could we not better afford to pay 10 cents than to pay 40 cents ? Mr. Jackson. No; you would stiU have the 40 cents. You would not do away with that. Mr. Haugen. Oh, yes. Mr. Jackson. No, sir. The price I referred to was f. o. b. Baltiis more and the price you are thinking about is in Chicago. It costs so much to get it there and it is a'scarce article. Mr. Haugen. The proposition is one which has sent a number of our people into bankruptcy, and I think I know something abou,t it-s If you had accepted wheat for storage last fall and hedged the,, difference would be 40 cents, would it not ? Mr. Jackson. I can not quite see that, sir. FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 269 Mr. Haugen. That is the way it ought to be. Mr. Jackson. It costs so much a month to carry it. It is worth the difference in the price at which you put it in there plus the amoxmt it has cost to carry it up to that time. That is the only added cost. Mr. Haugen. If I store a thousand bushels of wheat in an elevator at home and they give me a receipt for it and the elevator man turns around and hedges and buys 1,000 bushels of grain, instead of getting the cash price his price is cut 40 cents a bushel, and that is what has put them on the highway to the bankruptcy court. Mr. Jackson. I can not see that. It is past my comprehension. Mr. Haugen. If you ever try it out, you will see it. Mr. Jackson. I can see how it would send them there if they got 40 cents less than the market. Mr. Haugen. Certainly. Mr. Jackson. I agree with the gentlemen who spoke before that sometliing ought to be done whereby the control oi the purchase of grain in such large amounts by the Dutch Government and the Nor- wegian Government and the Danish Government and the English Government woiild be through some governmental agency, whereby a record would be kept and knowledge obtained. It is a lack of knowledge of how much these people have got hoarded that hurts 'the market. If people think they have 50,000,000 bushels bought in Chicago it is going to scare the market up 10 cents. Mr; Young of North Dakota. WiU you be permitted from this time forward to buy any grain for export to Holland or Denmark or SiNorway ? Mr. Jackson. I can until the Government stops me. I am per- fectly wiUing to stop the minute the Government says so, but if I can make a profit I do not see why I should not do so. '■ Mr. Young of North Dakota. Are you able to make deliveries to those coimtries ? Mr. Jackson. Every day. The Norwegian and Dutch Govern- □aents have ships there. My own firm has at least 1,500,000 bushels of grain sold to those Governments. ' Mr. Young of North Dakota. According to newspaper reports it vas understood that shipments to those countries would be shut off mtirely. Mr. Jackson. By whom? Our Government has not acted so far IS I know. Mr. Young of North Dakota. Do you think that shipments to hose countries ought to be continued ? Mr. Jackson. You ask me a political question ? I do not. I TOuld let them starve until they came our way. The Chairman. You would starve them into an alMance ? li Mr. Jackson. Yes; that is what I would do, and you could do it ery quickly. Mr. Young of North Dakota. In order to prevent any of it getting irough to Germany ? Mr. Jackson. I do not know whether it gets through to Germany • not ; but they have got to have a large portion of it at home because ^en if they do not eat that grain it takes the place of other food hich they may send to Germany. If the United States Goyern- ;ent should stop all those neutral countries from getting gram, it ould have a big effect. 270 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. The Chairman. Do yon happen to know anything about the 15 or 16 Dutch boats tied up in New Yotk? Mr. Jackson. They are not tied up there. They were tied up because the British Government would not give them a way to sail; but they have given them a way now and they have gone. Mr. Wilson. How does the British Government control their sailing from our ports ? Mr. Jackson. They say, "Gentlemen, you have got to go to Hali- fax or Kirkwall to be examined, and we will not tell you which until we get ready, in order that the supply of food into your country shall be brought down to a minimum." STATEMEITT OF MR. W. N. DOAK, VICE PRESIDENT OF THE BROTHERHOOD OF RAILROAD TRAINMEN. Mr. DoAK. Gentlemen, I appreciate very much your kindness in giving me just a minute, and i will read what we have to say to you: Confirming our request of a few days ago to be heard briefly on the question of the restriction of manipulation and speculation in foodstuffs and other necessaries of life and the prompt and courteous reply by the chairman of your committee, statii^ that it would be a pleasure to hear us briefly concerning this matter, we therefore, on behalf of more than 500,000 railroad employees in transportation service and on behalf of the more than 1,000,000 more dependents of these men who are represented by the Brotherhood of Locomotive Engineers, the Brotherhood of Locomotive Firemen and Enginemen, the Order of Bailway Conductors, and the Brotherhood of Railroad Trainmen, asking your careful consideration of the following brief suggestions: It is the policy of the four railroad transportation brotherhoods to favor some form of legislation to prohibit by law speculation in or the cornering of foodstuffs and necessities of life with a view to giving relief, if possible, to the men represented by us from the enormously increased cost of living, as we have found that the cost of the necessaries of life have increased so enormousfy that it is almost an impossibility for our men and their families to exist under such conditions. While it is true that our particular classes of employees have had some substantial increases in wages during the past few years, we find that the cost of living has increased at so much greater a percentage that we are far worse off in the final analysis than we were before such increases were granted, and particularly is this true within the past few months, until it has become a question of whether or not we can stand up under this enormous increased cost. We are not in a position to state positively or definitely what would be the proper thing to do in this connection — whether these results could be obtained by a more rigid enforcement of present existing laws or by the addition of such laws in a manner that would strengthen them and make them more effective, or whether by legislative enactment new laws should be passed supplanting or strengthening the present laws. We believe that you gentlemen who have given this matter an exhaustive and far- reaching study are possibly in the best position to act intelligently and properly on these questions, and we would prefer your superior judgment in this connection to anything that we may be permitted to suggest as a remedy. We do most earnestly and respectfully request on behalf of more than a million and a half citizens of this country that something be done, if possible, to reheve this situation, and hope that you in your wisdom may be able to solve this question promptly by some recommenda- tion to the Congress of the United States as a near future date. Thanking you for your consideration and courtesy shown us in this connection, we are, Sincerely yours, H. E. Wills, A.G. C. E. and National Legislative Representative B. ofL. E. P. J. McNamaka, Vice President National Legislative Representative B. of L. F. & E. W. M. Clark, Vice President National Legislative Representative 0. R. C. W. N. DoAK, Vice President National Legislative Representative B. of R. T. FOOD PBODUCTION, CONSEEVATION, AND DISTEIBUTION. 271 The Chairman. Gentlemen I have received the following telegram, which I will put m the record: ^ "giam, Hon. A. F. Levee, Washvagton, D. C: ^^™'''^' ^'°^-' ^"^ '''' ''''■ o J^' or^ization was represented at hearine before Senate committee and urged sn rr-n«^°'T"'J'"'=^ would have increa^eS acreage of five staple food products 80 per cent. If action is not taken within 10 days food shortage can not be avoMed Zi ?h»^r' '^^\ "^'^f *^' responsibiHty. Sfiut up the breweries and distnieries tm ^^.Pt?i"'^'"^^f.^?^^r'' f^^ *^' Secretary of Agriculture authority and we will meet results. It is time for action not hearings. Grant Slocum, Representing the Gleaners. (The committee thereupon took a recess until Tuesday, May 1 5 1917, at 10 o'clock a. m.) -^ ' Committee on Agricijlture, House of Representatives, Tuesday, May IB, 1917. The committee met at 10 o'clock a. m., Hon. Asbury F. Lever (chairman) presiding. ' , ^- YouNG'of Texas. Mr. Chairman, I desire permission to read the following statement: Mr. Chairman, for the past several days this committee has been hearing witnesses on the bill now pending before us, the essential feature of which is the creation of a Federal agency with authority to fix the price on farm products while still in the hands of the farmer. The legislation sought is without precedent in the whole his- tory of our country, and should it be enacted into law every farmer in the United States would feel its effects for weal or woe. Appearing as witnesses before the committee from my State, Texas, are H. N Pope, Peter Radford, and J. S. Cullinan, all of whom have testified. At all sessions of this committee while these Texas witnesses were before it one J. A. Arnold, formerly of Fort Worth, Tex., has been in constant attendance sitting with these Texas witnesses, nodding assent to many of the statements made by Texas witnesses and applauding at times. In fact, Arnold came to WasMngton a few days in advance of Pope and Radford. It is known Arnold is in New York frequently. Witnesses Radford and Pope both urge the passage of this legislation, claiming to represent the viewpoint of the farmers, among whom is my constituency. Mr. Chairman, I have challenged their authority to speak for the farmers on so Important a matter as this. These witnesses came to Washington before a line was published in any Texas paper as to what the far-reaching terms of this bill are. No man in Texas was consulted by them as to the wisdom of passing thus particular bill, because no information as to its terms had been disseminated in that State. Pope claims to be president of the Farmers' Union of Texas, president of the Asso- ciation of State Presidents of the Farmers' Union of America, also president of the American Federation of Organized Producers and Consumers, and that these various organizations have a membership running into the millions. He testified as to a meeting he had called of the American Federation of Organized Producers and Con- sumers at Kansas City, Mo., which he attended on his way to Washington and claimed to be presenting the views of this organization as expressed at the Kansas City meeting. On cross-examination he could name only three people who were present at this "fake" meeting. What I am contending for is that Mr. Pope has a right to speak his individual views on this question, but no right to bolster up his statements with the names of high- sounding and multitudinous organizations, when it has been physically impossible for him to see any individual members thereof in order to faithfully express the views of these mythical millions of people on the intricate and far-reaching legislation we are now considering. Mr. C hairman, my State produces from 3,000,000 to 4,500,000 bales of cotton annually. Our 4,000,000 population is either prosperous or the reverse, dependent on price obtained for this great crop. Sorrow and suffering has been brought to the homes of many cotton farmers in Texas by reason of nefarious gambling practices in the cotton 272 FOOD PRODUCTION", CONSERVATION, AND DISTRIBUTION. exchanges of the country. This crop has always heen a prolific source for these gam- blers, who are battering away at the price of cotton even before the farmer goes forth to sow the seed in the springtime, and these gambling leeches on society continue their operations till the last bale has been gathered by the farmer. Designing men, by maldng false reports as to acreage in cotton, weather conditions, shipping embargoes, and actions of farmers' organizations as to prices suggested by them on their cotton product and a thousand other ways, can and have been used by cotton gamblers to beat down the price. In fact, acts of honest men by way of inadvertance or carelessness have been dis- torted by these gamblers to the same end. Mr'. Chairman, H. N. Pope was in New Orleans, La., on September 6, 1916, attending a meeting of the presidents of the Association of State Presidents of the Farmers' Unions of America, 30 States said to have entered the organization. Pope was elected president of this organization at this meeting. On September 6, 1916, a telegram was sent from Fort Worth, Tex., by one J. A. Arnold, as follows: "New Orleans, La., September 6, 1916. "The annudil meeting of Associations of State Farmers' Unions Presidents which has just closed here fixed 12 cents per pound as a minimiun price of cotton and urged that all bankers, merchants, and business interests of thfe South cooperate in maintaining this price in order that the cotton industry of the South might be placed upon a stable basis." This telegram was relayed from New Orleans, going to eighty-odd leading papers in all sections of the United States and given general publicity in these papers on September 7, 1916. Somebody paid telegraphic tolls for this service aggregating some $125. Spot cotton was selling around 15 cents per pound on the date of September 6, and after publicity given throughout the country of the telegram mentaoned the bear gamblers, taking advantage of this telegram, raided the market and broke the price around 30 points per pound, which meant a loss to cotton farmers of Texas on a 3,000,000-bale crop aggregating $4,500,000. Pope has since denied authorizing such telegram to be sent. The fact remains, however, that J. A. Arnold did have this telegram sent over Pope's name, and he and Pope are fraternizing during this hearing, together at the hotel, in committee rooms, and apparently on intimate terms of friendship. Mr. Chairman, so far reaching in effect was this gigantic blunder, to put it mildly, that one Frank G. Odell, a citizen of the State of Nebraska, filed the following afldavit before Hon. T. W. Gregory, Attorney General of the United States, which I insert as a part of this statement: AFFiDAvrr. [Witli exhibits attached.] Washington, D. C, October 25, 1916. Hon. T. W. Gregory, Attorney Oeneral of the United States, Washington, D. C; The affiant, Frank G. Odell, a citizen of the State of Nebraska, respectfully lays lays before the Department of Justice the following information: 1. That the afiiant is a life member of the Farmers' National Congress of the United States, and has been for three years last past an executive officer of that body. That affiant has been until recently the editor of the Nebraska Farm Magazine, a reputable agricultural journal formerly published at Omaha, Nebr. That affiant by virtue of the foregoing relations is under obligations to use his influence to protect the inter- est of the farmers of the United States. 2. The affiant has reason to believe that on or about September 6, 1916, certain incidents occurred in the States of Texas and Louisiana by virtue of wliich the Western Union Telegraph Co., a corporation engaged in the transmission of intel- ligence for the purposes of interstate commerce, and certain newspapers hereinafter identified, were unwittingly used in furtherance of a conspiracy in restraint of trade, to make possible and promote extensive speculation and gambling in cotton, a staple farm product, all of wliich, as the affiant believes, was to the great injury of the farmers of several States and in violation of the statutes of the United States. 3. As information bearing upon the foregoing statement there are attached to this affidavit exhibits "A" and "B." Exhibit A purports to be copies of 10 telegrams filed for transmission and trans- mitted over the wires of the Western Union "Telegraph Co. between and including the dates of September 6 to September 12, 1916. POOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 273 Telegram No. 1 shows that a certain message therein referred to and identified by telegram No. 2 was transmitted to numerous dally newspapers which are identified paragraph 4 of telegram No. 2. 4. Telegram No. 2, paragraph 1, announced to the public that officials of the Farmers' Union in session at New Orleans, La., had fixed 12 cents per pound as the minimum price of cotton. This telegraphic statement, ostensibly signed by Henry N. Pope, was subsequently repudiated and denied by said Henry ST. Pope in attached telegram No. 10, dated September 12, 1916. Telegram No. 9 indicates that said Henry N. Pope was not the author and trans- mitter of telegram No. 1 herein referred to, but that said telegram No. 1 appears to have been filed and published by one J. A. Arnold, the afiiant being without knowl- edge as to whether J. A. Arnold had the authority of Henry N. Pope for the filing and transmission of said telegram No. 1. 5. The affiant has reason to believe that the market records from September 6 to September 12, 1916, will prove that as a result of the filing and publication of telegram No. 1 the market price of cotton declined 50 points, to the financial loss of farmers having cotton for sale, to the amount of several millions of dollars. As indicative of this probable loss there is attached to this affidavit Exhibit "B," a copy of the Farm- ers' Kreside Bulletin, published at Arlington, Tex., on September 27, 1916. Said journal contains an article referring to telegram No. 1, and m paragraph marked (x) makes certain charges referring to the probable loss sustained by farniers as a result of the publication of telegram 1. 6. The affiant has reason to believe from his knowledge of the markets and from examination of the exhibits hereto attached that some person or persons to him un- known entered into a conspiracy in restraint of trade with reference to the marketing of the cotton crop, by virtue of which a great loss was incurred by farmers who are growers and owners of cotton. The affiant therefore believes it to be his duty to lay the foregoing information before the Department of Justice and request the Attorney General of the United States to institute an investigation for the pijrpose of determining whether a conspiracy in restraint of trade and to promote gambhng in the cotton crop did actually exist. (Signed) Frank G. Odell. Unfted States op America, District of Columbia, ss: Personally appeared before me, an officer qualified to administer oaths, the affiant, Prank G. Odell, who, being first duly sworn, deposes and says that the statements made in the foregoing affidavit are true to the best of his knowledge and belief. Frank G. Odell, Affiant. In testimony whereof I have hereto attached my signature and seal of office this 25th day of October, 1916. [seal.] Chas. B. Sornborger. exhibit a. \Westem Union special.] Fort Worth, Tex., September 6, 1916. To Mgr, New Orleans, La.: (1) A book of 24 copies containing 275 paid words night press rate, dated New Orleans, La., is being transmitted from this office to Dallas for distribution. A copy of this special with addresses totaling 336 words is being sent you for record. You will kindly render bill covering same. ■' A. C. Farmer. [Western Union special.] Fort Worth, Tex., September 6, 1916. Mgr, New Orleans, La.: (2) 1 The annual meeting of the Association of State Farmers' Union Presidents, which has iust closed here, fixed 12 cents per pound as the minimuin price of cotton and urged that aU bankers, merchants, and business interests of the South cooperate in maintaining this price in order that the cotton industry of the South might be placed upon a stable basis. . . . , i,„,v„„^ „* 2. Peter Radford, of the Texas Warehouse Commission, was appointed chairman ot the committee having these matters in charge. Mr. Radford imniediately called a meeting of his committee at Houston on September 19 and invited leading officials of the union in all cotton States to attend. The committee mil discuss with the business men of Houston the warehouse, financial, and shipping faaUties with a view 104176—17 18 274 POOD PBODtrCTION, CONSEKVATION', AND DISTEIBUTION. of determining the percentage of the southern cotton crop which can be stored, financed, and handled through Houston. The organization of the entire South into marketing units, with farmeirs' union locals as a basis, will begin as soon as suitable men can be put in the field. 3. Henry N. Pope was elected president of association and I. N. McOolhster, of Loxiisiana, secretary. The union has State organizations in 30 States and President Pope will make a tour of all States at an early date, and the work of organization will be rapidly extended to meet the needs of every product and every section. The association has invited the cooperation of conunercial clubs, business men's organiza- tions, State and Federal Governments, and all efforts to improve agricultural economics, and contends that a higher degree of efficiency can be obtained by all agencies for progress working through the organized farmers. 4. American, Austin; Enterprise, Beaumont; Review, Cleburne; 'News, Dallas; Caller-Herald, Corpus Christi; Times, El Paso; News, Galveston; Post, Hbuston; Express, San Antonio; News Telegram, Sulphur Springs; Telegram, Temple; Courier, Texarkana; News, Waco; Tribune, Wichita Falls; Texas Advertjser, Montgoriiery, Ala.; Gazette, Little Rock, Ark.; Constitution, Atlanta, Ga.; News, Savannah, Ga.; Times, Shreveport, La.; Dispatch, Meridian, Miss.; Observer, Charlotte, N. C; News, Greensboro, N. C; Oklahoman, Oklahoma City, Okla. ; State, Columbia, S. C. [Special.] FoBT Worth, Tex., September 6, 1916. Mge., New Orleans, La,: Henry N. Pope, of Texas, was elected president of the Association of State Presi- dents of the Farmers' Educational and Cooperating Unions of America, an organiza- tion of State farmers' union presidents, which has just closed a three days' session in this city. There are 30 States organized in the union, with a following of 6,000,000 farmers. The association affirmed President Pope's stand in opposing the eight hour law re- cently enacted by Congress and passed resolutions opposing his messages sent Presi- dent Wilson asking that the entire controversy be arbitrated. An agriculttiral transportation commission was created for the purpose of studying the transportation problems from the standpoint of the farmer. The commission was instructed to appear before any tribunal having authority to deal with matters of transportation and to represent the farmer. The keynote of the convention was co- operation. All agencies seeking to aid agriculture were invited, to work through farm organizations. The principal work of the organization during the next year will be to improve present marketing methods through better storage and financial facilities and to otherwise promote the business side of farming. An organized effort will be made to promote the business side of farming. An organized effort will be made to improve culture methods to encourage scientific farming, diversification increase, and iniprove live-stock production and combat crop pests and live-stock diseases. Statesman, Austin; Journal, Beaumont; Journal, Dallas; Times-Herald, Dallas; Herald, El Paso; Star-Telegrani, Fort Worth; Tribune, Galveston; Chronicle, Houston; Standard, San Angelo; Light, San Antonio; Times-Herald, Waco; Times, Wichita Falls; Reporter, Abilene; Banner, Brenham; Democrat, Sherman; Transcript, Ter- rell; Courier-Times, Tyler; Light, Waxachais; Herald, Weatherford, Tex.; Associated Press Correspondent, Washington, D. C; Age Herald, Birmingham, Ala.; Examiner, San Francisco, Cal.; Post, Denver, Col.; Post, Washington, D. C; Herald, Washing- ton, D. C; Constitution, Atlanta, Ga.; News, Chicago, 111.; Tribune, Chicago, 111.; Record-Herald, Chicago, 111.; Star, Indianapolis, Ind.; Register-Leader, Des Moines, Iowa; Times, Kansas City, Mo.; Herald, Louisville, Ky.; Times-Picayune, New Or- leans, La.; Press, Portland, Me.; American, Baltimore, Md.; Boston News Bureau; Journal, Boston, Mass.; Free Press, Detroit, Mich.; Tribune, Minneapolis, Minn.; Globe-Democrat, St. Louis, Mo.; Bee, Omaha, Nebr.; Tribune, New York, N. Y.; Times, New York, N. Y.; Union, Springfield, Ohio; Leader, Cleveland, Ohio; Ore- gonian, Portland, Oreg.; Incjuirer, Philadelphia, Pa.; Journal, Providence, K. I.;. Commercial Appeal, Memphis, Tenn.; Virginian, Richmond, Va.; Post-Intelligencer, Seattle, Wash.; Times, St. Louis, Mo.; Star, St. Louis, Mo.; Intelligencer, WheeUjig, W. Va.: Free Press, Milwaukee, Wis. Heney N. Pope. FOOD PRODUCTION, CONSEBVATIOIir, AND DISTEIBUTION. 275 [Special.] Fort Worth, Tex., June 16, 1916. Manager, New Orleans, La.: (4) The annual meeting of the Association oE State Farmers' Union Presidents which has just closed fixed 12 cents per pound as the minimum price of cotton and urged that all bankers, merchants, and business interests of the South cooperate in maintaining this price in order that the cotton industry of the South might be placed upon a stable basis. Peter Radford of the Texas Warehouse Commission was appointed chairman of the committee having the matters in charge. Mr. Radford immediately called a meeting of his committee at Houston on September 19 and invited leading officials of the Union in all cotton States to attend. The committee will discuss with the business men of Houston the warehouse, financial, and shipping facilities with a view of determining the percentage of the Southern cotton crop which can be stored, financed, and handled through Houston. The organization of the entire South into marketing units with Farmers' Union locals as a basis will begin as soon as suitable men can be put in the field. Managing editor Times-Picayune, New Orleans, La.; Age Herald, Birmingham, Ala.; Constitution, Atlanta, Ga. Henry N. Pope. [Special.] Fort Worth, Tex., September 6, 1916. Mgr, New Orleans, La.: (5) This office transmitted to Dallas a 212-word special, paid, of which the first 19 copies were sent as paid day press rate, the other 38 addresses were sent as paid night press rate; this matter was dated New Orleans, for which you will kindly render this office a bill. The traffic department are taking these copies to a New Orleans CKT and getting a number on each one of them from your office. Herewith is a_ copy of the addresses and messages which kindly check this office for its transmission from Fort Worth to New Orleans, 378 words paid D. P. R. A. C. Farmer. [Special.] Fort Worth, Tex., September 6, 1916. MoR, New Orleans, La.: (6) A book of three copies containing 172 words, night press rate dated New Orleans, is being transmitted from this office to Dallas for distribution. A copy of this special, with addresses, totaling 186 words, N. P. R., is being sent you for record. You will kindly render bill covering same. •' - A. 0. Farmer. [Special.] New Orleans, La., September 6, 1916. W. A. L., Dallas, Tex.: (7) SY Please advise how we should check on C dated New Orleans Paid N. P. R. to Times-Picayune, signed Pope. Should not there be a via Fort Worth on it? M. J. [Special.] Fort Worth, Tex., September 7, 1916. New Orleans, La. (8) SYS. Check yourself city rate on Times-Picayune. [Telegram.! Dallas, Tex., September U, 1916. W. A. Porteotjs, New Orleans, La.: , ^ „ ,, • , (9^ Informed Henry N. Pope, now in Fort Worth, understands fully all cu-ciim- stini connected ^ speciafreferred to and filed by his publicity ^-/j A. Arnold. Further, we are informed "12 cents per pound as the ^^^^^i^"^ P"Si ^^'Lq ° eX^ should have read, " 12 cents per pouna as the loan pnce of cotton. That con-ecUon is being issued by Mr. Pope and those concerned at Fort Worth. If further iniorma tion desired advwe. Was ready for wire talk but wire failed. Schkoeder 276 FOOD PKODUCTION^ CONSERVATION, AND DISTRIBUTION. (Telegram.) FoKT Worth, Tex., September n, 1916. New Orleans Cotton Exchange (Care W. H. Schroeder), New Orleans, La.: (10) Special of September 6 was wired from Fort Wouth to New Orleans to be resent under New Orleans date line. This was not signed or authorized by me and I am making investigations here. No fault of Western Union. Henry N. Pope. Mr. Chairman, cotton is so susceptible of fluctuations at the hands of the gambler that it would be most dangerous for this committee to support any bill constituting a governmental agency '■ffith power lodged with it to fix prices at some future time at its discretion. Cotton is now and has been for weeks selling around 20 cents a pound. The bear gamblers have sought in every way to reduce the price. The 1916 crop was short. The world's supply is limited. The present price is not too h^'gh. If this committee shoiild report ths b; 11 establishing a price-fixing board it would be a Damocles sword hanging constantly over the head of the cotton farmer. I shudder- for the indxistry and would not dare' to predict how successfuUv the bear raid would be. What is true of cotton is in my judgment largely true of the other staple crops. Mr. Cullinan, the other Texas '^tness, a .realthy oil man, is entitled to have his statements considered as an individual and we should weigh them aasuch. Isn't it a little strange, however, that he wants this drastic legislation applied alone to the crops grown by the farmer? \Miy should it not be applied to gasoline, crude oil, and by- products of the oil industry? The prices are high on all these and they are now necessities, both for the Nation and the citizen. The other witness from Texas, Peter Radford — ^well, where Pope and Arnold are, there he is also. Mr. Chairman, in making this statement some parts of it are very unpleasant, but my sense of responsibility to my people and my country impels me to do my duty as I see it. I will not agree to legislate against the farmer as a class and make him the "goat" in this hour of peril. I know him and he is a patriot. Let him alone and the world will be fed and its battles fought. The Chairman. Without objection, gentlemen, the statement will be made a part of the record. Gentlemen, we have before us this morning by invitation Mr. Home, who is the president, I beUeve, of the American Association of Refrigeration. STATEMENT OF MR. FRANK A. HORNE, NEW YORK CITY, PRESIDENT OF AMERICAN ASSOCIATION OF REFRIGER- ATION, AND PRESIDENT OF THE MERCHANTS' REFRIGER- ATING CO. OF NEW YORK. Mr. DooLiTTLE. Mr. Home, will you detail a little just what this Am.erican Association covers ? Mr. HoENE. I will be very happy to. Mr. Chairman, the Ameri- can Association of Refrigeration is an association made up of the various Unes of industry with which refrigeration is connected. For example, the public cold-storage warehousemen are members. The engineering profession connected with refrigeration are also members. There is representation of the various colleges and universities that have to do with the teaching of the science of refrigeration. We have representation, I may say, of representa- tives of the Department of Agriculture, as the chairman of one of our committees, the comnaittee on food research, Dr. Mary E. Pen- nington. We have ice manufacturers, both artificial ana natural, artificial with regard to manufacture, and ice dealers with regard to natural ice. We have representation of the railroad men who use refrigeration in refrigerator cars and we have representation of other FOOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 277 industrial applications of refrigeration. It is purely a trade orL^aniza- tion lor the interchange of information and the discussion of methods and the promulgation of general matters regardino- the work of refrigeration and its general appHcation. Mr. DooLiTTLE. Refrigeration as an independent proposition and also as connected with the meat packing houses and concerns like that? Mr. HoRNE. More with respect to the public cold-storage warehouse- men than the meat-packing industry iUeli. The application of refrigeration to food, of course, is the aspect of the situation I am here to discuss. That is not only connected with the refrigeration m pubhc cold-storage warehouses, but al-o all down the line^of food pre'^ervation and conservation from the smallest farm,er's ice box, and going up through the refrigerator boxes and plants of the shippers and dealers and handlers of these products running through the refrigerator-car service to the public warehouses in the large terminal markets of the country. While we fully recognize the purpose of this '•bill and understand that it is a war measure — and I may say we heartily favor any action the Government may take to safeguard the interests of the public and of the forces of the Government — we desire to speak of one a&pect of the situation which, while it may be covered in part, it seems to me it is important in the very interest of the conservation of food and of the equalization of values that it possibly should be covered a little more specifically. You gentlemen, of course, are cognizant of the functions of the storage of perishable products which are accumulated in the period of seasonal flush production for distri- bution during that part of the year when there is little or no pro- duction. It is in my judgment very necessary at this time that all the food that can be produced should be conserved and distributed not only by transportation from one part of the country to the other, as need be, but that there should be safeguarded the facilities for the application of refrigeration so that the flush production we are now encouraging and which the Government is seeking to increase shall be held so that it can be used and transported from the summer season of production into the winter time of scarcity. You gentlemen doubtless are familiar with the large extent of this industry and the quantities of our food products which are carried in these public cold-storage warehouses. As an illustration of that, here is a report of tlie United States Department of Agriculture dated April 2, with a r^sum^ of the cold-storage egg season of last year, showing the amount on hand in the houses who voluntarily report to the department. I may say that our association has been cooperating with the Government in the matter of these monthly reports. We beheve they should be developed and extended, and we have cooperated to the limit in helping the department get this information before the country and the dealers and the consumers and the trade. This shows that on August 1, 224 of the cold-storage houses reporting to the Government had on hand 4,977,807 cases of eggs of 30 dozen each, and that on March 1 that quantity was reduced to 3,206 cases, and that the deliveries in regular seasonal order were as follows: For the month of August— I wiU leave out the odd figures— 499,000; September, 601,000; October, 1,001,000; November, 1,172,000; December, 1,013,000; January, 583,000; February, 101,000. 278 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. My point there is the regular distribution of these products out of cold storage as needed, because of the lack of fresh production. That is also true of other products; for example, take the item of apples. Mr. DooLiTTLE. Before you go into that, your statement shows there were only about 3,000 cases of eggs in storage on the 1st of March. Mr. HoKNE. Three thousand on the 1st of March as against about 5,000,000 on August 1. Mr. DooLiTTLE. In other words, practically all the eggs of the concerns reporting to the department had been exhausted ? Mr. HoENE. Yes; before the fresh crop. That is an illustration showing the percentage each month from August 1 down to March 1. My point is that it is a seasonal distribution, and that nothing in this bill should interfere with that function of supplying our food to the public, and for the purposes of the Army and the Navy during the scant season of production. Mr. DooLiTTLE. Had you begun to put in the fresh eggs of this season's crop by March 1 ? Mr. HoENE. No; the season begins the latter part of March, but mainly in the months of April and May. They are now coming in from the fresh crop. This is the report for the last season, and is conapiled by the department. Mr. Thompson. What part of the bill would prohibit that — the hoarding provision? Mr. Hi)ENE. I think there should be some safeguarding there. The language I think is a little dangerous, and would deter the trade from venturmg on this long holding with that provision over their heads. I will discuss that in a moment. I want to first present these figures. Now take the report on the storage of apples, which you recognize as a seasonal product, usually harvested and stored in the fall of the year, in the months of September, October, and early November. I only have the figures for three months. On December 1, 1916, out of 484 warehouses reporting there were 2,700,000 barrels and 3,800,000 boxes — ^I leave off the odd figures. On March 1, three months later, that had been reduced to 1,303,000 barrels and 2,364,000 boxes. Mr. McLaughlin. Bushel boxes ? Mr. HoRNE. It is the uniform package box which comes from the coast. I do not know about it in bushels. Mr. Hogan would know. Mr. Hogan. A short bushel. Mr. Horne. It is the regular package of boxed fruit coming from the coast points, Mr. Wilson. What do you mean by a short bushel ? Mr. HoKNE. Mr. Hogan used that phrase and I will ask him to explain it. Mr. Hogan. We call it a short bushel because there are hardly three boxes with the same ratio to the barrel. Mr. HoKNE. They are not sold by the bushel, but by the box, and it is not expected to be a; bushel. Mr. Haugen. How much short is it from being a bushel? Mr. Hogan. I would say about 15 pounds on a barrel. Mr. HoENE. Continuing this statement, it should be remembered that this remaining stock on March 1 will last through imtil the early fruits of summer come in. They are now going out very rapidly. POOD PRODUCTION, CONSEEVATION^ AND DISTRIBXJTION. 279 With regard to cheese, I have here the figures reported by the Gov- ernment for three months. I have not the same figures I had on eggs. On January 1 there was 29,900,000 pounds of cheese in 282 ware- houses; on February 1, in 289 warehouses there were 19,000,000 pounds showing a delivery of 10,000,000 pounds during a month; and on March 1, in 289 warehouses, 12,400,000 pounds of cheese. Creamery butter, which is stored in June, July, and August during the summer time when grass butter is obtainable, in 249 warehouses on January 1, after, of course, considerable of the crop had been withdrawn, there was 45,700,000 pounds. On February 1 that was reduced to 29,800,000 pounds, and on March 1 still further reduced to 15,467,000 pounds. All of which goes to show that these stocks are not stocks which are being hoarded. They are held for the pur- pose of proper distribution from month to month as the trade de- mands them and as there is a shortage in the fresh production of the various crops. So much, then, for the quantities and the dis- tribution of these products, and there are many other products which are on the same basis. I have not the figures here, but the products which I have mentioned are typical. It seems to me that without specific mention somewhere in this bill of this function and of the propriety of the warehousing of these products from the time of flush production, so that they may be dis- tributed during the period of scant production until the next crop, it is apt to work a hardship to the merchants and dealers who handle and store these products. We read in the bill. No. 4125, that it is made unlawful for any person to commit or permit preventable waste, etc., to hoard or to hold, the only exception being made in excess of an amount reasonably needed to supply his individual or business requirements for a reasonable time. Now, I think you shotild go further with that and in some place and in a proper way cover the point which I am making, and 1 just suggest this language in rough form which might be added after the word "time," in section 2, page 2, line 9, "or reasonably required to furnish necessaries produced m surplus quantities seasonally throughout the period of scant or no production." Mr. Young of North Dakota. Eead that again, please. Mr. HoRNE. I will read the clause with this added language, if I may: That it is hereby made unlawful for any person to cominit or permit preventable Waste or deterioration of any necessaries, to hoard or to hold, or enter into any contract or arrangement for any necessaries in excess of an amount reasonably needed to sup- ply his individua:! or business requirements for a reasonable time or reasonably re- quired to furnish necessaries produced in surplus quantities seasonably, throughout die period of scant or no production. This would have to be inserted at other places in the bill along the same line. „ ^ , .,, „ Now, without this amendment, what are we confronted witn < The merchant reading this bill sees that he is subject to penalty for violations, simply dependent upon the interpretation of the words "reasonable amount" and "reasonable time for his own business. It is very difficult for any official or any body of men to determine what is a reasonable quantity and a reasonable time. A reasonable time is fixed by nature, and that is the season, the season of scant production, and for any man or any official to say in advance what 280 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION, that is going to be, I declare to be impossible. It depends on future and unknown conditions. Mr. Jacoway. Would not that be especially true now ? Mr. HoRNE. I think it would be. I think so, exactly. Now, furthermore, the man is in danger of confiscation, as provided for else- where in this bill. He is confronted with the idea of the possibility of the fixing of a maximum price and of a minimum price, and if a minimum price is fixed, he knows he has got to pay more for the product to go in storage. If he thinks that six or nine months hence he is to be confronted with a maximum price, how does he know there wiU be a reasonable profit ? We agree with you gentlemen, that any- thing and everything should be done to curtail and eliminate what you call here — and I am very glad you qualify it — injurious specula- tion. Mr. Jacoway. What would you think of leaving out the provision f)roviding for a maximum price and leaving in the provision providing or a minimum price ? Mr. HoENE. If I may discuss that point here, my present judgment would be in favor of that for this reason : Your minimum price would encourage production, and the very quantity thus produced would control the maximum price, and you would not hold this club over the head of the merchant and dealer who might store these products for future consumption. Mr. DooLiTTLE. You are not in favor, then, of a maximum price being fixed ? Mr. HoRNE. With relation to this industry; no. Now, Mr. Chairman, with regard to injurious speculation, it is my judgment that that could be covered under the provision of this bill which provides for the licensing of warehouses. Under section 4 ample power is given to the Secretary of Agriculture to issue regular tions and to provide for the method of the handling in storage of these products, and I believe the powers conferred by that section are ample for correcting the matter of injurious and excessive specu- lation. You gentlemen must recognize that the speculative feature is inevitably involved in aU such transactions. Speculation and merchandising are involved together in these transactions for the reason that a man must forecast the future. There is a distinction between reasonable and fair speculative merchandising and out- and-out gambhng speculation. I think we must recognize that distinction. The men who put these goods away in carload lots in the spring and early summer have to speculate and have to take a chance, having in mind their own requirements and what is going to happen in the fall and winter, and they are doing it only because there is a possibility of a reasonable profit. I am not an operator. The warehouse company of which I am president never owned a dollar's worth of any product, We are public warehousemen, and that is true of the other men associated with us. We are not merchandisers in any gense; but I want to say that the rank and file of the men who are customers of our houses are patriotic business men who are contented to operate on a reasonable profit. There are, of course, the excrescenses of commerce which you read about, the rampant speculator, who may deal in these products and every other product, but the average operators and storers are POOD PKODUOTIOlSr, CONSERVATION, AND DISTRIBUTION. 281 men who have a trade and who are contributing their part to the dis- tribution and the marketing of these products. Now, in regard to section 10, I want to say I very heartily favor that section, which authorizes the President to ascertain the needs of the country for preference movements of common carriers, both as connected with the. handhng of these perishable foods for the people and for the forces of the Government, and also with reference to the product ice. Yesterday in this city assembled representatives of the various States and sectional ice associations of this country and a hearing was had before a subcommittee of the car service division of the Interstate Commerce Commission, also associated with the Coun- cil of National Defense, urging that the shipment of ice be placed on the preferred list. That comes right home to this question of the con- servation of food — the conservation of food on the farms, at the ship- ping points, and in the homes. Cases were brought to the attention of the commission yesterday, showing that there was difficulty even now, before going into real hot weather, or before moving the crops, in securing cars for the transportation of ice from the places where it i. manufactured to points where there are no ice factories, thereby working a very great hardship on the people of those communities and upon the handlers of food. I think that is a very important provision. I think it should also be apphed to coal used in ice and refrigerating plants. Gentlemen, unless we can get coal and unless there can be a prefer- ence given to coal for the purposes of our plants some of the plants will have to go out of business and vast quantities of food will be spoiled. I therefore very heartily favor that proposition and I would like to have it, if possible, amended so as to cover both ice and coal, because it is involved in the handling of the foods of the country. Now, then, I also desire to say that ifavor the provisions of the bill, H. R. 4188, particularly the provision there providing for a thoroughgoing investigation. Our association has always stood for the most careful and thoroughgoing investigation of our practices. Our association has appeared here before Congress, or its various committees considering regulations of a drastic character — — The Chairman (interposing). If you wiU permit me to interrupt you there, I will say that the other day I called the "attention of a witness, who was testifying against that provision, to the fact that that bill had already been reported by the committee, and that the committee did not, therefore, feel the need of taking any further testimony on that subject, and I must enforce that same rule against you, who are in favor of it, in 'order to be entirely fair to both sides. Mr. HoRNE. Certainly. I was not aware of that fact. The Chairman. I know you were not. We wiU confine the dis- cussion to the bm H. R. 4125. Mr. HoRNE. I thmk that is aU I have to say with reference to the bill H. R. 4125, but I wiU be glad to answer any questions that gentlemen may have to propound. The Chairman.- Gentlemen, we have a pretty fuU committee membership attendance this morning, and I suggest that we start at the head of the table and go around to each member in turn and see who desires to ask questions. Do you desire to ask any questions, Mr. Rubey? 282 POOD PRODUCTION, CONSEKVAWON, AND DISTEIBUTION. Mr. EuBBT. I would like for you to give us some iaf ormation as to the profits made by the men who store these various a,gricultural products — say, for instance, eggs. We will take eggs as an illistration. What are the average profits made by the men who store eggs ? Mr. HoRNE. I thmk if you would take the average of a period of 10 years, the profits would be negligible, if not on the mmus side. It was true last year, with war conditions confronting us and with large export demands, coupled with short crop, that there were large f)rofits made, but, if I remember rightly, the year before there were osses sustained. Mr. KuBEY. Of course there is a period when the prices are com- paratively low. For instance, in the spring the prices are compara- tively low. Of course the man who holds them must pay the price or the cost of storage, and he sells them at a period when the price is high. Of course, he has in view the making of a reasonable profit, and what I want to get at is. What is that reasonable profit? What do they get in the way of profit ? Mr. HoRNE. In a long period of years I venture to say that the profit would not be over from 5 to 10 per cent. It is not fair to take an exceptional year like last year. For instance, those eggs are going away from storage at the seaboard at about 36 cents per dozen, which is a very high price. A year ago, as I remember it, they were selling for something like 24 or 25 cents per dozen. The producer is also getting the advantage of the high price this year, but I think I am safe in saying that if you will take the gains and losses over a period of 10 years the profits would not exceed from 5 to 10 per cent. Mr. RuBEY. On the other hand, if you did not have that method of keeping those things, the price of eggs would be enormously high at the period when the production was low. Mr. HoRNE. Yes, sir; and very much lower at the period of great- est production, because there would not be a market. There would be a glut of the market and low prices, which would discourage the producer. Mr. RuBEY. Then, your position is that storage tends to equaUze those conditions ? Mr. HoRNE. Yes, sir; and it lowers the average price and increases the quantity. ' Mr. Thompson. You spoke about maximum and minimum prices, and expressed yourself in favor of a minimum price in order to increase production. Mr. HoRNE. Yes, sir. Mr. Thompson. And you indicated that you might oppose a maxi- mum price, because you thought competition would control that price. Mr. HoRNE. Yes, sir. Mr. Thompson. Sti.ll, competition has never done it as yet, has it ? Mr. HoRNE. I think it has, as I understand it, from my judgment and observation. I am only discussing those commodities of which I have knowledge. Mr. Thompson. Your products do not go on boards of trade and exchanges, do they ? I refer to eggs, butter, etc. Mr. HoRNE. No, sir. Eggs, butter, cheese, dried fruit, nuts, green fruit, etc., are our products. They do have some exchanges, but they are not like the so-called boards of trade that you have reference to that handle grain. FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 283 Mr. Thompson. They do not corner the market on those products by buying futures on them ? Mj. Horne. Not to the extent that they do in the case of other products. Mr. Thompson. But they do so to some extent?- Mr. Horne. No, sir; I think not. Of course, they have to buy ahead. They may purchase supplies ahead, but I do not know of any considerable future sales, although there may be some. We do not merchandise, and I do not claim to be very well informed on that point. Mr. Haugen. Do mei chants and large hotels buy those products in advance ? Don't they buy them for future delivery ? Mr. Horne. To. some extent, particularly the hotel supply houses. Mr. Haugen. You mentioned, I believe, 246, or whatever the number was, reporting there. Now, how does that number compare with the total number of cold-storage houses ? Mr. Horne. That is a large proportion of the large houses, but there is a large number of small houses. I think the blue book shows there are something like 800 in aU, but those are not the leading houses. Mr. Haugen. This list includes, of course. Armour & Co. ? Mr. Horne. Yes, sir; I think it does. Mr. Haugen. It includes Armour & Co. and the larger packing houses ? Mr. Horne. I think it does. Mr. Haugen. I understood you to say that you are opposed to one man fixing the price, and that it would not be safe to leave it to a board ? Mr. Horne. Yes, sir. I think that the only safe way of fixing prices is by the practice of the largest possible number of dealers in the particular product. I think that competition controls, depending, of course, upon the available supply and the market conditions. That is the only safe method of fixing adequate prices where that is free and open. Mr. Haugen. You would be opposed to having it controlled by a board or commission ? Mr. Horne. I would, except in a very great emergency. Mr. Haugen. Would it be safe to leave to the President in his discretion ? Mr. Horne. I think so, or to the Department of Agriculture. Mr. Young of North Dakota. Now, as to those storage concerns, or cold-storage concerns, that do not report to the Government-^ what is your judgment as to their influence on the market ? Mr. Horne. It is neghgible. I am informed by the storage department of the Ofiice of Markets and Rural Organization that they have reported to them practically aU of the large public cold- storage warehouses in the country. This is borne out by the fact that one of our associations, the American Warehouse Association, of which I was a director, reported 54 leading houses. Those are the largest houses. The Government has this information privately, and we do not see who is included. The total capacity of these two or three hundred houses is very shghtly in excess of the total for the 54 big warehouses. For instance, our company controls 9,000,000 284 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. cubic feet, and the capacity of the big houses ranges from one to ten milUon cubic feet, whereas a large number of the small houses might have only a matter of 100,000. 50,000, or even 20,000 cubic feet. Yet, they are accounted as public warehouses. Mr. Young of North Dakota. What would you do in cases like those reported in the newspapers last winter in Chicago, where, for instance, a corner was had in certain commodities, including eggs? What would you suggest in order to prevent the recurrence of that ? Mr. HoRNE. In the first place, I can say from my own knowledge that there was no such comer in eggs. There was a shortage of eggs; there was a very heavy demand for eggs, and there were some speculators who made big profits on eggs and who talked rather freely in the press about their profits. However, there was a big mistake in those figures that I saw. It was said that a man had 5,000,000 eggs, I believe, but I do not suppose that that man had over — I do not know how many. A hundred cars of eggs would be — I do not know what that would be. I think it would be 40,000 cases. I do not know what that man had, but it is inconceivable to me that he had over 40,000 cases. Now, you asked me what I would do. I beheve that the licensing feature of this bill and the powers given to the Secretary of Agriculture to regulate and issue orders would cover that in times of stress and emergency, and ordinarily the open free competition which is the fact in this industry would do it. Those 5,000,000 cases of eggs that were referred to are possibly held by thousands of individuals and competing owners all over the country. I have some figures that I gathered in a former hearing showing the number of holders of stocks of eggs some four or five years ago, and that discloses the fact that they were held by a large number of independent competing owners throughout the country. Mr. McKiNLEY. You feel that if we give power to the Secretary of Agriculture to license dealers that that would largely clear up the situation ? Mr. HoRNE. To hcense the dealers and, if you please, the ware- houses. Mr. McKiNLBY. One witness who testified here took the position of only fixing the price to cover a season, allowing then all of the work to be done through the regular channels of business and allowing each handler a fixed profit. What is your opinion as to that? Mr. HoRNE. Do you mean a fixed profit or a fixed price? Mr. McKiNLEY. He would fix the price, which of course would be the price guaranteed by the Government to the producer, and then he would allow each producer, and of course the warehouseman and wholesaler, a fixed profit. Mr. HoRNE. I would not want to qualify as an expert on the han- dling of products, because we do not merchandise, but right offhand I doubt whether that could be done with a fixed price on any one product. There are so many products and so many conditions, and the conditions in different parts of the country are so different, that I do not see how you could do that without difficulty. I have not thought it out, however. Mr. McKiNLEY. His plan was to divide the country into zones and to take the average price for 5 or 10 years, and, after taking into consideration the war profits or war conditions, he would fix the price. POOD PRODUCTION, CONSERVATIOlsr, AND DISTBIBUTION. 285 Mr. HoRNE. It would be a pretty broad exercise of power to fix the minimum price, and then to arbitrarily say that every one who handled that product would get so much profit out of it all along the liae. I wonder whether that would work or not. Mr. McKiNLET. Of course, in your business it would work. Mr. HoRNE. We get a fixed charge for storage. Mr. McKiNLEY. I asked you that as an expert. Mr. HoRNE. I will have to think that over. I do not believe that it would work. Mr. DooLiTTLE. You stated a moment ago that you were in favor of giving the Departrnent of Agriculture or the President the po^er suggested in this bill in the face of an emergency. Now, don't you think that emergency exists now? Mr. HoRNE. Yes, sir; I do; but I think that would favor the quali- fications I have suggested in my testimony to cover this very feature of period storage. We need that, in view of the further conservation of foods and the further making of them available, to avoid this penalty or cloud hanging over the heads of merchants who would operate. Mr. DooLiTTLE. You stated that the competition between mer- chants would satisfactorily govern the prices to the consumer ? Mr. HoRNE. Yes, sir. Mr. DooLiTTLE. Let me ask you whether in times when the demand exceeds the supply that would have any effect upon the proposition ? Mr. HoRNE. There the law of supply and demand enters, and when the demand exceeds the supply you will have high prices inevitably. The cotmterpart of that is also true, and where the supply exceeds the demand you will have lower prices, because every merchant knows that he must move his goods before the end of the season. Mr. DooLiTTLE. If the demand exceeds the supply, the competi- tion between the sellers would not govern the price ; that is, it would not satisfactorily govern the price to the consumer ? Mr. HoRNE. No, sir; but that has the effect of curtailing the con- sumption of that particular product and throwing the consumption to a more reasonable product, which is the normal and wise course of action. Mr. Young of Texas. I understood you to state in answer to Mr. Thompson's question, I believe it was, on the price-fixing feature of this biU, that you would favor the fixing of a minimum price to the farmer for the produce in the hands of the farmer in order to guarantee a larger production ? Mr. Horne. From my present knowledge, yes, sir. Mr. Young of Texas. But after it leaves his hands,, you are doubtful as to the propriety of fixing any price to be received by any agency that may handle that product from the farmer down to the ultimate consumer, your viewpoint being that the fixing of maximum prices would not be a workable proposition ? Mr. Horne. Yes, sir. . Mr. Young of Texas. And you would leave the price alter tfie product left the hands of the farmer to the law of competition in the trade in the various article produced by him? Mr. Horne. Yes, sir. 286 FOOD PRODUCTION, CONSERVATION', AND mSTRIBITTION. Mr. Young of Texas. Now, that being your viewpoint, let us re- verse the proposition and take it from the farmers' standpoint. I want to say to you that I am speaking his sentiments. He has got the weather conditions to contend with that may bhght his wheat and destroy his cotton, and insect pests may destroy everything he grows, or a great percentage of it. Now, do you think that it would be very fair to the farmer who has got to go up against all of those uncertain propositions, more uncertain than any conditions that can comfort the man who handles this stuff between him and the consumer — -do ^ou think it would be fair to him for an agency to fix the price that e can get, with the autocratic power that that agency would have, and that that power be confined to that one class of people, the farmers ? Mr. HoRNE. My thought as to the minimum price was that it would be advantageous to the farmer, and that it would be sufficiently adequate to encourage production, and that it would be based on conditions that you have mentioned. Mr. Young of Texas. But this price must be. fixed by human beings, and have they not got the same figures to calculate on with respect to the intervening agencies from the farmer to the consumer ? There are no more uncertainties in the conditions that surround those agen- cies than there are in the conditions that surround the farmer, and if that board is capable of fixing a profitable price for the farmer, why is not that board also capable of fixing the same kind of price for those intervening agencies from the farmer to the consumer ? Mr. HoRNE. I am not here advocating that. I simply stated that I saw some values in it. I do not profess to be an economist along that line. Mr. Young of Texas. I am trying to see the strong and weak points on both sides of the proposition. Mr. HoRNE. I was saying that in times of emergency, with the possibility of a national crisis in the matter of food, such, action might be warranted, or you would have the condition of a glut and inade- quate prices, and the farmer will not produce. It will go to waste, and all of it will not be shipped to the market. Mr. Young of Texas. Now, this further proposition: From your viewpoint there can be only one reason assigned for the Government exercising such autocratic power as that of fixing the price of the prod- ucts in the hands of the farmers, and that is the present emergenxjy, and as a means of inducing the farmer to do his best to feed the world. Mr. Horne. Those are my views. Mr. Young of Texas. The farmer is a human being like you and I. Don't you think that the farmer understands at this very moment that the world is short in its food supply ? Mr. Horne. He must know that, of course ? Mr Young of Texas. And don't you know that he is just as anxious for his labor and capital to bring him a profit as any cold- storage man is Mr. Horne (interposing). The cold-storage man does not make any profit on the goods. Mr. Young of "rexas. But the same principle is in the heart of the farmer ? Mr. Horne. Yes, sir. Mr. Young of Texas. Then, the farmer having knowledge of that and being a human agency, don't you know that at this very moment, FOOD PRODUCTION, CONSEKVATIGN, AND DISTRIBUTION. 287 having in view the world's needs and that he will get a crackerjack price for what he produces — don't you know that he is doing every- thing in his power to produce everything that he possibly can ? ]Mr. HoRNE. I do not think that you need to apply the minimum in this case, but I think it is a good thing to have in the bill in case the necessity arises to encourage production. I do not beheve that the power ought to be used arbitrarily. Mr. Young of Texas. Don't you beheve that when you single the farmer out as a class and have this power hanging over his product, that instead of encouraging him to greater production it will have the opposite effect and discourage him ? Mr. lioRNE. I hardly see that. Mr. Jacoway. What time do you begin to put eggs in cold storage ? Mr. HoRNE. Usually in the month of April. We begin in the month of April, and they are put in during the spring and early summer. Mr. Jacoway. Taking into consideration the war situation and the stress, have you in your mind any idea of how you would fix the minimum price for a dozen eggs ? Mr. HoRNE. I have not enough knowledge of conditions in the West to answer that question. Mr. Jacoway. What would you do under conditions like this: You say you are in favor of fixing a minimum price for the farmer. Now, suppose when he produces this stuff that the market price is below the minimum price; who would pay the difference between that low market price and the minimum price ? How would you take care of a situation like that ? Mr. HoRNE. I can not conceive of a situation where the market price would not reflect this minimum price. If the law is good for anything, the market would have to move itself with the minimum firice. I do not say that I believe this minimum price fixing for the armer is the last word, but I do say that the time might come in a national emergency where it might be desirable in order to encourage production. Mr. Jacoway. It did come in Germany — that is, the very condi- tion that I suggested in my remarks to you prevailed in Germany, as I understood from the testimony of Dr. Taylor, and the difference between the minimum price or fixed price and the market price, which was below the minimum price, was paid by the German Government. The German Government stepped in and paid the difference as a war proposition. Mr. HoRNE. I did not know that. Mr. McLaughlin. Speaking of the price and profits m the handling of products from the farmer to the consumer, in your case is your charge always a fixed charge regardless of the market ? Mr. HoRNE. Yes, sir. Do you mean for storage ? Mr. McLaughlin. Yes. Mr. HoRNE. It is a fixed charge regardless of the market, dependent upon the service and the length of time. Mr. McLaughlin. When you were speaking of the appearance ot the ice representatives before the Council of National Defense, was that appearance voluntary on then- part, or were they caUed i Mr. HoRNB. They came voluntarily to ask for relief from the lack of cars in which to make shipments of ice and shipments ot coal lor their plants. 288 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. McLaughlin. I did not know but what you had some knowl- edge of the mvestig;ations that that organization is making now. Do they call the people who appear before them here, or do they come voluntarily ? Mr. HoRNE. I have no knowledge on that point, except that they gave us a very cordial and sympathetic hearing in the presentation of our case. The Chairman. Mr. Home, you stated awhile ago that there were no future markets in such produce as eggs, butter, etc. ; do you mean to make that statement as UteraUy true ? Mr. HoRNE. I meant to qualify that by saying that future sales in those products were not had to the extent that they were had in other commodities. I really have not much accurate information on that point. The Chairman. As you know, there are the Elgin Board of Trade, the New York Produce Exchange, and other produce exchanges? Mr. HoRNE. Yes, sir. The Chairman. Do they conduct their business through future operations or future transactions to some extent ? Mr. HoRNE. So far as my knowledge goes the great bulk of the transactions in the New York Mercantile Exchange are daily trans- actions. There may be some exceptional trades for future deliveries, especially wliere the storage season is being anticipated. The Chairman. Do you have any information as to the method of making quotations on these produce exchanges ? Mr. HoRNE. I only have knowledge with regard to the situation in New York by observation. The quotation there is made by trade reporters. In the case now of butter and eggs those reporters are pubhshera of producers' prices current. They secure their quotations by making inquiries through the trade as to the actual sales made, and simply report in their prices current the result of their investigations, reflecting the actual sales made. The Chairman. The thought in my mind comes from a suggestion that was made to me by a gentleman the other day, who ought to know what he was talking about, that the quotations of many of those produce exchanges were absolutely fictitious, and did not represent transactions going on in the trade, but that they were arbitrarily fixed in a large measure by a few large purchasers. What is your observation in the respect ? Mr. HoRNE. I do not believe that to be true. The Chairman. You do not think that is true ? Mr. HoRNE. No, sir.. The Chairman. You were asked a question about the so-called corner in eggs in the city of Chicago last winter, and you said that was impossible, for the reason that this so-called cornerer could not possibly have cornered the egg market because there were some 5,000,000 cases of eggs out. Could not this be true, however, that an individual in Chicago, or in the city of Washington, if he had capital enough, could comer the egg market as affecting the city of Washington for the time being ? Mr. Horne. I do not think so, Mr. Lever, for the reason that Washington is on the raHroad lines, not very far from New York or Chicago or these other big storage points. As a matter of fact, I happen to know that your cold-storage warehouses in Washington FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 289 last winter were extremely bare of eg^s and the large supply that came to Washington came from outside of Washington and not from your loca,l warehouses here. The CiL\.iRMAN. I happen to know this, Mr. Home, in my own small experience, that two or three days after the inauguration Mrs. Lever had to pay 80 cents a dozen for eggs in the city of Washington; I went home and found eggs in Lexington, S. C, selling at 25 cents a dozen. I suggested to some of my young merchant friends that they buy up some eggs, ship them by parcel post to some of the hotels here in Washington, and make a profit. I instructed one of my young men in the office to find out by wire what the situation was, and in a week's time the price of eggs in Washington had gone down to 40 cents a dozen. How do you explain that situation ? Mr. HoRNE. That is rather difficult. Of course, I think you are contrasting the retail price of eggs here of 80 cents with country- buying prices in the South of 25 cents. Mr. Lever. No; the point I am making particularly is not the difference in^he price of eggs in Washington and Lexington, S. C, but the difference in the price of eggs within a week or 10 days' time in the city of Washington itself. Mr. HoRNE. At no time last winter was the wholesale price of eggs at a price to warrant any such retail price. I am not reflecting on the retailers of Washington, but it would appear to me, from my knowledge of the wholesale price of eggs last winter, that there was no justification for that difference between the wholesale price of eggs and 80 cents a dozen. Another thing, permit me to say that if your cold storage here in Washington had been fiUed with the spring product to its full capacity you would have had a lower price. I think there was a short local supply here and the retailer took ad- vantage of it. The Chairman. One of two things happened, either the whole- salers were taking advantage of it or the retailers, in a conspiracy themselves, were taking advantage of the situation. Mr. HoRNE. I would say it was the retailers, but I would not say it was a conspiracy. The Chairman. Mr. Home, you have been questioned as to the proposition of fixing a minimum price to the farmer. I wonder if you quite understand what is in the minds of the committee in the use of the word ' ' minimum " ? Mr. HoRNE. Perhaps I do not. The Chairman. The bill provides that the Government shall guar- antee a minimum price to the farmer in order to stimulate produc- tion; not fix a minimum above which he may not sell, but fix a mini- mum below which he is guaranteed against a loss if he does sell. With that definition in your mind, what would you think of the wisdom of making such a guaranty to the farmer ? Mr. HoENE. I would repeat that I think under an emergency and in the face of a large increased production, it might be a desirable thing. . . , The Chairman. You have not any well-defined opinion upon that subject, as a matter of fact ? '. t ^ x j u * Mr. HoHNB. I have not. It is an offhand opinion,, as I stated betore. The Chairman. Did I understand you, in answer to a question trom a member of the committee, to say that you did not beheve tJiat tins 104176—17 19 290 FOOD PRODTJCnON, CONSERVATION, AND DISTEIBUTION. tremendous power should be lodged in the hands of any individual, or even in the President of the United States, to control the food situation in the existing emergency, or did I misunderstand you ? Mr. HoKNE. I am hardly prepared to answer that. I presume that under a very extreme emergency, and provided the right man could be secured, that might be a desirable thing; but otherwise I would fear it might be dangerous. The Chairman. Would you consider an emergency to have occurred when the price of a barrel of flour is $16.50 ? Mr. Hokne. I would think that it was approaching an emergency. The CHAniMAN. Pretty closely approachmg it, too? Mr. HoRNE. Yes. The Chairman. Well, if an emergency does arise, and some of us think that it is here now, you have got to intrust this power to some- body, have you not ? Mr. HoRNE. Surely. The Chairman. Would you object to doing it? Mr. HoRNE. Not with proper safeguards, and if the.right man is available. The Chairman. We have got to take a chance on getting the right man, of course. Mr. McKiNLEY. Ask him what he means by proper safeguards. The Chairman. Yes; what do you mean by proper safeguards, Mr. Home? Mr. HoRNE. Well, with regard to the powers conferred and with regard to the exercise of the powers. I do not think we want to have a czar here. Mr. McKiNLEY. And you think there should be the right of appeal ? Mr. HoRNE. I think there should be sonae right of appeal and possibly some check on the wrongful use of the very great powers. The Chairman. Would you object to the power being conferred if we accorded you the right to go into the courts and get your reUef ? Mr. Horne. I think that would be a proper safeguard. The Chairman. Mr. Horne, have you ever thought of the propo- sition of the Government itself, under the power it has to confiscate, either confiscating and paying the market price and selling the goods to the consumer, or if the market happened to be either too high or too low, going into the market itself, with the power of the Treasury back of it, and taking charge of the situation in the interest both of the producer and the consumer ? Mr. Horne. Well, that is getting along pretty well toward social- ism. The Chairman. That is very true. We aU appreciate that. Mr. Horne. I would prefer to have it handled by a department along the lines of this bill, or if the condition is more difficult and extreme, confer the power upon some individual with the safeguards mentioned. The Chairman. Let me ask you this further question, and then I am through: Would you think it wise to confer on any existing department of the Government, excepting the President himself, the autocratic and plenary powers carried in. this biU ? My thought is this, that there is not any established governmental agency at this time that could carry the burden of such a load, in the first place, and in the second place, it could not, if it was to be useful in the future ifOOD PEODUCTION, CONSERVATION, AND MSrEIBUTTON. 291 possibly survive the odium that would attach to the controller of such a situation. Mr. HoRNE. On reflection, I am inclined to -agree with that. I think the department has other work to do in encouraging production and in ehminating waste and deterioration, and that when it comes to the handUng of markets and all that sort of thing, there ought to be another agency of some kind. The Chairman. An agency which would provide for its owa automatic destruction when the emergency is over. Mr. HoRNE. I think so. Your biU I notice provides that the bill- itself shall lapse after the war. Mr. RuBEY. Mr. Home, I would like to ask you just one question', for information. Is there much trading in products while they are in storage? Mr. HoRNE. Ordinarily, no. Sometimes they are transferred in storage, generally from one successive type of owner to another; that is to say, the shipper may sell to the wholesaler and the wholesaler to the jobber, and the jobber to the chain-store man, but seldom more than that. Mr. Wilson. Do you hold any product for export trade ? Mr. HoRNE. Oh, yes. Speaking of our own concern on the sea- board of New York and at Jersey City, frequently goods are sent there and held awaiting shipment for export. Mr. Wilson. What products generally do you hold in that way? Mr. HoRNE. Well, it would be a small proportion of the \\rhole. Most of the products which are stored with us are for distribution in the New York market, but such products as poultry and butter and cheese, quite largely cheese, and green. fruits, apples, and to some extent, meats. Mr. Anderson. Mr. Home, you referred a moment ago to the transfer of products in storage. Are those products transferred by the actual delivery of the goods, ordinarily, or by the transfer of the receipts ? Mr. HoRNE. Well, the receipt is actually the goods. Of course, the goods stay in the same room and the same place, and it is simply a transfer of record. The uniform warehouse receipts act provides very clearly for the issue of negotiable warehouse receipts and the goods are simply transferred by the surrender of those negotiable receipts and the issue of new receipts. Mr. Anderson. That is what I wanted to get m the record. Mr Horne. But the sales are aU with reference to specific lots. That is what I would hke to have brought out. Where sales are made in warehouses they are sales of particular, identical, specified goods, and tile transfer is either made by movement out of the house lor reshipment elsewhere or for consumption, or by the transler o± the warehouse receipts. , -n i i * +i, Mr. Haugen. What act do you refer to— the J^ederal act or tn& State act ? -.-04.+ + Mr. Horne. The uniform warehouse receipts act is a State act. I thmk that law is now in force in over 40 States of the Union. Mr. Haugen. You are not operating under the Federal warehouse act? Mr. Horne. No, sir. . ,. .■ j Mr. Jacoway. Mr. Horne, what is the capitalization of your con- cern? 292 FOOD PRODUCTION, CONSEEVATION", AND DISTEIBUTTOiir. Mr. HoRNE. We have $4,000,000 of capital stock. Mr. Jacoway. Is any part of that $4,000,000 of stock watered stock or has it all been paid for dollar for doUar ? Mr. HoRNE. Well, our preferred stock represents property and the common stock represents in part — ^its value is represented by actual property. Mr. Jacoway. Is there any watered stock in it ? That is what I am trying to get at. Mr. HoRNE. Well, what do you mean by watered stock? Mr. Jacoway. Well, you know as much about it as I do. I would say that it is stock for which nothing has been paid. Mr. HoRNE. The market value of that stock represents its book value, in which there is no water. Mr. YoxjNG of Texas. I would like to ask you one other question with reference to the proposition we were discussing just a moment ago about getting close to an emergency with this exorbitant price of flour of $17 a barrel. That price has recently been made, andlong after the wheat product from which the flour is produced has gotten out of the hands of the farmer. The farmer is not responsible for that price. He sold his wheat at $1.25 or $1.30 or $1.40 a bushel. Now, it is out of his hands and the price has gone up since it left' bis hands by tremendous leaps and bounds. Mr. HoRNE. You wlU understand that my discussion of flour is purely academic because they do not store flour in cold storage. Mr. Young of North Dakota. What is the minimum quantity of eggs that you will accept for storage ? Mr. HoRNE. We will take one case. If the friends' of Mr. Lever want to send up a case when they are 25 cents a dozen and sell them when they are 80 cents, we will do business with them. We wLU take anything from one case to carload lots. Mr. Haugen. From anybody ? . Mr. HoRNE. From any and everybody. It is an open house. The Chairman. If there are no further questions, we are very much obliged to you, Mr. Home, for your interesting statement. Mr. HoRNE. You are entirely welcome. STATEMENT OF MR. ALBERT S. ROCKWOOD, 32 LIBERTY STREET, NEW YORK CITY, REPRESENTING THE NATIONAL WHOLESALE GROCERS' ASSOCIATION OF THE UNITED STATES. Mr. KocKWOOD. Mr. Chairman, I stated yesterday that the execu- tive committee of the association was now in session in Atlantic City. They are meeting there because recently the scheduled convention which was to be held in Washington this week was called off on account of the conditions here and in order to help out in the present emergency. Mr. Young of North Dakota. On account of what conditions here? Mr. RocKwooD. The war-time conditions. President Whitmarsh, who has spent several weeks here in the last two months, conferred with various officials here, and the consensus of opinion of the various officials was that it would be the proper thing to call off this conven- tion, inasmuch as probably 800 or 1,000 wholesale grocers from all FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 293 over the country would convene here, and the meeting could be done away with and avoid that expanse of transportation, etc. President Whitmarsh telephoned me yesterday that this resolution had been adopted by the executive committee of the association: RESOLUTION ADOPTED BY THE EXECUTIVE COMMITTEE OF THE NATIONAL WHOLESALE grocers' ASSOCIATION OF THE UNITED STATES AT ATLANTIC CITY MAY 14, 1917. Resolved, That the National Wholesale Grocers' Association of the United States heartily approves the administration's proposal to take full control of the country's food production, manufacture, and distribution during the period of the war, and pledges its aid in every way possible and as the Government shall direct; and that the association earnestly supports the proposal to give the Secretary of Agriculture power to license food manufacturers and distributors, and respectfully urges that the Lever-Gore bill (H. R. 4125 and S. ) be framed (sec, 3) so as to empower the Secretary of Agriculture to require the name and address of the producer or packer or distributor responsible for placing the commodity on the market, or the name of any duly licensed corporation, partnership, or person to be branded on every com- modity. I would like to explain the latter part of that resolution. Section 3 of the bill as it now stands gives the Secretary of Agriculture power to make regulations so as to require commodities to show the name of the packer or producer, and inasmuch as other provisions of the biU are to give the Secretary power to license both manufacturers and distributors, it was thought only just and proper that the name of the distributor ought also to be included in this provision of section 3 ; that is, their name should be upon the label in those cases where they are responsible for the product. I might say in this connection for the benefit of those who are not familiar with conditions, that if the bill stands as it is now— that is, section 3— and the power given there is exercised, perhaps millions of labels for different products would either have to be destroyed or mutilated, involving a great loss of time in putting on stickers to change the present designation of the distributor. It is a fact that when ordering labels probably a five- year supply will be contracted for in order to reduce the cost, and whenever any changes are made in the label requirements, that necessarily means a big loss, and that is true all over the country. I thought it would be well to bring that fact out m the record here, so that it could be considered when you are considering section 3 of the biU. I want also to state that President Whitmarsh will be down here a Uttle later in the week to see the chairman. They are stiU in session at Atlantic Qty. President Whitmarsh has been acting on a committee with Dr. Alsberg, of the Department ot Agriculture, and representatives of the National Canners Associa- tion, in an endeavor to conserve the supply of tin plate ot the country in putting up canned goods. President Whitmarsh has communi- cated with all the members of the association m the various States, urging them, in view of the short supply of tin plate and its need m ttie mrnufacture of munitions, to either suspend the operation of their contracts with canners or packers for the putting up of canned goods or to cancel them altogether; at least, those that have to do with commodities that are strictly not perishable. At the executive com- mittee meeting yesterday this action of the president was brought to the attention of the meeting and the action was unanimously ap- proved. I think that is all, Mr. Chairman. 294 FOOD PRODUCTION, CONSEKVATION, ANI> DISTRIBUTION. Mr. EuBEY. I would like to ask just one question with reference to the use of cans. The proposition to hot supply them was limited only to those to be used in nonperishable products. It would not decrease the supply to canners of tomatoes and things of that kind ? Mr. RocKWOOD. No; it is strictly to nonperishable products — for instance, peas, beans, and things of that sort which may be preserved in other ways without the necessity of using up the tin supply. I want to say here that although the wholesale grocers point out that whenever changes are made in label requirements that necessarily involves a loss represented by change of labels, and for that reason they would be in favor of the entire elimination of section 3 of the bill; but they do not ask that. If the committee deems it wise to leave that provision in the bill, they are perfectly willing to do their best to com- ply vnth any regulation and help out the Government in every respect, depending upon what the committee considers and determines to be wise. The only provision they make any specific request about is the provision regarding the name. Mr. Thompson. You say you represent the Wholesale Grocers' Association ? Mr. EocKWOOD. The National Wholesale Grocers' Association. Mr. Thompson. Of the United States ? Mr. RocKwooD. Yes. Mr. Thompson. About how many members have you ? Mr. RocKwooD. About 1,050. Mr. Thompson. Does that represent all the wholesale grocers in the United States ? Mr. RocKWOOD. That represents the wholesale grocers handling about 85 per cent of the product. Mr. Thompson. Of the entire food product of the United States ? Mr. RocKWOOD. Passing through wholesale grocers. Mr. Thompson. The resolution you just read approved the provi- sions of this bill for the Government taking over the distribution of these products. What would become of your members if the Gov- ernment took over the distribution of the products ? Was it in your mind that the Government would continue your members as agents of the Government in this distribution ? Mr. RocKWOOD. I do not know whether they had anything along those lines in mind in approving this bill, but as I recollect the pro- visions of the bill, it gives the Secretary of Agriculture and the Presi- dent power whenever they deem it necessary to take over any manu- factory or distributing agency and operate it and pay the owner a reasonable compensation, and turn it back whenever the Govern- ment shall have finished with it. Ml. Thompson. Your association approves that, then, do they? Mr. RocKwooD. In an emergency they are willing to stand by and approve anything that the Government deems necessary. Mr. Thompson. What compensation would they want, or have they ever discussed that particular question? Mr. RocKwooD. That has not been discussed. That is for the President and the Secretary of Agriculture, under the provisions of the biU, the only quahfication being that it shall be reasonable. In other words, they take the attitude that this is a time of emergency and they want to help all they can, and they do not object to any- FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 295 thing in the bill except this one particular feature, which is only i:easonable. Mr. Wilson. You say that these big concerns often order a five- year supply of labels. While that may be true, the supply of five years is seldom dehvered at once, is not that true ? Mr. RocKWOOD. I am not a wholesale grocer myself, and I do not know just what the idea is, but I do know that they do order about a five years' supply, and what I have just pointed out is made evident by what happened in this serial guaranty under the national food law of 1906, where the Department of Agriculture authorized the serial guaranty, "guaranteed under the food law of 1906, Serial No. so-and-so," and then afterwards on the ground that that was misleading the pubhc canceled that regulation and thereafter pro- hibited its use, but allowed the trade about two to three years in which to use up the labels on hand, which had been prepared on the authority of that regulation. Mr. Wilson. My understanding was that when they ordered a large supply like that they would be delivered as they wanted them, and I did not know whether you were familiar with that or not. Mr. RocKWOOD. I am not positive, but I think they are aU printed or lithographed and delivered. Mr. Haugen. Just one question about the tin supply. What can you tell us about the supply of tin ? Mr. RocKWOOD. I really could not tell you anything about that. I have not those statistics. Mr. Young of North Dakota. Your association and its members are large distributers of flour, I presume ? Mr. RocKWOOD. Yes; I guess they are. Mr. Young of North Dakota. I think I noticed that you were in the coromittee room yesterday. Did you sample the bread made from what they called 87 per cent flour ? Mr. RocKWOOD. No; I did not. Mr. Young of North Dakota. Did you see it ? Mr. RocKWOOD. No; perhaps I had better state now that I am not up on those subjects. Mr. Young of North Dakota. I was just going to ask whether you thought the people of the country would stand for that stuff ? They passed it around the room yesterday. Mr. McKiNLEY. It was mighty good stuff. Mr. Young of North Dakota. It struck me as mighty poor. Speaking about the conservation of tin, which is an exceedingly important matter in connection with the saving of canned products, do you think your association could influence the tobacco manu- facturers to put their products up in containers made from something else than tin ? ^ ■, x, t i-v. Mr. RocKWOOD. Possibly. I know many of the members ot tne association who handle tobacco products, some of them cigars and others pipe tobacco. Of course that is another association and i do not imow whether we could butt in there, but it is just possible that we could make a request as an association. 1 am sure tne association would be glad to do it. . , . j? j Mr. McLaughlin. You spoke of authority bemg conferred upon the members of your association to suspend or cancel their contracts 296 FOOD PEODUCTION, CONSERVATION, AND DISTSIBUTION. which they had made with others for their products. How would you do that ? Mr. RocKwooD. The wholesale grocers, many of them, not all of of them, make contracts with packers for canned peas or canned tomatoes or canned beans and things of. that sort, and this is a request to all members to forego their rights under those existing contracts and release the packers from liability to deliver the goods, however profitable those contracts may prove to the wholesale grocer. Mr. McLaughlin. I understood from what you said that you would favor or request a law that would provide for that. My recol- lection is the Constitution of the United States says that neither Congress nor any of the States shall pass any law impairing the obli- gation of a contract, and if two individuals or two companies have a contract, either one could compel its enforcement through the courts, and no law could be passed impairing that obligation, and that being true, there could be no regulation by any board constituted under our law. Mr. RocKWOOD. That is just it. This request by the president of the association to all of its members is based upon patriotism only. It is true they can not invade the legal rights of the individual mem- bers as far as contracts entered into by them with packers are con- cerned, but it is certainly going a long ways for the president to write a letter ui^ing that thing, and his action was backed up yesterday by the entire executive committee. Mr. McLaughlin. Then it is not your idea that Congress take action in the matter ? Mr. RocKwooD. No. Mr. McLaughlin. It is simply something which is to be left to the individual members ? Mr. RocKwooD. I just stated that to show what the wholesale grocers are doing along the lines of helping out this preparedness program. The Chairman. There are some representatives of produce ex- changes present this morning, and we will ask that one member represent the delegation and present its views. STATEMENT OF MR. H. P. PIPER, REPRESENTIITG THE NEW YORK PRODUCE EXCHANGE. Mr. PiPEE. I represent particularly flour, or, rather, only the flour trade of the New York Produce Exchange. The Chairman. Just proceed in youx own way and give the com- mittee the benefit of your views. Mr. Piper. Mr. Chairman, our chairman is unfortunately detained in New York and can not be present here, so I am unexpectedly called upon to present this matter. I want to say this word in the beginning : I am not here to defend our business. There is a passionate desire on the part of the mem- bers of the Produce Exchange to render all possible aid to the Govern- ment in this emergency, and the object of our visit here and of the hearing before this committee is not in any sense to attempt to secme any protection for our business or for our personal interests, but we feel that we might be of some aid in directing legislation along lines that are in a business way practicable. FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 297 Now, coming directly to the features of this bill, H. R 4125 which particularly interests us, we give willing assent to the central- izing of authority m the matter of food control, and we wish only that that central authority be backed and supported by directing or assisting minds that have been for years handling the very business of which that authority will take over the control. We feel that such assistance would be of great benefit in avoiding any misdirected energies. Now, as to section 6 of the bill, .upon the question of prescribing a lengthened milling percentage of flour: The only advantage that I can see in such a measure would be to increase the output in bulk. That does not necessarily carry with it an increase of the bulk of nutritive elements which would reach the consumer. Now, as to the disadvantages: In the beginning there would be no reduction in the cost of manufacture. The regular processes of milling would continue; the customary separations and divisions into the various grades of flour and feed would be carried on in each individual mill in practically the same way that they are carried on now The cus- tomary percentage of flour is now about 72, and the designated per- centage of 77 or 81 or 83 would be selected from the classified prod- ucts being brought together and mixed together, andpossibly by the addition of mixing machinery and put on sale. Therefore, there would be no saving in the cost of manufacture and a possible increase in the cost. Now, there are some problems that we have to handle in New York that are quite different from those that face the miller in the West. His office ends ordinarily when his flour is milled and put through the mill door into the cars, but we in New York have to contend with the long delay in interior transit, the intricate problems of handling Mghterage distribution, and for those of us who are engaged in the exportation of flour the added problems of ocean transportation. Now, those are only easily handled details when we consider the cus- tomary grades of flour, but if we are compelled to handle the flour containing what we. know as red dog, feed middlings, and the germ middlings, we are faced with an entirely new set of problems. Dur- ing the not months of the year it is presumable that unless there is a wonderful reformation in railroad transportation a good deal of the volume of that flour will arrive in New York unsound and unfit for human consumption, and even unfit for animal food. So there is a possible danger of loss by deterioration which would balance the increased output by increasing the milling percentage. Of course, this is a measure that has never been attempted to €iny great extent. We can only judge from the very trifling business in such classes of flour as we have to handle to supply the demand for graham flour, of whole-wheat flour, and similar grades. Now, we do not care to bring Graham flour from the West, because there is no certainty of its arriving' in a sound condition. We are compelled to rely upon our local mills for genuine Graham flour, which means ordfinarily the entire wheat ground up. We have to rely upon the local mills for genuine Graham flour, or we have to have as a substitute for it something that the Department of Agri- culture compels us to brand as imitation Graham flour, which is the customary high grade white flour with a certain proportion of bran. 298 POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Now, here is the question : The produce exchanges have been build- ing safeguards about the flour trade for a great many years, reaching back to the mills in the West and reaching all over the consuming world, and I do not faiow what is going to become of our safeguards if we are compelled to handle this long percentage flour. I fear that they will have to fall. What will we do in arbitrations, such as I am frequently called to sit upon ? If a miller in good faith ships a car- load or a trainload of 77 per cent flour from Kansas City, and it is held up by some blockade, as is happening daily — we have h;ad cars six months coming from Kansas City to New York — ^what would happen when that trainload of flour arrived in New York unsound and \mfit for food, human or animal? Who would pass the loss? Would it fall on the miller in the West or the buyer in New York ? Mr. Wilson. Who pays it now? Mr. Piper. It does not happen now, because we have not reached the point of handling flour of that kind. The flour that is milled now will stand six months' delay even in hot weather and arrive in a sound condition. We have no recourse on the railroads even for delays in transit such as I speak of. Mr. Haugen. Is it a fact that age affects flour ? Mr. Piper. It does after a period of 60 or 90 days. Flour is at its prime for about 60 days after milhng. It depends somewhat on the season and the climatic conditions. Now, in reference to the economic problem of seUing flour of this character — I mean to our own popmation: The separation in the present milling grades is the outgrowth of a good many years of pro- gressive business demands. A certain class of people want good flour and are able and willing, to pay the price, but here is another large class, equally important and equally worthy of consideration, who are not able to pay a high price and who are contented with our medium or low priced flour. Under the regulations which are sug- gested in this bill as being made compulsory in an emergency, both of those classes would have to eat the same flour and pay the same price. The people on Fifth Avenue and the people on Christie Street would be served in exactly the same manner. That looks inequitable, and I have not yet been able to see the force of the demand that there should be only one grade of flour made, even in an emergency like the present one. There is no duplication of distribution at present that would be avoided by confining our- selves to a single grade, because the demand for high grades and low grades exists in all localities. The high grades and low grades are made by aU the mills now and would be made by all the mills under the new program, except that xmder the new program they attempt to throw them all together and mix them with their feeds. I will leave to my colleague, Mr. French, the discussion of the chemical and technical side of the problem. I do not believe that it is neces- sary to call to your attention the argument that has been doubtless advanced to you many times by the millers that the diversion of the richest part of the mill-feed products of the mills in extending the percentage of flour would be d!^irectlv taken from the equally essential dairy feeding of the Nation, and wnat we added to our bread supply we would take from our milk and meat supply. Mr. Anderson. And it would be more than that if we took into consideration the relative nutritive value of the products for human consumption and for cattle consumption. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 299 Mr. Piper. It certainly would. I think that Mr. French will be able to demonstrate to you that the added food element in the flour would have absolutely no nutritive value to the human consumer. Mr. Haugen. The contention before the committee has been that it would raise the nutritive value. Mr. Piper. There is an abundance of evidence to the contrary, and until we are blessed with gizzards like barnyard fowls or fermen- tation tanks like cows, we wiU never be able to get the nutritive elements out of bran. Mr. Haugen. I would like to get the opinion of your expert on that. Mr. Piper. If that condition is true, it is taking away from the milk supply, or adding to the cost of the milk supply, and that would bear most heavily on the children whom we should regard in times like this as deserving of the greatest consideration. Now, passing to section 7 with reference to the extension of flour products by mixing with flour socaUed flour made from other cereals, such as corn flour, barley flour, rice flour, etc. In a way that has more merit than the first suggestion, because there is a valuable nutritive element in these proposed adulterants. I do not use that word in an offensive sense, you understand. To my mind the difficulty is one of the physical handling of the distribution, or how to make available for mixing at the source these various additional elements. Now, there is no objection in the minds of our member- ship in New York to the manufacture of corn fiour, barley flour, or any of those other varieties, and their sale anywhere in the world on their merits, and their blending with wheat flour to any degree that is desired at the point of consumption. Mr. Anderson. That is something for the housewife. Mr. Piper. The housewife or the baker. We do not care to what extent the baker or the consumer mixes those other ingredients with white flour. Mr. Anderson. You would have no objection to the mixing proposition if a limitation were put upon it prohibiting the mixing of other cereal flours with wheat flour except in the place where the wheat content of the flour was manufactured ? In other words, the wheat miller himself would do the mixing in his own plant. Would there be the same ob j ection to it if the mixing were done by him ? Mr. Piper. The difficulty is in the wh^at miller securing a supply of the other ingredients with any regularity. Except to a very limited extent, the manufacture of these additional forms of flour in the mill where the wheat is ground is unpossible. They require a different class of machinery, and to a very large extent the grams go in different territories. Your barley product is largely in_North Dakota, South Dakota, Minnesota, Wisconsin, and Cakforma. How is the miller in Texas, Oklahoma, or Kansas, going to get a supply ot barley flour to make the required mixture ? To begin witn, tne making of barley flour is the creation of a new industry, ihere is no such article of commerce existing to-day, and it might necessitate the invention of machinery. To make practicable and of any value a business of that kind would require probably a longer period tnan the existence of the war. That is a condition that does not exist so 300 FOOD PKODUCTION, CONSERVATION, AND DISTRIBUTION. far as corn flour is concerned, for there are 15 or 20 good-sized manufactories of corn flour. Mr. Anderson. Where are they generally located — ^in what section ? Mr. Piper. If you have a morning paper, you will find a list of them. In all of the morning papers you will find the location of the 15 most important corn miJls in the United States. These are mills in which corn flour is a by-product. It is a by-product from the manufacture of brewers' grits, and the mills make only what they are compelled to make, and it would be physically impossible at the present time to buy 100 pounds of corn flour for dehvery within the next three months. I firmly beheve that. The fact is, and it is generally understood, that the corn-flour product of the existing miUs is sold ahead, possibly 6 months ahead, to the British commis- sion. It is shipped over there to be mixed with flour in baking! their war bread. Now, if we require that product for our bread here, we wiU not be able to ship it over there. • It has been shipped also in -considerable quantities to Belgium. The process of making corn flour differs radically from the process of making wheat flour, and it requires a: different class of machinery. It has got to be steamed and degerminated and kiln-dried. It looks almost like a physical impossibility to attempt any very general distribution and blending of corn flour at the source of manufacture of the wheat flour within any reasonable time. Then, there is another very serious question, in that it wiU involve a big haul on the railroads, and it would utterly demoralize our trans- portation system. All the main grain products move from west to east all over the world, and if we have got to ship from east to west, from north to south, or from south to north, this 15 or 20 per cent element of corn flour that the wheat mills would be required to blend — I think it is safe prediction to say that within 30 days after the enforcement of that law 75 per cent of the flour mills of the United States would be shut down and we would have a real flour famine all over the country. Now, there is no objection to making that flour and shipping it anywhere in the world where it is wanted to be mixed at the point of consumption. Mr. Wilson. I judge from your remarks, Mr. Piper, that you are not in favor of mixing wheat and corn in the making of flour? Mr. Piper. No, sir; I am not; not in the making of the wheat flour at the point where the wheat flour is made. No objection to mixing where the natural movement of commerce will bring those two ele- ments together. It might be mixed at the seaboard in special mills arranged for the purpose. Mr. Wilson. Could the housewife mix it? Mr. Piper. Perfectly w«Il, in any proportion she wanted to, and there is no objection to making the propaganda of distribution of corn flour as wide as it can be made, the wider the better. It is a valuable food and one that ought to be used to a much greater extent in this country than it is now used, but the conditions surroimding manufacture and distribution and its keeping quahties are so widelv different from that of wheat flour that they snould not be blended, because these other cereal flours deteriorate rapidly and they de- teriorate just as rapidly after they are blended as before, and they carry down to unsoundness and unfitness for food the wheat flour with it. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 301 Mr. Anderson. Mx. Piper, it has been claimed in hearings before the Committee on Ways and Means, when the question of £peS the mixed-fiour law was under consideration, that this sort o? Sf would happe^ That the wheat flour would be purSaid from Sf mills m the West by the corn products people in Illinois ard^lS. shipped East, stopped m trarsit at some point in Ohio or Ilhn^°' there mixed with com, ard then shipped on to New York or Jhe Orient or wherever it was to go. Now it is claimed the result of that ZS^^ i"^ iTT ^\' T^""* "^^^'^ ^"ti^^'ly of tl^e business and the market which he has budt up on the basis of wheat flour Is there anything m that claim, m your opinion? Mr Piper. I do rot know that it has ever been the practice of the com-flour manufacturers to buy wheat flour and mix their corn products and appear m the market as sellers of wheat flour I have r ever heard of that phase of the business. It was the custom-it started 20 years ago, nearly, with a few mflls in the West— to buv the corn flour and mix anywhere from 5 to 20 per cer t of it with wheat flour and seU the blerded product as wheat flour at a vast profit to themselves. ^ Mr. Young of North Dakota. Adulteration, in other words .u . 't. ^'^^■^^ P^lib^i'f^te adulteration, and it was to correct that evil that the mixed-flour law was passed in 1898, which the Rainev bill seeks to repeal, and the New York Produce Exchange is on record in the KamevbiU heanng as stronglv opposed to the repeal of that law claiming that the operations of the mixed-flour law have been ade- quate m protecting the pubhc from the impositions of adulterated tionr. Mr. Hutchinson. Mr. Piper, I want to ask you a question right on that line. Was not the mixed- flour law passed for the purpose of preventing the use of the by-products of the starch factories? Was not that the great trouble ? Mr. Piper. That was the case in the beginning. Mr. Hutchinson. You are a miller, are you? Mr. Piper. I was a miller for a good many vears. Mr. HuTCHixsox. You unclerstand about' that, then? Mr. Piper. I remember well the beginning of the business and the first mixtures were made with the precipitated by-product of the starch factories. Mr. Hutchinson. And that was under the wet process ? Mr. Piper. Yes. Now, there is only one other point in my direct statement which I would like to add, and that is the consid.eration which is due to quite a large territory to which New York has for years exported practically their entire requirements of flour. A por- tion of that territory is American soil — for instance, our island pos- sessions, Porto Rico, the Virgin Islands, the Canal Zone, Panama, Cuba, which is under our protectorate to some extent, and likewise Haiti, San Domingo, and the northern coast of South America, and to a very large extent Brazil. Now, to none of those markets could the lengthened percentage of wheat flour be shipped at all, and I think it would be very hazardous to attempt the shipment to any of them of a mixture of barley flour. Then, there are departments of our Government in the same position — for instance, the Army and the Navy. None of these flours could be supplied to the Navy. They would be thrown overboard within two weeks. We could not 302 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION* ship any of those flours to the southern Army posts. It; seems, therefore, that a blanket requirement, which is, of course, only sug- gested here as a final resort m an emergency, but even then it seems to us it would work more mischief than good. And in the last anal- ysis the main point in drawing attention to these trade inconsistencies in the reqmrements of this bul is chiefly to point out the necessity of having the backing of trained, experienced, unselfish, and unbiassed business men who have spent years in the handling of this very busi- ness, the details of which are simply a refined and filtered distillate of all past experience; that such a body of men should be at the side or behind the central power into whose hands the food control appears to be or is about to be placed. The Chairman. Does that complete yotir statement, Mr. Piper ? Mr. Piper. That completes my statement. Mr. Thompson. At this time, if I understood your testimony, the percentage of flour is about 71 per cent? Mr. Piper. From 71 to 72 per cent. Mr. Thompson. Now, about how high would it be safe to increase this mixture ? Mr. Piper. None at all. Mr. Thompson. Eighty-one per cent would not be safe ? Mr. Piper. Not at all. Mr. Thompson. Flour milled up to 81 per cent you say would not keep and would spoil? Mr. Piper. Under the present railroad conditions I do not think shipments of flour of that sort from points west of the Mississippi River in the hot paonths would reach Ne\*- York in a sound condition, and they would not bear exportation to any extent at all. Mr. Thompson. The 71 per cent is now fixed by experience, is it not ? Mr. Piper. By experience; yes, sir. Mr. Thompson. Eunning back through many years ? Mr. Piper. Running back to 1626, when the first mill was built in New York City or in New Amsterdam. Mr. Thompson. You say you have been a mfller ? Mr. Piper. Yes, sir. Mr. Thompson. You are not engaged in the mOhng business now? Mr. Piper. I am not engaged in the milling business now. I was in the business for about 15 years in the West, and for the past -20 years have been in the service of the oldest flour milhng, merchandis- ing, and exporting house in the United States. Mr. Thompson. What is your house ? Mr. Piper. Holt & Co., estabhshed in 1801. Mr. Wilson. You export a great deal of flour, do you, Mr. Piper? Mr. Piper. Yes, sir; our business is almost entirely exporting. Mr. Wilson. Can you give us an estimate of the amount of flour you exported in the year 1916 ? Mr. Piper. I could not. I can refer to one item in the year 1915, but I would not presume to say it was a fair indication of the volume of our exports; but in the year 1915 we furnished about 1,000,000 bags of flour to the French Government involving the chartering, loading, and dispatching of a full cargo a week for about four months. Mr. Wilson. Have you exported a great deal this year ? Mr. Piper. Not as much. Business has been greatly disturbed by war conditions, by the limitation of foreign credits, and the pre- FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 303 vailing high prices of flour. The high prices of flour are a very active agency m reducing consumption. Mr. Wilson. Have the allies purchased your output pretty gen- Mr. Piper. Not to any great extent since 1915. I would not un- dertake to say that that was our milling output. That supply was drawn from I do not know exactly how many, but I would say from more than 50 mills. Mr. Wilson. Have you many imfiUed orders now that you can not deliver ? Mr. Piper. Fortunately, no. Mr. Young of North Dakota. I judge that cities here in the East, like New York, Philadelphia, Boston, and this thickly settled section of the country, get their main flour supply from the Northwest or the Central West? Mr. Piper. Very largely, and a great deal from the Southwest. Mr. Young of North Dakota. And in either case it comes a long distance ? Mr. Piper. It does; yes, sir. Mr. Young of North Dakota. As I understood you, this flour milled to a high percentage wiU not keep as well as the flour made at this time or in the past ? Mr. Piper. It wiU not. Mr. Young of North Dakota. It gets musty; is that the idea? Mr. Piper. It gets musty and it gets infected with insects. Mr. Young of North Dakota. And unsalable ? Mr. Piper. And unsalable, and not even fit for cattle food. It be- comes putrid. I would not want to convey the impression that that is a universal or a frequent occurrence. Shipments of whole wheat flour from the West are really very infrequent owing to the risk that is run of a delay in transit which would produce that unsound con- dition. Mr. Young of North Dakota. Now from the fact that our trans- portation lines are now overloaded and from the fact that the great population is here in the East and the supply is mainly in the North- west, Central West, and Southwest, at long distances, you would re- gard it as dangerous to change the character of the flour as is pro- posed or as the biU here would permit ? Mr. Piper. I would regard it as extremely dangerous. Mr. Anderson. Mr. Piper, I want to get back to a question I asked you some time ago. You referred to the fact that it was physically or economicafly difficult, if not impossible, to bring the corn flour to the miUing points in the West and do the mixing ia the mills there ? Mr. PiPEK. Yes. Mr. Anderson. Would it be equally as difficult to bring the wheat product from the mills in the West to the corn miUs ia Omo and IIH- nois and there mix the wheat product with corn flour ? Mr. Piper. Anywhere in the hne of trade movement from west to east, where the streams of wheat and com flour would naturally come together, they could be blended. If the proposal is to blend wheat flour at the com miUs, then the capacity of those miUs would be the measure of the output of the blended product. That would not rpach far. We eat 20,000 barrels of flour a day in New York City. 304 FOOD PRODUCTION, CONSEBVATION, AND DISTRIBUTION. Mr. Anderson. The Com Products people appear to be- very desirous of obtaining the repeal of the mixed-flour law. Can you give us any idea of the reason for that desire ? Mr. Piper. That is the easiest problem to answer in the world. It is the natural desire to be able to sell com flour at the price of wheat flour. Mr. Anderson. I quite agree with you, but I wanted to get your opinion. Mr. Young of North Dakota. Did I understand you to say, in discussing the price of flour to the poor man, that, as compared with the kind of flour he has been buying — that is, the low-grade flour — this new product would not be of as good quality as the low grade he has been buying and that he would probably have to pay as high a price for it, if r ot higher ? Mr. Piper. I think your extended-percentage flour wotdd cost as much. I do not think there would be any reduction in the cost. There would certainly be no reduction in the average cost. Mr. Hutchinson. I believe you stated that you were a miUer, and I am going to try to help you out a httle in the presentation of a few things that I do not think the committee understands. I do not think the committee understands what you mean by percentage. Your judgment is that the nuUs are to-day making not more than 72 or 74 per cent. Now, as a matter of fact, that is all the flour there is in the wheat, is it not ? That is all the good flour there is in the wheat, is it not ? Mr. Piper. It depends, of course, on the quality of the wheat. There may be a variation of 1 or 2 per cent, but I do not beheve that it is possible to get 75 per cent of flour out of wheat. Mr. Hutchinson. That is the way I understand it. In other words, if they pass this law and increase it to 81 per cent, you wiU simply increase the bulk. Mr. Piper. Yes, sir ; we would increase the bulk by adding a portion of miUing feed. Mr. Hutchinson. In other words, there are different mflls so adjusted that they can make any percentage they want to meet the price or the grade. For instance, they can make 50 per cent patent flour or 85 per cent straight flour ? Mr. Piper. Yes, sir. You understand, of course, that there is a difference between percentage of extraction and percentage of flour in a commercial sense. When we speak of flour percentage we ordi- narily mean the percentage of the flour content of the wheat, as, for instance, 72 per cent. Mr. Hutchinson. That is what I wanted to bring out for the com- mittee. I do not think they understand this question of the per- centage of flour, or flour content, or wheat content. Now, that flour content is not over 74 per cent, or that is the basis. Mr. Piper. Yes, sir. Mr. Hutchinson. Now, in reference to corn flour, it is not necessary to have a law for the housewife to mix that flour ? Mr. Piper. No, sir. Mr. Hutchinson. They can buy the corn flour and mix it if they want to? Mr. Piper. Whenever corn flour becomes an article of general distribution and sale, any housewife can buy corn flour and mix it, FOOD PBODUCTION, CONSEEVATION, AND DISTEIBUTION. 305 just as she now buys corn meal. There is no diflaculty now in buy- ing cprn meal. Mr. Hutchinson. There is no restriction on it. Now, as to the Com Products Co., there is a difference there between the two pro- positions, is there not ? Mr. Piper. I do not know of any recent attempt to mix with flour the by-products of starch made by the Corn Products Co. Mr. Hutchinson. They can not do it under the law. Mr. Piper. You mean that under the law it is prohibited ? Mr. Hutchinson. Yes; it is prohibited under the law. Mr. Piper. I hardly think that the law which they are seeking to repeal — or, rather, that the repeal of that law would permit the mixing of that particular type of product. My impression is that that has been declared to be unfit for food. Mr. Hutchinson. Is it a glucose by-product ? Mr. Piper. It is a by-product of glucose. I will get Mr. French to answer those questions, because he is a more technical expert than I am, particularly in the matter of cereals. Mr. Hutchinson. If there was not any law passed, and you people on the coast wanted to mix floxir you could do it, could you not 1 Mr. Piper. Any mUler can now mix corn flour. There is no legal obstacle to any miUer mixing corn flour, provided he complies with the mixed food law and brands his package and pays the tax. The Chairman. How much is that tax ? Mr. Hutchinson. Four cents per barrel. Then, there is nothing to hinder a man to-day, if he wants to mix his flour, from doing it if he pays that tax of 4 cents per barrel and brands his package ? Mr. Piper. No, sir. Mr. Hutchinson. Can the corn mUler make a flour fine enough to make a respectable looking flour by blending it with flour at the rate of 10 per cent, or something like that ? Mr. Piper. It would injure the appearance of the flour somewhat. Mr. Hutchinson. It would be coarse, would it not ? Mr. Piper. Corn flour is coarse. It can not be miUed and bolted as fine as wheat flour. Mr. McLaughlin. Do you think it would be advisable to have any regulation governing the use of Graham and breakfast foods 1 Mr. Piper. I hardly think so. Mr. McLaughlin. What kind of regulations would you have? Mr. Piper. I hardLy think there is any necessity for the regulation of breakfast foods. 1 think the operation of the law of supply and demand will be a better regulator than any legislation. . Mr. McLaughlin. Have you any figures showing the amount of grain of the different kinds, and its proportion to the total, used m breakfast foods ? Mr. Piper. I have not. . Mr. McLaughlin. You gave a date— it was 1626, was it not ( Mr. Piper. I think it was. Mr. McLaughlin. And from that date this flour of 71 per cent or 72 per cent has been used ? ... Mr. Piper. No, sir. I was simply referreng m a more or less jocu- lar way to the beginning of miUing in New York It was undoubtedly a very crude sort of stone milhng. It was an old miU that stood down there outside of the fort, or at what is now Battery Park. 104176—17 20 306 FOOD PBODUCTION, CONSEEVATTON, AND DISTEIBUTION. Mr. McLaughlin. How many years has this practice of using only 71 per cent or 72 per cent of the wheat in making flour prevailed ? Mr. Piper, I thmk it would date back to the beginning of what we call the patent process of gradual reductions, which began about 1875. Mr. McLaughlin. Previous to that time was a larger proportion of the wheat used ? , : >i; Mr. Piper. Well, the mills were not able to clean up their protect so closely, and I doubt whether there was any larger proportion iljiat went into the flour, because there was a lai^er proportion of the 'flour product that went into the feed. It was not so complete a separaJj tion of flour and feed then as it is under the patent process. Mr. McLaughlin. Previous to the use of the patent process^ was there much difficulty experienced in the heating and spoung of flour ? Mr. Piper. I hardly think so, because there was not the extended distribution of flour from large milling centers. I think the large milling centers were established on the introduction of the new process of milling. Mr. IVkLaughlin. These milling establishments ship more now than they did at that time; but there were some shipments made over those long distanceSj were they not, even at that time ? Mr. Piper. Possibly. I was not in the business at that time, and would not be competent to answer that question. Mr. Hutchinson. There would be less danger at that time, because it took more bushels of wheat to make a barrel of flour then than now, and more of the germ went into the feed. Mr. Piper. I do not know to what extent the germ was ground up in the flour. Of course we now purify it all out. Mr. Hutchinson. In other words, the mflls to-day are trying to get all of the good flour out of the wheat, whether it is 72 per cent or 73 per cent ? Mr. Piper. Yes, sir. Mr. Hutchinson. And they can not get any more than that without getting something in that destroys the flour? Mr. Piper. Yes, sir. Mr. McLaughlin. Before that time these other things went into the flour? Mr. Piper. No, sir. They did not take out as high a percentage of flour as they do now. I doubt if they got out 70 per cent. Mr. Hutchinson. They did not get out 6.5 per cent. The Chairman. I have one question, Mr. Piper: Your fear is that whoever controls this food situation will control it in such a manner as to make it more detrimental than helpful, for the reason that you are assuming that the power wiU be lodged in some existing govern- mental agencies, and that some department chief will pass upon this {)articular proposition, and you would have no objection to this egislation if you were satisfied in your own mind that the President, in exercising the discretion contained in this bill, or whoever was acting for him, would call into consultation the men of the trade of your type and get the facts? Mr. Piper. That is the chief contention that I wanted to bring before the committee. The Chairman. I thought so. I feel that your chief contention is that you desire to see that whoever controls the situation is put in a position, either by the law itself or through his own good common sense where, before exercising all these powers, he would bring in for FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 307 consTjltation the men who may be regarded as experts on the par- ticular problems under consideration. Mr. Piper. That is the purpose, exactly. I do not beheve it is possible to standardize and establish by specific legislation a pro- g;ram such as is suggested in this bill that would be physically prac- ticable, and it might become economically absurd in practice. The Chairman. I agree with you fully, and therefore the bill has been drawn in such a way as not to commit the Congress to any specific proposition, but only to lodge in the hands of somebody — the President in this case and in some cases the Secretary of Agri- culture — the power to do the things that may be necessary to be done, if their judgment and the judgment of the best men they can bring into consultation warrant such action. Mr. Piper. Yes; Mr. Chairman, that is the point exactly; and I could go a step further and say that the intimations contained in the bill created a feeling that there was possibly a danger that the coun- try might be committed to a world-wide experiment which would be disastrous. The Chairman. Would you have any particular fear if this bill should lodge in the hands of the President of the United States through such an outside agency — I use the word "outside" as contra- distinguished to governmental agenc}^ — the power of enforcing this act or the exercise of these powers, if you were satisfied that the President wotdd be sensible enough to pick the most sensible men he could find in the country to deal with it ? Mr. Piper. That is the essential point. My opinion is whoever this power should be lodged with should call to his aid the ripened experience of people who have handled this business for the past score or two score years, and as to who should exercise that supreme authority I would not undertake to offer any suggestion, only that it be some one who was a sufficiently experienced executive to feel how essential it is to have just the kind of support and advice I have recommended. I do not think it would be a fair thing to add to the tremenduous burden of the President of the United States the necessity of diverting his mind to the handling of a power like this. There ought to be men to whom power could be safely delegated without adding to the burdens of the President, in whom, of course, we have absolute confidence. The CHAiEirAN. Would you suggest that these men should be appointed by the President or by whom * You could not very well ask Congress to name a body of five men to Qontrol this legislation, could you ? Mr. Piper. I would want to think about that proposition. I had not thought of it up to the present moment. The Chairman. I am not trying to trip you. Mr. Piper. I understand that. The Chairman. I am simply trying to get your judgment, because you are a business man and we are glad to have you before this committee. Mr. Piper. I think advice as to. appointments of that character might be sought from important business centers, important ex- changes where business of that sort concentrates, and I think the whole country which participates in manufacture, distribution, sale, and exportation of food products should have a voice and represen- tation, if that be possible without making the committee too cumber- 308 FOOD PEODTJCTION-, CONSEKVA'nON, AND DISTEIBUTION. some, so that all phases of the business might be adequately repre- sented. The Chairman. Is it not safe to assume, Mr. Piper, that whoever might be appoLated food controller or whatever his designation may- be, would have sense enough to do that very thing, to call the tradie into counsel and advice. Mr. PiPEK. I should hate to think otherwise. The Chairman. So would I. Mr. Hutchinson. Mr. Piper, I want to ask you a question. Your house is one of the biggest nouses in New York and you are familiar with the manufacture of flour. Suppose we shoula pass this law providiag for 81 per cent flour, could you tell it under a test ? Mr. Pipes. You could not teU the percentage; no. Mr. Hutchinson. Of course you could not. Mr. Piper. You can not standardize flour of that character. Mr. Hutchinson. It is absurd to put it in the biU. You say you could not teU ? Mr. Pipe6. No. Mr. Hutchinson. And no other expert coidd. ' Mr. Piper. I can tell you the percentage of flour ground now very accurately, and Mr. French can tell you almost exactly by his labora- tory processes, but I do not believe a laboratory man could determine the percentage exactly of flour asserted to be 81 per cent. Mr. Hutchinson. And yet there is a penalty in this bill. , Mr. McLaughlin. But if the mills were licensed, they might be inspected. Mr. Hutchinson. How could they teU then, Mr. McLaughlin? Mr. Piper. How about the trouble and expense of mstalluig such a tremendous inspecting and investigating machinery as would be involved in keeping surveiUance over the 12,000 mills in the United States ? Mr. McLaughlin. Well, it could be done. Mr. Piper. Oh, it could be done. It is physically possible. The Chairman. If there are no further questions, we are very much obhged to you, Mr. Piper. Gentlemen of the committee, I have received a letter here from Mr. J. WeUer Long, secretary- treasurer of the American Society of Equity, Wausau, Wis. This is one of the gentlemen whom we invited to appear before the committee, and I think his letter and the resolutions ought to go in the record, and without objection it will be so ordered. (The papers referred to foUow:) National Union American Society of Equity, Hon. A. F. Levee, Wausau, Wis., May 12, 1917. Chairman Agricultural Committee of the Hou^e, Washington, D. C. Dear Sir: I am inclosing a. set of resolutions passed at a convention of farmer organizations held in Kansas City, Mo., May 7, which embodies the ideas of the Amer- ican Society of Equity in regard to controlling food products. We hope that you will give this matter due consideration from our standpoint, as we feel that this Is a true expression of at least 90 per cent of the farmers as a class and that this is as much as we could say if we were there in person. If there is anything further that we can do , I should be glad to hear from you again, and if you believe it necessary in any way that o\a society be represented, we will gladly do so if we are notified in time. Wishing you success, I am yours truly, American Society op Equity, J. Weller Long, National Secretary-Treasurer. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 309 To President WUson and the Members of Congress; We, your committee on resolutions, beg leave to submit the following: The United States of America having been forced into the horrors of war, now threatening the very existence of civilization, it becomes the duty of all citizens to do their utmost to support and assist their Government in the conduct of the conflict for democracy and humanity. President Wilson, in h^is address to Congress on April 7, stated the object of the war to be "to vindicate the principles of peace and justice in the life of the world as against selfish and autocratic power.' We believe this to be the real purpose and the ideal for which we battle. Now, therefore, we, the representatives of the American Society of Equity, the Farmers' Union, the Nationzl Farmers' Association, the Grange, the American Federa- tion of Producers and Consumers, and the farmers' independent clubs in national conference assembled at Kansas City, Mo., do hereby declare it to be our unalterable purpose to support and sustain the Government of the United States in all the ways within our power during the present conflict and always. In order that the high purpose announced by our president shall be accomplished as a result of the war and that the war may be prosecuted with the greatest efficiency, the least waste of blood and treasure, and the least amount of suffering and hardship to those who sustain the war industrially, and that the institutions of Democracy estab - hshed in this, om- land, may be maintained, even in the face of this cataclysm, we , the representatives of the organized farmers of the United States, recognizing the responsibility that rests upon us to feed and clothe the world in this crisis, pledge ourselves and our organizations to fulfill this obligation to the best of our ability, and in order that we may do so with effect, we demand — First. That the provisions of H. R. No. 4125, known as the "Lever bill," be modified and amended to contain the following pro^dsions: A. To provide for a commission for the administration of the law of which the Secretary of Agriculture shall be the chairman, and to contain a proper representation of producers and consumers. B. That maximum and minimum prices of food products be established within 60 days after the passage of the law. C. To provide for the hearing of all interested persons. D. To provide for the prohibition of all speculation in the necessaries of life during the full period of the war by the closing of boards of trade, stock exchanges, and chambers of commerce, so far as their speculative activities in such necessaries are concerned. Second. That a graduated income tax be enacted into law taxing all incomes of $2,000 and over so as to conscript the excess of all incomes over the sum of $25,000 to the end that thif: generation shall not load upon succeeding generations the burden of this war and that capital shall bear its just proportion of the sacrifice entailed upon us because of it. Third. That the Government take over, dming the period of war, all packing houses, storage plants, warehouses, and terminal elevators and such other industries and utiUties as may be necessary for the successful control of the marketing znd distribu- tion of the necessities of life, to the end that the making of fortunes by private specula- tors and dealers at the expense of those who bear the brunt of the war may be made utterly impossible in this war for democracy and humanity Arthur Le Sueur, President Peoples College, Fort Scott, Kans. D. 0. Mahoney, President American Society of Equity. B. Needham, Master State Grange, Kansas. .D. Resler, President Farmers' Association. R. J. J. Montgomery, President Farmers' Union of North Dakota. Wayne B. ^^^leeler, general counsel, Anti-Saloon League of America, submitted to the committee the following memorandum on the power of Congress to enact legis- lation prohibiting the use of food products to make liquor during the war. 310 FOOD PBODirCTION', COlSrSEEVATION, AND DISTEIBUTIOX. PROVISIONS OP THE CONSTITUTION AUTHORIZING THE LEGISLATION. The preamble to the Constitution, among other things, states the purpose of Gov- ernment as follows: "To promote the general welfare — to provide for the common defense." These purposes are carried out by legislation authorized in the Consti- tution. Section 8 of Article I of the Constitution provides: "The Congress shall have power to declare war, to raise and support armies, to maintain a navy, to provide for the common defense and general welfare " — This clause is ordinarily construed as a limitation on the Federal tax power — "to make rules for the government of the land and naval forces, to make all laws necessary and proper for carrying into execution the foregoing powers and all other powers vested by the Constitution in the Government of the United States." The Federal Constitution includes only the powers delegated to the Federal Gov- ernment by the States. This authority, as a rule, is strictly construed. Through the years there has been a tendency to construe these powers more liberally. In other words, they are construing the provision of the Constitution which says that "Congress may make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers, vested in the Constitution" more liberally. This section was given new vitality during the Civil War when the Federal Government made bills of credit a legal tender in payment of notes previously contracted. It was held that this was not a means properly and plainly adopted to carry into effect any express power vested in Congress. This was later revised and the dissenting opinion of Justice Miller was adopted as the law. In rendering this dissenting opinion which was later adopted by the court, Justice Miller said : "We were in the midst of war which called all these powers into exercise and taxed them severely. A war which, if we take into account the increased capacity for destruction introduced by modern science, and the corresponding increase of its cost, brought into operation powers of belligerency more potent and more expensive than any that the world has ever known." He maintained that "the legal-tender act prevented a national disaster * * * It stimulated trade, revived the drooping energies of the country, and restored con- fidence to the public mind." Justice Miller put his dissenting opinion clearly upon the ground that the act in question was necessary as a war measure. He accepted the rule formerly established by Chief Justice in McCulloch v. ^Maryland, as follows: "Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to the end, which was not prohibited but consistent with the letter and spirit of the Constitution, are con- stitutional." In 1870 the cases of Knox v. Lee and Parker v. Davis (12 Wall,. 457) invohdng the same question were argued at the court and are kno«Ti as the legal-tender cases. The court said : "It is not indispensable to the existence of any power claimed for the Federal Government that it can be found specified in the words of the Constitution, or clearly and directly traceable to some one of the substantive powers expressly defined, or from them all combined. It is allowable to group together any number of them and infer from them all that the power claimed has been conferred. Such a treatment of the Constitution is recognized by its own provisions." Justice Bradley in delivering a concurring opinion said: "It is absolutely essential to independent national existence that Government should have a firm hold on the two great sovereign instrumentalities of the sword and the purse, and the right to wield them without restriction on occasions of national peril. In certain emergencies Government must have at its commnad, not only the personal services, the bodies and lives, of its citizens, but the lesser, though not less essential power of absolute control over the resources of the country. Its armies must be filled, and its navies manned, by the citizens in person. Its material of war, its munitions, equipment, and commissary stores must come from the industry of the country." This decision reversed the decision of the court in Hepburn v. Griswold and adopted the diss3nting opinion of Mr. Justice Miller in that case as the law. It was a plain, unequivocal, unambiguous declaration that Congress had passed these acts strictly as a necessity of war. That whether the power was an express one or an imphed one realljr made no difference. The life of the Government was in jeopardy and the doctrine of self-preservation was resorted to to maintain it. It is true that Justice Bradley, in his concurring opinion in the last cases, said that he "did not i)Ut this exercise by Congress as a war power, for other emergencies might arise even in time FOOD PBODUOTION, CONSERVATION, AND DISTBIBUTION. 311 of peace when it would be necessary for Congress to exercise such power " yet he concurred in the opinion of Mr. Justice Miller and that of Mr. Justice Strong that as the exercise of a war power it was entirely within the power of Congress to pass the acts in question. A WAR EMERGENCY JUSTIFIES EMERGENCY ACTION. The Constitution provides that private property shall not be taken for public use without just compensation, but during times of great emergencies, property is taken without compensation. In Parham v. The Justices (9 Ga., 341) it was declared: "It is not to be doubted but that there are cases in which private property may be taken for a public use, without the consent of the owner and without compensation, and without a,ny provision of law for making compensation. These are cases of urgent public necessity, which no law has anticipated, and which can not await the action of the legislature. In such cases the injured individual has no redress at law— those who seize the property are not trespassers, and there is no relief for him but by petition to the legislature. For example, the pulling down houses and raising bulwarks for the defense of the State against an enemy; seizing corn and other provisions for the suste- nance of an army in the time of war, or taking cotton bags, as Gen, Jackson did at New Orleans, to build ramparts against an invading foe. These cases illustrate the maxim salus populi suprema lex — ^the good of the public is the supreme law. ' ' Willoughby on the Constitution, section 715, second edition, says: "The constitutional power given to the United States to declare and wage war, whether foreign or civil, carried with it the authority to use all means calculated to weaken the enemy and to bring the struggle to a successful conclusion. When dealing with the enemy, all acts that are calculated to advance this end are legal. Indeed, the President in the exercise simply of his authority as Com- mander in Chief of the Army and Navy, may, unless prohibited by congressional statute, commit or authorize acts not warranted by commonly received principles of international law; and Congress may by law authorize measm-es which the courts must recognize as valid, even though they provide penalties not supported by the general usage of nations in the conduct of war. Thus during the Civil War in certain cases the provision by congressional statute for the confiscation of certain enemy property or land was enforced, though such confiscation was not in accordance with the general usage of foreign States. Even in dealing with its own loyal subjects, the power to wage war enables the Gov- ernment to override in many particulars private rights which in time of peace are inviolable." POWER TO MAKE CONSTITUTIONAL PROVISIONS EFFECTIVE. Article I, sections 8-18, gives power to Congress "to make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this Constitution in the Government of the United States or any •department of office thereof." This provision of the Constitution has been criticized most severely. It is the clause which gives life and vitality to the Constitution. A more complete endowment of constitutional authority could scarcely have been made. Alexander Hamilton said: "It has been the source of much virulent, invec- tive, and petulant declamation." Mr. Madison said: "Few parts of the Constitution have been assailed with more intemperance thna this." The evident meaning of the language is that Congess shall have the authority to enact any law which may be necessary and proper in order that the powers which the Constitution has, may be executed. The court in the cases cited have construed this clause to mean that any or all of the powers designated in the Constitution may be made effective by the acts of Congress and as the court said, supra, "It is not indispensable to the existence of any poiver claimed for the Federal Government that it can be found specified m the word^ of the Constitution or clearly and directly traceable to some one of the specified powers." It is manifest from the construction placed upon the Constitution that in times of natidnal peril and war emergencies, Congress is authorized to enact legisla- tion which will safeguard the Nation. This has been done in numerous instances cited. The purpose of the Government as set forth in the preamble and tiie provision authorizing Congress to declare war, to raise and support armies, to provide and mam- tain the Navy, to make rules for the government and regulations for the land and naval forces, to provide for organizing, arming, and disciphmng the nulitia, and to provide for the common defense are sufficient authority taken collectively it not separately for the legislation. Congress may deem it proper to prohibit the use ot grain for making liquor in order that the Army may have suffiaent tood and sulJicient support from the people home in order to successfully prosecute the war. Jingiana 312 FOOD PRODUCTION, CONSERVATION, AND DISTErBTJTION. has been handicapped more by the liquor traflBc in this war than by any one factor. Her food problem would be easily solved and were it not for her inexcusable waste of foodstuffs and man power according to the "strength of Britain movement," the war would be closed. The power of Congress to support the Aimy requires no stretch of construction for the authorization of such legislation. Repeatedly the court has said that a national peril justifies emergency legislation. At no time in the history of our country has there been a greater need for exercise of this precedented power. The food supply is short. The liquor traffic is menacing the man power of our country in the trenches and at home. Not only our own country but the fate of the great world powers is at stake. POWER OF CONGRKSS TO PASS LAWS HAVING A REASONABLE RELATION TO AN AUTHOR- IZED ACT. When Congress or a State legislature has authority to pass a law, it carries with it power to enact legislation to make it effective. This principle of law was well estab- lished in the case of Purity Extract Co. v. Lynch (226 U. S., 192). The court said: "When a State exercising its recognized authority undertakes to suppress what it is free to regard as a j)ublic end, it may adopt such measures having a reasonable relation to that end, as it may deem necessa^in order to make its own action effective. " The same principle was applied in the White Slave case (Hoke v. State, 227 U. S., 309): "Congress may adopt not only the necessary but the convenient means necessary to exercise its power, over a subject matter within its power." It is manifest that the conservation of the food supply at this time has a reasonable relation to the support of the Army and the common defense, and it may be our na- tional existence. This leMslation has not only a reasonable relation but a direct bearing on these subjects clearly within the power of Congress — 1,000,000 men will be taken from the ranks of the producers, and the food supply short and help lacking to plant crops. The men in the Army and Navy must be fed by those at home. Liquor wastes enotigh food to maintain 7,000,000 people. The relation to the subject matter is direct. CONSTITUTIONAL AUTHORITY TO PROHIBIT USB OP GRAIN FOR MAKING LIQUOR. The purpose set forth in the preamble of the Constitution to provide for the com- mon defense and the power conferred on Congress in the Constitution "to support the Army and to provide for the common defense" authorize laws safeguarding tbe food supply. Even if this authority was not sufficient when it is taken in connection with other provisions named it clearly authorized food conservation laws. If the resources of the Nation and its food supply are essential to the safety of the Nation and support of the Army, then such legislation is valid. Justice Bradley stated it strongly when he said that "It was absolutely essential to independent national existence that the Government should have a firm hold on the sword and the purse. That in certain emergencies the Government had the right to require the lives and resources of the country. " We are told that this great war may be determined by the food supply. It is manifest, therefore that a law which conserves the food sujpply by prohibiting the use of grain which is a waste of food material would be vahd, and to carry out consistently this program so that grain would not be used to make alcohol for industrial purposes. Congress should give authority to some department of the Government to take the liquor now in bond and reduce it to ethyl alcohol for munition purposes. In this way the food situation would be conserved and the general welfare promoted. If the committee considers it wise to consider the whole program for conserving the man power and resources of the Nation, we respectfully submit that there is authority for prohibiting the beverage liquor traffic during war as an emergency measure. STATEMENT OF MR. ROBERT M. FRENCH, 109 BROAD STREET, NEW YORK CITY, PRESIDENT OF THE FRENCH-PANCOAST LABORATORIES. The Chairman. Give to the stenographer your name and address and the capacity in which you appear before the committee. Mr. French. Eobert M. French, 109 Broad Street, New York City. I am the president of the French-Pancoast Laboratories, con- FOOD PBODTTOTION', OONSERVATTON, AND DISTRIBUTION. 313 suiting chemists, who are also the official chemists of the New York Produce Exchange. In order to take up the various points that I want to bring out, I thought it best to give you a very brief outline of flour milling, a little bit in addition to what Mr. Piper has already said. - Taking what we call the average production from the average flour mill grinding average wheat, we have about 72 per cent flour, from 3 J per cent to 5 per cent red dog, from 8 per cent to 11 per cent of feed middlings, and 14 per cent to 16 per cent of bran. This flour is further divided into three main classifications. We have the patent flour, which is the best; the clear flour, which is sometimes divided into first and second clear, which is a more glutenous flour, a flour more high in protein than the patent flour, but of a poorer quality; and last we have the low-grade flour, which is, of course, the poorest of all. Now, in the practice of milling all these flours may be run together to make what we call a 100 per cent or fuU stock straight flour. The low grade may be taken out, and the low grade is, as a rule, about 5 per cent of the total flour produced, which would be 5 per cent of 72 per cent, or about 3.6 per cent of the total amount or the wheat. That is taken out and the balance of the flour run together, and we caU that a straight or a 95 per cent patent, or various other similar names. Now, the patent which is taken out will vary in percentage be- tween very wide hmits, but we can take as representative from 43 per cent to 65 per cent of the total weight of the wheat, and then, of course, the clear flour would vary inversely. As the patent is iq- creased, the amount of clear flour is decreased, and vice versa. In the milling of wheat by the patent roller process, which is em- ployed in all but the very smallest mills, it is necessary to make all of the products which I have enumerated. In order to reduce the whdat to a proper size so that it can be made into bread, first of all we have to pass it through corrugated roUers which break the kernel and remove the endosperm, or interior part of the wheat, from the bran. Now, that passmg through those rough rollers wiU be repeated twice, maybe as many as six times, until all the flour is removed. That is further carried on by putting that bran in bran dusters and other devices which get off the last traces of flour. Then the balance of the product which you have obtained from these corrugated rollers is separated according to its coarseness and size. There is some flour; there is a great deal of material which you are probably all f amihar with in the form of such things as Cream of Wheat and Farina. Now, those coarser particles have to be groimd separatelv between smooth rollers in order to make flour, ihe process of grinding will flatten out the germ and the bran particles which have stuck to the larger part of the endosperm, and that can be removed by sifting. The larger fragments of bran and the germ go to make up our feed middlings, which may be called shorts or various other names. The finer fragments are red-dog, and Irom red-dog to the coarsest feed middhngs there is quite a gradual vari- ation in size. At the Taylor mill there is a certain amount ot Hour produced which contains some of this bran and germs comparatively smaU in amount, which can not be sifted out, and that is our low grade. 314 FOOD PKODUCnoN, CONSEBVAHON, ANR DISTBIBUTION. Now, in commerce each one of these particular products |has a definite use, a use to which it can be put and gire the best and most satisfactory results to everybody that has to handle it,, Practi- cally all the flour which is made is used as human food. OccasionaJlj flour will be damaged in transit, or it may be made from unsound wheat and be unsound, or become unsound shortly after milling, and flour like that is used for paste or some other manufactul-ing purpose, but that is a negligible quantity and something that can not be helped, because it depends on perhaps the carrying of the wheat when it is harvested, or weather conditions, where a carload of wheat flour becomes spoiled. The most striking example of the uses of these various grades of flour that I can give you is probably in the making of rye bread. To make rye bread it is almost a necessity for a baker to have the clear grades of flour, the most glutenous flours, flours which are stronger and tougher. Rye flour — ^has no gluten, and it is the gluten which gives the dough the power to rise, and when it goes in the oven, to stay risen. If we do not have a strong gluten in the clear, we can not make a good loaf of rye bread. On the other hand, the best grades of flour are ideal for making macaroni. Poor grades of flour are no good for making macaroni. The good grades are no good for making rye bread. I could carry that thing out and enlarge on it to a very great extent. Now, if we are going to increase the percentage of flour milled from the wheat we have got to add the red dog. If we add the red dog, that will bring us up to about 76 per cent or 77 per cent. If we add feed middlings, it will bring us up to 83 per cent or 85 per cent, or whatever percentage we may care to fix. You have got to decide. Of course, if you are going to regulate it in one place, it should be regulated everywhere; you have got to decide what part of the feed middlings or what part of the red dog is going to go into that. That is going to be a pretty difficult thing to do. • But if we do decide to increase the percentage of flour produced from the wheat, regardless of whether it is going to be 76 per cent or 83 per cent, we have to consider against the advantage from an increased stock of flour, the disadvantages which are about as fol- lows : Mr. Piper mentioned the fact that there would be no reduction in the cost of milling ; second, macaroni is one of the principal articles of diet of a very large part of our population, namely, the Italian born or those of Italian extraction; I should say that macaroni is probably their most important article of diet. If you include the red-dog and fibrous particles of wheat in that flour, you can not make macaroni. That is something that is, to my mind, most important. Durum wheat, which has been advocated very extensively by the Department of Agriculture, is almost only suitable for the making of macaroni. If you make one grade of milling you can not use the durum wheat for macaroni. What are j'ou going to. do with it ? The elimination of the clear grades of flour and the substitution of this war flom", or long percentage flour, would, as I said before, make it almost impossible to make a really edible loaf of rye bread. I have not been able to get exact statistics, but I believe there are somewhere in the neighborhood of 7,000,000 barrels of rye flour used annually, and those 7,000,000 barrels would take from 5,000,000 to 10,000,000 barrels of clear flour to mix with it. FOOD PKODUCTION, CONSERVATION, AND DISTEIBXTTION. 315 More important, however, than any of these other considerations is the keeping quaUty of this long percentage fiour. The germ of the wheat contains by far the largest proportion of oil. It also carries many enzymes or ferments. When the wheat berry is intact these organisms are bottled up in the envelope which contains the germ. When that wheat goes to the mill that envelope is broken and those enzymes immediately begin to act on the starches, on the oil, on the germ itself. The oil becomes rancid, and part of the starch is con- verted into sugar, arid we get conditions which we know as unsound- ness. It may be sourness, it may be mustiness, or it may be moldi- ness. The principal source of that trouble is from the germ, and if you are going to include the offals of wheat in your flour you have got to include your germ. During the past year our laboratory has had to pass upon a very large part of the flour that has gone to the Greek Government. One of the principal requirements in Greece was a very low percentage of oil or fat, because if the percentage of oil in the flour became at all high the flour would become unsound. There is another point about soundness. No matter how hard you try to scour your wheat or clean it, it is almost impossible to remove all eggs of insects from the wheat. Normally, those are carried into the feed and the offals. As a general rule, the offals are sold comparatively close to the mill, generally for consumption in a short time. If you put the offals into the flour those eggs hatch and we have flour that is full of weevils, worms, or moths; it gets webby and you can not use it. The keeping power of this long extraction flour, as far as my ex- perience goes^ is almost never over about three months. I have known whole-wheat flour, or nearly whole-wheat flour, to become bad in three weeks or less. I have done considerable experimcntmg on the makmg of different kinds of bread and different kmds of crackers. Sometimes I have not been able to complete my experi- ments, which would extend over a period of two or three weeks, be- fore the flour I was working on was full of bugs. It was even kept stopped up so that nothing could get in from the outside. There is another pomt, as to digestibihty. Whole-wheat flour, or the 83 per cent flour, will contain more patent, which is what goes to build muscle. On the other hand, it wiU not contain as much starch but more oil or fat. From a chemical standpoint there is more food value in whole-wheat flour than in the white flour. As far as 1 have been able to find out, though, and I have done a good deal of reading on the subiect, the nutriment that is in there can not be gotten out by us. We can put it in our stomachs but we can not utilize it. Bran is only digestible to the extent of 50 per cent. The patent con- tained in the feed offals is not valuable. Aside from that the most important thing is the action of the coarser particles on the bowels and mtestmes. Near whole-wheat bread, such as this would be, would undoubtedly be fine for those who are troubled with consti- pation, but we have to take it only when we need it; and those oi us who would not be troubled m that way would be troubled m quite * ThCTe^'is^another'thing to be considered I beheve, and that is that the great majority of people do not like this kind of bread, i 316 FOOD PEODUCTION^ CONSERVATION, AND DISTRIBUTION. think if you stop the making of white flour you would do naore than any one thing that could possibly be done to stir up dissatisfaction on the part of the people. In connection with our laboratory work we have a commercial bakery. Since the first week in March we have been experimenting in that bakery with making war bread. We have taken the white flour that we have used for making our good bread and we have added to it red-dog and feed middhngs and just such products as it is pro- posed to add to the flour now. We have given a loaf which contains 4 ounces more for the same money than was contained in the loaf of white bread. We have advertised this bread and we have tried to push it. For every one loaf of that bread we make to-day we make . 10 or 15 of white bread. We always have some of that bread left over. I never had any white bread left over. People coma in to get white bread when we have none left, and we say, "Take a loaf of this bread," and they say, "No; I have tried it. I would not eat that stuff. I would rather go without." Gentlemen, that is all I have to say, except that I beheve that these sections which empower the Secretary of Agriculttire to authorize the fixing of the percentage of flour, ii enacted into law, would put into the hands of one man the power to experiment with the principal food of the Nation. By that I do not mean to convey any disrespect to the Secretary of Agriculture or anyone connected with him, but I do not think it should be put in anybody's hands to experiment with our food, the principal staple article of our food. Mr. Wason. I understood you to say that this bOl is for the pur- pose of conserving food. Now, if we pass this biU, don't you think it would create possibly more waste in the white flour ? Mr. French. If you pass that bill I do not believe that New York City would have over 50 per cent of the bread that it would- need, and that the balance of it would be waste. Mr. Haugen. You agree to the statement made by Mr. Little that the 83 per cent wheat flour has a greater food value ? Mr. French. Yes, from a chenucal standpoint. Mr. Anderson. I have a letter from a man in my district in which he says: Touching, now, war flour: If we add 10 per cent of the offal or feeds worth to-day an average of $35 per ton, the 82 per cent extract would reduce the price of straight only 17 cents to 20 cents per barrel, or still $1.60 above the price of a clear flour that is more digestible for the reason that while feed analysis shows a high percentage of nutrients, only 10 per cent is digestible by human beings, while the cow recovers or digests 84 per cent. Do you concur in that statement ? Mr. French. I beheve that is about right, but I can not say specifi- cally for the reason that nutritive experiments on human beings are the hardest things to control, and I do not want to go on record as stating that that is positively the truth. I beheve, in essence, that it is right. Mr. Anderson. In the statement that you have just made you refer to nutritive elements from a chemical standpoint ? Mr. French. Yes, sir. Mr. Anderson. You are not referring to the amount of nutrient that is recovered by the human being ? Mr. French. No; not the valuable nutrient; only the total that is there. FOOD PRODUCTION, CONSEKVATION, AND DISTRIBUTION. 317 The Chairman. Doctor, how many years experience have you had as a chemist ? Mr. French. I started to study chemistry in 1902 and I have been at it, either studying or practicing, ever since. The Chairman. From what institution did you graduate? Mr. French. Columbia University. The Chairman. Do you know Dr. A. C. Taylor of the University of Pennsylvania ? Mr. French. I met Dr. Taylor down in Washington. That is the only time I ever met him. The Chairman. He is a weU-recognized expert on dietetics ? Mr. French. So far as I know. The Chairman. Suppose he disagreed with your views on this proposition, would you still hold to your opinion ? Mr. French. Absolutely. The Chairman. Do you know Dr. H. W. Wiley ? Mr. French. Yes, sir; I have known him for some years. The Chairman. He is a well-recognized authority on these sub- jects, is he not ? Mr. French. He is well known; yes, sir. The Chairman. But is he not well recognized ? Mr. French. I do not agree with Dr. Wiley on many of the posi- tions he takes. I believe there is no more sincere man in the world than Dr. Wiley, but if I may be permitted to say so, I think he is misguided in a great many of the statements he makes. The Chairman. You have heard of Mr. Hoover ? Mr. French. Yes, sir; I have met Mr. Hoover. The Chairman. Suppose his testimony was to the effect that in certain of these warring nations across the water they were using this flour up to 80 per cent, and 81 per cent, or even 76 per cent, or 77 per cent. Would Ihat influence your opinion in this matter at all? Mr. French. No, it would not; because we did quite a lot of work for the Belgian Relief Commission all through the early stages of the war, and I made quite extensive investigations of this particular question of long extraction flour, and the mixing of other cerea;ls with flour. I believe that on the other side they have an entirely different situation to face than we have. Over there you can not figure more than 60 days at the outside for milling and consumption. The Chairman. I recognize that fact. Mr. French. In New York City it often takes us 30 days to get a car of flour across the river into some of our bakeries. Mr. McLaughlin. What is the keeping quality of wheat and barley flour? Mr. French. Barley flour is a poor keeper. Mr. McLaughlin. I do not 'mean whole barley, but where they are mixed in proper proportions ? Mr. French. Barley, as a grain, is the most — wefl, we call it enzymic. It has more hfe in it than any other grain. There are more ferments in it, and after the barley is once broken it keeps poorer than any other grain. If you pearl it, where the outside of it is removed, the pearlecf barley wiU keep well. Mr. McLaughlin. In what proportion are wheat and barley mixed satisfactorily as flour ? 318 FOOD PEODUOTION, CONSERVATION, AND DISTRIBUTION. Mr. Feench. Well, I have tried mixing wheat and barley flour, and I should say that the damage done to the wheat is not so terribly much up to 12 per cent or 15 per cent, but after that it begins to hurt very much the quahty of the bread. Twelve per cent to 15 per cent wUl make a loaf that does not appear so bad. I do not hke the taste of it myself, but others may. Mr. McLaughlin. Is flour containing 12 per cent barley a good keeping flour ? Mr. Feench. No, sir; it is not. I do not behave that flour of that kind would keep more than about 90 days. Mr. Wilson. What is a mixture of rye and wheat ? Mr. Feench. Rye does not keep as well as wheat. It is the prac- tice with bakers, as a rule, not to buy their rye flour more than 3 or 4 weeks ahead, and whole wheat flour 12 weeks ahead, because some- times it runs along — in the winter sometimes you can keep it longer and in summer it is very dangerous to have in stock any dry flour. Mr. Haugen. Your objections are based on its keeping qualities? Mr. Feench. Absolutely. Mr. Andeeson. Mr. Chairman, I would hke to put in the record the letter from which I quoted awhile ago. It is very short. The Chaieman. Without objection, the letter wiU go in the record. (The letter referred to is as follows:) Everett, Aughenbaugh & Co., Waseca, Minn., May 12, 1917. Hon. Sydney Anderson, House of Representatives, Washington, D. C. Dear sir: Since receiving your favor of the 4th I have endeavored to locate some publications setting forth fully the information that you desire. Failing in this, I will give you the information briefly with the assurance that I will go into each point as far as desired. Wheat extract. — Normally 100 pounds of wheat will yield 72 pounds of flour and 28 pounds of feed in even numbers, there being a slight variation due to climatic condi- tions, also a fractional invisible loss. This year on account of light shrunken wheat, the proportion is 66 per cent flour and 34 per cent feed. Flour grades and separations. — Some flours are marketed as straights containing the full 72 per cent extract or, as it is termed, 100 per cent flour, straight or long patent. From this extract various separations are made. The middlings, approximately 70 per cent of the extract, is the choicest part, containing the highest nutrients, is of a whiter color, and when manufactured produces a flour easily manipulated in bread making and less susceptible to unfavorable conditions, thereby avoiding loss and fully digestible. The balance is a grade commercially known as clear. This is more fibrous, of a darker color, and for bread making purposes most susceptible to condi- tions with the attendant unsatisfactory results in waste. Analysis shows approxi- mately the same percentage of nutrients but they are not recovered to the same degree as in the middlings or patent flour. There is a difference in price to-day of from $3.50 to S4.00 per barrel between the high Made or patent flour and clear. The straight is $2.20 per barrel cheaper than the middlings patent but SI. 80 per barrel higher than the clear. From this you will readily see that various grades can be made from different combinations at corres- ponding prices. Normally the price of a clear will range from 80 cents per barrel to |2 per barrel below the price of patent. Therefore the comparative difference in price of straight would not be as great. The better grades are used principally by housewives and the better grades of bakers ; while clears have in the past been used extensively by bakers for blending with better grades of patent flour for economic reasons. The practice is rapidly becoming obsolete. This grade is now being used domestically for blending by rye millers and bakers for certain classes of bread. Comparatively a larger proportion of the clear grades are exported than of patents. Touching, now, war flour: If we had 10 per cent of the offal or feeds worth to-day aa average of $35 per ton, the 82 per cent extract would reduce the price of straight only 17 cents to 20 cents per barrel, or still $1.60. above the price of a clear floiir that is more POOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 319 digestible for the reason that while feed analysis shows a high percentage of nutrients only 10 per cent is digestible by human beings, while the cow recovers or digests 84 per cent. As suggested above I have endeavored to answer your questions briefly and shall be glad to go into any and all points to the minuteat detail, if you desire. Now, to make my position perfectly clear, I heartily concur with your idea of a thorough canvass to determine the food resources of this country and the combined requirements of the allied countries. The Department of Agriculture estimates that Canada and the United States can safely export 100,000,000 bushels of wheat prior to harvest. With favorable conditions the United States and Canada will harvest a crop as large or larger than last year. Argentina has withdrawn to some degree the embar- goes on the exportation of cereals. Australia comes forth with an exportable of surplus, likewise India and England are reported by our Government as producing a larger crop than last year. Following our harvest, say from November to March, 1918, harvest will be in progress in parts of South America, South Africa, while during January, February, and March large producing countries such as Argentina, Australia, and India will produce and harvest another crop, so that while I feel the necessity ot con- servation of. foods, with present prospects and possibilities, there is no necessity of acting hastily but make an intelligent survey just as you suggested. After fully considering and discussing with others your problem of placing the au- thority to control foodstuffs with the Department of Agriculture, I am fully con- vinced that the situation should be handled by some committee or board of control composed of practical business men to be appointed by the President or Congress, but positively should' not be placed with the Department of Agriculture. Before any drastic move is made'by this board full information should be secured by them from practical millers, then a decision rendered as to what is necessary and best from all points of view. From the position taken by the Department of Agriculture in various matters, all sides of the question are not fully investigated or considered; therefore in the matter of war flour Uiey could instantly decide to compel all mills to produce only war flour resulting in ruining the business, and in the years following the war loss of money which tie Government expects to realize as revenue. I am opposed to war flour, not only from an economic standpoint, but from the fact that it will destroy trade that has required a lifetime to build, besides the outlay of immense amounts of money. For this reason I am opposed to that part of the bill granting authority to compel the production of war flour. This, however, is a detail, and objection should be withdrawn provided the Department of Agriculture is not given the authority but that same was vested in the President or control board. After this board has determined what is necessary, this company will gladly comply with any requirements. Thanking you for the serious consideration that you have given the matter and awaiting your reply, I remain, Yours, truly, Guy V. Everett. (Thereupon the committee went into executive session, after which it adjourned.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Committee on Agricultctre, House of Representatives, Wednesday, May 16, 1917. The committee met at 10 o'clock a. m., Hon. Asbury F. Lever (chairmaii) presiding. STATEMENT OF HON. GEORGE C. SCOTT, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF IOWA. The Chairman. Gentlemen, yesterday the committee agreed to hear certain Members of Congress who had requested to be heard, and a rule was adopted, in order to expedite the hearing, that we would allow each one of these gentlemen 15 minutes. Mr. Scott of Iowa is present this morning. We wiU be glad to hear Mr. Scott, and I will ask the committee to let him complete his statement be- fore any questions are asked. Mr. Scott. Mr. Chairman and gentlemen of the committee, I had more particularly in mind bringing the attention of the com- mittee to what I believe to be the sentiment of my part of the country ■with respect to the maximum and minimum price. I do not find any sentiment in my section in favor of the maximum price, and none so far as I have been able to discover among the farmers in favor, of the minimum price. As I understand, the purpose of the proposed legis- lation now under consideration by the committee is to assure an adequate supply and an equitable distribution of foodstuffs, and the first paragraph of the bill seems to lay particular emphasis upon the matter of speculation and manipulation as bearing upon that object. I believe that factor is the most important one of all; that if specu- lation and manipulation between the producer and consumer can be eUminated and effectively controlled, we wiU not have any diflaculty in maintaining a relatively reasonable price for agriciiltural commod- ities. If the Government has adequate power and authority to survey and keep in touch with the visible supply of foodstuffs, know where it is and in whose hands it is, and has adequate authority to supervise and control the market facihties of the country and also the transportation facilities, I beheve that inteUigent cooperation of those factors will bring about a fair relative set of values. I presume that one of the things that meets the attention of the committee at the outset is whether to deal with this matter of specu- lation and manipulation by direct and positive legislation, or whether to grant authority to the executive branch, with discretion to pro- mulgate rules and handle that question from an admmistrative standpoint. Personally, I believe it ought to be dealt with by direct legislation, at least in a basic way— possibly giving the admin- istration authority to establish rules and regulations under which, to 104176—17 21 ^2^ 322 FOOD PBODtrCTIOK', CONSEKVATION, AND DISTRIBUTION. some extent, buying and selling by those not actually users might be permitted — that is to say, to permit the stuff to move along the natural course, the actual commodity, and through hands that are not necessarily engaged in manufacture or who do not expect to actually consume the product— that probably is necessary — ^whole- salers and retailers in many of these products. The main leverage of the speculator to-day, in my opinion, is the advantage that he seems to have at the great primary markets of the country. We have an excellent system of markets — a system which has grown up in response to the very natural conditions of the country. It may be said to be a triple system. We have three sets of facilities which coordinate, our large number of country units, our great primary interior markets, and our export markets, but the interior primary market is the hub of them all. Either actually or theoretically all of the agricultural commodities— I have in mind more particularly the grain stuffs — ^move to that market and from that market either for domestic distribution or export, and it is around those markets that the speculator hovers. If we could have a governmental instrumentality, a board or commission, constantly in control regu- lating those great primary markets and eliminating speculation and manipulation, giving the farmer an opportunity to sell his product to the man who wants to use his product, releasing him from the necessity of selling to the man whose object is to withhold it from those who want to use it, we will have a fair level of prices,. I am a farmer myself lq a small way. I raise corn. I sold my crop about midAvinter of this year for 80 cents per bushel. I sold it at a time when it was next to impossible to get cars to move the freight. To-day, that same corn would sell in the same local market at SI. 65 with cars easy to get. Why is that? Simply because the product has moved out of the hand^ of the producer and is being withheld so far as it is visible by men, not by those who are using the product or propose to use it, but bv those who are withholdiag it from that class for a higher price. They have doubled the cost of that commodity, and I think that is the primary evil to which you ' •hould direct your attention and your legislation. The question of storage capacity in this country is a very important one. Of course, we all understand that the storage capacity of the primary markets is greater than any other market, except, of course, the local elevators m the aggregate. I understand we have about 25,000 country elevators and their capacity, of course, is great. We have in the primary markets of the country, I think, a capacity of between 100,000,000 and 150,000,000 bushels. Ihave not the exact figures. 1 have not been able to get any figures except some that were several years old. I am waitjng for them now from the Amricultural Department and expect to have them here this morning. We ought to keep the graia moving in and out of those markets as freely as possible and not permit congestion. That tends to equahze prices and demand and tends to a proper level of prices. We ought to prohibit the speculation at those markets for the reason that it keeps the grain from moving in and out. While I think that is beneficial in some degree, it would be impracticable to have all the grain moved to those markets, but at the same time it is equally pernicious to have a very large part of the grain moved there, go into storage, and remain in storage; glut the storage capacity of the FOOD PRODUCTION, CONSERVATION, AND DISTEIBUTION. 323 primary markets and then let the speculator sit in his office and by wire buy and divert grain from point to point over the country when it IS purchased on the basis of the primary market price Now It do^ not make any difference whether the grain goes to Chicago from Iowa or not; it is sold on the basis of the Chicago market if it is corn, and possibly on the St. Louis market if it is oats. We had this experience less than two years ago. We were selling our corn in northern Iowa on the basis of the Chicago market, which, of course, would be with freight deducted. In southern Iowa, where the crop was short, they were buying corn in large quantities on the Chicago market, of course the basis being with freight added. The corn did not go to Chicago and back to southern Iowa. It was bourfit at local points and shipped direct. The speculator took the freight both ways and paid one short intrastate rate. Those con- ditions can be eliminated if we have control of the primary market facilities, I believe that one of the most important factors in this food-handling question is a strongly empowered instrument at the great prunary markets of the country to take control of these ques- tions. It would have to have some branches, because there are quite a number of very important markets. Chicago is the greatest market of the country on corn; Minneapolis on wheat; and oats has various points where there are important markets. Possibly St. Louis is ;the greatest market in the country for oats. But the prin- cipal point I want to emphasize is, that we do not need either a maximuna or a minimum price. We do need to eliminate speculation and manipulation and keep the commodity moving freely; keep your primary market from becoming glutted and keep a sufficient supply of cars to keep the grain moving both in and out. Now, we have another system in tms country that hampers the movement of grain, and that is a lot of independent buyers, situated aH over the country. They have no elevators, they have no storage capacity, and they rely entirely upon the railway cars to serve the place of elevators and storage, and by skillful systematic diversion in transit and reshipping they can hold cars for weeks and weeks at a time when they ought to be actually carrying food. AU that tends to aid the speculator in the manipulation of the market and of prices. , Mr. EuBEY. Mr. Scott, what is your objection to the minimum guaranty price for the producer ? Mr. Scott. My objection to it is that either a minimum or a maxi- mum price upon a single set of commodities, leaving all other com- modities in large measure free, will throw these commodities out of balance. Mr. Thompson. As long as there is a great demand for food prod- ucts, such as we have now, of course there is no necessity for a minimum price. Mr. Scott. None whatever. Mr. Thompson. But suppose this war were to stop right off short, or suppose the Germans were to be successful in their submariae warfare and stop the exportation of foodstuffs, and it was all thrown on the markets here, and suppose there should be a tremendous yield, more than we could possibly use, naturally and iaveitably that would reduce the price, would it not ? Mr. Scott. Somewhat. 324 FOOD PRODUCTION, OONSEKVATION, AND DISTTMBUTION. Mr. Thompson. Possibly below the cost of production, would it not ? Mr. Scott. I think not. Mr. Thompson. It might do it, might it not ? Mr. Scott. I do not see any danger of that. Mr. Thompson. You do not see any danger of that, but if it did have that result, would you stiU be opposed to a minimum price ? Mr. Scott. Yes. Mr. Thompson. You want the farmers, then, to suffer this loss ? Mr. Scott. With the war over, even though agriculture sustained a slight loss temporarily for a single crop, that would be better than to launch into such a custom. I do not believe the farmers of the country care for that guaranty, if they have an equal start and a fafr chance with all other industries. Mr. Hutchinson. Mr. Scott, you read the estimates of the Govern- ment on the amoiint of grains on hand, did you not ? Mr. Scott. I am not familiar with the figures up to date; no. Mr. Hutchinson. You notice that generally they come out pretty nearly accurate, but of course not absolutely accurate? Mr. Scott. Yes; they are fairly accurate. They have a good system. Mr. Hutchinson. Did you know that at the present time there are only about 4,000,000 bushels of corn in this country ? Mr. Scott. Yes. Mr. Hutchinson. About 4,000,000 bushels is the visible supply of corn in this country. Mr. Young of North Dakota. And that is just after seeding has been done ? Mr. Hutchinson. Yes; with six months to run before the next crop. Now, is not that the reason we are having such high prices on corn ? You say you sold yours at 80 cents arid it is now worth $1.65. Mr. Scott. No; that would not produce any such advanced prices. We had a reasonably fair crop last year. We are not exceptionally short of corn. Frequently the coimtry is as hard up for corn as it is now, and we have never before, to my knowledge, had any such price. Mr. Hutchinson. Do you not think it is a serious matter when we get down to 4,000,000 bushels of corn with six months before another crop ? Mr. Scott. No; not particularly serious, because we have now reached the grass and farmers are using substitutes. They will get through all right this year. We are short on cattle also. We are not feeding as many beef cattle at the present time as we usually do. Mr. Hutchinson. But you do not want to look at it from the' farmer's standpoint alone. There are horses and animals in the cities that have to be fed. What do you think about them ? Mr. Scott. I think there is plenty of grain, oats, com, and other substitutes to handle that end of it. Mr. Hutchinson. Well, you may think so. Mr. Young of North Dakota. Wnat is your authority for the state- ment that there are only about 4,000,000 bushels of com? Where do you get those figures ? Mr. Hutchinson. That is the estimate of the department of the com which we have in this country now. We have 30,000,000 EOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 325 bushels of wheat, 18,000,00,0 bushels of oats, and that is all the visible supply. Mr. Lesher. Mr. Scott, speaking of these small grain dealers, that practically use nothing but the cars, what objection have you to iJiose people dealing in grain ? Mr. ScoTT. They ought to be regulated, and closer touch ought to be kept of our transportation system and our market system. Mr. Lesher. Now, whom do they harm and what harm are they doing ? Mr. Scott. They tie up the cars of the country. Mr. Lesher. The only redress we have from the elevator man and the millers up in our country is from these men who deal in grain and ship it in the cars. They will pay us a httle more than the other fellows, and when the other fellows fix a price, they slip in and buy up the grain. They are the only salvation we have. Mr. ScoTT. Yes; they can slip in and buy it up and make these short shipments. Thej' get a rake-off in the difference in freight largely, and they may serve a purpose, but they do tie up the trans- portation system of the country at a time when you need cars to move freight. Mr. Lesher. But they are at times a salvation when they step in between the buyer and the producer. I know they do up my way, because when the mUlers fix a certain price, they step in and offer 5 or 10 cents per bushel more occasionally. They do that when, the price is fixed. Mr. Scott. In what grain — wheat ? Mr. Lesher. Wheat, oats, corn, or anything. Mr. Scott. You do not seU any corn to the millers to speak of ? STATEMENT OF HON, ADOIPH J. SABATH, A REPEESENTA- TIVE IN CONGRESS FROM THE STATE OF ILIINOIS. Mr. Sabath. Mr. Chairman and gentlemen The Chairman (interposing). You tmderstand, Mr. Sabath, that the Members of the House have been Hmited to 15 minutes. Mr. Sabath. I am interested in action and not in wasting the tune of the committee or of the House. As you know, gentlemen, I come from the second largest city_m the United States, and the people in my city, as well as m all other large centers, are suffering to-day because of the high price ot food- stuffs. To my mind, there are various causes which have brought about this unreasonable increase in the price of foodstuffs. I am of the opinion, gentlemen, that if, in the first place, you stop the specu- lators, or the speculation in food supphes, m wheat, corn and every- thing else, you will have started to solve the question. 1 know tHat there are thousands upon thousands of people m the different parts of the United States who buy on the exchanges wheat, corn, and other foodstuffs that they never expect to receive, that they never expect to have, and that they never expect to use. feey do that for speculation purposes only, and by these means tney increase the prices of these commodities. Now, if we would immedi- ately stop speculation in all foodstuffs, I feel confident that within 20 days the prices of most of these things would be more reasonable than they are now. Only day before yesterday, the Chicago Board 326 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBUTION. of Trade, realizing that the country will not tolerate much longer this damnable gambling in foodstuffs at the expense of the masses of this country, fearing that they might within a short space of time lose out if they should persist in their methods — ^I say that the Chicago Board of Trade for those reasons and for their own protection stopped its gambling for three days. Now, what was the result ? There was a drop in everything from 10, 15, to 20 cents per bushel. In view of that situation, on yesterday I introduced a bill making it unlawful for anyone to sell anything that he does not own or can not deliver, or for aayoae to buy things that he does not expect to receive. T do not desire to deprive millers and others of the privilege of buying for future delivery, if the deliveries are going to be made, but for a lot of outsiders, a lot of speculators, or a lot of gamblers, who at wiU raise the price of the necessaries of life — ^for those people to live at the expense of this country in that way, is outrageous, and those prac- tices should be stopped. I know fhat you have read and heard again and again about the' differences between the prices of foodstuffs and the necessaries of life to-day and the prices of last year and two years ago, and, therefore, I am not going to take up your time with a discussion of that. All that I wish to say is that the people of the coimtry, especially the laboring people, are looking to you and looking to Congress for some relief. I am not going to tell you of the hardship and tKe suffering going on in the large cities of the United States. Notwithstanding the fact that wages have been increased, it is impossible now for these geople to buy meat or to buy the necessaries that they are entitled to ave. Of course there are some people who are more unfortunate than others; there are some people whose wages or salaries have not been increased, and you will find thousands upon thousand^ of clerks, professional men, and a great many other people who do not, belong to Organized labor, whose salaries have not been increased. Those men work for fixed salaries, and they are the people who are suffering most. In the various industries where the people are organized, especially the mechanics in the trades whose wages have been reasonably in- creased, the suffering is not so great, but even there, where the wages have been increased 10, 20, or even 50 per cent, the cost of living has increased between 75 and 100 per cent. Their burden, of course, is heavier to-day than it was a year ago. I say that there should be some immediate action taken, and that is aU I desire to impress upon you. I am not interested in any particular biU. I have a bill before your Committee which I first introduced six years ago and then reintro- duced four years ago. I introduced that biU again about a month and a half ago. It is a biU to regulate cold-storage warehouse^ and pro\ides for the securing of statistics, so that the country might kriow what quantities of foodstuffs were on hand each month. Now, as it is, the newspapers go out and try to make the people believe that we are out of corn, out of wheat, out of cattle, and out of everything, and, consequently, the farmers are not selling their products. They keeping a great deal of it on hand. T am sure of that, and, in addition to that, the warehouses, or rather, the cold-storage houses and the elevators are jammed with products, but we have no way of ascer- taining what there is really on hand to-day. I have heard people say that you have only 4,000,000 bushels of corn. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 327 That is from the reports received from the elevators, but there is no way of 'ascertaining how much corn there is, because over 40 per cent of the elevators do not render a report. Now, jny bill aims to force each and every elevator in the United States, whether owned pri- vately or pubHcly, by farmers' organizations or by commercial organizations, to make a report every month showing just what there is on hand of wheat, corn, and aU other food products. I beheve that if a correct statement could be secured of the corn, wheat, potatoes, and everything else in storage we would be amazed. We would find, I believe, that there is from 50 to 75 per cent more of it on hand than is now reported. That unfortunate condition is due to speculators and to the misinformation that we are receiving from time to time, not deliberately, but because there is no way of securing the correct information. Consequently, the people are made to believe that within a short space of time there will be nothing to eat — that there wiU be no corn, wheat, or anything else. That, of course, encourages speculation, and everybody is trying to buy things, whether he needs them or not, thereby raising the price of those necessaries of Hfe. Mr. Wilson. How do you know that that is misinformation or is not comj)lete information ? Mr. Sabath. Because we have no method by which we can secure all of this information. There is no law that would compel the ware- house people or that would compel the elevator people to render a report. You wlQ see from the reports that you receive that the reports contain only about from 60 the 65 per cent of the warehouses and cold-storage houses in the United States. Mr. Wilson. Do they not reckon the percentage from those reports ? Mr. Sabath. Oh, they may guess at it. My bill provides that there shall be an accurate report made to the department on the part of each and every cold-storage house and warehouse, and that the report shall be issued and sent out each and every month so that the people of this country may know what we have on hand in the country. Now, in a measure, that proposition is embodied in your bill that was reported last week. It is not the wording of my bill, and the chances are that it may take a longer time to secure the information under your bill than it might have taken under my bill, although I admit that your bill goes further than mine does. What I desire is immediate information and immediate action, and that is what I am here for, gentlemen. I believe that if you would pass that bill to-morrow, or whenever it can be reached, and also pass or report a bill immediately to stop speculation in aU food supplies, you will have solved the question and you wiU have given the country immediate relief. Realizing that you are busy, I am not going to take up any more of your time, although there are a great many things I would like to submit. The Chairman. We are very much obliged to you for your state- ment. The members of the committee may desire to ask Mr. Sabath some questions, but I want to say to the committee that I have con- scripted a gentleman here from the Belgian Rehef Commission, who is very busy, and I want to give him an opportunity to be heard, 328 POOD PEODXJCTION, CONSEKVATION, AND DISTKIBTJTIOH'. and I want to give the members of the committee an opportunity to hear his statement. Therefore, if you have any questions to ask Mf. Sabath, I hope you will make them as brief as possible. Mr. Hutchinson. Do you know that a large number of the big mills of the country are shut down now for want of wheat 1 Mr. Sabath. Yes; and it is because the speculators are holding it. They are gamblers. There is no question about that. Do you Imow what business I would have in buying 10,000,000 bushels of wheat? I have no use for it, and would not use it. If I were in the milling business, it would be different, but what justification is there for a man to buy things that he does not need ? Mr. YotJNG of North Dakota. I understood you to say that in your judgment the food situation is very acute. Now, I would like to ask you this: Would you be willing to prohibit the manufacture of grain into intoxicating liquors ? Mr. Sabath. Well, if you can show me that it wiU help, yes; but I think that that is a mistaken idea, because it was only to-day and yesterday that I received over a hundred telegrams from organiza- tions and other people protesting against any action to be taken^ on the part of Congress to prohibit the use of corn and barley in the manufacture of beer, because they maintain that they would suffer a terrific loss due to the fact that they could not secure feed for cattle and hogs. Now, if you desire, in that connection I can read you some telegrams. I think I can say that that would be really a mistake at this time, because we have enough corn, wheat, and rye in this country Mr. Young of North Dakota (interposing). A plenty for whisky but not for food. Mr. Sabath. A very little of it is used for whisky. Mr. Leshee. Do you own any property ? Mr. Sabath. Yes, sir. Mr. Leshee. Do you own any more than you have use for yourself ? Mr. Sabath. Yes, sir. Mr. Leshee. Then what are you holding it for? Mr. Sabath. Because I can not sell it. I have held some property since 1890, and I wish I could have sold it. Mr. Leshee. Are you not keeping the price up ? Mr. Sabath. No, I am not. I wish I could sell it. I have been trying to sell it, but I have not been able to do it. The Chaieman. I desire to have the committee hear Capt. J. F. Lucey, who has been associated with Mr. Hoover in the Belgian relief work. I think that Capt. Lucey can give the committee some information that will be worth while. STATEMENT OF CAPT. J. F. LUCEY, OF THE BEIGIAN REIIEF COMMISSION. Capt. Lucey. Mr. Chairman and gentlemen, I am not in the habit of addressing bodies of this kind, so Ido not know whether I can make a very good showing, and I do not know that you are even interested in what I am going to tell you. I am the man who organized the transportation and distribution of the commission's relief m Belgium, and it has occurred to me that there were some things we did there that might be cited as illustrations or examples of what might be FOOD PEODUCTION, CONSEEVATION, AND DISTEIBUTION. 329 done in this country. My thought is this, that we could show what we did accomplish, but, of course, we understand that those same methods could not be applied in this country. Still, the fact remains that we can show some very remarkable accomplishments in the way of food prices. I think perhaps that one of the most important statements that I could make would be that w;e bought wheat in this country at a price of about $1.50 per bushel, paid a high cost of transportation all the way from the beginning, from 18 shillings to 75 and 85 shillings, and vet we sold that bread in Belgium to the people who could afford to buy it at a profit and still undersold the Paris and London markets by something like 10 or 20 per cent. That was direct distribution from the producer to the consumer, and I do not know that that method could be apphed in this country.. We have established means of business and of trade that of course can not be disturbed, but the fact remains that that illustration to a certain extent, I believe, can be applied to this country. I think that that is about the most important statement that I can make to you. The actual scientific part of the work, the mixtures, and all of that detail, was not within my province, because mine was entirely in the physical handling of ' the supplies. I think that it is absolutely essential and necessary, if you do pass a biU to control food regulations, that you give that control absolutely autocratic powers. If you do that, it will not be necessary to use them. I had charge first of the organization of the transportation system in Holland, and afterwards I had control of the actual distribution of the foodstuffs in Belgium. We had powers, you might say, of life and death, because the people could not live with- out our food supplies, regardless of their money or means or position. There was only one way in which they could acquire food and that was through the American conunission. We had all kinds of au- thority, but we never used it. I might cite the case of the bakers and show you how we controlled them. We found bakers in the city of Brussels who were not living up to our standards and regulations which provided for 90 per cent of the whole wheat for bread and 10 per cent of bran that fed the animals. There was no cattle food in the coimtry, and we found it was very difficult to regulate the situation in Brussels, which is a very large city — the city of Brussels and the immediate vicinity having a popu- lation of 800,000 people — in fact, the Belgians told us it could not be done; that it was foolish to attempt to control Brussels a« we had attempted to control the small cities; but we put this very simple method into effect and it regulated itself. We made an investigation of something like 60 bakeshops in Brussels and we found that they were sifting the flour so as to make. cakes, pastry, cookies, and things like that. We have prohibited that. We found that was a waste, and we insisted upon all flour being made into bread as we sent it from the mills. We then issued a notice which we posted up in every bakeshop and in every window and in every store in Brussels to the effect that here were our rules and regulations, that we would issue to every baker in town sufEcient bread to feed the people; that we had found there were some violations of these rules and regulations, and that for every future violation we would shut down such a baker for three days and we would provide another bakeshop for that man's 330 FOOD PRODUCTION, CONSERVATION', AND DISTRIBUTION, customers, and if a second violation of our rules and regulations took Elace we would shut the bakeshop down permanently. We never ad to shut down a single bakery m Belgium. You will understand that the people regulated that situation themselves. If they dis- covered a man was robbing the people of their food, the very food that meant life and death to them, his life would not have been worth while. And so on, throughout the whole work, we never had occa- sion to arrest anyone or to resort to any undue methods. Everything regulated itself by very simple and practically automatic means. Now, I think that many of the ideas might be applied in this country, but, of course, in a more liberal manner. We tackled, for instance, what seemed like an impossible task. The people of Europe told us it was not possible to feed an entire nation; that no organization of this kind had ever accomplished it in the history of the world; and yet inside of 70 days we built up independently — and many times against the opposition of the German army — an independent means of transportation and we were feeding not all the people wanted, but we were delivering some food to every man, woman, and child in Belgium inside of seven days. Now, I think that is about all I can tell you about it, gentlemen. If there are any questions you desire to ask I will be glad to answer them. Mr. Wason. Did you have any difficulty in the transportation of the raw material, so to speak ? Capt. LuoEY. In Belgium ? Mr. Wason. Yes. Capt. LucEY. Yes; of course that was at first our great problem. You understand when we started there was no water in the canals, the bridges had aU been blown up by the Belgians themselves, and all the main lines were in the hands of the German Army and we never could use those, but we rebuilt what were known as the visunal lines, small tramp systems which paralleled the canals. We rebuilt those in many instances and obtained permission of the German Army to clear away the bridges, and then we would allot that task to the nearest town. For instance, one of our great dangers at the outset was that the Belgians were determined to attack the German Army rather than die of starvation, and one of our great problems was to fight that very danger at the outset. It took us nearly six weeks to reach the Province of Charleroi, the great mining community, and in another instance, in the Province of Ledeberg, we had to transship some of the food shipments en route as many as six times — first on the railroad in Holland, and then to canals, and finally again to other small canals, and then overland by any way we could get man power or woman power — but finally we built up an independent means of transportation, and even a postal system, so that we were our own couriers. Inside of three months we had a perfect organization, so that we were in daily communication with every Province in Belgium. Mr. Wason. And that was controlled, of course, by your relief association ? Capt. LucEY. Controlled absolutely by the Americans. During my time the greatest number of Americans I ever had was 30, and they were young men, Rhodes scholars, who were available in Eng- land at that time. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 331 Mr. Wilson. Where did you get your help ? Capt. LucEY. For handUng the food supplies ? Mr. Wilson. Yes. Capt. LucEY. We used Belgians principally. Of course, in Bel- gium, we used entirely Belgians. In Holland we employed the Dutch and some Scandinavians. We had some Scandinavians in Brussels, also. Mr. Wilson. Did you have a large force? Capt. LucEY. We had a very large force; yes, sir. We had some- thing like five distinct organizations for the actual distribution and 'control. Mr. Wilson. What did you pay them? Capt. LucEY. As far as the commissioners themselves were con- cerned- Mr. Wilson. I do not mean that. I mean the help you employed. Capt. LucEY. Of course, the Americans were almost always volun- teers, and they made no charges. Sometimes we had to pay a man's expenses when he could not afford to pay them himself. The average pay in the office of Rotterdam of men capable of running, for instance, a department, would run from $170 to $250 per month. In the case of clerks it would run from $50 to $65 per month, and there were some Mr. Wilson. I did not mean the clerical force. I meant the men and women who were doing work in conveying the food. I wondered how you cleared that up. Capt. LucEY. In the transportation of the food we handled prac- tically 75 to 80 per cent of the food through the canals, and that was a fixed charge. We unloaded the boats in Rotterdam, and delivered the food at an average cost at the outset of $1.35 per ton to the mill, or to what we called the district warehouse. We finally brought that cost down to 90 cents a ton. I think for actual operating costs the coinmission has the lowest operating cost of any organization in the history of this or any other country. Mr. Wilson. I have heard that. Capt. LucEY. It has been less than half of 1 per cent, but we had brains and an organization that, of course, money could not buy. Mr. McLaughlin. You spoke of using 90 per cent of the wheat in the piaking of the flour. Capt. LucEY. Yes, sir. Mr. McLaughlin. Was the wheat milled and made into flour m that coimtry? Capt. LucEY. Yes; we found that was the most economical way of handling it. We found it was too much of a waste to brirg over flour, which to begin with was expensive, and much more costly in transportation. . , -.i Mr. McLaughlin. I suppose many of the mills were equipped with a different process, one not using so much of the wheat. Did you find any difficulty in having the mLUs adjust themselves to that condition? .„ , ,,. Capt. LucEY. No; we brought over expert millnien from this country, and we selected from all the mills in Belgium the ones that "wrould be most adaptable for our work. 332 FOOD PRODUpTIOSr, CpNSEEVATION, AND DISTEIBUTION, Mr. McLaughlin. Did it require very, much readjustment of ma- chinery and appUances ? Capt. LucEY. Practically none. We only met with one difficulty in that respect. We had a shipload of karachi wheat which we could not use in Belgium and which we traded to a Dutch mUl. When I say we used 90 per cent of the whole wheat, since I left Belgium they have used quite a mixture of corn. We were using during my time — we started with 5 per cent and then got up to 10 per cent. Mr. McLaughlin. Five and 10 per cent of what ? Capt. LucEY. Of com to the flour. We also at the very begin- ning made a good deal of potato flour. In some of the Provinces in Belgium at the beginning, in the latter part of 1914, there were potatoes and some cattle, but there was no food for the cattle, and what the German Army did not requisition the Belgians were killing off as rapidly as possible. Mr. McLaughlin. Was this mixture of wheat and corn made by yourselves, or was it left to the bakers to do the mixing ? Capt. LucEY. We did all the mixing. The baker only had to bake the bread from the flour we gave him. Mr. McLaughlin. They were not accustomed to using corn at all ? Capt. LucEY. No, sir; that was one of our problems and we had to teach them that. Mr. McLaughlin. Was there much difficulty in doing that ? Capt. LucEY. No; we issued instructions and even sent people around to explain the details to them. Many things of that kind we had to teach them. For instance, they had never eaten any pork and beans over there, and that became a very popular dish. They had never had any of our canned corn. They could not or would r;iot eat our oatmeal at the outset, but we taught them to eat all of those things. Mr. McLaughlin. Were the mills which adjusted themselves to the using of wheat in a different way equipped practically as the mills in this country are equipped ? Capt. LucEY. I do not know that, sir. We had men on the com- mission who could give you all that information, but mine, as I explained to you, was more of the physical work, the actual organiza- tion and distribution of the food supply, although I had complete charge in Holland and in Belgium. Mr. McLaughlin. How was the bread made of this 90 per cent of wheat or the bread made of the mixed flour received by the people ? Capt. LucEY. It was entirely satisfactory. Mr. McLaughlin. Was there any impairment of health ? Capt. Lucy. No. There was an impairment of health from many things. For instance, we found that children under 3 years of age were not being properly nourished, but that was due to the fact of the excitement and the strain upon the mothers and ttie lack of proper food for a nursing woman, so we made a special investigation of tnat condition, and we organized what we called a series of baby canteens, where we fed all children under 3 years of age, and we fed those children what the doctors considered a proper and sufficient nourishment; in fact, if a special diet for any of the children was required beyond the standard diet at these canteens, that was pre- scribed. There was always a doctor on duty at these canteens, and FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 333 we fed in the city of Brussels alone 9,000 children under 3 years of age. That cost us somethmg like 2 cents per day per child, and during my time in Belgium the Belgians lived on a cost of a little over 4| cents. Our aim was to try to deliver to them 6^ cents worth of food pep person per day. Mx. McLaughlin. You found they were not properly nourished before you started to feed them and not afterwards ? Capt. LucEY. Yes; before. The mothers were not receiving proper nourishment, and also on account of the excitement of the war they were unable to properly nourish the children. We have also found this situation since that time, that the growing children, school children, for instance, between 6 or 7 and 15 years of age, were being attacked by tuberculosis for the reason that while the food we were giving them was all right for an adult, yet it was not sufficient to make bone and muscle for the children. We overcame that by giving them one supplementary meal of especially prescribed food during the school hours and in the schools at a cost of 1| cents per child. Mr. McLaughlin. What was that extra meal ? Capt. LuCEY. It consisted principally of different kinds of fats and a cereal, perhaps, and the different commodities we were able to five them. We considered potatoes very good. We had a special epartment on that work. I am not familiar with that, because that was done since I left there, but we have all those statistics, and we would be glad to give them to you if you think they would be of interest. Mr. Hutchinson. When you went over there had those mills abeady been grinding a percentage of 90 per cent ? Capt. LucEY. No, sir. Mr. Hutchinson. And you changed the mills ? Capt. LucEY. Yes; we put in force these regulations. Mr. Hutchinson. And then you put the bran and the middlings and all but 10 per cent of the grain into the flour? Capt. LucEY. All but 10 per cent went into the bread and with the other 10 per cent we maintained the cattle as well as we could. Mr. Hutchinson. And you changed the miUs after you went over there ? Capt. LucEY. Yes, sir. Mr. Hutchinson. How did you find that flour? Did it make a nice loaf of bread or was it dark ? Capt. LucEY. I think I look like a fairly husky person and I lived on it daily for something like four or five months. Mr. Hutchinson. Ana you did not have any trouble with the flour keeping ? Capt. LucEY. No, sir; it was used up. The normal ration of a soldier is 500 grams of bread per day, and during my time we never fave the Belgians over 250. We gave the miners in Charleroi 300, ecause they were producing coal in order to provide the people with fuel. , , Mr. Hutchinson. What means did you have of knowing whether you got 90 per cent of flour ? Capt. LucEY. We controlled the mills and kept our inspectors right there. 334 FOOD PRODUCTION^ CONSERVATION, AND DISTRIBUTION. Mr. Hutchinson. In. other words, you weighed the wheat as, it w^nt in, and weighed the results coming out, and that was the only waj you could teU? Capt. LucEY. Yes. We were in control of the miU and we took everything that came out. The mill man had no control over that. Mr. Hutchinson. You ran the miU ? Capt. LucEY. We let him run the mill, but we exercised supervision over it. Mr. Hutchinson. Suppose you did not have an inspector, and took that flour, could you tell whether you got 90 per cent flour or 75 per cent flour ? Capt. LucEY. I am not sufficiently experienced to be able to answer that question, but I think that would be very difficult from what I have heard. Mr. Young of North Dakota. To supplement the questions of Mr. Hutchinson I would hke to ask how long did this flour take to get into the hands of the consumer after it was made? Capt. LucEY. Oh, almost instantly, I should say. I am speaking now entirely of my own particular administration there. We hoped to have a 30-day food supply on hand, but we never had a 48-hour food supply on hand wmle I was there, and that would be from October, 1914, up until April, 1915. Mr. Young of North Dakota. Experts in this coimtry, chemists and others, have stated that flour containing as much as 90 per cent of the wheat is a very poor keeper, and within a reasonably short time becomes musty and even worse than musty; becomes even imfit for food for stock. Now, as I understand you, in Belgium you made very prompt and quick dehveries ? Capt. LucEY. Yes, sir. Mr. Young of North Dakota. In small quantities which were used up quickly? Capt. LucEY. We only gave the baker a one day's allowance at a time. We gave him sufficient flour daily to keep his people alive. Mr. Young of North Dakota. So you do not know how well that kind of flour would keep ? Capt. LucEY. No, sir; but I think we could furnish you with that information, based on our experience in Belgium. Mr. Young of North Dakota. If you did not keep any of it more than a very brief time you would not have any experience about that. Capt. LucEY. You imderstand that since I left there they did acquire considerable in the way of a storage of supphes, at least 30 days' food supply in advance, and they may have had some expe- riences that would be of value to you that I am not familiar with. Mr. OvERMYER. I would hke to ask if the work is going on there now to about the same extent it was. , Capt. LucEY. So far as we know. We still dehver the food sup- phes to the frontier. Mr. OvERMYER. Are the contributions ample to keep on with the work ? Capt. LucEY. The contributions have never been ample to reaUy enable us to distribute a proper food supply. Mr. OvERMYER. Are they as liberal now as they were a year ago ? Capt. LucEY. They are more so at the present time, but the fund we are particularly mterested in at the present time is the one for EOOD PRODUCTION, CONSEKVATION, AND DISTRIBUTION. 335 this additional daily meal for the school children or for the adolescent children. We are trying to raise a fund of $1,250,000 a month for that, and I think we have about 1600,000. Mr. Lesher. "What condition is Belgium going to be in with regard to live stock, cattle and horses, after this war is over ? Capt. LucEY. There will be practically none there. The cattle food for Belgium is practically all imported from this country — oil cake. Mr. Heflin. Is this bread made of a mixture of meal and flour very paUtable ? Capt. LucEY. For myself I can not say I either liked or disliked it. It was entirely satisfactory. But my wife, who was with me, said it was the nicest, sweetest bread she ever ate. Mr. Jacoway. On an average, how many people per day did you feed? Capt. LucEY. In Belgium we had approximately 7,000,000 people, and in France, when we took over the 3,000,000 French people behind the German lines, that made a total of 10,000,000 people whom we fed daily. The Chairman; I have just one (question to emphasize your main thought. Your chief thought in this whole situation is that in order to handle any big proposition such as we have before us, the con- trolling of the food situation of the country and largely of our allies, it is absolutely necessary to have some centrahzed power — ^is that your idea ? Capt. LucEY. Yes, sir; with absolute authority. To be able to. accomplish the work you must have absolute and complete authority to control. Mr. Wilson. Is there anyone ta this country now who has been connected with the Belgian rehef fund who could give us more definite information on this milling process you have just spoken of ? Capt. LucEY. Yes, sir. Mr. Wilson. Would you kindly tell us who he is ? Capt. LucEY. I will be glad to. I do not know who the best per- son would be. We have many people here who have had various kinds of experience, the child specialist, the mill man, and the man who is an expert on food mixtures and all such things, and we have aU of those men here. It is possible we may have some one here just at the moment. Dr. Kellogg, from the Stanford University, is here now. He was over there since my time, but I will find out to-day just what his particular work was. We have all the information you have asked about here and it is available to you, of course, with pleasure. Mr. McLaughlin. Mr. Chairman, the witness speaks very interest- ingly on this point, that having the authority, and the people knowing they had the authority, it was not necessary to exercise it, and the witness has given one very good illustration, and I would like to know if he has. any others. Capt. LucEY. No, sir; that was our great problem at the outset, to convince the people we had this authority. Of course, we had large problems, for instance, the putting of these regulations into effect. We had to deal, for instance, with three different political parties who were opposed to one another, and strange as it might seem, at the 336 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. outset they were even anxious to utilize the question of the feeding of their people and make poUtical capital out of it; so we had to reconcile the Catholic party, which is controlled, of course, entirely by the church, and we had to reconcile the liberal party and the socialist party. But I ana glad to say to you that once we were able to reach the leaders and present the actual facts and the necessity of close cooperation, we were able to accomphsh oiu- purposes without any trouble whatever. We conferred always with the men in author- ity, and we took in every Une of business — the ablest men there were — and simply drafted them into our service just as you can do in this instance. The Chairman. Captain, we are very much obliged to you for your interesting statement. The Chairman. The next witness is Mr. Francis M. Phelps, of Washington, D. C. STATEMENT OF MR. FRANCIS M. PHELPS, ATTORNEY AT lAW, WASHINGTON, D. C, REPRESENTING THE MILLERS' NATIONAL FEDERATION. Mr. Phelps. Mr. Chairman, I am here to present briefly the posi- tion and the attitude of the Millers' National Federation, which is a body made up of representatives of all of the larger wheat mills in the United States, and a great majority of the small ones. It is in truth and fact a national body. At a meeting of the federation on April 20, 1917, the following resolution was passed: Resolved, That the flour millers of the United States, through the directors and delegates of the Millers' National Federation, herewith pledge their whole-hearted allegiance to and cooperation with the Government, to the end that breadstxiffs pro- duction msty be raised to the maximum and that greatest economy and eflSciency may be obtained in the distribution and use of flour and grain products. To this end the Millers' National Federation and its officers place themselves wholly at the dis- position of the President and the Government, and will take pleasure in appointing a special committee representative of the entire country to cooperate in any and all ways that may be determined to be for the best interests of the people of the United States and our allies. Furthermore, we wish to express our unanimous approval of the appointment of Herbert C. Hoover for chairman food-control commission and to express our utmost confidence in Mr. Hoover. This is signed by the Millers' National Federation, Samuel Plant, president, St. Louis, Mo.; A. P. Husband, secretary, Chicago, 111.; Mark N. Mennel, chairman of committee, "Toledo, Ohio. There are, of course, two phases or features in this bill which are of great vital interest to the millers. The first one is the proposition to mix com products or other cereal products with white flour. That phase of the question has been taken up in Congress a great many times. Prior to 1897 there was no pure food law, and there was no law against the mixing of flour, and conditions in the flour industry became so bad that nobody knew what they were getting. Everybody was mixing flour, or practically everybody was. They were using varying amounts of adulterants, and putting in all that the traffic would bear. They were using com flour, corn starch, flourine, mineraline, which is a barytes product, or anything that they thought would add to the bulk, irrespective of its food value. Those conditions got so bad and the millers who were trying to be honest were being driven to the wall so fast, because they could not POOD PEODTJOTION, CONSEBVATIOlir, AND DISTEIBTJTIOK. 337 meet the other fellow's price, that something had to be done. The purchaser would say, "Here is a flour that looks just as good as that, and why should I buy that flour at $6.50 instead of buying this at $5." The purchaser did not know and the housewife did not know the protein content or value of the flour as food for the family. Therefore, they would buy the cheaper flour, and, of course, the middlemen would prefer to handle the cheaper flour because they could sell it at a bigger profit. Therefore, the flour business became entirely disorganized. The result of it was that the millers came to Congress, before the Ways and Means Committee, of which Mr. Tawney was the chairman, and had incorporated in the Spanish War revenue bill a provision imder which a mill which wished to mix corn flour with wheat. flour could do so upon the payment of a tax to the internal revenue of $12 a year, or $1 per month, and, in addition, the payment of a tax of 4 cents per barrel on each baiTel of mixed flour that they produced. That, of course, immediately stamped that flour, because there was a Government stamp on each package of that flour which showed that it was not wheat flour, but that it was a mixed flour. Then, just as fast as the people got on to the fact that they were not getting wheat flour — they did not know that it was being adulterated before that — they ceased to buy it, and the amount of mixed flour that is now produced is negUgible. That is true, because it must be sold in the original package with the Government revenue stamp on it. That kmed the business, because the people did not want it. Now, that is a revenue measure, but it was not meant to be a revenue measure. It was done to protect the peoj)le of the United States from flour adulteration. Now, that provision operates both inter- state and intrastate. In other words, you can not, for instance, in the State of North Carohna, mix flour and sell it within that State without putting a Government revenue stamp on it. That is the reason that that provision is much more effective in this industry than it would be to leave it entirely to the pure food law. Mr. Jacowat. Did you use the taxing power in order to get that result when you cfould not get it in any other way ? Mr. Phelps. Yes, sir; because at that time there was no pure-food law. That was in 1897, before the pure food went into effect. That has resulted in pure-food flour. It has brought the standard of American flour up and has kept it up. The conditions before that time were so bad that foreign countries were refusing to buy our floiu" because it was adulterated. Those pure flour conditions have continued ever since. A year ago last fall, or about 2 years ago at this time, thisre was a bin introduced in Congress by Representative Rainey, of lUinois, known as the Rainey bill, providing for the mixing of flour. It provided for marking it mixed flour and that the percentage of each mgredient must appear on the sack. That seemed reasonable, but why did they want to call a mixture of cornstarch and wheat flour by the name of flour? They wanted to call it flour, because they wanted to get the benefit of the name flour which everybody recog- nizes as wheat flour. It was practically a trade-mark infringement, and it was unfair competition. They knew that they could not sell that stuff as it was unless they used the word "flour. ' 104176—17 22 338 FOOD PEODUCnON, CONSERVATION, AND DISTEIBUTION. Last year, in February, we had a week's session before the Ways and Means Committee, and there is the report of the hearings on it [indicating document] — just on this provision to repeal that one section of the revenue bill. We had people from the Department of Agriculture present, from Mr. Vrooman down, who said that it should not be done. Dr. Wiley was very much opposed to it. He came down there voluntarily, and that bill has never been reported. It has never even been allowed to come to a vote in the committee, so that the wheat flour industry of the coimtry seemed to be fairly well protected. Then, this measure has come up now in the way of a war emergency bill. In order to get a proper perspective of this question, it is necessary to go back and see who is behind the mixed flour proposition. It is the Com Products Co., which company has been held by Judge Hand, in the southern district of New York, to be a combination in restraint of trade. He has found them guilty of all sorts of imfair trade practices, such as price cutting, crowding out competitors^ buying them out, and everything of that kind. It is also interesting to know that their offices are in the same building and closely associated with the offices of the Standard Oil Co.y at 26 Broadway. Now, why are they interested ? They manufacture as their chief product glucose, which is used by all candy manufacturers in the manufacture of candy, it being very sweet and very much cheaper than cane sugar. They manufacture glucose by what is known as the wet process, which is a chemical process; and in the production of that glucose they make enormous quantities of com starch. They make more corn starch than they can possibly use; it is a drug on their hands, and they can not get rid of it. Tb.ey can sell it in little packages to make puddings, and that sort of thing, and they can sell some laundry starch, but there is an enormous amount of it that they can not dispose of. They were looking around for a market, and they said, "Here it is, right here; we will just go to work and pass this mixed flour biU, and then we can put all our surplus starch into wheat flour and sell it to the public." Mr. McLaughlin. Do you mean that biU that you had those hearings on ? Mr. Phelps. Yes, sir; and the provisions in the present bill before this committee are practically the same as the provisions in that biU. The Chairman. What authority have you for saying that the com starch people had anything to do with writing the provisions in this bill? Mr. Phelps. I did not say that at all; I am not talking about that revenue bill. The Chairman. I think you had better make that clear. Mr. Phelps. I did not mean that at all. I do not think that the cornstarch people are here at all, except that this is a measure that has been proposed and advocated as a means of reducing prices, but this matter was simply and solely before the Ways and Means Com- mittee. The Chairman. Then you were talking about the other bill ? Mr. Phelps. Yes, sir. I have not gotten to this bill yet. It is true that it is the same provision that was in the revenue bill. Mr. Hatjgen. Do you say that the provisions in this bill are prac- tically the same as those in the other biU 2 FOOD PEODUCTION, CONSERVATION, AND DISTEIBUTION. 3 3 9 Mr. Phelps. They will give exactly the same result as the pro- visions in the revenue bill. The aim and ultimate objects are ex- actly the same. Now, cornstarch, or starch, has absolutely no strength-giving or tissue-building properties, or any other properties except these: Pure starch has a certain number of calories to produce heat in the body, but it. does not make any bone; it does not make any tissue, and it does not build up any strength at aU. As a matter of fact, it is contained in very large quantities in wheat Hour. Wheat flour contains practically the same amount of starch that pure milk contains of water. Pure water in milk is necessary, but you do not want any more of it than is necessary. Starch in wheat flour is necessary, but there is enough of it already there. Now, this biU by this provision would operate in exactly the same way as if you told a dairyman that there is a big shortage of milk here in the city, and that you wanted to add to the mUk supply 5, 10, or 15 per cent more water so as to enable you to spread the supply out. You might not hurt it particularly, but you would be diluting; the milk that much, and if you do permit the producer to put a certain amount of water in the milk, he is going to forget some morning just how much he is putting in. Some day when the cows have not given as much milk as he thinks they should, he wilt forget how much, water he should put in and add more. Now, that is exactly what the millers will do. They can do it, because Mr. Howard, of the Agricultural Department, testified to that effect in the hearings on. the Kainey bill. He was testifying on the question of how much check you would have on mixed flour, and he said that he would consider that in a 20 per cent mixture a variation of from 5 to 10 per cent would be an allowable limit in normal work. In other words, if you said put in 20 per cent, the miller could run it up to 25 per cent or even 30 per cent without being detected. That would be reducing the protein content of the flour, which is the valuable content and the mineral content which builds the bones in the body, just that much, and it would not be adding any food value at all. Again, it would have another and further eftect: The bakers are controlled in the amount of yeast, oil, and other ingredients used by the strength of their flour. For instance, if they are using a certain wheat, they know what is the strength of it, but if you give them a mixture and tell them that it contams 20 per cent of added starch, when, as a matter of fact, it has about 28 or 29 per cent of added starch, then you are going to spoil their bread. The bakers of this coimtry make about 70 per cent of the bread, and so they are the ones that you want to consider in this discussion. Now, therefore, it seems to me, and it seems to the federation, that it is a great mistake to in- struct the millers to adulterate, because the consumers or users of that flour can not check them up and can not produce the uniform bread that is now produced. They may make a good batch one day and a poor batch the next, and you can not control it. If you find it necessary to mix com flour or com starch with wheat flour,, then make the ba'kers do it. They have mixers; all of the large bakeries have mixers, and when they get strong durum wheat and a weaker spring wheat they mix it in their mixers so as to get the particular flour that they want. 340 FOOD PKODUGTION, CONSEEVATIOX, AND DISTKIBUTION. Now, they can put cornstarch, or corn flour in there if you order them to do so, and they wUl know exactly how much they are putting in. They will know just what the stuff is that they have got to make up into their bread, and if there is to be any mixing, that is the place to do it, but do not allow the millers to do it. Neither corn flour nor cornstarch will make bread, because it wiU not hold any yeast. It is the gluten in the wheat that enables you to get the bread to rise. The gluten carries the protein and the minute you decrease the amount of gluten and protein you decrease the food value of that floxir. Now, in a barrel of flom- there is on an average about 24 pounds of protein, but if you mix 20 per cent of cornstarch with it you have reduced the protein content, which is the valuable food content, about 4 pounds. If you want to replace that with protein from beefsteak, it wiU cost you $6 or $7 to do it. and yet you have only reduced the value of your barrel of flour at the present prices possibly by 75 cents or $1. That is the practical situation. As I have said, it is just like putting water into mUk. If you think that your nulk is too rich you, as the user, can put the water in it, but you do not want the dairyman supplying you with milk to be instructed to put water in it, under such conditions that he can use more or less water as he sees fit, without detection. Now, the other proposition in connection with the mixed flour is the use of com flour as distinguished from com starch as the adul- terant. Com flour wiU never be used to any appreciable extent because it is much more expensive than cornstarch; but even if it should be used, while it has some gluten in it, the gluten in it has not the food value or strength of wheat gluten. It is a very different gluten, and the food value of the flour would be reduced, although not as much as it would be reduced by the addition of cornstarch. In other words, when you mix com flour with wheat flour, it is hke mixing skimmed muk with good nulk. It is not quite as bad as adding water to it, but that is another thing that you do not want to allow the producer to do. If you want to adulterate it, it should be done at yoiu- own house or at the bakery. When the baker adul- terates it, he knows what he is doing. That is one proposition, but you do not want to allow the millers to do it. That is the plea that everybody is making. Mr. Carl Vrooman, the Assistant Secretary of Agriculture, wrote a letter to Senator Kenyon in which he advised Senator Kenyon not to do anything that would disturb the present flour conditions, saying: "The purity and nutritive value of this fundamental and all-important constituent of our national dietary should be so thoroughly estabHshed as to be above suspicion." Mr. Haugen. Was that recently? Mr. Phelps. That was when the Eainey biU was up two years ago, prior to the war, of course. I have here a reprint of Mr. Tawney's report on the original mixed flour bill. It is out of print in the Capitol here, but we have reprinted it, and in that report there is a very graphic description of the con- ditions as they existed before the mixed flour bill was passed, and that is a description of what the conditions wfll be if a mixed flour biU, either in the form of the Rainey biU or in the form in which it is presented here in this committee, should be enacted. Now, the other situation that we have here is, the question of increasing the milling percentage of the wheat. We mill now 71 per FOOD PBODUCTION, CONSERVATION, AND DISTKIBUTION. 341 cent, or an average of 71 per cent, and that leaves us aboxit 28 per cent for cattle feed. Cattle feed is scarce in this country to-day. You have heard of the cattle supply, or rather the present lack of it' and we have got to have cattle. We have got to have milk and we have got to have butter and the other dairy products, and the minute you mcrease the milling percentage you decrease the cattle feed supply and you upset the existing conditions both in the flour business and in the dairy business. As a result, while you make some more flour, you make less beef and such things as that than you do at present, and there is a general all-round shortage. Further than that, if you go up very materially m the milling percentage you will get what is known in the wheat berry as the germ. That germ is present in 85, 87, and 90 per cent milling, and in addition you get some of the bran, but the germ in S articular. The minute you get any of that germ into your wheat our, that flour wiU not last over six weeks before it begins to get. musty and mouldy and stale and totally unfit for food, and is a. total loss. Now Capt. Lucey spoke of the conditions in Belgium- There they milled one day and within a week the bread was baked. They wanted to stretch the flour as far as possible, and if you can get it to the consumer in a week your flour can keep and is aU right, or if you can get it there in two or three weeks; but ht this country we ship from Minneapohs to the seaboard and it takes- a month or six weeks, and if you undertook to ship 87 per cent flom- from Minneapolis to New York it would frequently be spoiled before it was ever taken out of the car, because of the presence of a percentage of the germ in that flour. You could not possibly ship it across the Atlantic. There is not a chance of any of it going from St. Paul to England or France and being fit for even cattle food when it arrives over there. Furthermore, the 71 per cent milling is not, as Dr. Taylor pointed out in his statement, very much different from what the EngHsh are doing now. Our law permits only 13^ per cent of water. In their 81 per cent milled flour there is 3 per cent more water iu practice, which corresponds to 75 per cent with our flour. Our milling is about 72 per cent on our standard and 75 per cent on theirs, so we are really not so inuch lower than they are as is apparent upon paper. In other words, the English to-day are not millmg what Would cor- respond in this country to 80 per cent. They are milling to what would correspond in this country to 75 per cent flour, and they can- not go any higher. Even there, their conditions are different because it does not take a month to get from one end of England to th» other. It is 12 hours across the English Channel and 24 hours from one end of England to the other, and therefore it is not a fair com- parison. The chief difficulty is the loss that is going to be incurred the minute you get any germ into the wheat flour, because the minute you do, and keep it five or six weeks, that is a total, absolute loss, and we want to guard against that. We try and have tried to give the American people the very best and most efficient product whicb. will do them the most good, and that is what we want to keep om doing. In other words, it is not bulk that counts; It is not how much you eat. It is how much food value the food you take con- tains, and you can get along on a very small amount of very nourishing 342 POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. food, whereas it takes an enonnous amount of food that has little nourishment in it, and it is simply a question, Do you want to subtract food value and add bulk, or do you want to keep the best food value and have less bulk ? The Chairman. Mr. Phelps, let me ask you one or two questions. Have you read this bill, H. R. 4125? Mr. Phelps. Yes, sir. The Chairman. Are you in favor of the general proposition of con- ferring plenary powers upon some individual to control the food situa- tion of this country? Mr. Phelps. Yes, sir; I am. The Chairman. Are you in. favor of section 3 of this biU, which enables the Secretary oi Agricultiu-e to establish grades of products, and also to fix standards for receptacles in which they may be carried ? Mr. Phelps. Well, I was only called into this matter by a telegram which I received on Monday, and I have not given any sections of this biU serious study, except the two sections in which the Millers' Federation are primarily interested. The Chairman. I wonder if you have given any attention to sec- tion 4 of the bill, which enables the Secretary of Agriculture to license the manufacture and storage and distribution of food and food materials. As a general proposition, do you think that would be a good idea? Mr. Phelps. As I say, I have not been deep enough into it. My one thought here has been simply the protection of the flour, and I was able to appear here on very short notice on that subject because of my connection with it in the last several years. The Chairman. Mr. Phelps, in section 11 of the biU we confer upon the President of the United States autocratic power to limit, regulate, or prohibit the use of foods or food material, and so on, in the pro- duction of alcohol or alcoholic liquor. What do you think about that as a general proposition? Mr. Phelps. My general thought has been right along that 'there has got to be in this country a control of the food supply. I was very much impressed a week ago Saturday. I went with Mr. Rogers, of Chicago, who was associated with me, before the Ways and Means Committee, and who is very much interested in food conservation and gardening in Winnetkia, where he Hves, just outside of Chicago, and we had- a long interview with Mr. Vrooman, and I left mm thoroughly impressed, more thoroughly than I had ever been before, with the absolute necessity of the Government taking complete control of all our food supply. The Chairman. In other words, Mr. Phelps, to make your story short by asking you a question, Mr. Vrooman impressed upon you the absolute necessity of some autocratic control of the food situation in this coimtry ? Mr. Phelps. Yes, sir; and he further impressed on me the fact that we have got to put the screws on now, and that every day that is wasted is precious. The Chairman. And you are quite willing, as a matter of fact, that that control shall be lodged in some one who will exercise it in his good discretion ?, Mr. Phelps. Yes, sir; and I think it is the duty of every American citizen to say, "You know better than I do what is required here and FOOD PEODUCTTON, CONSEEVATIOIT, AND DISTRIBUTION. 343 how much our allies want, and it is up to us who have made no sacri- fices before to now make our maximum scarifices to carry our allies until their crops come in. The Chairman. Of course, you understand, Mr. Phelps, having read the two sections in which you are vitally interested and which you have been discussing this morning, that we are only lodging dis- cretion in somebody to do, what is proposed there, you understand that? Mr. Phelps. Yes, I understand that fully. The Chairman. Then I was wondering how you can reconcile your being in favor of the proposition of giving complete autocratic au- thority to do all the other things in this biS, and objecting to giving the same authority and lodging the same discretion in some one with reference to the business which you represent. Mr. Phelps. I object to it on this ground: That this one industry has been singled out for specific instructions as to what to do and that is adulterate the product and lower its food value. If you would simply say Mr. Wilson (interposing) . Have you read the bill ? Mr. Phelps. Yes; I do not think there are any other products singled out, at I understand it. Mr. McKiNLBY. Is it not true that we simply give the Secretary of AgricTilture power to mix this fiour if he wants to ? Mr. Phelps. Why is it necessary to give him power to adulterate fiour and not give him power to adulterate, for instance, noilk ? The Chairman. Why is it necessary to give the President power to prohibit the use of cereals in the matter of whisky ? Why is it neces- sary, to give the President authority to prevent speculation in food products ? Why is it necessary to give the President power to pre- vent hoarding in this country, and power over transportation, and all those questions ? Your proposition, it seems to me, is on absolutely the same footing. We are simply trusting somebody to be sensible in this matter. Mr. Phelps. Our feeling is that in this particular case you are legal- izing adulteration. The Chairman. Not at all. We are conferring upon somebody the power to use, his discretion. Mr. Phelps. To legalize the adulteration of wheat fiour. You are not, in other words, revoking any of the provisions of the pure-food law in regard to any other food products. Mr. MoKiNLEY. We are giving him absolute power to do anything he wants to in this bill. Mr. Phelps. I am talking specifically. Mr. McEJNLET. But the bill is a most general one, and it gives him power to do almost everything. Mr. Phelps. It is most general except in connection with flour. Mr. Jacoway. When the whole world is crying for bread and for wheat, do you not think it is right that this Federal Government should provide for adulteration, provided it is the right kind of adulteration ? ,,•■.. t Mr. Phelps. Yes; if you want to tell the bakers to do it, but i am interested in the consumers knowing what goes into it. Mr. Haugen. This starch can be used in the mixing of flour now by paying a small tax of 4 cents a barrel. 344 POOD PRODTJCTION, CONSERVATION, AND DISTRIBUTION. Mr. Phelps. Any baker- Mr. Haugen. I mean any miller can use it. Mr. Phelps. Any miller can use it by paying 4 cents a barrel and a tax of $12 a year on his plant. Mr. Haugen. And he can use cornstarch now ? Mr. Phelps. He can use cornstarch or com flour. Mr. Haugen. But it has to be labeled. Mr. Phelps. It has to be labeled and has to have the Government's green tax stamp on it. Mr. Hutchinson. Mr. Phelps, you understand that this measure is to stretch out the food supply ? Mr. Phelps. Yes, sir. Mr. Hutchinson. I do not know whether you know anything about the milling business, but I want to ask you one or two ques- tions. You know the ordinary barrel of flour makes from 300 to 320 loaves of bread. Do you think that with a mixture of 20 to 30 per cent of com flour you would get that much bread ? Mr. Phelps. No ; you will not get any more loaves of bread. Mj. Hutchinson. Will you get as many ? Mr. Phelps. I do not think you will get as many because the gluten is weakened down; it will not rise, and the starch will not be properly affected by the yeast cells and the yeast cells wiU not work properly. Mr. Hutchinson. In other words, if you use 20 or 30 per cent of cornstarch you are going to reduce the quahty of the flour and not get as much bread ? Mr. Phelps. You will increase the bulk of your flour but you will reduce the number of loaves of bread you will get from the flour. Mr. Hutchinson. You spoke about 71 and 72 per cent flour. Is not that all the good bread quality there is in wheat ? Mr. Phelps. Yes, sir. Mr. Hutchinson. And when you put any more in it you are reducing the quality ? Mr. PfiELPs. You are reducing the strength of the flour. Mr. Hutchinson. You spoke a while ago or some one made the remark about these two sections, that there is a penalty attached, and if we pass a law providing for 81 per cent flour and a man does not stand up to it, he is liable to a penalty of $5,000. Mr. Phelps. Yes, sir. Mr. Hutchinson. And that is not in the discretion of anybody but is the law. Mr. Phelps. That is to say, if the Secretary of Agriculture orders it, nobody wiU be permitted then to make pure flour. It wiU not be permitted. (The committee thereupon took a recess untU Thursday, May 17, 1917, at 10 o'clock a. m.) pood pkoduotion, conservation, and disteibxjtion. 345 Committee on Agricultuee, House of Representatives, Thursday, May 17, 1917. The committee met at 10 o'clock a. m., Hon. Asbury F. Lever (chairman) presiding. STATEMENT OF MR. JACOB WEIS, VICE PRESIDENT AT- lANTIC EXPORT CO., 32 BROADWAY, NEW YORK. The Chairman. Gentlemen, Mr. Wels, of New York City, repre- senting the feed trade, desires five minutes of the time of the com- mittee, and I am going to ask Col. Caffey, the Solicitor of the de- partment to give him the opportmiity of proceeding for five minutes. Mr. Wels. Gentleman, I am not going to take up any of your time with statistics and reading a whole lot of figures. You have had information as to the grain which is left after the brewing is done. You have heard all about that, and I do not propose to say any more in regard to it, except this: When we had this terrible railroad trouble a few months ago, it was impossible for the farmers to obtain the necessary amount of cattle food from the West, because freight would not arrive. Cars were on the way anywhere from 4 to 12 weeks, and practically the only thing that saved the day for the farmers was the fact that they were able to obtain these dried grains and malt sprouts from grains manufactured in the East, and I am sure that this railroad trouble wiU again repeat; that is, we may expect, with all this Government demand for freight transportation, that it is apt to repeat, and if it does I am sure it wiU be an impossi- bility to satisfy the farmers' demand unless they have something of this sort. That is aU I wish to say, gentlemen. STATEMENT OF MR. FRANCIS G. CAFFEY, SOLICITOR OF THE DEPARTMENT OF AGRICULTURE. The Chairman. Gentlemen, I have asked Col. Caffey, Solicitor of the Department of Agriculture, who is responsible for the legal theory of this bill and the language of it, to appear before the committee ; not to make a statement with reference to the facts involved, but as to the legal theory and the constitutional powers underlying the bUl. I presume we will enforce our rule of permitting Col. Caffey to finish his statement before any questions are asked. Mr. Thompson. Do you mean finish his entire discussion of the bill or section by section ? The Chairman. Col. Caffey is going to discuss in general terms the constitution ah ty of the biU, and I do not think he desires to discuss the particular sections. Mr. Caffey. Gentlemen, I understood from the chairman when he asked me to come up that the wish of the committee was that I make a general statement as to the legal theory of the biU, as to the power 01 Congress to enact legislation for the control of the food supply. . ■ 1 ■ The general proposition which I wish to submit to you is that in time of war the power of Congress is complete to control the food sup- ply, in some such manner as is proposed in the bill pending before 346 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. you. I understaoid the subject matter to be House bill 4125 and sec- tion 6 of House bill 4036, which it was desired be transferred to House bill 4125. It was omitted from House bill 4188, as I was inforrned, with the idea that it would be taken up later and perhaps transferred to House bill 4125. At any rate, what I wish to discuss is the general subject matter embraced in House bill 4125 and section 6 of House bUl 4036. Now, as Mr. Lever has indicated, the function of my assistants and myself with reference to the preparation, for your consideration, of this proposed legislation has been merely that of draftsmen. The questions of policy, of what is wise or unwise, I have not gone into, and shall not undertake to express any judgment about. In acting as draftsman I have undertaken two functions, first, to try to express what was in mind, and secondly, to safeguard against invalidity. The drafts were prepared under great pressure for time and I am sure can be very much improved. If I am to be permitted to be of assistance later in carrying out the design of the committee, after it has reached its conclusion as to the policy of the legislation, it wiU be very helpful to me, after I com- plete my general discussion, if questions are put to me on the legal side. I may not be able to answer them now, but it will at least open my mind to the inquiries. Naturally, one whose nose has been as close to this bill as mine has been may have overlooked a good many considerations that occur to others. I want to call your attention to a statement made by Senator Shields on May 12, 1917, appearing at pages 2271 and 2272 of the Congressional Record, in which he sets forth in most excellent form the power of Congress to enact legislation of this kind. What he said was in the course of debate with reference to a proposed amend- ment to the espionage bUl, as I understand it. Since these food bills were drawn — in fact, within the past few days — there has come into my hands a copy of the Harvard Law Review for the present month, in which there is an article on "War emergency legislation," by Prof. Eugene Wambaugh. Prof. Wam- baugh was formerly a professor of law, I think, at Iowa State Uni- versity. A good many years ago he transferred to the Harvard Law School, and is now a professor there. Mr. WiLsox. What is the date of that? Mr. Caffey. May, 1917. This article is so interesting that I have had copies made, and if it is the wish of the committee, I will leave them with you. I may say, generally, that the author reviews briefly the war emergency legislation that has been enacted in Eng- land, and then takes up the question, as to whether or not that legis- lation, if it had been enacted by the Congress, would be constitu-' tional. In England there is no restriction upon the power of Parlia- ment to delegate legislative power to executive oflicials. As to that phase of the legislation, I may say that Parliament has quite fre- quently delegated broad authority. Of course, under our Constitu- tion, the Congress can not delegate legislative power to executive officials, and that is one respect in which it would be necessary to be extremely careful in framing this legislation, and in reference to which, in some details, if you redraft the bills, I should like to make some suggestions later. FOOD PBODUCTIOK, CONSERVATION, AND DISTKIBUTTON. 347 Mr. Thompson. I do not want to ask you a question, but I would hke to make this suggestion: There is no parallel between the English lawmaking power and ours, because they have no consti- tution. Col. Caffey. Certainly. Prof. Wambaugh does not suggest that. He merely takes the English legislation as an intersting subject to discuss, so to speak. Of course, however, the English parallel as to what IS the hne between executive and legislative authority is helpful. Now, I want to say further that I am not prepared at this time to furnish you a hst of the decisions of the courts, particularly of the Supreme Court of the United States, to sustain all of my theories or assertions here; but, within a few days, a brief containing a dis- cussion of the authorities wiU be prepared and submitted to the committee, if the committee wishes. Mr. Young of Texas. I would very much like to have a codv of that brief, Mr. Caffey. ^^ The Chairman. I think we can make it a part of the printed record. Mr. Caffey. If it is going to be made a part of the printed record, it will have to be prepared, of course, with great care, and it will take some days yet to get all of the authorities fully collated. The Chairman. Can you furnish us copies in this mimeograph form without much trouble? Mr. Caffey. Yes. The Chairman. Then, that wiU be sufficient. Mr. Caffey. Now, 'gentlemen, this bill is drawn under the express war powers of the Constitution. That is my theory as to the source of authority upon which the Congress may base its action in this case. Not that there may not be — certainly for the exercise of some of the powers that are exercised by the Congress throughout the biU there are some other sources of authority; but, so far as concerns the necessity for authority to enact this legislation, you need not resort to any source of authority except the express war powers. It has been said so often that it hardly needs authority to sustain it, and it has been said in connection with the discussion of the war powers, that the Government has the right to exist, and that when there arises a necessity for the enactment of legislation which is essential in order to safeguard the continued existence of the Government, there can be no doubt of the power of Congress to enact that legislation. As I shall a oit later call to your attention, some question has arisen at times as to the form of particular legislation, or as to the form of certain authority conferred or undertaken to be conferred when Congress has acted in a particular way; but in the cases in which Congress has, under its express powers, reached the conclusion that it is essential to take a prescribed course of action in order, in time of war, to preserve the Government, there are, as I shall undertake to show you, no limitations upon the power of the Congress, so long as it confines itself within rational limits in reaching its conclusions as to what is necessary and does not violate one of the prohibitions of the Constitution. So long as the Congress confines itself within those limits, the courts are without power to set aside the legislation. Moreover, if in such event the Congress exercises its powers in that way, of necessity there is no limitation by State lines upon the 348 POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. statute; it is of universal and sweeping effect, without regard to State lines. Mr. Young of North Dakota. What is the constitutional provision ? Mr. Caffet. I am coming to that. The express powers in the Constitution to which I wish particularly to call your attention are four clauses in Article I, section 8. The first is the eleventh clause, which confers expressly upon the Congress the power "to declare war." I do not read the remainder of the words of the section. I only call your attention now to those words, that Congress has the express power "to declare war." Secondly, in the twelfth clause of the same section of the Constitution, there is the express power "to raise and support armies." Thirdly, in the thirteenth clause, there is likewise the express power "to provide and maintain a navy." Then, in the eighteenth clause, the general clause following the enumeration of the three powers which I have just recited and a num- ber of other powers, the Cfongress is expressly authorized "to make all laws which snail be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitu- tion in the government of the United States, or in any department or office thereof." I shall base my discussion upon those four clauses without going to other clauses which, in the course of the brief, I shall call to your attention. As I have already indicated, the proposed legislation can be sustained — probably in whole if somewhat altered in scheme, certainly in part — without resort to the war clauses of the Consti- tution. But I am confining myself now to the proposition that the war powers are sufficient. In connection with the parts of section 8, Article I, of the Consti- tution, to which I have referred, I want to read you three brief extracts from opinions of the Supreme Court. I do this merely to suggest to you the idea as to the proper interpretation of those enumerated powers. I do not rely upon the decisions read from as direct adjudications of any issue with which we are now concerned. Ex parte MiUigaii, Fourth Wallace, page 2, is a case which I shall discuss somewhat more in detail later. I gather that there is some misapprehension as to the effect of that case. At least, the decision of the court in my judgment does not have the effect that is some- times attributed to it. You may recall that in ex parte MOligan the court split five to four. The dissenting opinion was delivered by Chief Justice Chase and was concurred in by Justices Wayne, Swayne, and Miller. The extract which I am going to read is taken from Chief Justice Chase's dissenting opinion. When I later call your attention to what was actually decided in that case, I think you wUl agree that there was a good deal of dictum in both the majority and the minority opinions. The extract I am going to read is dictum. Nevertheless, it suggests the main idea I have in mind. Chief Justice Chase said, at page 139 : Congress has the power not only to raise and support and govern armies but to declare war. It has, therefore, the power to provide by law for carrying on war. This power necessarily extends to all legislation essential to the prosecution of war with vigor and success, except such as interferes with the command of the forces and the conduct of campaigns. That power and duty belong to the President as comman- der in chief. Both thase powers are derived from the Constitution, but neither is defined hy that instrument. Their extent must be determined by their nature, and by the principles of our institutions. FOOD PEODUCTION, CONSEKVATION, AND DISTBIBUTION, 349 I read next from MiJler v. the United States, Eleventh Wallace, 268, at page 305, where Mr. Justice Strong used these words: 1 I^^ Constitution confers upon Congress expressly power to declare war, erant letters of marque and reprisal, and make rules respecting captures on land and water Upon the exercise of these powers no restrictions are imposed. Of course the power to declare war involves the power to prosecute it by all means and in ariy manner in which war may be legitimately prosecuted. There is some controversy as to the extent to which certain rights a,ssured by the Bill of Eights may be suspended by the Congress in time of war. It has sometimes been said that there are no limita- tions upon the war power. However that may be, it is not essential in considering this legislation to go into that question. For the purpose of this legisliation as drafted, the attempt has been made to protect against any violation whatsoever of any right assured by the BiU of Rights. In that respect, as I previously remarked, I think some slight changes may improve and additionally safeguard the measure. For the purposes of my statement here, I assume that it would not be the desire of the committee in any respect to violate the Bill of Rights. Therefore when it comes to a discussion of the details of the measure later, if I am permitted to be of assistance, I shall attempt to safeguard the measure when it gets to those details, so that in no respect shall there be any violation of any prohibition of the Constitution. There is one other case that I desire to caU to your attention, because it is so very interesting and suggestive ; or, rather, the expres- sion used by the Supreme Court is so interesting. That is United States V. Gettysburg Electric Railway Co., 160 U. S., 668. You will recall that the Government determined to preserve the battle field of Gettysburg and had to resort to condenmation proceedings in order to take some of the land. In the course of the opmion, in which the power of the Government to take the required private property was upheld, the court said this, at page 681: Congress has power to declare war and to create and equip armies and navies. It has the great power of taxation to be exercised for the common defense and general welfare. Having such powers, it has such other and implied ones as are necessary and aippropiiate for the purpose of carrying the powers expressly given into effect . Any act of Congress which plainly and directly tends to enhance the respect and love of the citizen for the institutions of his country and to quicken and strengthen his motives to defend them, and which is germane to and intimately connected with and appropriate to the exercise of some one or all of the powers granted by Congress must be valid. This proposed use comes within such description. The provision comes within the rule laid down by Chief Justice Marshall in McCulloch v. Maryland . The expression I have read seems to me to be very illuminating, for the reason that the court went to the point of there saying that the Congress might even provide for the didactic value of a battle- field in time of peace, in order to keep ahve a proper sentiment with respect to the defense of the country. If Congress has the power to go that far, can it be denied that, in time of war, it has authority to enact legislation for the doing of any one of the things which it, in the exercise of its enumerated powers, determines to be essential in order adequately to carry on the war and to preserve the existence of the country by carrying war to success? Mr. Wason. Was that 166 U. S. ? Mr. Caffey. No; 160 U. S. That is merely suggestive.- The authority itself may not be of special value in this connection. 350 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. The scheme upon which House bill 4125 is drawn may be brougkt out in this way. The bill is divided in five parts. The first part is section 1 ; the second part is section 2 ; the third ptart is a number of sections which I call the remedial procedure sections, and to which I shall refer by way of illustration later; the fourth part consists of merely administrative sections that might go into any bill; the fifth part is the last section, limiting the duration of the act to the period of the war and not exceeding one year after the war terminates. The purposes of section 1, as drawn, are, first, to make clear that the Congress, in the enactment of this legislation, is consciously exercising its war powers under the Constitution; and secondly, even more important than that, to include an express finding by the Congress that the things which it is doing in the biU are essential to the successful prosecution of the war. Congress, as I take it, is a more appropriate department of the Government to make that finding of fact than any other department. Sometimes in the legislation enacted by Congress there has not been a finding which clearly revealed the mind of Congress as to what Eower it was imdertaking to exercise or what condition of facts it ad adjudicated to exist. When the question of vaUdity of the statute arose in the courts, the courts reviewed the facts, as they may properly do within certain limitations. In such cases the courts frequently reach a conclusion upon the facts which is entirely different from the conclusion upon the facts which Congress might have reached and incorporated in the measure. Let me illustrate what I have in my mind. You wiU recall that when the legal-tender statutes first came before the Supreme Court they were declared to be un- constitutional. It was undertaken in that case, as I recall it (the discussions were so long that I have not had an apportunity recently to review the case with care, so that I make this statement subject to correction, though I feel quite sure I am right on my general proposition) — as I was saying, it was sought in the first Legal Tender case to sustain the statutes as to emitting paper money and making the paper money legal tender for debts as a war measure. The court first held that this could not be done; but in the second Legal Tender case the conclusion was reached that it could be done. In the second case, while the court placed its decision upon several f rounds, the matter was discussed under the war power, and it was eld that it could be done under the war power. The interesting thing about this case is that its determination depended, more than anything else, upon reaching a conclusion of fact. Now, my con- tention IS that Congress has the right, in respect to that, substantially to foreclose such discussion by its own express finding of the facts; that is, as to whether or not the particular measure here proposed, with respect to the control of the food situation, is essential in order to prosecute the war to a successful conclusion. I have a feehng, also, in some degree, that if, in the course of the enactment of the legal tender legislation. Congress had expressly incorporated in it a finding of fact on its' part that it was essential, under all the con- ditions, in order to carry the Civil War to a successful conclusion, to make this paper legal tender, etc., that legislation never would have been declared unconstitutional in the first instance When it comes to the wording of section 1, of course, it may be phrased in various ways. The essential value of section 1, as it POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 351 seems to me, consists in making it manifest that Congress is con- sciously exercising its war powers, and, in the next place, that it is making an express finding of fact that the enactment of the legisla- tion is essential to the successful prosecution of the war. The second branch of House bill 4125 is section 2. Section 2 is incorporated, just as section 1 has been incorporated, for purely- legal reasons. My feeling is that in section 2 it would be of value, m broad language, to make unlawful the doing of each one of the things which is specifically dealt with later in the remedial procedure section. It would tend to relieve the biU from the possible defect of delegation of legislative power to executive officials if, in the legisla- tion itself, in some such form as is proposed in section 2, it be declared that the doing of any one of those things covered in the remedial procedure sections is, in and of itself, unlawful. The attempt has been made, therefore, to frame section 2 in comprehensive language, so as adequately to cover every provision that is incorporated in the remedial procedure sections. Having that in mind as the purpose of section 2, no penalty has been provided in it for a violation of it. The thought I had with respect to section 2, and the inadvisability, for the purposes of this emergency legislation, of providing a penalty in section 2 was that it is so broad and general in its terms that it would be difficult for- the citizen to know with certainty what fine of procedure he should follow under it. It might be a wise thing to enact section 2 as permanent legislation, with penalties, under some appropriate clause of the Constitution; but, in enacting it as emergency legislation, with great uncertainty as to the length of time that it wUl remain in effect — assuming, as I do assume, that you would incorporate in the closing section a limitation on the period of the duration of the act — I say the thought that was in my mind that it would be of doubtful pro- priety to include a penalty for a section under such broad terms as those of section 2. However, the legislation would not suffer in fact in that respect for the lack of a penalty under section 2. When you come to the remedial procedure sections you provide adequate penalties for everything that you prohibit; also in the remedial pro- cedure sections you provide with such certainty as to the line of conduct that must be pursued by the citizen that he can not be in reasonable doubt as to what is required of him. Therefore you do not lose anything by omitting a penalty in section 2 for the things that ought to be penalized. On the other hand, when you come to the remedial procedure sections, you do not talk in the same general terms that you do in section 2; therefore, you do not leave the citizen in doubt as to what his course of conduct should be. You provide in the remedial procedure sections that there shall be either a regulation or an order which is definite and specific in its terms, issued by the executive under the authority conferred by the Congress. Hence, the citizen may know how to govern his conduct. Section 2, as I have said, was incorporated for purely legal reasons, particularly for the purpose of aiding in safeguarding the bill against the vice of a delegation of legislative power. There are so many of the remedial procedure sections that perhaps I should not b« of assistance if I should discuss aU of them in detail 352 POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. now. The provision of the Constitution that is more hkely than any other to bring up discussion, as to whether or not there has been, a deprivation of constitutional right, is the fifth amendment. The discussion of whether there has been due process of law and whether or not there has been a deprivation of property rights without just compensation would arise under the fifth amendment; that is, if that question could arise, and I am assuming for the sake of the argument the complete existence, without suspension, of every part of the biU of rights during the period of the war. When it comes to the Government taking property by requisition or otherwise, it is expressly provided in the bill that there shall be payment to the individual from whom the property is requisitioned at a price ascertained by the Executive to be reasonable, and that, if the person from whom the property is taken is dissatisfied, he may then go into the courts and litigate for the recovery of any balance he claims to be due him. Congress has so often enacted legislation in that form — certainly it has several times done so — that I take it that there can hardly be any doubt in jo\xr minds now as to the validity of such a provision. There are, however, three instances in the bill in which there is a requirement made of the citizen that he dispose of his property, or sell it, or get rid of it, without the Government .compensating him. Those three provisions are in the so-called licensing section, which is section 4 of House biU 4125; the so-called spoilage section, which is section 6 of House bUl 4036; and the hoarding section, which is section 15 of House biU 4125. Those three sections each provide a duty on the part of the citizen to dispose of f)roperty without any provision that the Government shall pay him or it. Now, let me call your attention to the framework of the licensing section. The licensing section provides, in substance, when the Executive finds it essential, in order to prevent the uneconomical manufacture or the inequitable distribution of necessaries, to license such manufacture or distribution, that, thereupon, he may require the manufacturers and distributors to secure licenses. There is a typical illustration of what I have frequently spoken of as the neces- sity of safeguarding against the delegation of legislative power, and I will advert to that for a moment. There are so many decisions of the Supreme Court sustaining the power of the Congress to confer flexible authority upon an Executive official when the Congress pre- scribes merely that the Executive shall make a finding of f-act or a finding of the existence of a condition, and also prescribes the prin- ciples that shall govern him in making his finding, that, as I said before,. there is little doubt that the legislation as already drawn is, or as it can be drawn by slight amendment, wiU be, free from the vice of delegating legislative authority. But, to go back to this question of taking property under this sec- tion, or rather compelling the holder to dispose of the property he has in his hands without the Government providing compensation for it, I want to caU your attention to the fact that this is a licensing section, and the first requirement is that the individual shall be licensed. Then we proceed to deal wath the various things that govern the licensees. This section relates only to licensees. I. will read some of the provisions: FOOD PBODUCnON, CONSERVATION, AND DISTKIBUTION. 353 Whenever the Secretary o! Agriculture shall find that any licensee has under con- tract or in stock a quantity of foods, food materials, or feeds in excess of an amount reasonably essential to supply his individual or business requirements tor a reasonable timej or that any rate, charge, or practice of any licensee is unjust, unreasonable, dis- crinunatory and unfair, or wasteful, and shall order such licensee, within a reasonable time fixed in such order, to dispose of the excess quantity of foods, food materials, or feeds so contracted for or in stock, or to discontinue any such unjust, unreasonable, discriminatory and unfair, or wasteful rate, charge or practice thereafter unless and until such order is revoked or suspended, it shall be unlawful for such licensee to hold such excess quantity of foods, food inaterials, or feeds or to continue such unjust, unreasonable, discriminatory and unfair, or wasteful rate, charge, or practice. In other words, in substance it is provided that when the licensee has an excessive quantity, or an unreasonably excessive quantity, or a quantity in excess of his reasonable individual or business needs, there is authority to direct that he dispose of the excess product, and the Government does not make any provision for paying for it. The licensee must go out into the market or find a market in which to dispose of it. That is one of the sections, and the other — Mr. Young of South Dakota (interposing). Suppose he can not find anybody who will buy it 1 Mr. Caffey. If you wUI excuse me a moment, I want to cover the answer to that and related matters in one statement. Section 6 of House biU 4036 in substance provides that if a person has on hand a quantity of food which is about to spoil on his hands, and he wiU not go ahead and sell it, you can order him to dispose of it. To give you an illustration of what was in my mind with reference to that section, I would say that I have been told that there was one place in this country where there were held 200,000 bushels of grain which was spoiling in the hands of the owners, but that the holder would not dispose of it or do anything with it. The thought was that in a case of that kind there would be given a definite and specific order to compel the person to put that grain on the market. The two sections which we have been discussing as raismg the issue under the fifth amendment, one dealing merely with licensing and the other with spoilage, because of the special circumstances, perhaps do not raise quite so difiicult a question as is raised by the hoardmg sec- tion, which is section 15 of House bill 4125. Mr. McLaughlin. It has been suggested that an amendment may be necessary to cover the business of those who are engaged m buy- ing large quantities of produce, or foodstuffs, durmg certam seasons of the Vear so as to supply the need and demand when those thmgs are not ordinarily available and would not be unless they were stored and kept for use during the later months. Would it be necessary to have an amendment to cover that phase of it or would that be he d to be a reasonable accumulation of such foodstuffs, or a reasonable ^'X. Caffey. I think it would be held reasonable under the lan- ^"^^ McLaughlin. You know, of course, how business of that kind is carried on ? Mr Caffey. Yes, sir. , , .... Mr McLaughlin. Certain dealers gather together large quantities of food suppUes at .certain times and distribute them later, and at certain times of the year when these dealers might be found to have very large quantities on hand 104176—17 2S 354 FOOD PEODUCMOIS", OONSERVATIOlir, AND DISTRIBUTION. Mr. Caffey (interposing). If that is not carefully safeguarded now it can be. , • • i. j Section 15 of House bill 4125 in substance provides, when it islound to be essential in order to prevent the unreasonable hoarding or the monopolization of necessaries, that a Uke order may be made, compel- ling the person who has the goods on hand to dispose of them within a reasonable time. In other words, there is no provision made in the section as now drawn for compensating the owner. There is no mar- ket provided for the owner at aU. He has got to get his market, and, as Mr. Yoimg has suggested, it is conceivable that he can not find one. I am not going to discuss the poHcy of the legislation, or the question of whether you want to change it in any respect as to its pohcy; but I am going to direct my argument, for the moment, to the question of whether Congress has the power to do the ,thing I have outlined without providing for the compensation of that man if he does not find a market. There is another section of course, under which the Government might requisition the goods; that is an alternative power that the Government might use or not, as it saw fit. What I am discussing now applies only to those special sections dealing with licenses, the preventing of spoilage, and the preventing of hoarding and monopolization. As to those I submit, and I think that in time I can bring you authorities that will sustain the proposition, that the Congress has power to make the requirement of disposal or sale with- out providing one cent of compensation; that if it does so, it will not in the sMghtest degree infringe upon the fifth amendrnent. Let me bring the point to your minds by referring to another statute. You will recall that in the Federal food and drugs act it is provided that if articles are adulterated or misbranded within the meaning of that act, they may be seized upon by a process of libel, and if they are found to be adulterated or misbranded, the court may order them to be destroyed. In the administration of that act, the courts as well as the administrative oflS.cials concerned endeavor in every way not to use this power to effect the destruction of property without strong reasons; but, so far as the power is concerned, it is adequate, and the constitutionality of the food and drugs act has been explicitly upheld by the courts. Now, let me call your attention to the background of this legis- lation. Mr. Young of North Dakota. Has that particular feature of the food and drugs act been upheld ? Mr. Caffey. It has been in seizure cases. I can not at the moment cite you those cases, but there is no question about the po'\v,er, and that confiscatory power has been upheld. The proposed legislation provides that the things which are covered by these sections which we provide for forcing a man to put on the market, are unlawfully held. The three sections compelling the articles to go on the market are remedies against what in the second section you have declared to be unlawful. You could have provided, when you got down to the hoarding section, for instance, that if a man unreasonably hoards, a thing which you declare to be unlawful, or, if he monopolizes, a thing which you have declared to be unlawful, the Government could con- fiscate his goods. There is no doubt, I submit, of the power of Con- gress to enact legislation to that effect. Whether it would be wise to do it is another question. If Congress may authorize the complete FOOD PRODUCTION, CONSERVATION, AND DISTEIBUnON. 355 confiscation of goods, may it not apply to them the much milder measure of compelling the owner to put them on the market? Mr. McLaughlin. There is a difference between confiscating goods and requisitioning them. Mr. Caffey. Entirely. The two things are very different. When you requisition them, you pay the owner for them. _ Mr. Young of North Dakota. In both cases Uncle Sam does it himself, and Uncle Sam can do anything within reason. But in this other instance you are compelling the fellow to dispose of his property. You say that he must do it, but it seems to me that he might not be able to do it, because that requires some other man to cooperate with him. Mr. Caffey. That is a matter of detail that can be straightened out if it be not clear now. That language can be easUy altered so that it would not leave the owner in a position where he is required to do the impossible thing. As I have said, this bill was drawn under pressure of time, and the language must, of course, be properly safe- guarded. Moreover, the penalty clauses in the licensing and spoilage and hoarding sections apply only in case of willful violations. No one could be convicted if he bona fide placed his goods on the market on reasonable terms and failed to find a buyer. But, as I have said, so iar as the power of Congress to compel the person to get rid of those goods is concerned, there can be no doubt, because Congress can confiscate them. Congress can confiscate them because, with reference to the specific articles, he has violated the law in that he has been guilty of hoarding, has been guilty of monopolization, or has been guilty of keeping them so as to promote spoilage. That is my theory. Under the food and drugs act, when a man has adulterated or mis- branded his goods, there is absolute power to confiscate those goods, to take them and destroy them. Mr. McLaughlin. It might not be directly in line with the argu- ment you are making ,, th^ t i The Chairman (interposing). If you will pardon me, Mr. McLaugh- lin, I wish to say that some gentlemen at this end of the table desire to ask some questions, and I have asked them not to do it until Mr. Caffey has concluded his statement. However, if you gentlemen think that you can better expedite this proposition by asking ques- tions as we go along, we will just exercise our common sense about it. Mr.' McLaughlin. I was just going to say that it might not be directly in line with the argument you are making, but the very fact that there is an unreasonable hoarding and the very fact that there is an attempt at monopoUzation of food supphes unphes that some one is trying to buy it and that the owner is holding it and refusing to seU it. Mr. Caffey. Undoubtedly. , ^^ v i, Mr McLaughlin. Therefore, the case that Mr. Young has sug- gested, in which there might be no buyers, is answered by the lact that a man can only unreasonably hoard that which spme one else wants. If he is unreasonably holdmg the goods, there will be buyers, because if there are no buyers for what the man holds, there would not be any unreasonable holding. Mr. Caffey. Yes, sir; that is true. 356 FOOD PRODUCTION^ CONSBBVATION, ANP DISTRIBUTION. Mr. Young of North Dakota. Of course, I do not want to support a man who does that, but I do want to be sure that we get the right man under the provisions of this bill. Mr. Caffby. What I am directing my attention to is the question of whether Congress has the power. Now, it seems to me that the greater includes the less, and if you can — as the Supreme Court has eld in the case of other statutes that Congress can do — provide for the absolute destruction of those articles which are by the law de- clared to be contraband, then, in this case, you can do the less thing and require the owner to put the goods on the market. You have the power to provide that if he does not within a reasonable time avail himself of the opportunity to sell his goods, or if he can not sell them, the United States Government may go in and seize those goods without making compensation. Mr. McLaughlin. Of course, the idea involved in these adultera- tion cases rests on the theory that the goods are altogether imfit for use. Mr. Caffet. I do not think you have to go that far. There are many provisions in the food and drugs act with respect to mis- branding and with respect to adulteration. Under the statutory definition of adulteration, it does not always occur that the goo(fe are unwholesome or unfit to eat at all. Therefore, it would not be implied necesLsarily that, in the exercise of this power, you were doing something that it was essential to do in order to protect health. As a matter of fact, when we have these seizure cases in the Federal courts, it is rarely ever the case that we destroy the property; but there is the power to do it in every one of them. There is only one other substantial thing that I want to call to your attention. I wish to refer to the Milligan case briefly. In that case, as you wiU recall, a citizen out in Indiana during the Civil War was tried before a military tribunal, and the question which came up eventually to the Supreme Court was whether there was power to do that. A careful reading of that case will demonstrate that the majority opinion turned upon the fact that the Congress had not authorized to be done what was done, ard that there was a mere attempt to proceed under executive authority that had not been con- ferred by the Congress. Mr. Jacoway. Will you put in the record a reference to that case ? Mr. Caffey. I have done so. Mr. Thompson. It has been suggested that section 6 of H. R. 4036 be amended. Did you take that up ? Mr. Caffey. I have taken up the perishable products section. Mr. Thompson. That is what I want to call your attention to — section 6 of 4036 — ^which it is proposed to take out of that bill and fut in the one we are considering now as an additional provision, t is to prevent gluts and provides for change of destination of cars, etc. Mr. Caffey. That is another provision, which I have not discussed, relating to perishables. Mr. Thompson You discussed it to some extent. Mr. Caffey. I discussed only the spoilage provision. Mr. Thompson. The legal proposition you advanced with reference to the spoilage provision would not apply with reference to a change of destination of cars, would it ? POOD PEODXJCTION, CONSERVATION, AND DISTRIBUTION. 357 \f f^r^P.^^^^!-^ *^VS^' *^'' •'^'^* °^ i* ^°^1^ be substantially Ihis, 11 1 may explain. Of course, apportionment of perishable products among markets, resulting from an arrangement entered into between the producers, would be unlawful under the anti-trust act This is one aspect would confer authority upon executive officials to say that m certain instances that might be done without violating the Federal antitrust act. That is one phase of the question On the other side there is the question as to whether there is authority to do it. I should think the same source of authority that Congress would have to enact the other provisions here, which I have discussed, would cover also this provision. For instance, it mav compel a man to go into the market and dispose of goods without any compensation being afforded him by the Government where there is hoardmg or where there is monopolization, inasmuch as back m the framework of the law Mr. THOMPSON (interposing). I understand your theory is that you make that unlawful under a previous section and then you would have authority to compel him to do that because of the fact that it is an unlawful act ? Mr. Caffey. Yes, sir. Mr. Thompson. But the shipment of goods by a producer to a certain market is not unlawful ? Mr. Caffey. Oh, no. Mr. Thompson. Now you seek here and attempt to authorize executive authority between the point of destination and after the shipment is made, and when it is perfectly legal, to divert that ship- ment and bring it to another market when it is not an unlawful act which he has committed. Mr. Caffey. In section 2 we have made it unlawful to enter into any contract, arrangement, or conspiracy to restrict the supply Mr. Thompson (interposing). I understand that; but here is a producer who in perfect good faith, without knowing anything about a glutted market, starts his car on the railroad to a point of destina- tion 1,000 rmles away. Now, a glut occurs after he starts his car, and it is perfectly legal for him to do that, but you divert it after he has directed his shipment to a certain point. Now, how do you sustain such authority as that ? Mr. Caffey. On the theory on which I "drew the bill, the provision ought not to go beyond what is made unlawful in section 2. If you think it does, then perhaps it ought to be redrafted in its wording when you get to the details of it. In section 2 it is made unlawful to "enter into any contract, arrangement, or conspiracy to restrict the supply, or, except as permitted by law for preventing gluts and for effecting equitable apportionment of perishable products among markets, to restrict distribution, or to enhance the prices of any such necessaries." This part in section 6 ought to be kept within the limits of what is made unlaAvful in section 2, and if the language goes beyond that it can be redrafted. Mr. Overmyer. Even in that case, it does not f oUow that he would suffer any loss; in fact, the chances are he would not. Mr. Thompson. That is a supposition. Suppose the shipment were deflected and turned to another market, and when it reached the other market there was no sale for it there, and there was an absolute loss on the shipment. Then what is his remedy ? 358 FOOD PRODUCTION, OONSEEVATION, AND DISTRIBUTION. Mr. RuBET. We can very easily put in an appropriate clause pro- viding that the Government shall make good any loss that might occur on account of such diversion. Mr. OvEEMYER. They would not order a diversion unless there was a glutted market. Mr. Thompson. Of course, if they did that, that is not taking prop- erty without due course of law; but this other case comes very near to that point. I can understand the comparison you make oi these different matters of hoarding, glutting, monopolization, etc., which you make unlawful in section 2 with the pure food and drug act, because that makes it an illegal act, and of course the Government owes no duty under such circumstances. Mr. Caffey. The Supreme Court has called it contraband. They have used that expression. Mr. Anderson. May I ask you, Mr. Thompson, if it is your theory of this bin that in order for the Government to regulate and control the supply of food, that it can only do it by penal prohibitions ? Mr. Thompson. Oh, no. I am only speaking with reference to property that is already in existence, where you are attempting to take that particular property. You can not take that property ordinarily under another constitutional provision without conform- ing to due process of law and giving the man his day in court. Mr. Anderson. You would not, for instance Mr. Thompson (continuing). Now I think if the Government makes unlawful a certain thing under the decisions of- the State courts, as, for instance, in the prohibition or liquor cases where it is a matter of the exercise of police power, when they make a certain thing unlawful, then there is no property right vested in the man who violates the law and acquires property of that prohibited character. Now that is the theory of the bill and my idea is that it is a very good theory. Mr. Anderson. Suppose it were necessary, for instance, to suspend all shipments or to detain shipments of food in order to permit ship- ments of munitions for a given period, and as a result of that detention or prohibition produce should spoil, either in the cars or at the ter- minals or something of that kind, would the Government be liable in a case of that sort for property which had spoiled or deteriorated ? Mr. Thompson. There would be quite a different question presented in the case of a shipment that had never originated and had never started on its way toward destination. Of course, the Government, on account of its superior power, would have the right to say what character of shipments should have precedence, but if a man had entered into a legal contract and his goods were en route and the Government then stepped in and stopped his shipment en route and it was destroyed, quite another question would be involved. Mr. Anderson. It seems to me that this section rests rather upon the power of the Government to regulate the transportation of articles than to deal with the articles themselves, and that the Government has the unquestioned right to regulate transportation for the purpose of conserving the food supply and for the purpose of maintaining a continuous supply of food for the Army and the Navy ; that all this proposes to do is to regulate the shipment, not to deal with the food except in the matter of regulating the transportation of the food. I simply suggest that. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 359 Mr. Caffey. I might suggest to you, Mr. Thompson, a phase of the matter which I have not discussed here but which will be discussed in the brief. These powers which we call war powers, of course, exist in times of peace in the sense that they are just as much written in the Constitution in time of peace as in time of war, but it is only the change of conditions that permits of their exercise. In the exercise of them, it seems to me that the Congress, if it undertakes to exercise powers along the lines suggested in this bill, has in substance found that all this food supply is affected with a public interest. If that be so, why then you may bring the regulation of all the food supply, so far as concerns the fifth amendment to the Constitution, within the class of cases with which you are doubtless all familiar. The Supreme Court has said that 'the fourteenth amendment, which places restrictions upon the power of the States, is more of a restric- tion upon the legislatures of the States than the fifth amendment, which places the restrictions upon the Federal Legislature, is a re- striction upon the power of Congress. Therefore, whenever you find a decision of the Supreme Court of the United States which arose imder the fourteenth amendment, holding that State legislation is not in violation of the fourteenth amendment, you have a good authority with respect to the authority of the Congress under the fifth amendment. I am endeavoring now to work out and to in- corporate for you in a brief that phase of the matter growing out of such cases as Munn v. Illinois, and the great variety of cases where the States have provided for the regulation of various public facilities, elevators, cotton gins, and what not. I think possibly I could work out the provision of section 6 of H. R. 4036, dealing with perishables, to which you refer, as sustained by that theory, without a violation of the fifth amendment; although I have drawn the bill, as I ex- plained to you, upon the other ground of making section 2 cover as unlawful the doing of everything incorporated in the later remedial procedure sections. Mr. Thompson. I now want to direct your attention to section 14 of H. R. 4125. Mr. Caffet. The maximum and minimum price provisions ? Mr. T^EOMPSON. The price-fixing provision. Now, in order to sus- tain the minimum price which the President may fix, I notice that you confer upon him here in the bill authority to fiix the import rate or the tariff on imports brought into the coimtry, so that he can raise the rates or lower them in accordance with the minimum price he might fix, in order to maintain that price. How do you attempt to defend the constitutionality of that delegation of legislative power, because it would be legislating Mr. Caffey. No, sir. Mr. Thompson (continuing). And when the Constitution specifically provides that Congress shall have power to levy imposts ? ■ Mr. Caffey. I think I can find you a dozen precedents w;here the Congress has conferred such power in exactly or substantially the same language as the language used here. Congress lays this duty. The President does not lay any duty; but the rate that is essential to accomplish a certain purpose is a question of fact, which would have to be determined at the time. The section confers authority upon him to find these certain facts. The same thmg was done, as I recall, in the reciprocity statute. 360 FOOD PRODUCTION, CONSERVATION, AND DISTEIBUTION; Mr. Young of North Dakota. Those were all reductions. They gave him power to reduce certain duties, but not to increase them in any case. Mr. Caffey. That would not change the legal question. He ascer- tains the certain facts, and there is a Imitation here on his power. As I understood Mr. Thompson's question, he feared, as it is worded there, that this was a delegation of power to the President to levy a duty. I say, as I understand it, the Congress itself lays the duty and the rate to be fixed is determined by finding certain facts, which at the moment can not be determined, and which can not be determined at all until the occasion arises. I am pretty sure I can find some precedents for similar exercise by Congress of that power. Mr. Thompson. I did not want to argue about the matter, but I simply wanted to call your attention to it. Mr. Cafpey. And I think the Supreme Court has upheld it. I am very glad to have these questions so as to direct my mind to what is in yours. As I said in tne beginning, I may not be able to answer them now, but I woidd Mke to look them up for you. Mr. Thompson. You have discussed the provisions of section 15. I believe that is all I have to ask. Mr. Haugen. I would like to ask just one question. Would there be any objection to adding a penalty clause to section 2 ? Mr. Caffey. That is a question of legislative policy. I think there is no question about your power to do it, on the legal side of it. I explained that I had in my mind in not providing a penalty that there were penalties in the later remedial procedure sections, which covered everything that' really was embraced in general terms in section 2. Mr. Haugen. And all those points are covered ? Mr. Caffey. All those points are covered by penalties; and, inas- much as section 2 is so broad and general in its terms, you would necessarily leave some uncertainty in the mind of the citizen, with that section standing alone, as to what were the rules of conduct that governed him, whereas when you get to the remedial procedure sections you prescribe absolutely for making it definite and certain what he may and may not do. Mr. Haugen. However, putting in a penalty clause to section 2 would be the more direct way of doing it ? Mr. Caffey. There is no question of the authority of Congress to do it, but the question of whether you should do it is a question of policy. Mr. Haugen. Suppose the Government should make a requisition for, say, 1,000,000 bushels of wheat and the Government should find that $2, for instance, would be a fair price, then the owner could go into court and sue for the balance if it was worth, as it is to-day, $3.46. Mr. Caffey. It is provided that he may have recourse to the courts if he is dissatisfied with the finding by the Government as to what is a reasonable price, and he may go into the courts and bring a suit to recover from the Government such an additional amount as, added to the amount that has been paid him, will make just compensation. Mr. Haugen. What would the court most likely hold, the market price of $3.46 or the Government price of $2 ? Ml'. Caffey. I can not forecast that. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 361 Mr. Wilson. It would probably depend on whether the iury was made up of farmers or not. Mr. Haugen. No; I do not think so. Mr. Young of North Dakota. I thmk you called attention to some statements you had seen in the newspapers or had had called to your attention in some other way, where some one was holding 200,000 bushels of wheat and had refused to sell even though it was boiling at the time. Mr. Caffey. No ; I did not say that. Mr. Young of North Dakota. What was your statement ? Mr. Caffey. I said I had been told that there were being held some 200,000 bushels of wheat, possibly it was some other grain, which was spoihng. I did not know the circumstances or the reason why it was not disposed of. There might have been a perfectly good reason. I do not know anything about that; but I simply used that as illustrative of the possible necessity of incorporating in the legis- lation some provision against spoilage, and the kind of ttdng whicn I had in mind. Mr. Young of North Dakota. Wheat is usually not perishable if it is properly stored. Mr. Caffey. Its condition changes pretty rapidly, I have been told. Mr. Young of North Dakota. Do you think it would be possible to change the wording of the law in such a way as to prevent letting some man who has a corner and who has been ordered to sell selling to some other man who is also a speculator ? ^ . Mr. Caffey. Yes. Mr. Young of North Dakota. In otherwords, itlooks to me as though the law now might permit a man who has a corner on a commodity and who has been ordered to sell, to sell to some other man who is a speculator, and, as the chairman says, "pass the buck," and we would not get any rehef. Will you give consideration to that matter and suggest an amendment ? Mr. Caffey. Yes; I shall be very glad to. Mr. Hutchinson. Mr. Caffey, I would 'hke to ask a question in regard to section 6 of H. R. 4125. In my judgment it is very drastic. To illustrate, this gives the Secretary of Agriculture the power of labeling the flour. Now, for instance, the mills in the country have various brands, and some of them have spent millions of dollars in advertising their brands. This section absolutely destroys that. Does the Government pay for that ? Mr. Caffey. No, sir. Mr. Hutchinson. Why not ? It is the biggest asset they have got, larger than their mill. Mr. Caffey. On the question, of policy, of course, if you want to provide for that, that is another question. Mr. Hutchinson. Is not that confiscation ? Mr. Caffey. No, sir; no more than the provisions of the food and drug act constitute confiscation. Mr. Hutchinson. Can you take a man's miU away from him ? Mr. Caffey. You can take his fife under certain circumstances. It depends on the circumstances. Under the war power this raises no question different from that involved in the food and drug act prescribing that certain articles, if not handled in a certain way, shall 362 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. be considered adulterated or misbranded under the food and drug act and may be confiscated. Mr. DooLiTTLE. In other words, it is not a question of whether we can or can not; it is a question of whether we want to or not ? Mr. Caffey. That is it. Mr. Hutchinson. That is what this section does. It destroys the mining business and puts it out of existence. Mr. Young of Texas. I would hke to ask you this question in ref- erence to section 14, I think — the section referring to the proposition of fixing prices, maximuni and minimum. I will preface my question with my viewpoint. Under the dual system of government we have, the State and the Nation, my old law preceptor, who was known as the "Alcalde Governor of Texas," a very great man, in lecturing the boys on the proposition of the different powers which the States reserved and certain powers delegated to the Federal Government, in discussing that proposition said that when you want to find out whether or not the Federal Government got such a power, to put your finger on the section of the Constitution where delegated powers have been given to it and see whether it is in there or necessarily implied. Tjiat was the viewpoint he used to lecture to us on, and it is still in my mind. Now the question I want to raise is this: This feature of the bill gives to the President or to some agency that he will create, the power to fix the price of the farmers' product. It would give to some man the power to fix the price of the farmers' product, and I want to know where they could get that authority under the Constitution ? Mr. Caffey. Are you speaking of the minimum or maximum price ? Mr. Young of Texas. Either. Mr. Caffey. They raise different questions. Mr. Young of Texas. Well, take both. First, take the minimum price. Where does Congress get its authority to delegate that power to.fibc the minimum price of the product that the farmer grows while it is still in the farmers' hands ? Mr. Caffey. It comes from the express powers of the Constitu- tion, the war powers of the Constitution. It the Congress shoidd de- termine that it is essential, in order successfully to prosecute this war, to stimulate production, and the Congress further determines that, in order to stimulate production, it is essential to assure the farmer that he wiU get at least a certain amount for his products, and if it makes an appropriation to pay him in the event that he does not get that amount. Congress has done nothing in aU of that except in the exercise of its war powers; having first found the fact that it is essential to stimulate production, and having directed the President, according to certain prescribed principles, to find when a certain condition comes into existence. It is not delegating its power at all. It is not a delegation of legislative power. Mr. Young of Texas. If then, under the Constitution, or under the war power of the Constitution, Congress has the right to do that kind of thing, then Congress has the right to turn over the whole universe, so far as this Nation is concerned, and leave it to the discretion of the President to say whether it is necessary to do this, that, or the other thing. Mr. Caffey. Certainly it has that power. It has that power if it is essential to win the war, so long as it does not violate the pro- POOD PRODUCTION, CONSERVATION, AND UISTEIBTJTION. 363 liibitions of the Constitution, if you gentlemen adjudge it to be necessary. Mr. Anderson. I am anxious to get your viewpoint on the legal theory of the bill, and I would like for you to make it as plain as it is possible to make it. As I understand it, you proceed upon the theory that the war power does not in itself suspend constitutional guaranties ? Mr. Caffet. I proceed entirely upon that theory. Mr. Anderson. Is it your view that Congress imder given circum- stances might suspend constitutional guaranties ? For instance Mr. Cajtey {interposing). Yes, sir; it can. That is my view of it; it can ; but it has not been done in this bill. Mr. Anderson (continuirig). It can establish martial law. Mr. Caffey. Yes, sir; undoubtedly; but, as I have said, it has not done it in this legislation as it is drawn. Mr. DooLiTTLE. In other words, this bill does not go as far as we could go if we wanted to ? Mr. Uaffey. Yes, sir; that is true. Mr. Anderson. Of course, I take it that that would foreclose the right of a court upon review to determine whether a state of facts actually existed which justified the suspension of the guaranties of the Constitution. Mr. Caffey. The court has the right of review. My feeling is that substantially it may be stated this way: That if there existed a state of facts from which the Congress might rationally draw a conclusion as to the necessity to do those things, the court could not, because it thought that the evidence was stronger on the other side, upset that concmsion of Congress. • Mr. Anderson. Is it your theory in declaring that these things are essential to the conduct of the war and to the national security and defease that while it may not foreclose a review of the facts, the court would be very reluctant to overturn an express finding of Congress that the doing of these particular things was essential for the national security and defenses Mr. Caffey. Yes, sir; undoubtedly, and it greatly strengthens the biU to have that congressional finding of fact. Mr. Jacoway. But you do not know that a court of review would not do it ? Mr. Caffey. There is no way of keeping the court from doing anything. Mr. Anderson.' You referred to section 4, or to the licensmg fea- tures of section 4, of this bill? Mr. Caffey. Yes, sir. Mr. Anderson. I take it that the mere fact that you use the method of hcensing these manufacturers in order to regulate them does not give you any additional power to regulate them. In other words, you can regulate them directly without hcensing them, if you can regulate them indirectly by using that method of hcensmg them. The mere fact that you use the licensing method would not give you authority to require the sale of products if you did not have that authority without using the method of hcensing. Mr. Caffey. From my standpoint, I might concede that absolutely for the purposes of the argument; but I, am not sure that you could not go somewhat further by the Hcensing method. When you have 364 FOOD PBODUCTIOK, COlirSERVATTON, AND DISTKIBUTION. found that the occasion requires that, in order to accomphsh a certain result, the distributors of food must be Ucensed, after you hcense them, I have a feeling that you could do a good many things that you could not do if they were not licensed. I do riot think that it is essential to estabHsh that proposition, however, in order to maintain this measure; because, if I am right on section 6 of H. E.. 4036, Congress has even got the power to go away beyond what it is proposed to do here, namely, to require the holder to market his product. It may absolutely confiscate it, and, inasmuch as the greater includes the less, it seems to me that that argument would apply to this section. Per- haps it would be better in that respect if that were more plainly expressed in this section. Mr. Anderson. Now, with reference to the requirements of section 4 and other sections of that bill under which any person who has more food products in his possession than is required for his individual or business needs shall be required to sell them. In connection with that provision, you have referred to the authority contained in the food and drugs act under which the court may require the sale or destruction of property which has been offered for sale in violation of the provisions of that law. Now, it does seem to me that there is some difference between authorizing an administrative bureau of the Government to require a sale under given circumstances and allowing a court to require it after it has determined the fact that there has been a violation of the law. Now, the administrators of the law certainly could not be clothed with power to determine that there has been a violation of the law, and, upon the determination of that fact, to impose a penalty, and, consequently, it has seemed to me that there must be in the bill somewhere a general authority to control by methods provided in the biU itself, the sale, distribution, and trans- portation of foods, and it seems to me that there is the possibility, in imposing a penalty or requiring a sale under the circumstances pro- vided in the bill, that you are violating the constitutional provision against imposing unusual and cruel punishments. I think there is more question about your power to compel a sale by an individual to some other person^-not to the Government, but to some other per- son — than there is about any other provision in the bill. Mr. Caffey. I agree with you on that. I think I could easily safeguard that against the question that Mr. Young has raised by providing, in substance, for a sale, or, at least, a bona fide offer of sale to the public at a reasonable price, as prescribed. by the President, and theQ, in the event that was not done, the Government might proceed against the goods. Power might be vested in the Govern- ment to proceed agamst the property by a process of libel for con- fiscation. In that proceeding the finding of the Government on the question as to the value of the goods, if relevant, might be made prima facie evidence of their value. That would provide you with an administrative scheme whereby you could practically force the putting of the product upon the market at a reasonable price. I feel pretty sure that if you safeguarded it in that way there would be no doubt as to its validity. However, I agree with you entirely that that is the provision in the biU that raises the greatest legal difficulty. Mr. Anderson. I am very sure that the thing which is sought to be done in that respect can not be done in the. way in which it is apparently designed to be done in the bill. I am not so sure but FOOD PRODUCTION, CONSERVATION, AND DISTEIBUITON. 365 what it can be done iu some other way, but I think that the choice of methods is at least unfortunate, as it is outlined in the biU itself. I have no objection to the jDOwer to do the thing if it can be legally confirmed, but I think that it is desirable from the standpoint of the legislative situation, if it is possible to do so, to adopt a method which is not open to as much legal doubt as this particular provision is. Mr. Caffey. I would be glad on further consideration of it to work over that language, and, also, to work over an alternative provision, but I will mclude a fuU discussion of that point in my brief. Ml- Anderson. Referring just a moment again to the declaration of the essentiality of the method which you should pursue, it seems to me that it is desirable, on general principles, at least, to confine that declaration to the purposes which are obviously connected with the war emergency, such as the conservation of food supphes, the maintenance of continuous and adequate distribution of supplies, the prevention of waste, the maintenance of the Army and Navy, etc., rather than to include in that general declaration such proposi- tions as preventing gluts, maintaining adequate prices, preventing extortionate prices, etc., because the preventing of extortionate prices is not on its face, it seems to me, essential to the conduct of the war. That is a mere matter of domestic regulation. It may be inciden- tally related to the conservation of the food supply, but it is, after all, the conservation of the food supply which is essential to the conduct of the war. I simply make that suggestion if you propose to redraft some of those sections. ' Mr. Caffey. That would be in a redraft of section 1 ? Mr. Anderson. Yes. Mr. Jacoway. I did not hear the beginning of your argument, and I want to ask you whether it is your idea to write into this biU that it shall be unlawful to do this, that, or the other thing, and then, having made it xmlawful, whether it is your theory that you get the power under that feature of the biU to do these other things provided for in the bill, such as confiscating and requisitioning goods, because of the fact that they are violating the law ? Mr. Caffey. What I said was this — ^before you came in, Mr. Jacoway— that the purpose of section 2 was, in general terms, to make unlawful everythmg that was included in the later remedial procedure sections. I stated that I wrote section 2 in the bill for purely l^al reasons. I provided no penalty in section 2. That section is very general in its terms, but when it came down to the specific things, we provide regulations , • -L-n u ^ Mr. Jacoway (interposing). It is not your idea m this bill that you can enforce the provisions of this bill, through the power of penal laws. In other words, you want to confer upon the President authority to do certain things that he can not now do, without prescribing any penalties ? ' , • , • i.i, Mr. Caffey. Yes, sir; in certain instances; and m certain otJiers there will be penalties. . . Mr Jacoway. Following up Mr. Anderson's question, i agree with you that it is difficult for Congress to undertake through t^s bill to compel individuals to do certain things, whereas that ditticultv does not arise in compelling the Federal Government to do it. it 366 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. would not be difficult, perhaps, where the right of eminent domain apphed, but that would not apply to individuals, would it? Mr. Caffey. I think what Mr. Anderson had in mind, as I under- stood it, was that in those sections where under varying circum- stances the bill provides that the individual shall dispose of his property, the bill does not provide that the Government itself shall either requisition the property or pay him any loss Mr. Jacowat (interposing). But suppose the individual says he wlU not do it; suppose he refuses to do it, where is the constitutional authority to make him do it, unless it comes under this general pro- vision that it is unlawful? Mr. Caffey. It would only be under that section, of course, and under those circumstances. My argument was this, that if it were made unlawful by the bill to do certain things — -as, for instance, if hoarding were made unlawful and the individual were hoarding — of course perfect power is provided for confiscating the goods without making any compensation at all. Mr. Jacoway. I have one more general question : You have read the bill carefully, section by section, and you have been in conference with the Department of Justice people, and I want to ask you whether, in your opinion, all of the provisions of this bill that we have been discussing will stand up in the light of the Constitution ? Are these provisions absolutely constitutional? Mr. Caffey. In its essential provisions, the bUl is constitutional; but I would like to safeguard it more in some of its provisions. I would feel safer and more confident if that were done, but it can be drawn so that it will be absolutely constitutional in every respect. Mr. Thompson. As to the language of the bill, you wiU leave that, of course, to the committee. In section 2 it is provided that it shall be unlawful for any person to permit or commit a preventable waste, etc. Under the language of tnat section a man might commit that offense unknowingly and still be guilty. Mr. Caffey. This bill was drawn under great pressure of tinie for the purpose of bringing the question before you. Mj. Jacoway. The word 'unlawfully," m that connection, has been judicially determined to mean knowingly. The word "un- lawfully," in that connection, is synonymous with the word "know- ingly." Mr. Thompson. Not in the prosecution of criminals. This under- takes to make the man a crimmal. The Chairman. We are very much obliged to you, Mr. Caffey, for your statement. (Thereupon the committee adjourned until to-morrow, Friday, May 18, 1917, at 10 o'clock a. m.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Committee on Agrictilture, House or Representatives, Friday, May 18, 1917. The committee met at 10 o'clock a. m., Hon. Asbury F. Lever (chairman) presiding. STATEMENT OF PROF. VERNON KELLOGG, STANFORD UNI- VERSITY, CAL. The Chairman. Professor, I will ask you to give the committee, in your own way, such information as you think would be of interest to them. Prof. Kellogg. Mr. Chaii-man and gentlemen of the committee: I do not want to waste any gf your valuable time in talking about things than are not pertinent. 1 understand j'ou had before you several days ago Capt. Lucey, one of the early directors of the com- mission, and he had up some matters, or you asked him and he answered certain questions in regard to matters of milling and organi- zation. To show what httle chance for experience I have had there, I went to Brussels in May, 1915, and have spent all of the last two years, except four months, in general charge of the work in Belgium and northern France. Now, of course, it is not Belgian relief that you want to hear about, but simplj^ if there are any practical results of this great experiment — for that is what it was — of con- trolling the character and quantity of the food of 10,000,000 people for two years. As the basis of people's food supply is bread, it is the breadstuffs I speak of first. We had absolute control of aU the breadstuffs of Belgium and of northern France. In normal times Belgium im- ports about three-fourths of its bread graias, raising about one- fourth. That three-fourths we imported as soon as the war began, and the one-fourth raised in Belgium we had entire charge of. It was put wholly into our hands. The first thing to determine was how to make this wheat go as far as possible. We began experimenting^ with millin g percentages. To make a long story short, after all the experimentation we decided on a percentage of 82 per cent which we have used for the last year and a hah. We tried 90 per cent. Bel- gium had been used to mdlmg about 72 per cent, namely, white flour. To make the wheat go as far as possible we jump to 90 per cent, but on the average we found that the medium of 82 per cent wa^s the most effective;- that is, it stretched the wheat furthest and produced a bread that was edible and not disagreeable. We mixed with this flour rice to the extent of 10 per cent at times; corn to the extent oi 10 per cent at times. This flour, of course, must be kept for a certain time. The 82 per cent has kept in our hands for as long as two. afi7 368 POOD PBODUCTION, CONSERVATION, AND DISTEIBUTION. months, probably in a few instances as long as three months. We have never tried to keep it longer than that; and I should judge from the experiments made elsewhere that three months would be about the limit of safety. The German flour furnished the soldiers is miUed at 82 per cent and stretched or mixed with wheat. As the Germans in north France give a certain percentage of the crop of north France back to the people, according to an agreement made with us, and five it back in the form of flour, we got acquainted with the German our. They give the French people exactly what the soldiers get. That flour tends to heat when it is stored too long. It has to be carefully cared for, and that is a thing I am sure must be taken into account'. In the year and a half of handling all of the flour of Bel- gium and north France, that is the result we came to. Now, that also is the restdt that other countries have come to. England is milling to-day, depending upon the different grades of wnea.t, at slightly varying percentages, but an average of 81 per cent. It is also mixing its wheat with at least 10 per cent of some other cereal; that is required, and that mixture may go as high as 20 per cent; that it permitted. Italy is milling at 90 per cent; France is milling at about 85 per cent, but stretching its wheat with at least 10 per cent of barley, oats, or some other cereal. In other words, the experience of Europe and our own experience in Belgium and north France, particularly, with perfect control, with opportunity to decide quickly on the basis of advantage to the people, to make the wheat go as far as possible and to make as good bread as possible, leads to the determination of a percentage of about 80 to 82 per cent and a mixture. Just one word with regard to the organization. Capt. Lucey, I understand, was asked whether we had an absolutely autocratic organization or control. We did; that is to say, the responsibiUty and the authority of this food control in Belgium and north France was all centralized. The actual execution and operation was de- centralized just as far as we could decentralize it; that is, in the carrying out of these general regulations which we arrived at largely by agreement, although we had the authority, we exercised it as rarely as possible. It was a matter of agreement with the Belgians themselves, with the miUs themselves. We took over, for example, all the great mills of Belgium and we controlled those mills abso- lutely, but we never had any difiiculty with the miUs. We asked them to change from milling at 72 per cent to 82 per cent, and they were able to make that change, apparently, without serious difficulty. Now, remember, they were not making patent flours in Belgium. They were making white flour of about 72 per cent; but they made the changes in all the great mills of Brussels, Namur, Ledeberg, and all the great cities of Belgium, and they pro- duced this 82 per cent flour without difficulty. We did that simply by an agreement. In other words, although we had the power, and the power naeant we could speed up decision, when the decision was arrived at we decentralized the power as regarded operation and execution just as far as we could. I do not know whether Capt. Lucey brought that out or not. Now, just one other word. I have a letter this morning from Paris, and another one from Rome, and a few days ago we had a large series of documents from England showing the conditions in those rOOD PBODUCTION, CONSEEVATION, AND DISTBIBUTION.' 369 countries of the food needs and the food supplies. I was associated with Mr. Hoover in London for three or four weeks before coming over here. I was thrown out of Belgium about the middle of March at the request of Governor von Bissing. Americans are no longer welcome there, of course. I was in London three or four weekp and was there associated with Mr. Hoover in an investigation of theiood supply and food needs of the different countries. I simply want to call your attention again — ^Mr. Hoover has done it, I am sure, before — to the pressure that the allies are bringing on us and to their actual need for food and for action on our part just as quickly as possible. That is the thing that is pressing me, the necessity of doing something. It is no longer simply an oppor- tunity for us to help those people. It is our absolute duty, and it is the one thing that we can do right away that wil| be of most value to them. The letter here from Paris is almost pitiful in its appeal; and the letter from Italy is almost the same, mhough these come from the food commissioners and authorities in those countries. Italy has a food commissioner. England, you know, has an absolute controller in Lord Devonport, head of the Ministry of Food, and France has also its department of food control. Those countries have found that the only way to handle these things has been to estabUsh a food control. Germany found it out long ago. The Department of the Interior and the Departmfent of Commerce tried to handle it and they fell with a great crash. It could not be done under the existing bureau arrangements. It was an emergency that required emergency treatment. Unless you have some particular questions to ask as to our experi- ence, that is all I have to say. The Chairman. Prof. Kellogg, let me ask you one question. You say that in Belgium you milled your wheat up to 82 per cent? Prof. Kellogg. As a final practice. The Chairman. And that in England they are now milling it up to 81_per cent? Prof. Kellogg. Their average is 81 per cent. It changes a little for the different grades of -rtrheat. The Chairman. And bread from that kind of milled flour on an average will keep for two months ? . u. j Prof. Kellogg. Oh, quite— I am talking about the flour itself made at ihat milling percentage. _ The Chairman. How long will the bread from that flour last ' Prof. Kellogg. Well, I do not know. I do not suppose they are allowing it to last very long. There is no reason for its lastmg very long. They have to keep it 12 hours. They are not allowed to eat it untU it is 12 hours old. The Chairman. I was wondering whether bread made trom tJiat kind of flour would last, in the way of hardtack, as long for the soldiers, for instance, as bread made from straight standard nour. Prof. Kellogg. Well, maybe as hardtack, that is dehydrated— with the water mostly taken out— it should certainly last as long. The whole question is the keeping of the flour, Mr. Chairman. The Chairman. Now, then, that leads me to ask this question: Would it be practicable to ship flour nulled m this country up to S^ per cent, to our allies across the water and there have them make 104176—17 ^24 370 POOD PEODUCTION^ CONSEEVATION, AND mSTBIBUTION. it into bread; or would it be, better to ship the whole grain and let the grain be miUed in the countries across the water ? Prof. Kellogg. My belief, Mr. Chairman, is that the latter practice is the only safe practice. In the first place, those countries are using flour, you see, of different percentages already. They prefer to do it that way. They want the wheat to stretch as they please. Italy stretches it by 90 per cent milling, England by 81, and France by stiU a different percentage. Send them the wheat and let them make their own kind of flour according to their own rules. The Chairman. The point I had in mind was this: If we can ship the allies our whole wheat and our whole corn and let them do the milling and the mixing, do the exigencies of the situation require that we in this country should mill up to 81 or 82 per cent for our own local consumption ? Prof. Kellogg. That is wholly a matter of figures! What are the actual stocks, what supplies have we, what are the actual needs? You have had some of those figures given you in confidence. If we have not, as we beheve we have not, a stock sufficient to-day to su- ply us with 72 per cent flour at our normal rate of consumption, then we must either reduce the consumption or increase the milling per- centage. The Chairman. For local consumption ? Prof. Kellogg. For local consumption. ■ Mr. RuBEY. How much would 82 per cent add to our product; that is, how many additional bushels would 82 per cent add to our grain supply ? Prof. Kellogg. I am not able to say. I do not know. Mr. E.UBEY. What is the color of the bread made from this 82 per cent flour ? Prof. Kellogg. It is slightly off color from white, just slightly. It is a bread that one becomes used to. To use my personal expe- rience. Minister Whitlock, has lived on it for two years, and all of us Americans lived on this bread, and one likes it. It is perfectly safe for any stomach except an actual invahd and perhaps a few weak children. We always made a little white flour in Belgium to give on so-called invalid cards. For the rest, all the people ate it and all the people were perfectly well. Mr. RuBEY. What effect do you think it would have upon^ the housewives throughout the country to compel them to use flour which would produce a dark-colored bread ? Prof. Kellogg. I think it is simply a matter of getting quickly used to it, and I believe the housewives of this country would con- sider a little change in color a small sacrifice to make in order to put this coimtry in better position to win the war, Mr. Thompson. I was not here when you commenced to testify. Prof. Kellogg. You were connected with the Belgian Relief Com- mission, were you ? Prof. Kellogg. I have been the director in Brussels for a couple of years. Mr. Thompson. Are you a chemist? Prof. Kellogg. I am not. I am a professor of biology. Mr. Thompson. What position did you occupy in the Rehef Com- mission ? Prof. KJELLOGG. I was the director in Belgiimi and North France. POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 371 Prnf^T.? ''''• ^^ ^^■'^ ^^'''''■^^ ^^'^"^'^ °f *^^ ^hole organization ^ .rroi. ivELLOGG. les, sir. In fS;^''''''^''''; P'' y^l" ^""^"^ whether there is any more nutrition P f VP*^"" '^^''* ^^^"^ ^^"^^ *^®^^ is in the 72 per cent « i'rot Kellogg That has been a constant subject of discussion on of aS?horft/ ^''^ ^^''*'' ^"""^ *^''' ^""^^ """^ ''^'^ *° ^« ^ conseLu^ Mr. Thompson. Isn't it generally accepted that you just get more bulk and no more nutrition; is not that the fact? ™. Kellogg. That is claimed by those who beHeve that way. As i say there is a difference of opinion, and I should not undertake. ^^f'^^m ^ *°i Jiot a chemist, to speak in any authoritative way Mr. IHOMPSON. Now you say it will keep for two months ? f/*^ m ^^^^*^^' ^® ^^^® ^^P* i* ^or two months; yes, sir Mr. iHOMPSON. Did you keep it under all kinds of circumstances and conditions for two months? Prof. Kellogg. We tried to do the best we could, but as we deliv- ered to 4,000 local centers in Belgium and 2,000 in France, I imagine ??® ^r^^ centers covered all kinds of conditions and circumstances. Mr. rnoMPsoN. Did you keep it in damp weather and hot weather ? rrot. Kellogg. There was damp weather and hot weather. We tried to insist that this flour in sacks in the local houses should be taken as good care of as possible; that they should get roomy, airy attics, if they could, for its storage, and if they piled up the sacks one on top of the other and found they were getting warm, they must spread them out and take all the ordinary precautions, but many of them were not taken. Mr. Thompson. Did you lose any of that flour ? Prof. Kellogg. We lost a very httle; yes. Mr. Thompson. Under what circumstances ? Prof. Kellogg. Where it was in close storage or in a room without air which got very hot, say under the ceihng or directly under the roof. It is mostly a matter of heat and a lack of air circulation. Mr. Thompson. How long had the flour which spoiled been milled ? Prof. Kellogg. I think there were cases of its beginning to spoil within seven or eight weeks. Mr. Thompson. Could you say from your experience and the experience you had over there, which of course was Umited Prof. Kellogg (interposing). Certainly. Mr. Thompson (continuing). Whether or not it would be safe to miU that kind of flour in this coimtry and then put it on railroads where it would take three or four months to go from Kansas City to New York and then export it by ship where it would take perhaps another month, imder all kinds of climatic and other conditions ? Prof. Kellogg. On the basis of our experience there, we certainly would not say suchpractices were safe. Mr. Thompson. With the hmited amount of food supply in the coimtry, would your judgment be that it would be a safe and wise thing to make that kind of an experiment in this country, under the circumstances and conditions that exist in this country, the long hauls and great freight delays, etc. ? Prof. Kellogg. Well, it seems to me it will depend actually on the specific conditions with regard to length of time necessary to keep the flx)ur. If the flour can be used within a reasonable time — I should 372 POOD PRODUCTION, CONSEEVATIGN', AND DISTRIBUTION. speak of three montlis as a reasonable time — ^I should say it would be safe and advantageous to make the experiment. When you speak of five or six months in transportation, that would seem to me dangerous. 1V&. Haugen. You spoke of German flour as spoiling at the end of a few months. Prof. Kellogg. The German flour they tried to keep longer than we did our flour; that is, they took this French wheat back into Ger- many, milled it there and then returned it, and returned enough to last lor six months at a time. Mr. Haugen. In other words, this German flour differed from what you were using ? Prof. Kellogg. Although it was milled at 82 per cent, it was mixed very heavily with rye. Then it was kfept, as I say, longer than our flour was kept, and hence there was more hkehhood of finding spoiling German flour in any of the magazines than our own flour. Mr. Haugen. England is now m illin g to about 82 per cent? Prof. Kellogg. Eighty-one per cent is about the average. Mr. Haugen. Then the English people are educated to using the 81 per cent flour? Prof. Kellogg. Yes; they are. Mr. Haugen. The contention has been advanced that it would be very diflicult to educate the people over there to using the 81 per cent, and for that reason we should educate our own people to usmg the 82 per cent flour and ship the good flour over there ?. Prof. Kellogg. I think any people educates itself very easily to such a sHght change as that. It reaUy is a slight change. Mr. Haugen. You said you had control of the mills over there. You did not operate the mills ? Prof; Kellogg. No. We controlled their operations simply by means of an arrangiement with the mill owners, of course. Mr. Haugen. At a certain profit ? Prof. Kellogg. At a certain fixed price. Mr. Anderson. The basis of 82 per cent in England, as I under- stand, allows a larger moisture content than we allow here ? Prof. Kellogg. You must compare the humidity or the moisture content, I presiune, of any flour with another flour of the same percentage, so I do not see how you can compare the 82 per cent there with our 72 per cent, or whatever it is we rim, exactly. Mr. Anderson. I think the statement has been made at some time during the hearing that the 25 per cent moisture allowed in England woiild bring the actual milliag content of the wheat down to about 76 per cent as compared with our 72 per cent. Is that true? Prof. Kellogg. I am not in position to answer that. Mr. Hutchinson. Prof. Kellogg, you said you had charge of the mills over there. Did you have different grades of wheat? Prof. Kellogg. Different grades of wheat were turned into the mill. Mr. Hutchinson. And you made 81 per cent of No. 4 and No. 1, and so on ? Prof. Kellogg. The wheat was mostly mixed, as I remember, and thef were supposed to return 82 per cent of the wheat turned in. FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 373 Mr. Hutchinson. Who mixed the wheat? Was that under your direction ? Prof. Kellogg. The millers, I suppose. Mr. Hui'CHiNSON. You took charge of the mills ? Prof. Kellogg. No; we did not take charge of the mills. I ought not to say we handled the miUs, but oi:ly those mills handled any- thing at aU which had made arrangements with us or we with them, so that we could control it to that extent. We had to have in our hands aU of this flour, so that we could assure the allied Govern- ments, England and France, that none of it was escaping to the German authorities. That was the particular reason for our limiting the milling to certain mUls. Mr. Hutchinson. When this wheat was mixed were there any star dard grades of flour, or was it just flour ? Prof. Kellogg. Just flour at 82 per cent. Mr. Hutchinson. It did not make any difference whether it was good, bad, or indifferent wheat that they took iu ? Prof. Kellogg. It was inspected in the first instance. The hu- midity was determined first and a limitation put upon the humidity or the moisture content and an attempt made to keep the flour good. Mr. Hutchinson. You say that England miUs 81 per cent. Do all the people in England eat 81 per cent flour ? Prof .Kellogg. I said there was some difference in the percentages, but the general average is 81 per cent. Mr. Hutchinson. Is it a general law applying to everybody ? Prof. Kellogg. Yes; I believe it is. Mr. Hutchinson. What becomes of the flour we send over there ? Prof. Kellogg. The Enghsh Army, for example, has so far pro- vided itseK exclusively with flour from this country, whereas the other flour is for the English civilians. Mr. Hutchinson. And the rich and poor and everybody eat this 81 per cent flour ? i -. i • i Prof. Kellogg. That is what one finds on the tables of the rich and the poor alike. Mr. Hutchinson. Now, by making 81 per cent flour, do you mean to say that if you put in the germ or the red dog and the middlings in the wheat it does not color the bread ? • «, i Prof. Kellogg. I say it does color it sUghtly. It is off-color. Mr. Hutchinson. I should think it would be. Prof. Kellogg. It is not a very serious difference. Mr. Hutchinson. I understand you have different grades there and they mix it and grind it up and use 81 per cent ? Prof. Kellogg. Yes. „ ^ „ v j ^i, ^.v •+ Mr Young of North Dakota. Prof. KeUogg, one of the other wit- nesses who served in Belgium said that the deliveries were made very *^Trof Kellogg. They were during his time. That was Capt. Lucey, was it not ? He was there at the beginning. Mr. Young of North Dakota. Yes. , , w ,„„w^ Prof. Kellogg. Then we had no stocks on hand. We were unable to get stocks ahead, so we used up our foodstuffs just as they came into the country. We were able fater, fortunate y, to import a httie faster than the eating was going on, and by that means we built up our stock. 374 FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Young of North Dakota. But even at that, in the restricted area you were serving, you were able to make dehvery, and the flour ordinarity was used up, I presume, within seven or eight weeks ? Prof. Kellogg. Yes; I should say that was the general rule. Mr. Young of North Dakota. And even in that period, some of it occasionally spoiled ? Prof. Kellogg. Here and there there was a little spoUage, that is true. Mr. Young of North Dakota. And England being a small country, probably the flour there is used pretty soon after it is made, do you not think so ? Prof. Kellogg. Well, that would simply be a matter of opinion. Mr. Young of North Dakota. In this country we have large cities here in the east, Boston, Philadelphia, New York, Washington, and this very thickly settled portion of the country where there is not so very much wheat grown, and it is necessary to bring the wheat supply from the Northwest, the Central West, and the Southwest, at long distances? Is not that true? Prof. Kellogg. Of course. Mr. Young of North Dakota. And the railroads of the country are in a congested condition, overloaded with traffic, do you not think it would be a very dangerous thing to attempt to make a flour such as you have suggested which has very poor keeping quaUties ? Do you not think it would be very dangerous to attempt to market a product of that kind when it must come here from such a long distance ? Prof. KJELLOGG. I should say that you are getting beyond my competence to speak. I am here only to give the committee a state- ment of the result of our work there. I would not imdertake to express an opinion about that. Mr. Young of North Dakota. Then you have no recommendation to make as to that? Prof. KJELLOGG. I am not making any recommendation; no, sir. Mr. Young of North Dakota. You said that the flour for the Eng- lish army is a better flour than that which is given to those who remain at home. Upon what theory do they give them this 72 per cent flour ? Prof. Kellogg. I can not answer that. I simply state as a fact — and probably it is a fact that ought not to be exploited — there have been two modes of purchasing wheat and flour m England, one for the Army by the army commission and one for the civilian population, the Royal Commission in Wheat Supplies, and the army commission has bought flour mostly from Canada, I believe, for the army and the others have bought wheat and milled it in England. Mr. Young of North Dakota. Does not this 72 per cent flour fur- nished to the Army carry out the suggestion of Mr. Thompson, that the added percentage, instead of adding to the nutritive value is something which detracts from the nutritive value and should not be given to a man who is doing a good, hard day's work? Prof. Kellogg. Well, take the other side. There is an army facing that army, the German Army, which has lived exclusively on 82 per cent flour, heavily stretched or mixed with rye, and the Ger- mans are giving the soldiers the very best food — that is, they feed the soldiers first in Germany, of course. They feed the army first FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 375 and take care of it first. That is what the German Army has been getting. Mr. Young of North Dakota. You started to say, I presume, that the Germans are giving the soldiers the very best food they can afford to give them. That may not be as good as it ought to be. Prof. Kellogg. That may be true; but at least I think if the Germans believed the white bread was better for them they would be getting it to-day. Mr. Young of North Dakota. You think they have enough of a supply of wheat in Germany to do that ? rrof. Kellogg. The way they have enough is to cut the civilian population to a certain fixed ration. They need so much flour and they cut from two fifty to two hundred and they can cut almost anywhere, but of course they must keep the people alive. Mr. Young of North Dakota. One of the witnesses said that the civilian population of Germany is not very much more than alive now, so they could not cut very much more in order to give white flour to their army. Prof. Kellogg. That may be true. Mr. DooLiTTLE. You stated that in mixing this flour wheat was added, but you did not mean wheat, did you ? You meant some other kind of grain, did you not ? Prof. Kellogg. If I said wheat, that was a mistake. If was some other cereal. Mr. DooLiTTLE. What other cereal was it? Prof. Kellogg. Do you mean in Belgium ? Mr. DooLiTTLE. Yes, sir. Prof. Kellogg. We mixed some corn and we mixed some rice, but we were not allowed to use barley. We had no right to use Mr. DooLiTTLE. About how long did it take to make the change in the milling over there ? t • 5 Prof. Kellogg. That was done before I arrived. Mi. Doolittle. Do you know how long it took the mills to make the change ? m, , i ■ at i. Prof. SiiLLOGG. I do not know. That was beguii m November and I arrived in May. It had been done before I arrived. Mr Doolittle What is the difference in the taste of 82 per cent bread and the ordinary white bread that we are accustomed to? Prof Kellogg. I suppose that would be answered differently by different people, but as to myself, I prefer it Mr Doolittle. You prefer the 82 per cent, bread i Prof. Kellogg. Yes, sir; but perhaps that may be because 1 have been used to it for two years. , , ^ , 4; „„„i„ +„ „Hr,nf Mr Doolittle. Then it is not much of a task for people to adopt the 82 per cent bread if it becomes necessary ? Prof Kellogg. It certainly was not for me, and it is not tor most neonle We found that they took to this flour very kindly ^ X b90LiTTLE. Then there would be no particular hardship at all in adopting it? ,,1-1 Prof Kellogg. I should not think so. S- Leshbe You say that you prefer the 82 per cent flour ? Sf Kellogg Yes, sir; but I suppose that is simply a matter of taste. 376 FOOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. Ml". Young of Texas. As to that milling proposition in Belgium, 1 gathered from one part of your statement that the German people there in that country took up the question of grain, and that they took it back into the interior, milled it, and sent it back to support the Belgian population. Prof. Kellogg. With this distinction — that applies only to north- em France, or the part of France occupied by the Germans. The wheat was not carried back into Germany. That which was billed to us was milled along with the rest of it produced in BelgiumL Mr. Young of Texas. The Germans did not undertake to control that at all? Prof. Kellogg. They undertook the control of it in Belgium to that extent Mr. Young of Texas (interposing). But they allowed your organi- zation to manage it ? Prof. Kellogg. Yes, sir. Mr. Heflin. You spoke of mixing corn meal and rice flour; did you use barley ? Prof. Kellogg. No, sir; we were not allowed to use barley. Mr. Heflin. Why were you not allowed to use barley ? Prof. Kellogg. That was simply a matter of control. They wanted to preserve that for other purposes. That was a rule, that we could not use barley or rye. Mr. Heflin. Do you know why ? Prof. Kellogg. I am not certain; no, sir. They were using some barley at a large brewery that was estabhshed in France, near the front. They used a good deal of barley there. Mr. Heflin. Did you ever eat any barley bread ? Prof. Kellogg. No, sir; I think not. Mr. Heflin. You did not use any barley at aU in mixing ? Prof. Kellogg. No, sir; we did not. Mr. Haugen. Why should not barley be used ? Prof. KJELLOGG. I 'think that many men who have some authority to speak with regard to the matter recommend barley, particularly as a cereal for mixing. Mr. Haugen. But you said that you were prevented from using it ? Prof. Kellogg. Yes, sir; we were prohibited from using it. Mr. Haugen. Can you state why ? Prof. Kellogg. No, sir; I can not. Mr. DooLiTTLE. I think the record ought to show by whom you were prohibited from using barley. Prof. Kellogg. I said that it was prohibited by the German au- thorities. The Chairman. The next gentleman who wUl address the com- mittee is Mr. Anderson, who is connected with the Department of Justice in some of its food investigations. Will you qualify yourself as an expert on that subject, Mr. Anderson ? STATEMENT OF ME. GEORGE W. ANDERSON, 85 DEVON- SHIRE STREET, BOSTON, MASS., UNITED STATES ATTOR- NEY FOR THE DISTRICT OF MASSACHUSETTS. Mr. Anderson. Answering your question, Mr. Chairman, I can not qualify as an expert on the food question. I am the United States attorney for the district of Massachusetts, and I am a special assistant FOOD PEODUOTIOK, CONSERVATION, AND DISTEIBUTION. 377 to the Attorney General. I was appointed on November 29, 1916. I am at liberty to come before this committee and express my per- sonal views on the subject of this legislation, and to state any facts I have ascertained, but I want to make it explicit that I do not represent, in expressing any views or opmions here, the Attorney General or the Department of Justice. I am here in my individual capacity and am entirely free. . Although I am a member of the Department of Justice, I do not represent it in anything I say. A statement of this Mnd obviously should be preceded by some statement as to who and what the person speaking is, because, otherwise, you would not know what weight, if any, is to be attached to the statement. I have been an active practiciag lawyer for more years than I Hke to admit, and I may be pardoned for saying that I was not a candidate for the office I hold. I took it only on certaicL personal and poMtical grounds; I therefore happen to be a United States district attorney with, perhaps, more experience in the gen- eral practice of the law than most of the holders of that office have. The department was very heavily overloaded this year with Sher- man Act busiaess, and when prices began skyrocketiug along in the late fall, the Attorney General asked me if I would undertake, in addition to the duties of my office of district attorney, to coordinate the investigations then being made in various jurisdictions. There was more or less exaggeration and some degree of misappre- hension in the newspapers as to the functions that I was to perform. I did not undertake a widely ramifying general investigation with new forces; but having had more experience than most of the United States attorneys I was asked to undertake some coordination of the investigations that they were making. I have been at it ever since,. directly or indirectly. I have consequently had an excellent oppor- tunity to watch and study the relation of prices to existing laws and to analyze oiir economic situation. Mr. Robert W. ChUds, a weU- known lawyer of Chicago, who is here in the room, was, at my sugges- tion, put in charge of certain investigations which were made in Chicago; Mr. Frank M. Swacker, who has been with the Department of Justice for some years, was also put in general charge of investiga- tions in New York, and he .is still operating there, and Mr. Edward A. Adler, who is a very brilliant law writer essayist, as well as an expe- rienced practicing lawyer, was made special assistant to the Attorney General. He has written some very scholarly articles, which were published in the Harvard Law Review, on the relation of modern business to modern law, which excited a good deal of comment. He has written for us recently two or three very scholarly papers on the nature and extent of power under the commerce clause of our Con- stitution and on the scope and meaning of section 2 of the Sherman Act. He knows all of the laws relative to price fixing from the time of Babylon down, as I once told him. He says there was a law enacted in Babylon to meet just about such a situation as we have now. Our investigations took a rather wide range. We came early m contact with the departments here at Washington, particularly with the Department of Agriculture, for the personnel of which I con- ceived the very highest admiration and respect. Very hkely a hke acquaintance with the personnel of the other departments would have aroused in me a hke admiration and respect. We took avail- 378 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. ' able data from the departments here and made a pretty careful study of it. We had available the results of the vanous investiga-, tions that had been made by the Department of Justice throilgh; various agents who had been investigating the question of prices m various parts of the country. Those reports came before us, and were carefully collated and compared, and followed up where there was any necessity to do so. There were, also, a lot of so-called "H. C. L. Commissions " in the country, some of which got out very intelligent reports. We collected the most of these reports, and culled them, through for such information and advice as we thought we could derive therefrom. So that I suppose, without assuming that we could know it all — because nobody can know much in these chaotic times with any certainty that he knows it — I suppose that perhaps we ranged over the field of existing law and the possibihty of controlHng funda- mentally important conditions under existing law, as widely as any men could do under the circumstances. I do not say that as a pre- mise, or that I feel that we have become a fount of wisdom. 1 might have added that we have examined about all of the available htera- ture concerning European experience. I do not regard any of the available literature as giving very satisfactory data for a full and complete study of the way legislation and orders over there have actually worked; but such as there is we have studied it. I have two suggestions that I am desirous of making to this com- mittee: One is that I think that there ought to be certain changes made in our permanent law. One change I have suggested which I think everybody has agreed to : I want to urge it upon the conimittee as absolutely necessary. Because after five months' of work the accomphshments which I might otherwise have been able to par- ticipate in have, in my opinion, been impossible. We had not been at this job of trying to find out the relation between rising prices and possible combinations and conspiracies in restraint of trade for two weeks before we found that it was utterly impossible, with the inadequate organization of the Government and industries in this country, to find out what the food supphes were. I do not mean the food supphes in the isolated farmers' graneries and cellars ; but I mean in the food reservoirs, such as storage warehouses, etc. It is true that we do get from some of them informal and unauthenti- cated returns to the Department of Agriculture. But there are no complete and verified returns. Now, suppose some dealers or speculators should desire to under- take to corner, at any particular time, some particular food product. Obviously the great food-storage reservoirs — storage warehouses, elevators, etc. — would be the natural place at which they would attempt to corner the product and conceal it from the pubMc. We could not find out what there was in Chicago, what tnere was in Buffalo, Duluth, or in Boston, unless we went before the grand jurj^, got a Ust of them, and put them through a long examination, within which time they might have changed their status entirely. It seems to be to be utterly absurd that an intelligent people as highly organized as we are should not have the power which would at least give us authenticated, verified returns from all of our storage ware- houses as to what they have on hand at any particular time. I know of no difference of opinion on that point. POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 379 There is no difference of opinion upon the question that the De- partment of Agriculture should be vested with that power As early as December 12, 1916, I made that recommendation. I under- stand, although I speak not with authority, that that power has been long desired by t e Department of Agriculture. A bill was drafted , I thmk, by Mr. Caffey, and was submitted at the last session of Congress, but it failed, I think, in the confusion of the final ad- journment. I want to emphasize to this committee that a large part of the labors of the officers of the Department of Justice this last winter has been probably wasted because of the failure to have that perfectly obvious piece of governmental machinery at hand to find out what there was at any time being put away in these storage warehouses. The Chairmai^. Mr. Anderson, I will say, in order that the record may show it, that it was undertaken to offer on the floor of the House an amendment to the Agricultural appropriation bill which would have given the Department of Agriculture the authority of which you have spoken, but under the parliamentary procedure of the House, a pomt of order was sustained against that proposition. Mr. Anderson. I did not know why it failed, but I do want to impress upon this committee the fact that we found after being engaged for four or five months in this work, that it was absolutely futile to undertake to get these corners in food products with the machinery that the Department of Justice has, adequate as it is for certain purposes. Until you vest the Department of Agriculture with the right to find out at any time what there is in the storage ware- houses, satisfactory results can not be accomplished. The Chairman. I do not want to interrupt you, Mr. Anderson, but if you will permit me again, I will say that this committee has already reported a bill giving the Department of Agriculture full power to make those investigations, and that bill is now the unfinished business of the House when the revenue bill is out of the way. So that I think the committee is in agreement with your views on that. Mr. Anderson. Then, I will spena no further time on that subject. Now, my other suggestion is as to certain permanent changes in the law, ana I should like to make a very brief statement regarding that point. I understand that the attitude of the committee and of Congress is (very naturally) to deal with emergencies by emergency legislation. I quite agree that such should be the general course of legislation in these times. But if, because of the experiences that we are now having, it becomes apparent that there ought to be certain changes in our permanent provisions of law, I venture to think it would be unwise not to make those changes now. I think that section 6 of the Sherman Act ought to be so amended as to arm the Attorney General with power to seize articles which are thought to be the subject matter of conspiracies in restraint of trade or monopolies — condemned in sections 1 and 2 — and cause them to be marketed; that is, sold at such times, at such places, and at such prices as the Attorney General may order, leaving the condemnation proceedings to follow the sale, and not, as now (unless it be perish- able stuff), to precede the sale. Section 6 of the Sherman Act has never been used but once. It provides in substance that articles of commerce which are the subject matter of the iUegal acts con- demned by sections 1 and 2 may be seized and forfeited, to the 380 FOOD PRODUCTION, COSTSEEVATION, AND DISTRIBUTIOK'. United States, like smuggled goods. Now, this provision is too'drastic to be of any value. Justice McReynolds, when he was a Special Assistant Attorney General, years ago did seize some cigarettes under that provision; that is the only time that the section has ever been used. My view is that if it be justly suspected that potatoes, onions, eggs, or other necessaries are being held in too large quanti- ties in certain places, and that they are probably held under combina- tions in restraint df trade, instead of gomg about the slow and almost impossible process of getting evidence m proof of such suspected illegahty, and then trying it out perhaps on the criminal side of the act, or through a civil proceeding, that the Attorney General should be empowered to authorize the seizm-e of such products and their marketing. Then let the condemnation proceedmgs be brought in the proper district. There should be another change, because the present remedy is so drastic that in all doubtful cases you are hkely to have the court or jury decide against you. Courts and juries do not like the idea of excessive pmiishment of a man who has perhaps gotten only a little over the line — ^has for example been talking too much about the profits he will make. But if you penalize such wrongdoing, say 10 to 50 per cent of the value of the cornered products, your remedy would be much more certain of application. Your unfair trader, your hoarder, your combiner-in-restraint-of-trade will be really hit to such an extent that he wiU quit that sort of imfair game. I be- lieve that section 6 of the Sherman Afct so changed would be of great value permanently. As it is now it is worthless. The remaining point that I want to bring to the attention of the committee is this: At present the consuming public is helpless under the eixisting law. I want to make my testimony emphatic, after four months spent in trying to see 'what can be done under the exist- ing law — to the fact that existiag law wiU not control prices and keep them within any sensible relation to the cost of production, past or prospective, or to incomes, salaries, and wages. I might put my proposition pretty nearly in these words: You either must vest some governmental authority with power to control prices within certain limits, or you are going to leavfe your consuming public at the mercy of prices made by speculators. You can not get the evidence in season to stop the exploitation of the consuming pubHc. In only a few cases can you subsequently get evidence sufficient to convict the persons who by combinations and conspiracies in restraint of trade have exploited the consuming public. For instance, suppose you take the potato market. Let me give you that as an actual illustration. Aroostook County, Me., produces a large part of the potatoes used in the Bast. When I was up there in September they were roUiag in wealth. They were getting about S2.50 per barrel for their potatoes; $1.50 per barrel represented approximately the fair cost of production. Pota- toes went up, until in November they were $4 per barrel. I heard the representative of a large dealer testify that his house quit buying potatoes when they went to $4 per barrel, because he did not regQ,ra it any longer really business, but gambling. Later potatoes went to 15 or more. But in January and February, when there were practically no cars available in which to make shipments of pota- toes out of Aroostook County, the dealers down there got to trading POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 381 "witli each other; the quotations based On those transactions were, of course, wired out. But, as I said, there were no cars in which potatoes could be moved from Aroostook County. The price went up to $8, $10, and even $12 per barrel, based on those trades that were made down there. One man on the stand testified that he bought 5,000 barrels at $10 per barrel. He had at that time received delivery of only 300 barrels. But he said under oath that he ex- pected to take and pay for the whole lot. What happened was that, while potatoes did not move out of Aroostook County while the market price was being made in the way I have described, to any considerable degree, some of the same con- cerns deahng in potatoes in New York, Boston, and other places, sold them to the consuming public at proportionate prices, i. e., somewhat higher prices. The consuming public paid those speculative prices that were made in that way. In other words, you had your farmer or potato grower, who got possibly $2.50 per barrel on the average for his potatoes; you had your consuming public paying nobody knows what average price for them. But the fact is that large quantities were sold to retailers and consumers at $10 and $12 per barrel; I do not know but what they sold as high as $15 per barrel. Now, who got that profit? The speculators and some dealers. It is very rarely the case that a man brought up under American conditions does not take all the profit that the traffic wiU bear. In the case of the onion market, the price went from about 1^ cents per pound to 15 cents per pound. Whether there wiU be indictments in any of these cases, you would not expect me here to say. Without regard to whether we succeed in indicting or convict- ing anybody, the evil has been done; you can not reach it under existing law. The evidence of the conspiracy is in such cases the accomplishment of the conspiracy. The extortion has been success- ful; the money has been paid. Rarely can you get evidence to con- vict when you morally know an offense has been committed. The telephone is the medium of communication. Suppose you were engaged in the potato business and wanted to form a conspiracy to put up prices — you would not gather in this room. The wise ones have no meetings; they do not telegraph or write, but they telephone. What are we to do about it when we have nothing but moral evidence? You find a set of dealers who are apparently inspired by the same motive, putting up prices. But they all say that it is simply a matter of "supply and demand." Maybe it is supply and demand- maybe they have been talking together over the telephone. If you are a representative of the Department of Justice, although you may morafiy Imow that there is a conspiracy, you are abso- lutely helpless when you undertake, under existing law, to mdict them and convict them . You can do nothing until you have evidence to show that there is a combination. You may go up and down the country spending the Government's money through special agents, while they may be operating right around under your nose, it is a very exasperating job, gentlemen. . Consider the coal situation as it now is. Bituminous coal has probably been hitherto produced in considerable quantities at less than fair cost. It has been produced in large quantities at a very low price at some mines. Bituminous coal m April, 1916, according 382 FOOD PKODUCTION, CONSERVATION, AND DISTKIBUTION. to reports which I have here, was selling at the mines for from 71 cents to $1.50 per ton. To that add freight and cost of handling to get the different prices at different points. Our public utility com- panies, railroad companies, and large manufacturing concerns in New England have generally paid for bituminous coal $3.50 to $4.50 per ton delivered at tidewater. This same report shows that in April, 1917, the prices of bituminous coal were from $2.50 to $5 or $6 per ton. That means that unless something is done the entire cost of bituminous coal (which is, of course, a basic cost of all of our rail- roads and for nearly all of our large industries) will be from 100 to 200 per cent higher, or 2 to 3 times what it was last year. The fact is that what we call "the economic law of demand and supply" has ceased to make prices; that present prices, measured in money, bear no relation to any accepted standard. You are now facing this very difficult situation. Of course, you do not expect me to discuss the details of this bill. I limited myself in a report I made on April 16 to the Attorney General to the very mild suggestion that there be a maximum price fixed; that maximum price to be in each case above what is believed to be a reasonable price — thus leaving full play for the law of demand and supply — -a full incentive for increased production. For illustration, take the case of potatoes: Potatoes ought to be sold next year for not more than $3 per barrel. But I would not put $3 per barrel as the maxi- mum price; I might put $4 as the maximum price. I might even make $5 the maximum price. Then if the farmer goes ahead and plants, and produces large quantities, or if conditions are better you could get full advantage of the law of demand and supply, so that the consuming community would be protected. On the other hand, if there be a short crop, then the farmer, know- ing that $5 is the maximum, will press hard to get a very large pro- portion of that maximum price. Such a plan would cut off specula- tion such as I instanced to you as occurring in January and February. So in onions. So, perhaps, in coal. Coal may require different treat- ment. Coal is urdike an agricultural product. There is just as much coal now as there was two years ago. The cost of putting coal to the mouth of the pit has increased perhaps from 25 to 40 cents a ton. Freight to tidewater, I think, has increased from most mines 10 cents or perhaps 15 cents. The cost of handling coal in the cities for de- livery has increased perhaps 10 cents to 15 cents. It may thus be that the total cost of getting bituminous coal from the mine to the New England tidewater has increased 75 cents to $1. What justifi- cation is there for allowing the consuming public to be charged $4 to $5 increase ? Where is the justice in a system of government which, in time of war, when we are in a struggle for the rights of mankind, permits the mass of mankind here to be exploited by the few of man- kind in any such fashion as that ? Now you are compelled to do something. If world conditions continue as they now are, or anything approximating the present conditions, the social upheavel, the political upheavel which may be threatened, can not be disregarded. I have already seen signs of it. There will be phenomena in America inconsistent with that regard for law and order and that belief in the justice and adequacy of our FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 383 Goveriiment in which we Americans are accustomed to pride our- selves. I felt, therefore, gentlemen, that having had this experience of what can and can not be done under existing law, without being in any sense a fount of wisdom, or having any dogmatic notions beyond what I have stated, I should do somewhat less than my duty if I did not come here and express to you some of the views formed as a result of my experience. I could give you facts and experiences for two day^, but that you do not wnat. The Chairman. Mr. Anderson, I am sure that every member of the committee feel with the chairman that we are under obhgation to you for your very interesting and able statement. Let me ask you if you have read carefully the provisions of H. R. 4125 ? ]Mr. Anderson. I have read it with some care; yes. The Chairman. Not in its details, but as a general proposition, do you think the provision of this bill will meet the situation that you describe ? Mr. Anderson. The grant of power seems to me to be very large. Undoubtedly, you would want to change the form of expression in some particulars. I do not think I should be willing to say I should expect Congress to give any larger grant of power than this bUl con- templates. Whether the exact machinery here suggested is the best machinery I do not venture now to discuss. The Chairman. Is it your view, however, that some large grant of power must be given in order to reach the conditions which you say is now upon us and may get worse if something is not done ? Mr. Anderson. I am perfectly sure we have got to have legis- lation; we ought to have had legislation by the last Congress — months ago. If it be desirable that there should be a minimum price — that is, a guarantee so as to induce production--it is a great mistake that that was not done months ago before planting. Now, as I stated to you, Mr. Chairman, I limited my suggestions to the Attor- ney General in the report I made on April 16, to the fixing of maximum prices, makmg the maximum very high, thmking thus you would furnish sufficient incentive for increased production. But my mind would be entirely open, if I were a member of this com- mittee, as to whether we ought not to go further and put the Govern- ment back of the producer by way of guarantee. My mind would be entirely open on that point. The Chairman. Assuming we must grant large powers to some- one Mr Anderson, to control the situation, in whom would you suggest that that power should be lodged, if you have an opinion "^S-.*A^DERSON. Obviously a large part of them should be vested in the Department of Agriculture. Whether you should undertake to vest in that department the fixing of prices for coal which is as im- portant as the price of wheat, I should suppose is at least a matter ot Houbt. I had assumed you would equip the various departments- Commerce, for instance, has to do with fish-with ^e^tam additional powers tending to increase production, and that price &^ng mrght very well be dllegated either to a special commission or to the Presi- dent to be carried out through such machmery as he might be left at liberty to devise himself. 384 FOOD PEODUCTION, CONSEBVATION, AND DISTEIBUTIOISr. The Chairman. Would you suggest, then, Mx. Anderson, that the purely administrative powers should be conferrred upon the existing agencies of the Governmeht and tha,t the larger, rfegtilatory powers stated in this bill should be vested either in the President or a specially created commission ? Mr. Anderson. That would be my off-hand notion, because I am not in accord with certain views I have heard expressed here that Congress at the present time should limit itself to emergency legisla- tion only, with a time limit, and then let it aU go by the board. You need to give the Department of Agriculture certain additional powers. It may very likely be that you will want to deal with cer- tain licensing, at any rate, of the produce exchanges. I have not yet read what the Secretary said, but if I had your responsibility I should .want to know what the Secretary of Agriculture thought about giving him certain general, regulatory control over the pro- duce exchanges and boards of trade. These concerns are in a dan- gerous situation. The Chairman. This biU vests that authority in the President of the United States. Mr. Anderson. Yes; but it it only emergency legislation, Mr. Chairman. The Chairman. That is true. You think, Mr. Anderson, that the way of all ways to reach the situation brought about through corner- ing, hoarding, and undue manipulation and speculation wiU be through the power to seize and confiscate the property, if necessary, under the processes of the law, of course? Mr. Anderson. I think that Would be a very wise additional power to give the department at all times. I would not make the confis- cation entire. I would make it partial. The Government would make mistakes sometimes and would seize something that it probably ought not to seize. But it is a power which I do not think would often be abused. The Chairman. The testimony before this committee on the proposition of price fixing is varied. Let me ask you if you thiiik a maximum basic price would be necessary to control the prices of food to, the consumers if you had this power of partial confiscation, if you had the power to regulate speculative exchanges, and if you had the power to handle the transportation problem in this country at this time? Mr. Anderson. That is a pretty far-reaching question, Mr. Chairr man. I should still be in grave doubt as to ■raether you would Hot find them escaping you,, getting up new plans of gambhng that would get by you and accomplish the same evil results before you could meet them. If you had a law to the effect that no contract for the sale of potatoes in excess of say, $5 a barrel, or whatever price was deemed to be a very large maximum price, in interstate commerce — ■ which of course would be the extent of the powers here — should be enforceable; that such a contract should be illegal and that anybody engaging in it was also guilty of a misdemeanor — I think you' would come pretty near stopping that. But whether in control of the pro- duce exchanges and m quickening transportation you would prevent their getting oy you I should be in grave doubt. The Chairman. There is some apprehension, Mr. Anderson, on the part of Members of Congress generally and some members of this POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 385 committee that the fixing of a maximum price might work an in- justice to a large number of men engaged both in the production and ^ distribution of food. The suggestion has been made that there might be worked out a maximum provision which would apply to the indi- vidual cornerer or hoarder for the time being in the locality in which he was operating, and that that maximum price would not apply to the article m general over the United States, but to the particular individual at the particular time and the particular locality What do you think of that suggestion ? Mr Anderson. I think you have got to give areas and put pretty flexible power into the hands of your commission. You could not put it m the mandate of a single statute. You have got to give broad power to the commission. The Chairman. We appreciate that. Mr. Anderson. But I do not see how you are going to do any mjustice to anybody unless your commission makes a grave *error and fixes the maximum price too low. With somethmg in the statute which indicated that the maximum price was not expected to be a reasonable price, but that Congress was relying upon supply and demand to give a reasonable price and general regulation and control of holding, and aU that sort of thing, your maximum price would merely be fixed to prevent panics and skyrocketing and this wild speculation. Unless you have watched it, you have no idea how far it goes. They put sugar in northern Massachusetts up to 25 cents a pound, in a panic growing out of some newspaper head lines which 1 will not stop to talk about, and women went down to the grocery stores and bankrupted the grocery stores by buying up sugar to last until next fall, thmking they were not going to be able to get any more sugar. The Chairman. That is just the point some of us have in mind. There was a local situation created by local conditions, a sugar panic within that city. Now, that panic did not extend beyond the bor- ders of that city; it did not touch Chicago; it did not touch Wash- ington, probably, or any of the cities in South Carolina. Now, the E reposition is to apply your maximum to that situation locally and reak that comer as it exists locally, rather than apply the maximum to that one article of sugar throughout the United States and work an injustice on some people not engaged in the evil practice. Mr. Anderson. There would be no injustice. Suppose 10 cents had been the maximum price. They could not have had that panic. There was plenty of sugar to be had if they had only waited until our inadequate transportation facilities could get it there and bring the price down to 8 cents. They went off into a panic just as unrea- sonable as a panic on the stock market or a run on a savings bank, and they felt there was not going to be any more sugar. It is just that kind of thing which causes a panic. Often it is a promoted panic, which is in danger of occurring just as long as we have this situation with demand greater than supply. Let me tell you what a friend of mine in the leather business said about what he was doing last fall : A fellow would come in and say, "What is leather to-day?" — these figures are simply illustrative— "32 cents." "That is an awful price," he would say. " It is, and I would not buy any." The other man would say, "I have got to have some. How much have 104176—17 ^25 386 FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. you got?" The reply would be, "I have not got very much." He would then say that he wanted so much and this man would reply, "I will let you have two-thirds of that." The next fellow would come along and say, "What is leather to-day?" and the reply would be "34 cents." He would go into a burst of frenzy ard the result would be that he would let him have two-thirds. To the next fellow who came the price would be 36 cents. It went up with exactly the same absurdity that you have watched the stock market rise when the people get crazy. Now that condition has gone on and is likely to go on throughout nearly all the price ranges of the neces- saries of life, and my notion for a maximtun price is, not to under- take to make it a reasonable price, but to prevent the panics, whether they grow out of hysteria, or whether they are promoted by a lot of fellows who are getting together and saying "Let us put up prices." Mr. Childs, I think, was tdling me the other day about some dealers out in Chicago who said "We will have eggs or potatoes at such a price on such a day. It is perfectly easy to do it in the present con- dition, just as easy as it was in the Leiter days, when Leiter and Armour were buying up aU the wheat, for them to put wheat up 5 cents a day or 5 cents an hour or whatever it was." The Chairman. Just one further question. Is your report to the Attorney General available to the pubhc ? Mr. Anderson. It is available to you. I do not know whether I ought, without his express permission, to allow it to go into the printed record or not. The Chairman. You referred to giving power to the Attorney General to require the sale of property with a view to subsequent condemnation proceedings. Is it your idea that the Attorney General should be authorized to require the sale in the open market ? Mr. Anderson. Yes; at such time and under such condition and at such prices as he might determine. Mr. AirDEESON of Minnesota. But you think it would be necessary, if that were done, either for the United States Government to institute condemnation proceedings, or to leave to the party who is required to sell a legal method by which he would, if he suffered a loss, recover the loss from the Government ? Mr. Anderson. I think the latter is necessary. I think you have got to institute condemnation proceedings. You can not take a man's property away from him without due process of law, and if you have taken property he is holding legally, not under any illegal combination, he is entitled to the full vSue of it, whatever the jury may find that to be. If it is held illegally, like smuggled goods, you can confiscate the whole of it, or take the less drastic measure I have indicated of taking only a percentage of it. • Mr. Anderson of Minnesota. The biU which we are now consider- ing apparently authorizes the President through such agency as he may create to require the sale of property in case the President or the agency whoever it may be finds it is hoarded, without any pro- vision either for condemnation or a suit to recover the value as against the Government. I have been under the impression that that was not a vahd provision. Do you care to express an opinion upon that ? Mr. Anderson. I note that this entire bill is groimded on war powers. It is an emergency bill. There is nothing in the law books FOOD PRODUCTION, CONSERVATION, AND DISTKIBUTION. 387 which enables one to form a very definite or Hmited opinion as to the extent of the war power. We all agree that the Government may- take our lives, anJ in the form of taxation, for war purposes, may take all our property. Whether the Government can tell me to use my back yard for a hennery, on the ground that they are going to need more eggs, and that they draft me to raise chickens and eggs, instead of drafting me to shoot somebody, is a question perhaps of degree. It sounds absurd when you put an absurd illustration; but, on the other hand, it is pretty good logic to say if you and I can have our last dollar and our lives and our limbs taken away from us in the national de- fense, that the same Government, which has that right to perpetuate itself, can not draft people to raise eggs and chickens, and that they can not tell people, if they have eggs and chickens, that they have got to put them in the market to feed other citizens to fight other folks. That is where your logic leads. I quite agree with you that unless you ground that on the war power, the limits of which I do not know, if there are any, I do not believe it is constitutional. Mr. Adler has written a very learned article, by the way, on the extent of the com- merce clause which all of you lawyers wiU be interested in if the Attorney General allows it to be printed. He has a notion, which I think is well grounded (going way back to John Marshall's definition of the extent of the commerce clause), which goes beyond the com- monly accepted view among lawyers to-day. Mr. Anderson of Minnesota. We wiU be very glad to have that, 1 am sure. I do not think there is anything- further I want to ask except I assume there is some limitation upon the war power; that there could not be a suspension of a constitutional guaranty unless there was a condition of which the court could take judicial notice, or which was susceptible of proof justifying the suspension of the guaranty under specified conditions. Mr. Anderson. Well, the MiUigan case indicates- what the Supreme Court thought after the war was over, relative to mihtary commis- sions and sentencing men to be hung when the courts were available in the same State. I inquired, yesterday, down at the Department of Justice if there had been any formal opinions prepared on the extent of the war power and I understood there had not been, and up m my ofiice, in such time as we have had to give to it, we have not been able to find verv much that illuminates the general principle that the war power is or may be under certain conditions practically a limit- less power. , . . . ,- Mr Wilson Mr. Anderson, have you been making any investiga- tions on the high cost of necessaries of life other than what you have spoken about here to-day, such as cotton and woolen goods and boots ^\t Anderson. There has been no particular investigation of boots and shoes and cotton and woolen goods. We limited ourselves mainly to coal and food. We did not go mto the manufactm-ed ^""Mr"" Wilson. That is what I wanted to know You have not had the manufactured products undei consideration? Mr Andef. son. Not any special study; no. , , _ , Mv McKiNiEY. In this^iU it is provided that the Government, or The one man, can compel a man, if it is thought that some indi- 388 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. vidual has too much of any product, to go and sell it. Do you not think that if such power is given the Government ought to furnish a buyer ? Mr. Anderson. Under certain conceivable conditions; no. Of course, the answer of the owner would be pretty adequate, being ordered to bring into market something he was charged with hoard- ing, and there was not any market for it. My old professor of polit- ical economy used to say that the best sentence he ever composed in his life was this: "A market for products is products in market," and if the President of the United States is granted by Congress power to tell a man to bring his product into market and there is not any market there, you can not really hold him for a crime, because a buyer does not appear, I suppose. Mr. McKiNLET. The provision in this bill does hold that as a crime if he does not sell it ? Mr. Anderson. An offer to do a thing, I should suppose, would be held by a court, and certainly by a jury, if found to have been made in good faith, as equivalent to the d.oing of it. That would be an ordinary principle of law, certainly on the criminal side. Mr. McKiNLEY. Would it not be fair, if such power is given, for the Government to provide a market ? In other words, would it not be fair for the Government to buy it ? Mr. Andefson. There again, you are discussing war emergency legislation, and you are following a path uncharted by any experi- ments heretofore made. Nobody would contemplate for one moment such suggestions as some of the suggestions in this biU are, except for the fact that we are confronted with conditions that are entirely unprecedented, and our needs are greater than we ever thought we would face. I am not at aU prepared to criticise the suggested grant of power there. The right of the Government to take property for a fair value and thereafter selling it, I do not think can be questioned. Mr. McKiNLEY. I have been very much interested in your state- ment in regard to coal and coal prices, because I happen to be a large buyer of coal. Don't you thmk that perhaps the large increase in the price of coal, as well as other commodities, is on account of poor railroad transportation ? Mr. Anderson. In very large part. I think, if there were better transportation facilities, the mines would produce coal in suflB.cient quantities to make the price of the product nearly normal, although they might not be able to get the labor. Mr. McKiNLEY. My experience is that miners only work about two days in the week. Mr. Anderson. There was some assertion up there, but how true it is, I do not know, that the higher the wages paid the less the men work. Mr. McKiNLEY. That is on account of the lack of cars. Now, the railroads are short of equipment, as we aU admit, and a great many people think that the reason they are short of equipment and can not provide the facilities required is on account of the laws which we in Congress have passed during the last 10 years limiting their credit so that they can not borrow money. Under those circumstances, would it not perhaps be well for the Government to furnish a supply of cars and locomotives as well as to furnish a supply of ships ? FOOD PBODTJCTION, CONSERVATION, AND DISTMBUTTON. 389 Mr. Anderson. If I started to discuss the railroad question with you I am afraid the committee would throw me out. I was a pubUc service commissioner up in Massachusetts, and had a great deal to do with the New Haven Raiboad and the Bostoh & Maine, and I was representing the Commonwealth of Massachusetts at the time that the settlement was made of the cases against the New Haven. The question of who is to blame for the present inadequacy and ineffi- ciency of our railroad systems is a question that I could dilate on at some length, hut I think the country faces the question of whether it is going to stand another decade or two of the same kind of inade- quacy and inefficiency from the railroads that it has had for the last two decades. Now, whether the Government could furnish cars any naore rapidly than the present management of the raihoads can fur- nish them, I do not know. I might perhaps modifv what I have said by saying that for a lot of the men now engaged, in managing the railroads I have the profoundest admiration and respect. They have been struggling very hard with conditions for which they are not responsible, for they are inherited corporate sins. Therefore, I do not want the statement I made to indicate that I indulge in any general wild denunciations of the present railroad managers. Far be it from my thought. But, on the other hand, it is not true, and I can say it, I think, with some confidence, that the present deplorable condition of the railroads is to any substantial degree due to the apphcation of drastic credit limitations upon the railroads. There has been too little law as to the issuance of securities and their manipulation, and not too much law. There has been too little regulation. There has been too much opportunity for certain people who called themselves railroad mana- gers, but who had no more capacity to manage railroads than I have to run a submarine ; there has been too much opportunity for manipu- lation by those men who have disregarded every principle of elemen- tary arithmetic and of ordinary sound finance. They built railroads where there was no need for them, and issued securities of no value until at last an outraged investing public refused to furnish any more money. Then for a period of months, if not of years, through the newspapers they attacked Congress and the Interstate Commerce Commission for ruining the credit of the railroads — a credit that was already absolutely ruined by the men who were paying out of the treasuries of the raiboad companies for^the attacks that the news- papers were making upon Congress and the Interstate Commerce Commission. Pardon me, I was almost making a speech. Mr. McKiNLET. Is it not the present condition, either through the fault of the railroads or of Congress, or of the railroad managers or Congress, that we are short of a great deal of transportation that we need now ? Now, while we are attem^pting here by legislation to meet this condition, would it not be well, as long as the railroads, through mismanagement or otherwise, can not provide it, for the Government to buy freight cars and turn them over to the railroads, under Government control, so as to relieve that condition ? Mr. Anderson. It might be, but it might be better for the country to take them over. I am not sure but that the Government should next week take over every railroad in the country. I am not sure but that that should be done. However, it is a very comphcated problem I sat in some conferences last winter with some repre- i>90 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. sentatives of the Interstate Commerce Commission, and the gentle- men who appeared before them seemed to be exceedingly intelligent and patriotic in trying to deal with the question of car distribution. There were various railroads that owned various cars, and the prob- lem was almost too complicated for the human int^llect to deal with. Suppose the Government undertook to furnish freight cars. If the Government imdertook to build them, they would have to take possession of the manufactories, and the manufactories, or many of them, are owned by the railroad companies. Suppose you build 100,000 cars. What would you do? Would you turn them over as an equipment trust for the Interstate Commerce Commission to deal with ? I do not see how you would go ahead with it any further than I understand they are trying to go ahead with it. Mr. McKiNLEY. You would have these cars built by the railroads ? Mr. Anderson. I do not understand that any railroad is unable to provide cars to-day for the lack of credit. If there be any such, I do not know it. Mr. McKiNLEY. I understood that that was the reason. Mr. Anderson. I did not suppose that it was. Now, perhaps that is true as to the Boston & Maine Railroad, because it has not much credit. That is true, because it is in the hands of a receiver. That is possibly true of the New Haven, but it can not be true of the Pennsylvania Eaih-oad or the great transcontinental railroads whose stocks, or nearly all of whose stocks, are selling well above par. But I quite agree with you that, whatever the expense may be, and whether the Government takes them over, or, if necessary, whether the railroads are loaned the Government's credit in order to be prepared, this country ought not to undertake to struggle through the European war in a crippled condition because we can not move things about. We should not be in the condition that we were in last winter. I will tell you one thing that we did that I think helped out in the situation. In our coal investigation we found that there were some concerns that were holding up cars. They were boosting prices, and we, thereupon, devised what I thought was a rather ingenious scheme. We said to the railroad companies, "furnish us with the names of the consignees who are holding up cars for over 48 hours, and we wiU ask them what they are holding them for." Of course they were holding them for the purpose of boosting prices, and it was a conspiracy in restraint of trade. As a result of that, they moved those railroad cars with a celerity that was very interesting. Mr. McKixLEY. You believe that the Government should take over a great many of these matters through act of Congress, and that they should be administered by a commission. Now, would you not advise that that commission be made up of lame ducks that have been defeated for Congress ? Mr. Anderson. Well, I sometimes shed sympathetic tears when I do not want to be responsible for all that the object of my tears might do if he were put in some other place. Mr. Young of North Dakota. I would like to ask you whether you are the gentleman who prepared the report in the Pere Marquette case? Mr. Anderson. No, sir; I did not. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 391 Mr. Young of North Dakota. The gentleman's very exceUent statement was so much m hne with the report in that case that 1 thought possibly he had written the report Mr. Anderson. No, sir; I did not write it. Mr. Young of North Dakota. You suggested that section 6 might need some amendment, or might possibly need a substitute section. >T ""^^lerstand you to refer to section 6 of this bill« Mr. Anderson. No, sir; I referred to section 6 of the Sherman Act. Mr. Wilson. Don't you think that somethmg should be done to relieve the congestion at the seaports of cars that are loaded with products for exportation ? Mr. Anderson. Yes, sir; I think so, but I do not know what could be done. Mr. Wilson. Have you given that any thought? Mr. Anderson. We have given it very painful thought. Mr. Wilson. What has been the result of your investigation of that subject? Mr. Anderson. Well, that condition varies from time to time. Of course, there came the time when exportations dropped off because of fright on account of the German tJ boats. That seemed to be a problem that was beyond the reach of human foresight. About aU that you could say about it was that it was one of the most embar- rassing transportation problems that ever confronted anybody. There was an inadequacy of bottoms, and then there was the U-boat fright when they had the bottoms. There was every possible em- barrassing condition. Everybody was trying to get ahead. Mr. Wilson. In making that investigation, did you have figures showing the number of cars that were held at the seaboard ? Mr. Anderson. Yes, sir; we had large figures from time to time. We had quite lengthy reports on that subject. The Chairman. We are very much obliged to you for your state- ment. We are fortunate in having with us this morning Gov. Eberhart, of Minnesota, who desires to address the committee. STATEMENT OF HOW. ADOIPH 0. EBERHAET, OF MINNESOTA. Mr. Eberhart. Mr. Chairman and gentlemen of the committee, I want to say to you that I am very much impressed with the statement made by Mr. Anderson as to the importance of this committee and its functions in this Congress. I think that it has considered and is now considering the most important problems before this country. I want to say in advance that I am not looking for any job for myself or for any office. I am interested in agriculture and in the develop- ment of food production. Now, what I shall say to you has perhaps occurred to every one of you, and it may have been considered, i think it is an important matter, and perhaps every one of you has thought of it, too. The tnree, four, or five States neighboring Minnesota, like South Dakota, North Dakota, and Montana have approximately four or five milhon acres of prairie, school, and university lands. They are owned by the States, and they are not developed. Now, it seems to me that 392 FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. the Government should be put in the position where it could take over those lands and use tha agricultural college people in their cultiva- tion, and to finance the raising of crops. Tnat could De immediately put into action, and it would mean tha cultivation of about 2,000,000 acres of State lands, making quite a large increase in our production. Now, I realize that there are some very serious difficmties in the way qf doing it and that time is going on. Yet I behave that this Congress has acted as quickly as it could, and that this question could not have been considered sooner. However, if it were con- sidered immediately, the action I have indicated could be taken. It would probably cost about $10 per acre to finance for agricultural purpose, say, 2,000,000 acres of the best State lands owned by those three or four States. For the second year the appropriation might not need to be more than $5 per acre, and the next year not more than $3 per acre, and so on. If this war lasts for three years, as we hope it will not, but as it is Mkely to do, the expense to the Government would not be anything, because the returns, figuring wheat at approximately $1.50 per bushel, would pay back to the Government all of the expense within that period of three years, and perhaps sooner. The States would profit by it, because I think the Government should pay to them a certam amount per acre for the lease of the lands, say, for the first-class lands for the first year 50 cents per acre, and for the second-class lands about 25 cents per acre. For the second and third year they should receive for the first-class lands about $1 per acre and for the other lands about 50 cents per acre. There is a serious question connected with it, and that is whether the States would be able to do it. They may not have that authority, but I think it would be worth while for Congress to make that request of those States, and if the States have not the authority they can call their legislatures in special session and have the authority granted. The labor situation should not be difficult under our conscription system, because there will be a large proportion of men disqualified for Army and Navy service, and those men could be put at agricul- tural work. It does not involve a very serious question of transpor- tation, because when this commission that is contemplated by the committee is put in charge of food supplies, foodstuffs will be given the preference in transportation, and if an additional amount of foodstuffs is produced in those States, it will be taken care of. Now, as to the question of whether or not it will have a tendency to decrease prices — because the farmers might think that if the Nation goes into the agricultural business there will be a reduction in the value of agricultural products — that question will be answered by the authority put in the hands of the President, or the commission, to regulate prices so as to secure to the farmers fair prices for what they produce. It seems to me that if the cultivation of 2,000,000 acres were undertaken, it might require the purchase of 5,000 big tractors. They could be bought, and we could get the agricultural colleges to put good men in charge of them. They might furnish other experts, and you might require each organization to have charge of, say, 300 acres or have two sets of outfits ia each section, put up a tent, require the Army rules to govern, and then we can go into the cities and conscript the necessary men without any difficulty. FOOD PEODUCTION, CONSERVATION, AND DISTBIBUTION. 393 As to the cost to the Government, while in the beginning it might require an outlay of $20,000,000 for 2,000,000 acres, it would be returned withm two or three years. I think the food problem is a serious one, although there has been too much said about it in the past 1- li^^* • ^ "^^ ^^*^^ *'^®^ fearful about it, but the production should be increased, and here is a chance to get from two to three or four or five million acres of the best prairie land right ready for cultivation. It can not be done by the State because the State has not adequate machinery. It can not handle the labor situation, it can not handle the transportation question, and it has not the ready funds. The question of securing the consent of the legislature would be an easy one. There would not be any opposition to it, and it seems to me it is important to bring mider cultivation all of this wheat land. Of course, the first year, beginning now, the first crop would be largely a forage crop and would not bring a very large return, but we would have the land ready for the next year and the following year. I do not know whether this can be brought about now, but I think it is worthy of being given most careful and serious consideration. There are no serious obstacles in the way which can not be over- come, and I beheve the States wiU readily respond. The States would f;ain by it. When the war is over and this emergency measure is no onger needed, the cash rental which the State would get from this land would be a great deal more than any other return they could pos- sibly get from the school lands. Minnesota has a school fund of about $30,000,000, but it can not be used for this purpose, and Minne- sota has not a very large amount of prairie school lands left. North Dakota, South Dakota, and Montana have very large amounts. Another very valuable return would be the return to our agricultural colleges. These men would get practical training in the field, and inasmuch as there are so many men disqualified for Army and Navy service, this would give them a chance to work outdoors, people who are not healthy and strong could work in the camps under army regulations and receive the best sort of training, and in addition to that bring returns to the State and the Nation. Now, I have not consulted any newspapers, I have not consulted the States, and have not consulted the departments. I thought the place to go was to go before this committee and ask whether or not it is too late to give the matter serious consideration. I do not know how far this committee has gone toward closing its deliberations, but it seems to me that if it could be taken up this year, and if these lands are to be ready for next year, action must be taken inamediately toward the solution of this problem, and secur- ing twenty or twentv-five million bushels of wheat every year from these State lands that are now not used for agricultural purposes. That is all, gentlemen. I feel that I should not detain you any longer. The Chairman. Governor, this is a very novel suggestion which has not been brought to the attention of the committee before, and I am sure the committee is very much interested in it and will give it consideration. Mr. Haugen. Governor, are these school lands accessible to the railroads, or they far away from railroads ? Are any of them close to the railroads ? 394 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBXJTION. Mr. Eberhart. Yes; a large number of them are very close to the railroads. Mr. Haugen. Have not those lands been picked up mostly ? Mr. Eberhart. No; South Dakota has about 1,750,000 acres and North Dakota about 1,500,000 acres. Mr. Haugen. I noticed in the papers awhile ago that quite a num- ber of the young men from the agricultiu-al colleges, and some young men from the colleges of Minnesota, have gone to Canada. Do they operate over there along the lines you suggest ? Mr. Eberhart. Yes; along the lines I have suggested. They are fetting $50 a month. Two hundred and fifty students left the Fniversity of Illinois, and they are now engaged on that work. Mr. Wilson. How many? Mr. Eberhart. I saw 252 at one time going through the station at St. Paul, and they are doing very wonderful work up there and getting credit for their work, and it is the best kind of experience that those young men can get. Mr. Haugen. Do they superintend the work on those farms ? Mr. Eberhart. No; these young men do the work imder super- visors selected by the Canadian Government, and the University of Illinois. Mr. Haugen. Have you any knowledge of the number that have gone to Canada ? Mr. Eberhart. At that time there were 252 from one imiversity. I do not know the total number that have gone into it, but a very large number. Mr. Haugen. Several from your university? Mr. Eberhart. Yes; from almost all the universities. Mr. Haugen. Did you mean that 252 had gone from all the uni- versities ? Mr. Eberhart. No; from the University of Illinois alone. Mr. Wilson. How are the people in Minnesota getting along with the labor question now? Mr. Eberhart. Well, so far we have not experienced any diffi- culties. The last legislature enacted some legislation which t think win help us with reference to the I. W. W. situation, and I think it wiU be quite effective in the future. If I may be permitted to add, Mr. Chairman, with reference to the control of the food situation, I think the biU under consideration is carefuUy safeguarded, and I believe the authority you have fixed in the Agricultural Department and in the President to control the situation is admirablei. I do not see how you can do otherwise than to enact that into law. I doubt if it would be a wise thing to fix prices immediately. I think that putting that express authority in the hands of some one who can do it at any time will be, for a long time, sufficient, and when it becomes necessary for him to use the authority there will be no trouble about it. If the authority is there, it is going to be a long step in the right direction, and up in Minnesota we are very much interested in securing the passage of this law as speedily as possible. Mr. McKiNLEY. Governor, do I understand that you feel your farmers will be satisfied to give the Department of Agriculture the right to fix in the future or at any time they please a price on the product that the f arme!rs are raising ? FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 395 Mr. Eberhaet. I think at the present time they will not require the imrnediate fixing of the price, but they demand that they shall have fair compensation for their farm produce, and they have con- fidence in the Government and in the President or the committee selected by the President to see to their getting a square deal. I believe you hear that sentiment expressed wherever the question is considered . Mr. Haugen . What will the consumer have to say about fixing the minimum price at a high price? Will the consumers be satisfied if the Congress authorizes the fixing of minimum prices, a guarantee of a good profit to the producer ? Mr. Eberhart. I think they would. I think the consumer will be satisfied with the conferring of the authority by the Government upon some body to fix the price when it becomes necessary to do it. Mr. Young of North Dakota. In North Dakota my impression is "that all these school lands and all the institutional lands are leased now to farmers for grazing, and I am assuming that perhaps the same condition exists in Minnesota, South Dakota, and Montana. If it were left to the legislatures, do you think they would be prevented or it would be impossible for them to pass any law that could take those lands away from those to whom they have already leased them ? Mr. Eberhart. I believe that the patriotic sentiment is so strong that when this question comes from Congress as a war measure no member of the legislature would refuse the granting of that authority. Mr. Young of North Dakota. You are speaking of the legislature. They might be wiUing to go ahead, but could they pass a law that would stand the test of the courts that would take away the lands that were leased to these people ? Mr. Eberhart. No, sir; but as to lands that have not been leased Mr. You^}G of North Dakota (interposing). Don't you thmk that this might be true, that while the legislature would act, it would take them quite a long time to get together and act on this question? Therefore, don't you think that the United States Government could conscript those lands— that is, take them from the people who are now using them for grazing purposes, pay them a reasonable amount for them, and use them for raising food supplies ? Mr. Eberhart. As an emergency measure, I think the Government could. . , . J. ^-u Mr. Young of North Dakota. Your suggestion has respect to the crop of 1918, or getting the land ready for cropping m 1918? Mr Eberhart. I think action could be had now by usmg tractors. These are prairie lands , and tractors are available for them . You could raise forage crops now. You could sow flax, barley, oats, corn peas, and plant potatoes, and you could get a very large crop o± torage during this year on the sod. , . , , . • , v,; iwv,^ Mr Young of North Dakota. I thmk that is a point on which the committee would like to have information. How soon would it be necessary to get in some of those crops if any action is to be taken *^Mr^ Eberhart. Durmg this month. It would do by the latter part of June, but not later. 396 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBUTION. Mr. Young of North Dakota. As this is an emergency proposition, if the committee has any notion of taking the matter up, I think this is a good time to do it. We should find out what is necessary to be done right now in order to utiUze those lands this year, and we should also have information as to when they would have to act in order to bring the lands into use next year. Mr. Ebeehart. I think as an emergency measure it would be necessary, first, to make available so much money for this purpose, and then have the Department of Agriculture, or some one selected by the President, put m charge of it. Tractors could be purchased and dehveries made, and then, if permission is given, men disquahfied for Army and Navy Service could be conscripted and made available for this work. Of course immediate action should be taken. If we do it now, then we could by next year get the lands in condition for a crop. Mr. Young of North Dakota. How late do you regard it as practica- ble to do breaking — that is, simply turning over the sod and putting the lands in such shape that they can be cropped? Mr. Eberhakt. That should be done late in the summer; but, so far as forage crops are concerned, it should be done in the latter part of June. Mr. McKiNLEY. Do you think that the cropping of this land, as you call it, by the Government, would interfere with the raising of beef cattle ? Mr. Ebeehart. I think it would help it, because it would furnish the first year a lot of forage crop, and the retm-ns from those lands would be infinitely greater. For instance, the rent for those lands would be three or foiu* times as much as they are getting now. The States would profit mostly by it. Mr. McKiNLEY. But would it not temporarily interfere with the raising of beef cattle ? Mr. Eberhart. It would not. If you picked out 2,000,000 acres of the best agricultural land in those three or four States, it would not materially interfere. Those lands that are fit only for grazing pur- poses are not included. They are farther west and farther from the railroads. You could not go too far away from transportation facilities, and I think that 2,000,000 acres would be all that would be considered now. There are, in fact, perhaps five or six million acres Mr. McKiNLEY (interposing). I had an idea that it would inter- fere with the range. Mr. Eberhart. It might interfere a little, but the things that the lands would be used for would be worth so much more that that inter- ference should not count. Mr. McKiNLEY. I have read in the papers, or have been informed, that a great many of the farmers are sending into the market unde- velopea cattle and hogs or pigs at this particular time, because thev believe that the Government is going to come in and take their stocfc at a less price than they can get now. I am informed that they are doing that now in order to save com and feed. I was wondering if they were doing that in your State, or what has been your observation as to that. Mr. Eberhart. There has been some of that, but the effect of this bill and assurance on the part of the Government that every farmer FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 397 wUl be treated right I think would remove that difficulty entirelv ihere is some fear. "^ •^' ^ww^Ju'^^^'- 9''^ °^ ^^^. P^^^*'^^ in Chicago made the state- ment that the market was bemg filled with undeveloped stock, and that It was never so fiUed with such stock as it has been this spring Mr. Eberhart The bringing into market of large forage crops this year would be a very valuable thing for that purpose, because It would help the farmers to take care of their stock Mr. DooLiTTLE. I want to offer the suggestion that one of the reasons, and one of the mam reasons, in my opinion, why this so- caUed undeveloped stock is going upon the market is because of the recent satisfactory prices that have been paid. The effect of good prices has been very great. Mr. Eberhart. Yes, sir. If the farmers are pretty sure that the prices will be stable and will keep up, they will not put on the market undeveloped cattle. If they have confidence in the Government, and are satisfied that there will not be a drop in the market, they wiU hold their cattle until they are in proper form. Mr. McLaughlin. If this matter is taken up, it will have to be worked out as to the details. You say that this would be very profit- able to the States in the end if these lands are improved. If that is true, why should they be paid a rental for the lands ? Mr. Eberhart. It will be profitable to them to some extent, but it would be necessary to call the legislatures into special session, and there would be some expense. The rent, of course, would be small. I do not mean a full rental, but a very small rental. Mr. Young of North Dakota. They would have to get it from the individuals who are now on the land. Mr. Eberhart. Yes, sir; they would get this land as it is turned over. Mr. McLaughlin. If the land is taken from those who occupy it, or is confiscated by the Government, they would be paid some compensation, but that would not be paying rent to the States. Mr. Young of North Dakota. I think the governor would agree to the proposition that if the lands are in the hands of private owners under lease from the States, they would have to be dealt with just as though they owned the lands, and the Government would have to conscript the lands and pay those people the value of them. The Chairman. Mr. Edwards, of Chicago, a dealer in grain feeds, is present and desires to make a brief statement to the committee. STATEMENT OF MR. SHERMAN T. EDWARDS, OF CHICAGO, ILL., REPRESElTTIirG THE AMERICAN POULTRY ASSO- CIATION AND THE AMERICAN FEED MANUFACTURERS' ASSOCIATION. Mr. Edwards. I have two points that I would like to present to the committee. One is the development of poultry and eggs, which I believe can, from the agricultural standpoint, develop more meat and more food soon than can be done by any other method. The Poultry Association of the United States comprises to-day about 25,000 members, and they have started a general campaign for the production of 100,000,000 pounds more of meat and eggs in the next 398 FOOD PBODUCTION, CONSERVATION, AND DISTEIBTJTION. six months. The American Feed Manufacturers Association has taken up this work and is distributing a large amoiint of information to assist in the work. We are very anxious for this committee to arrange for more cooperation on the part of the Department of Agriculture in the furtherance of this work. My other point is in connection with the American Feed Manu- facturers' Association, which is an organization comprising people who are engaged in the manufacture of feeds, principally of by-products from grains which are used first in the making of human food. In this work we are able to produce in many cases foods that are rich in value and at much less cost than the natural grains. We have in mind the development of a caK meal, or a feed for baby calves. In the State of Illinois two nurseries have been started in which they are saving heifer calves under three weeks old without giving them milk. In the other branch of the work there has been the develop- ment of a special feed for the production of eggs, in which there has been produced an increase of from 25 to 30 per cent; and the third' development has been to increase the weight of poultry to the extent of 35 per cent in 14 or 15 days. Part of those products are of natural grains and part of them by- products. Both associations desire to cooperate in every way possible and desire to work with the Agricultural Department, and I am here to extend that offer and to ask that this committee, if it is your direction or the Agricultural Department's direction, give us as much light as possible so that we may cooperate with you. I have been interested in this work and in the development of by-products for animal feeds for 22 years. I have been in the grain business since 1883, and a member of the Chicago Board of Trade. The American Feed Manufacturers' Association, although rather small, handles and ships approximately 2,500 carloads of feeds per day. I think that is about all I have to say, unless there are some questions the committee would Mke to ask me. The Chairman. Mr. Edwards, have you taken this matter up with the Department of Agricultin"e at all ? Mr. Edwards. Yes, sir; I have. The Chairman. Have you received satisfactory encouragement from them? Mr. Edwards. I have in the last two days; yes, sir. Mr. Thompson. You say your company manufactures this food which increases the production of eggs and poultry ? Mr. Edwards. Yes, sir. Mr. Heflin. Do you use any foodstuffs from grain that has been used in the brewing business ? Mr. Edwards. We do, sir; for dairy feed entirely, almost. Mr. Heflin. Is there any food value left in the grain after a good deal of the nutritious substance has been taken out for the making of beer? Mr. Edwards. There is very little nutrition taken out of the grain in the manufacture of alcohol or beer. The products we derive are richer by 250 per cent in protein and at least three times in fat. I am glad you speak of that, because I wish to bring out the fact that there is approximately from 500,000 to 750,000 tons of the by- product gotten from those three industries that we use in the devel- opment of dairy feed. FOOD PBODUCTION, CONSEE,VATION, AND DISTRIBUTION. 399 Mr. Heflin. What sort of process do you employ? Mr. Edavards. We use the goods after they have been dried in a mixture with sovoral other articles, such as bran and middlings and are able to develop over natural grain an average of 5 pounds of stutt per day more than we can from the straight grain, using the same amount and at considerably less cost on the market value Mr. Heflin. I have been under the impression that the barley used m making beer was taken entirely out of the feed supply or the bread supply. ^ •' Mr. Edw.vrds. The best information I have is that 30 per cent of the total weight of the grain used in the manufacture of malt and beer is returned m dry form. That drv form usually is considerably lower in moisture than the natural gram used in the first place. Mr. Heflin. You mean to say that you can make beer out of barley and then feed cattle with the remains of the barley ? Mr. Edwards. Yes, sir; we do. Mr. Heflin. And you do it in considera.ble quantity « Mr. Edwards. The Cornell College, of New York, recommends 500 pounds of grain after they are chied and come from the brewers and distillers, and at least seven or eight of the best colleges recommend that, and nearly all of the best manufacturers who manufacture dairy feed would be entirely upset in their method of making dairy feed if they did not have it. Mr. Heflin. What per cent of the food value is left after you get out the element used in making beer ? Mr. Edavards. By way of explanation, barley contains about 10 to 11 per cent, or an average of lOi per cent, the by-product, 30 per cent of the total weight coming back, has approximately 25 to 28 per cent protein, and about three times the quantity of fat that the grains contained originally. In the manufacture of beer and alcohol both, they take out but little of the rich value, only using the carbohydrates. I would like to call your attention, gentlemen, to the fact that that product comes to us practically in a form ready to feed, and there is no milling and no work on it. If we were obliged to take the natural grain and grind it, we would use, I would say, at least twice as much machinery, and it would take upward of one year, at least, to get the machinery ready to take the place of what we use now. I am not talking from the liquor side of the question. I never have been in favor of it as it has been used in the country. I am only talking for the conservation of this food, at least until we can get some other product, which the Chemistry Department at Washington may assist us in securing, to take the place of it. Mr. Heflin. I wanted to get your opinion about that. What other grain is used in the makmg of beer and then in the feeding of cattle Desides barley ? Mr. Edwards. About three-fourths of the total amount used, from the best figures I can obtain, is barley, and nearly all of the balance is com, a large percentage of it poor corn; that is, they can use the poor and damp and wet corn which would be unfit for human use, and make just as good alcohol from it. There is a little rice which is broken up and comes from the manufacture of rice for human food which is used, and also a very small quantity of wheat. Mr. Heflin. We have had up the question here, and it has been agitated for some time, Mr. Edwards, as to whether or not it would 400 FOOD PRODUCTION, CONSERVATION, AND DISTBIBTJTIOlSr. be wise to stop the use of ^ain during the war for making whisky and beer, and I am of the opinion it would be wise, and I just wanted to get your opinion on the proposition. Mr. Edwards. I would like to say that I know of no other use for the product except for the production of milk, and that is one of the very important foods for all of us, and I believe there are many dairies that are not making money to-day and are shipping their cattle, and Mr. Wilson has spoken of that here. We also find it in many reports from the dealers we sell meat to. We find that they are doing those things in the State of Illinois. I have looked into it quite extensively and we find a. large number of them shipping cattle with calves, • and the commissioner, W. Scott Mathews, has started a campaign about the question, which has been furthered and money contributed by the American Feed Association. Mr. Hatjgen. You say this product is used extensively for dairy feed? Mr. Edwards. Yes, sir. Mr. Haugen. They fatten a good many cattle at the distilleries, do they not ? Mr. Edwards. Not so many; no. Years ago they used the slop, before the mechanical equipment was provided for drying it. Now nearly aU of the product is dried and shipped and fed by dairies. . Mr. Haugen. And very Mttle fed to fatten cattle ? Mr. Edwards. Very little, indeed. Mr. Hutchinson. What effect would it have on your dairy-feed business if we put all the germ and middhngs and part of the bran into the human food ? Mr. Edwards. To cut down the bran supply would greatly inter- fere with it because it would take the supply away immediately before we could make any substitution or provision for it. Mr. Hutchinson. Would not that be a serious thing to do ? Mr. Edwards. It would be quite serious. The Chairman. Gentlemen, I submit for the record the following letter from Mr. Herbert C. Hoover : The New Willabd, Washington, May 17, 1917. Hon. AsBURY F. Lever, House of Representatives, Washington, D. C. Dear Mr. Lever: With regard to the food administration bill now pending I would like to mention some points for your consideration. 1. If this bill could be given the name of the food administration bill, it would be helpful in forming public opinion, for we do not want to give the complexion of food dictator or food controller, as this creates opposition at once. This is fundamentally an attempt to secure coordination and a wiser administration of the food supply in the country for both our own people and the allies. 2. The bill provides no method for securing information of any kind, and it will be impossible to take proper action in many directions without this power. The food administration will want to be able to secure such information with regard to dif- ferent subjects independently of the broad food survey proposed for tne Depart- ment of Agriculture, because their survey must be one of minute care and exactness and will be long delayed in its results, whereas the food administration might wish to set up short emergency investigations. Therefore I would suggest that something to the following effect might be introduced : "That the President, in order to obtain the information necessary for the effective carrying out of the provisions of this act, is hereby empowered to investigate and ascertain the demand for, supply, ownership of, costs, profits, and prices of any food- stuffs, feed materials or foods, and to require any person to give such information and to produce such books and documents as may be necessary for this purpose." FOOD PRODUCTION, CONSEHVATION, AND DISTRIBUTION. 401 3. The bill provides amply for minimum and maximum proces. There is no pro- vision for the establishment of a fixed price at which goods must be bought and sold either between traders or by the Government. It is difficult to say at the moment that such a power would want to be exercised, but there are complications of the food situation that might require such an intervention equally with the fixing; of maximums or minimums. A fixed price is the only positive, absolute method of eliminating speculation. 4. I assume that the appropriation mentioned under section 19 is for overhead expenses of the food administration. It does not appear to me that this needs to be extravagant, and I should think that at the start $3,000,000 would be an ample sum. 5. The bill provides for the contingency of actual purchase on behalf of the Govern- ment, but there is no provision for appropriation to cover such an issue or to finance tlie important question of minimum prices if this form of stimulation were undertaken. I would not know what sum to mention in this particular, but simply to lend strength to the administration it would seem that only some fairly large round sum would need be provided. Otherwise, any minimum guaranty or device would carry little confidence with the country, so that either some sum such as $10,000,000 needs to be mentioned or it should be provided that ultimately return could be made to Congress for appropriation for such piu-pose. 6. In section 14 would it not be desirable to introduce after the phrase "services of any person" the words "with or"? It would then read "services of any person with or without compensation." As the act reads it perhaps omits the right to pay salaries. 7. There is another difficulty of importance and that is there is absolutely no office space in this city for any kind of a new administration. The city has been hunted from end to end. The old departments have absorbed every kind of accommodation for space. In order to obtain space all European governments have had power to requisition hotels, apartments, or other public places, and I am convinced that there can be no hope of housing the food administration unless we have some such a locality. If it were possible to introduce into clause 14 a short phrase giving power to requisition office accommodations it would no doubt be a great saving and would facilitate quick action. ' 8. It might be useful to insert in section 14 after "cooperate with any agency the words "person, state, or local authority." This would make a specific path for cooperation with State and municipal governments. It would probably be necessaiy to have a food controller in every State and some method of cooperation between the State. and municipal governments. Yours, very truly, Hbrbebt Hoovek. (The committee thereupon adjourned.) 104176—17 ^26 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. House of Representatives, Committee on Agriculture, Tuesday, May 29, 1917. The committee met at 10 o'clock, a. m., Hon. Asbmy F. Lever (chairman) presiding. The Chairman. Gentlemen, by agreement of the committee, we have met this morning to hear certain farmers from the Northwest relative to the provisions of the so-called food-control biU. I hope it may be possible to conclude the hearing with this morning's session. If we run vmtil 12.30 p. m. and give these gentlemen two hours and a half in which to present their views, I take it they can conclude their statements in that time. Mr. Young of North Dakota. It may be, Mr. Chairman, the com- mittee will want to hear from them more fully after we get the matter opened up. The Chairman. I think, Mr. Young, these gentlemen will appreci- ate the fact that the time for action has come rather than talk, and until the committee can get into executive session and get to work on this bill, every moment of delay delays reporting and consideration of the bin. I am satisfied they are very reasonable and will be (juite satisfied to take up two and a half hours of the time of the committee, and the committee will be glad to hear from them. The rnembers of the committee will allow these gentlemen to complete their state- ments without any interruption, and then we will go down the list just as we have been dotag. Mr. Young of North Dakota. I may say, Mr. Chairman, by way of introduction for all the gentlemen who have appeared here this morning, that a conference of ^ain growers was held at Fargo last week representing five States, Wisconsin, Minnesota, North Dakota, South Dakota, and Montana; and at that conference they decided to send this delegation to appear before the committee, and a number of the men will appear before the committee this morniag. Mr. Anderson, who represents a great cooperative farmers' selling agency, will I think speak first. There are seven thousand farmers who own stock in this Equity Cooperative Exchange, and Mr. Anderson repre- sents that great agency. STATEMENT OF MR. J. N. ANDERSON, PRESIDENT OF THE EQUITY COOPERATIVE EXCHANGE, ST. PAUL, MINN. Mr. Anderson. In behalf of the organization I represent, gen- tlemen, I want to thank you for the opportunity we have been given of appearing before you." We realize tliat you are rushed with work, and realizing that, we appreciate this favor all the more. As stated by Representative Young, we are a farmers' cooperative organiza- 404 FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. tion. We pay only 8 per cent on our capital stock and the balance of our earnings go back to the patrons who have consigned stuff for us to sell or contributed toward the business of the corporation. We are a farmers' selling agency handlii;g grain and live stock on consign- ment. We have, as stated, 7,000 stockholders and a paid-up capital of over $200,000. In addition to that, we have a subscribed capital of 8200,000. The primary object of this corporation is to deal directly with the consumer in so far as that is possible. From the press reports and from statements made, I believe, by members of this committee, we have been led to believe that the Government is about to undertake some measure of price fixing. We want to cooperate with the Government in this crisis, and whatever the Government says will be agreeable to us, and if there is to be price fixing, our members would like to be heard. Ho.wever, we feel that there is something else necessary besides the fixing of the prices, and that something is to open up the markets. The grain and the live-stock markets of this country are closed to the farmers, and, gentlemen, when we tell you this we know whereof we speak, because we have tried to operate on the great grain markets and five-stock markets in the State of Minnesota. We have also tried to operate in the grain market of Chicago, and the one institution which has stood in our way in Minneapolis is the grain exchange, known as the Minneapofis Chamber of Commerce. They own the market place. Their members own the flour mills, their members also own the elevators. We attempted to enter that market in 1912 for the first time. We had a paid-up capital at that time of $16,000. We went there as grain commission merchants. We had been ficensed by the State of Minnesota as req^uired by the laws of that State to do a general grain commission business, and in the eyes of the law we were grain commission merchants. Now we were im- mediately informed, upon attempting to do business in the State, that it was impossible to handle grain in Miimeapofis without a membership in the Minneapofis Chamber of Commerce. Conse- quently, we took steps to become members of that institution. We were denied membership. We were told the reason we could not become members was that we had the cooperative feature in our by-laws, namely, patronage dividends, and they said that if we were admitted and permitted to do business on that basis, we would get all the commission business and nothing would be left for their members, because in reafity the co- operative feature of our by-laws would result in a division of com- missions, inasmuch as we paid to patrons a share of the net earnings. On investigation we found that the board of directors of the chamber of commerce by one vote can prevent any one from joining or be- coming a member. They may also by majority vote of the board of directors expel any member, and a member thus expelled has no recourse to the courts of the State of Minnesota or any other court. They can not appeal to the membership at large. So the institution is a close corporation. They have one rule, in particular, which provides that no member may go out into the country and offer more for grain for Minneapofis shipment than is paid on the floor of the chamber of commerce, and by that rule alone they can perfect their grain monopoly. They can preserve the power which they have of fixing prices. FOOD PBODUCTIOX, CONSKKVATION , AND JUSTKIKUTIOK. 405 Now then having been locked out of that institution, we pro- ceeded to do business as best we could. The members of the chamber ot commerce immediately refused to buy our grain Since 1912 TvJTJnnnmnl'^ Tf ^^'T'^^'^, ^^'^"^' «^ g^^'"^- We handled ovei 16,000 000 bushels of last year's crop, and of all this vast amount ot gram not a single bushel has been bought by a Minneapolis miUer or by an owner of a Minneapolis elevator. Having refused to buy our gram, they refused us elevator facihties, and to this day you can not get a bushel of gram into a Minneapolis elevator to be cleaned transferred, or stored for the account of the Equity Cooperative Exchange. ^ I want to emphasize this, gentlemen, because the members of these institutions have been going about the land saying that there are plenty of elevators ; that the trade can not supply or accommodate any more elevators. The fact remains that these elevators are not open to the pubhc m general, and they certainly have been closed to the farmers, and the sum and substance is that we are here seeking relief from a system of that kind. The members of the chamber of commerce have imported grain from China, Australia, and Canada. They have shipped in gram to Minneapolis from 21 different States rather than buy grain from the' Equity Cooperative Exchange. They made it so disagreeable for us in the city of Minneapolis that we were compelled to move to the city of St. Paul. We tried to get a Western Union " ticker " in our offices, one of those httle machines which tick out the market quotations, but the chamber of commerce interfered. They claimed that their quotations were private property, and I believe they have some court decisions in their defense. We take the position that a market place is a public institution. These great gram exchanges own the pubhc grain markets of the^ country. They correspond to the municipal produce markets that so many municipalities in this country maintain. They are places, in other words, where the buyer and seller of grain may come together and exchange their product; and we maintain, gentlemen, that these institutions should be under public supervision; and we are asking' you in the bill which you now have before you to provide, first of all^ that 'these grain exchanges, these pubhc markets, shall be made open to everybody; that anybody may become a member who is willing to pay the price of a membership, and that once having become a member, we want this Government to provide that they can not be expelled except by action of some competent court : that if a member is expelled he shall have recourse to the courts of the land. We also believe that a price registrar should be maintained on these markets. At present not all of the prices that are paid for the grain on these markets are made pubhc. They do not pubHsh their highest sales nor their lowest sales. We beheve that all sales should be made public so that the pubhc may know what grain is actually bemg sold at. We also behave that this Government should hold that the quotations on those pubhc markets should be pubhc property. They are made by the pubhc. The buying and selling pubhc are the ones that make these prices, and any producer of grain or any miller who buys grain or anyone who buys grain, whether he is a miller or a malster or a seedsman, if he buys or sells grain, contributes toward 406 FOOD PEODUCTION, CONSEEVATION, AND DISTRIBUTION. the making of prices for grain, and hence he should be a part owner of the market quotations. Now, there is an elevator shortage in this country. Cars have been kept on the tracks for months at a time right in the cities of Minne- apolis and St. Paul because there were no elevators there in which to unload the grain. We understand from rehable authority that there are no elevators on the seaboard of sufficient capacity to accommo- date the grain in transit for ocean shipment. Now, gentlemen, this is a serious situation. The railroad cars that carry the grain should not be used for the warehousing of grain, and in this crisis we beheve that the Government of the United States can well afford to follow the example set by the Government of Canada in constructing large terminal elevators in which the grain may be unloaded and kept for shipment, thus hberating the cars for transportation services. We also beheve that this Government during this crisis should arrange for a joint railway commission to have charge of the distri- bution of cars. We are confronted with a peculiar situation there in the markets of Miimeapohs and St. Paul as regards transportation facilities. There are three large trunk lines leading from the grain territory into the terminals mentioned. They are the Great Northern, the Soo, and the Northern Pacific; also the Milwaukee for that mat- ter; that is, the Puget Sound branch of the Milwaukee road. The Great Northern officials will not permit their cars to leave their own lines; hkewise the Northern Pacific; hkewise the Soo and the Milwaukee. They say that the railroads down South and in the East. are "car thieves," and that if they permit their cars to run south or east it may be years before they can get them back on their own lines. Consequently, practically all of the grain that comes into Minneapolis and St. Paul for shipment to Chicago, St. Louis, Baltimore, or New York, or other eastern points — practically all of that grain has to be transferred, and while it is waiting for elevator facilities for transferring it the cars stand idle. That is a very serious situation, gentlemen, in these days of car shortage. We believe, also, gentlemen, that you could well afford to attach an appropriation clause to this biU to provide for, say, $100,000,000 as an emergency fund to be used by the Department of Agriculture, if necessary, for the purchasing of grain and for the carrying out of this idea of assuring to the farmers a fair return for their products, and, at the same time, protecting the consumer against extortionate prices. We believe that the device known as the "pit" on these graia exchanges should be done away with. They have prohibited re- cently trading in the pit. That is the speculative phase of the grain trade. That subject will be handled more at length by Mr. Drake, who is the attorney for the Equity Cooperative Exchange. I want to speak briefly in regard to the situation that has prevailed since these pits were done away with. By resolution of the board of directors of the Minneapolis Chamber of Commerce, future tradiag in July wheat, and also in May and September wheat, was prohib- ited some three weeks ago, I beheve, or about that time. On the last day when future trading prevailed the price of July wheat was S2.94 per bushel, but when future trading stopped, the price went down the first day, as I remember it, to $2.60 per bushel^ or there- POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 407 abouts. I think that was the close. The price went as low as $2.25 on the second or third day after speculation was eliminated. The prices were unduly inflated. You may say that this was beneficial to the farmers, which, m this particular instance, is true. But, gen- tlemen, the point is this, that through the operations of the pit they were able to inflate the price and I believe that it necessarily f oUows that through the same operations they were able to bear down the prices abnormally low. As I have said, this will be taken up more at length by our attorney, Mr. Benjamin Drake. The principal argument advanced in favor of future trading is that it enables the mfllers to "hedge" their flour contracts, but our experience is that the millers are still able to hedge flour contracts. When they now contract to deliver flour on some future date, they go onto the market and buy the actual cash wheat necessary to produce the flour. That is a plaui business proposition. The farmer elevator companies, of which there are something over 2,000 in the States in which they operate, are also able to hedge their purchases of grain, because they can sell their cash graia to arrive, which is a legitimate hedge, and which is all that they reaUy need. Now, gentlemen, to sum up briefly, then, our position is this: These grain exchanges should be made open to all. They should be placed under rigid Government supervision; their memberships should be made unlimited; a price registrar should be placed in charge to register the prices actually paid for grain and grain products, and their market quotations should be made public property. Now, so much for the actual market place. Briefly stated, we believe that the Government should step into those places and act as referee in the game of marketing, and that everybody should be given an equal chance before the Government. We beHeve, also, that these ele- vators should be made public institutions, and that, if necessary, the Government should construct elevators in this crisis for the ware- housing of grain. Lastly, we beheve that a Government commission, a joint commission, should be provided for the operation of the rail- roads, particularly with reference to the distribution of cars. That, briefly stated, is our position as regards the gram market and the ^The Chairman. Now, gentlemen of the committee, I wiU ask each gentleman to make his inquiries as brief as possible and as pertinent to the issue as possible, because we want to give these gentlemen ]ust as much time as we can. i t i j.„ „ „„„ Mr Haugen. Do you mean to say that the pubhc elevators are %?^ANDESoN.'Yet-sir; they are not open to the grain of the Equity Cooperative Exchange. . They are considered m the eyes ot the law I believe, as public facilities ^ i , i t Mj- Haugen (interposing). Does not the State law take care of *^Mr. Anderson. It has not so far. We have made applications 'X'H^GE';^nterposing). And you have been denied? Mr Anderson Yes, sir; we have been denied. 1 hey have always told us^harthefr elevators were full, and that they could not accom- modate us. 408 FOOD PEODUCTION^ CONSEEVATION, AND DISTRIBUTION. Mr. Haugen . Of what value would a membership in the Minneapolis Grain Exchange be to you ? Mr. Anderson. Do you mean if we had a membership ? Mr. Haugen. Yes. Mr. Anderson. It would enable us to take care of our hedges. As grain commission merchants, we have to hedge grain for our cus- tomers. Mr. Haugen. Yes; but in order to do that you must find a buyer. Mr. Anderson. The hedging as it has been done has been done in the pit, but we have had to deal through regular brokers, which has been an expense to us and no income. Mr. Haugen. If you had 10,000 bushels of wheat, and there were no buyers there, and all the other members should conspire against their buying it, you would not be able to seU it. Mr. Anderson. They have not done that. We have had no trouble in placing hedges, but it has been an expense to us, and we have had no income therefrom. In the meantime they have sent representatives out through the coimtry advising the shippers that the equity had no membership, that they could not hedge and could not compete with other members of the trade. You can readily see how that would discourage people from shipping grain to us. Mr. Haugen. Did I understand you to say that the boards of trade and these other organizations have the power in their hands to put up or down the price at their sweet will ? Mr. Anderson. They can influence the market at times without reference to supply and demand. Their own members have testi- fied about that. Mr. Haugen. So that, when they are long, it is to their interest to put the price up— — Mr. Anderson (interposing). Yes, sir. Mr. Haugen. And when they are short they put the price down ? Mr. Anderson. Yes, sir; it is possible for them to do that. Mr. Haugen. Is it a fact that they do that? Do they actually accomplish that ? Mr. Anderson. I would say that they do. Mr. Haugen. You say that the farmers' elevators should have the right to hedge in the pit. What is the expense of this hedging ? Say, for instance, you are an elevator man and you sell wheat for delivery, say, in May. Now, if the wheat is not delivered, you are able, of course, to sell your contract and buy the cash wheat. Mr. Anderson. Yes, sir. Mr. Haugen. What would be the expense of that operation ? Mr. Anderson. The expense of the hedge is one-eighth of a cent per bushel. Mr. Haugen. What is the difference in the cash wheat and the futures ? Mr. Anderson. That depends. It varies. Sometimes the cash wheat is above the futures and sometimes it is below. Mr. Haugen. Say, for instance, you are a miller and buy 10,000 bushels of wheat for May delivery. Suppose the wheat is not deliv- ered, and you should sell your hedge and buy cash wheat. What would be the expense? Mr. Anderson. I do not think there would be any expense con- nected with it. FOOD PEODUCTION, CONSERVATION, AND DISTBIBUTION. 409 Mr. Haugen. There is a premium on cash wheat, is there not ? Ml'. AndeRvSON. Yes, sir. Mr. Haugen. Some exporters told us it was 40 cents. jVIr. Anderson. Yes, sir. Mr. Haugen. Then, the cost of hedging is 40 cents per bushel is it not ? ' Mr. Anderson. No, sir. Mr. Haugen. Suppose you buy wheat on contract and sell the contract for $2 per bushel and buy the wheat at S2.40 per bushel. There is a difference of 40 cents ? Mr. Anderson. Yes, sir; but the hedge does not involve any cash. Mr. Haugen. But the contract is for wheat, and you need the wheat for grmding. You need, we wiU say, 10,000 bushels of wheat, and you have bought it for future dehvery. You call for the wheat and the wheat is not dehvered, and you sell your hedge and buy cash wheat and pay 40 cents per bushel more for it ? Mr. Anderson. That is not the way it operates. Mr. Haugen. That is the way it operates with the exporters. Mr. Anderson. I am not a miller, and I can not testify as to that, but I am positive that there is no loss to the miUer, because the spread between the cash wheat and future wheat remains about the same. Mr. Haugen. Not in the fall « Mr. Anderson. It varies. Mr. Haugen. I will ask this question: What was the difference between cash wheat and future wheat in the fall ? Mr. Anderson. I see what you are getting at. Mr. Haugen. We have hundreds of elevator men in my country who have gone into bankruptcy, and that is a matter of common knowledge. They have gone into bankruptcy just because of the manipulations of the prices by these exchanges. This expense of 40 cents per bushel is what p\ut them into banfiuptcy. Mr. Anderson. I can understand how that occurred, because we have the experience of these elevator companies. Suppose an ele- vator company has accepted in October 20,000 bushels of wheat for storage for the farmer Mr. Haugen. Yes. Mr. Anderson. They ship out that 20,000 bushels of wheat and sell it and buy May wheat against it. Now', at the time when they sell that 20,000 bushels of wheat, it oftentimes happens that the cash and the futures are the same. Mr. Haugen. Yes. Mr. Anderson. You see that ? Mr. Haugen. That is true. It happens; yes. Mr. Anderson. It is generally the same. There is generally very little difference in the f^. When May comes along cash wheat has gone up 40 cents per bushel above May, and that is the price that the farmer receives when he sells the wheat he has stored. Mr Haugen. The cash price ? Mr. Anderson. He receives the cash price. He gets 40 cents per bushel more than the elevator got when it sold the grain. In that way the elevator has lost 40 cents per bushel, and a good many ot them have gone into bankruptcy just through that sort ot manipula- tion. 410 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Haugen. Now, it is just as true of the miller. The miller buys contracts and there is a difference of 40 cents Mr. Anderson (interposing). I could not quite see what you were gettiag at. Mr. Young of North Dakota. The time is so limited here this morn- ing I will not ask a great many of the questions that I would like to have put to Mr. Anderson to bring out a number of details in con- inection with the grain busiaess that I think the committee ought to know. We have been hmited in these heariags and there is not much time remaining, but there is one question I want to ask you : Is there any flour miller in Minneapohs, a city that makes more flour than any other city in the world — ^is there any miller there who dares to buy a carload of grain shipped in, we will say, by Mr. Pendray, of North Dakota, if he offers it to them ? ^vlr. Anderson. There is not any. Mr. Young of North Dakota. I am not talking about the Minne- apolis Chamber of Commerce, but I am talking about, we will say, the Pillsbury mills. If this man comes in and asks them to buy ms grain, even m carload lots, can he sell it to them 1 Mr. Anderson. No, sir. Mr. Young of North Dakota. They do not dare to take it ? Mr. Anderson. No, sir. Mr. Young of North Dakota. The miUs in Minneapolis d^ not dare to buy a bushel of grain from a farmer. These organizations not only have control of the market place, but they control every- body in that business in a certain area. Do the farmers realize the iron-clad control, combine, and monopoly that they have of the grain trade of the Northwest ? Mr. Anderson. I think possibly they know it. We have had farmers go right to the Pillsbury mills, and also to the Washburn- Crosby mills, and to the Diamond Milling Co., and offer them their grain for -sale, and they have invariably been advised that those companies can not buy direct from farmers because of the practice of the Minneapohs Chamber of Commerce, their rules providmg that ■ all sales must be made through that institution. Mr. Young of North Dakota. That is the only question I have. Mr. Wilson. You spoke about the building of elevators by the Government : Have you any estimate of about how many you would want to build and how large they should be ? Mr. Anderson. I believe that the Twin City points, St. Paul and Minneapolis, would need in the neighborhood of fiiteen to twenty mil- lion bushels' capacity in addition to the elevators that are now there. That is, to accommodate the trade and to take care of the increase. Private capital is not forthcoming in sufficient amounts to keep pace with the growth of the grain trade. Mr. Wilson. I was wondering whether, if you were really allowed the privileges of elevator service, which I understand you are not at this time, you would be all right then. Would it stiU be necessary to build any more elevators ? Is that your trouble ? Mr. Anderson. Yes, sir ; that is our trouble. Mr. Wilson. I thought, from what you said, that you did not have the privilege of elevator service. Mr. Anderson. If we were to advise the committee on the matter of building and where to build, we would build a million bushels' capacity FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 411 at the Minnesota terminals, St. Paul, and the balance on the seaboard, at New York, Baltimore, etc. Ml-. Wilson. Have they not elevator service in those places suffi- cient to take care of the grain that comes there in normal times ? Mr. Anderson. I do not know as to their facilities in normal times. Ml-. Wilson. You are complaining now about car shortage ? ^Ir. Anderson. Yes, sir. Our experience dates bacK to the beginning of this war, or our experience in car shortage, and it has been laid to elevator shortage. Mr. Wilson. You made the statement awhile ago that the grain and live-stock markets were closed to the farmer. That was in the early part of your remarks. You limited that statement, did you not, to the markets of Minneapolis and St. Paul ? Mr. Anderson. No, sir; not as regard the grain market. We have made application for membership at Milwaukee, and we have made inquiry as to the possibility of becoming members at Chicago, and in both instances have found it impossible to obtain a membership. Mr. Wilson. You do not mean to say that the farmers have not access to the live-stock market at Chicago, do you ? Mr. Anderson. I do not know anything regarding that live-stock market. Mr. Wilson. You said that they were, or your statement implied that they were. Ml-. Anderson. Then I apologize to the committee for making that statement, because we have never made application to become mem- bers of the Chicago Livestock Exchange. We have made applica- tion to the South St. Paul Livestock Exchange, and found it impos- sible to become members there. Mr. Wilson. You did not say that your exchange, or that the Equity Cooperative Exchange, was barred from the gram and live- stock markets. You did not say that in your remarks, but, as I understood you, you stated that the farmers were — not implying your own organization. When you spoke of your organization did you mean the farmers generally, or did you just mean your own organization? i i j. i,- Mr. Anderson. I am spealcing now particularly ol this organiza- tion that I represent. Mr. Wilson. I see. Mr. Anderson. I have been advised, though, that there are no farmers' organizations or cooperative organizations that are members of these exchanges, and that the farmers must deal through those who are members of the exchanges in order to be represented. Mr. Wilson. Where is the membership of your orgajuzation^ Mr. Anderson. It is largely in the States of Minnesota, North and South Dakota, and Montana. . Mr. Wilson. How long have you been in existence ( Mr. Anderson. We were incorporated under the laws of North Dakota in 1911. We buUt an elevator on the Mississippi Kiver m St. Paul Mr. Wilson. You have built one « r,^n nnn >M,«>,pk Ml-. Anderson. Yes, sir; we have built one of 500,000 bushels capacity. 412 FOOD PRODUCTION, CONSEKVATION, AND DISTEIBUTION. Mr. Wilson. Belonging to this cooperative exchange ? Mr. Anderson. Belonging to this cooperative exchange; yes, sir. Mr. Wilson. We have heard testimony about some of the States up there building or appropriating money to buUd elevators outside of their own States. Has that as yet been done ? Mr. Anderson. No, sir; it has not. Mr. Wilson. Has any appropriation been made? Mr. Anderson. There was an appropriation of $300,000 made by the legislature of North Dakota last winter, but the Governor vetoed the bill. That appropriation provided that the elevator might be built within or outside of the State, but for certain reasons set forth by the Governor the bill was vetoed. Mr. Wilson. You made another statement a while ago that sur- prised me. You said that there were certain railroads in the north- west that refused to allow cars with shipments to be transferred to other raUroads ? Mr. Anderson. Yes, sir. Mr. Wilson. Is that a recent practice? Mr. Anderson. It was in force for about three months a year ago, and it has been in force all of this year. A Great Northern car, for instance, will not be permitted to leave the Great Northern line, and likewise the Northern Pacific and the Soo. They want their cars on their own systems to accommodate the trade. In justice to those roads, I might say that there have been exceptions naade, but they were rare and are not general. Mr. Wilson. Do you mean to say that if a Great Northern car is loaded with flour for some point which the Great Northern does not reach, they would take that flour to their own terminal and then transfer it from one car to a car on another road ? Mr. Anderson. I do not know as to flour. Mr. Wilson. You made the statement so broad that I wondered if it included everything. Mr. Anderson. That statement was made to cover grain. We can only speak from our own experience and aU we handle is grain. Mr. Wilson. Then do you mean to say that a carload of wheat loaded in St. Paul on the Great Northern billed, we will say, to some miU in Missouri, they would unload the grain from that car and put it into another car ? Mr. Anderson. I beHeve your statement is a little misleadiag. You mean that if a Great Northern car of grain arrives in St. Paul Mr. Wilson. No ; I mean if you Mr. Thompson. Mr. Wilson, wiU you permit an interruption? Mr. Wilson. Yes. Mr. Thompson. My understanding is we have limited this hearing to 12.30 p. m., and quite a number of these gentlemen have come'all the way from North Dakota and Minnesota to be heard, and I think that they ought to be permitted to be heard within that length of time. Of course, if we ask them all the questions that might occur to our minds, aU of which are very interesting, we would consume all their time. Mr. Wilson. I have no desire to ask any questions that I do not think are pertinent to the hearings. Mr. Thompson. I do not mean that. FOOD PRODUCTION, CONSEBVATION, AND DISTEIBUTION. 413 Mr. Wilson. And I do not want to consume your time. Mr. Thompson. I imderstand that, and I do not want to imply that you are asking questions that are not pertinent. Mr. Wilson. But a statement was made here that was a surprise to me, and I think some of the other members of the committee were surprised — about the railroads not allowing cars to leave their own road when loaded with different kinds of products — and I was inclined to beheve, although I may be wrong, that he misspoke himself. The Chaieman. Let me make this statement, Mr. Wilson, if you i)lease. Of course, the cross-examination of these witnesses could be enethened out for two weeks. Mr. Wilson. I have no desire to do that. The Chaieman. . Going into the various phases of the trading in grain and the transportation of the grain and the baking of the flour and the transportation of the flour and all that sort of thing, and it would all be interesting; but we have a concrete proposition before the committee that we want to have the judgment of these gentlemen on, and that concrete proposition is represented in the bill H. R. 4630, which carries a number of different sections providing for the regula- tion or the closing of exchanges, providing for the manufacture of flour and the taking over of factories and providing against hoarding and doing a number of things, and I take it that these gentlemen have gone over this bill carefully themselves and in consultation with each other during their stay here, and that they have some definite idea as to whether or not they are in favor of the general purpose of this bill. Now, these details might be valuable to us as a matter of dis- cussion, but inasmuch as their time is so limited, I feel they ought to have the privilege of having as many of them as possible make a general statement as to their feeling in regard to the provisions of the bill, and then if we have time, we can go into the other details. That is simply my own view of the matter, but of course I am not going to limit anybody in his cross-examination. Mr. Anderson. I can state briefly, I beheve, by illustration, the exact situation: Suppose a car is billed from Great FaUs, Mont., to St. Louis. It originates on the Great Northern road and in that instance it is permitted to go through; but practically all that we receive is billed to St. Paul, and it has to be rebilled from there, and when such rebilling occurs is when the transfer is demanded. Mr. Haugen. I want to suggest that inasmuch as this bill deals exclusively with agricultural products and that we have a number of the representatives of the agricultural interests here, that they be given an opportunity to be heard, and if it is necessary, we extend the time because I believe they are entitled to a hearing. The. Chairman. To be sure, they are; but these gentlemen are very sensible men, and I think apperciate the fact that this com- mittee ought to get at work on this legislation right away. Mr Jacoway. I think, Mr. Chairman, the cross-examination con- ducted by Mr Wilson goes to one of the vital propositions in this bill, and it has been very interesting to me, and I think it is information which this committee wants, and I think it is information which the House wants. It is on the question of transportation, and i think that is absolutely vital, and I think it has been some of the most m- 414 FOOD PBODXJOTION, CONSERVATION, AND DISTRIBUTION. teresting and helpful testimony which has been adduced before the committee. The Chairman. The difficulty about that is that the trar.sportation end of this matter is being handled by another committee — the Com.- mittee on Interstate and Foreign Commerce — and I have no doubt that committee would be very pleased to have these gentlemen dis- cuss that particular phase of the question. Mr. Haugen. Freight transportation is involved in the whole question. Mr. Young of North Dakota. Mr. Anderson's contention is that if they are given more elevator capacity they will not need so many cars. The Chairman. Yes. Mr. McKjnley. Just one question, Mr. Anderson: To my mind, perhaps the most important point in this bill is giving the Govern- ment or giving the President the absolute right to fix the price. In your opinion, is that a good thing to do ? The Chaibman. Mr. McKinley, will you' permit an amendment to your question ? Mr. McKiNLEY. Certainly. The Chairman. Because that goes to the very vitals of this pro- position. Give the President the power to fix the maximum price, except that that maximum shall m no case apply to the original producer of the stuff; in other words, after it gets out of the hands of the farmers. That is in the new biU, Mr. McKinley, and you probably had not seen that. Mr. McKiNLET. I did not imderstand that. I thought it was to give the President the right to fix prices. The Chairman. Not at aU; only for two purposes, one to prevent extortion and the other to prevent cornering, and there is a provision that the prices shall not apply to the original producer of the article in question. Mr. McEoNLET. Does not House bill 4630 give the President the power to regulate prices ? The Chairman. No. Mr. Young of North Dakota. After the stuff has left the farmer, it does. The Chairman. And then, only for two purposes, to prevent extortion or to break a corner. Mr. Young of North Dakota. It gives him the power to fix the minimum price to the farmer, and after that they can fix prices for the consumers. Mr. McKinley. Mr. Chairman, does it give him the right to fix the minimum price for the farmer ? The Chairman. ' It gives him the power to fix a minimum guaranty to the farmer. Now, with that explanation, Mr. Anderson, will you answer Mr. McKinley's question? Mr. McKinley. Let me ask the question over again. This bill gives the President the right to fix 5 cents a bushel as the price of wheat for the farmer, or $5 a bushel. Do you beheve that the farmers would hke to have that clause in a biU ? Mr. Anderson. I believe the farmers would hke to have a guaranty price on wheat "fixed by this Government; in fact, I know they would. They assume, of course, and I beheve they have a right to assume, that that price will be fixed by a commission, and that they POOD PBODUOTION, CONSERVATION, AND DISTKIBUTION. 415 will be heard, and that that commission will be fair, taldng into con- sideration the increased cost of production. I believe the farmers have confidence enough in this Government to want that tried out. Mr. OvERMYER. Mr. Anderson, you spoke of an agreement which exists among the members of the Minneapolis and St. Paid exchanges which in effect excludes your organization and probably others from participation in the business of the exchanges. In your judgment, does that amount to a combination in restraint of trade ? Mr. Anderson. Yes, sir; it does. Mr. Overmyer. Have you ever taken any steps to call the matter to the attention of the Federal Department of Justice ? Mr. Anderson. Yes; we have. Mr. Overmyer. What satisfaction did you receive in the matter ? Mr. Anderson. None. Our attorney, Mr. Drake, can go into that more in detail in case the committee so desires. Mr. Overmyer. Where do you dispose of your grain ? Mr. Anderson. We sell our grain largely to millers that are not members of the chamber of commerce; millers located outside of the city of Minneapolis. Mr. Overmyer. In various parts of the country or principally in the West ? Mr. Anderson. In various parts of the coimtry; yes, sir. We have some mills in St. Paul that buy from us and also mills at La Crosse. Mr. Overmyer. Have you examined the provisions of House bill 4630? Mr. Anderson. I have. Mr. Overmyer. Do you favor the bill ? Mr. Anderson. Yes, sir; we do. Mr. Hutchinson. Mr. Anderson, 1 want to ask you a question. You spoke about the fact that the millers of Minneapohs would not buy from the farmers. Is it not a fact that they have to have some- body to supply their miUs, and do they not have one or two brokera who supply them every day— in fact, if they did not buy from the farmers, they would not have mi i. Mr. Anderson (mterposing) . No; that is not a fact. They have brokers on the floor of the chamber of commerce. Mr. Hutchinson. And they make arrangements with them to supply them, do they not ? , i a Mr Anderson. Yes; they have their own buyers there. As a matter of fact, some of them have their own commission companies. Mr Hutchinson. And that is the reason it is done. 1 hey use from 150,000 to 200,000 bushels a day, and they could not depend on the farmers to get their wheat. t j + Mr Anderson. If they do not depend on the farmers, I do not see whom else they can depend on. He is the only one who produces £ Hutchinson. The farmers would not go to them, probably. Mr. Anderson. They have to go somewhere with their wheat. Mr. Hutchinson. Another question I want to ask you is tnis: You have read this bill. House bill 4630 ? Mr. Anderson. Yes, sir. 416 FOOD PKODUOTION, CONSERVATION, AND DISTEIBXTTION. Mr. Hutchinson. In section 3 relating to price fixing there is this language : This section shall not apply or extend to any farmer, gardener, or other person with respect to the product of any farm, garden, or other land cultivated by him. Do you think that ought to be in there ? Why should they make an exception of the farmer ? Mr. Andekson. The farmer is the original producer. Mr. Hutchison. Do you think that ought to be in any bill? Mr. Anderson. Yes, sir. Mr. Hutchinson. That is all I want to ask you. Mr. Anderson. That, as I understand it, offers protection to the farmer. Mr. Hutchinson. Why should they be protected any more than anybody else ? Mr. Anderson. Because they are the original producers. They are the men who have contributed the labor; they are the men who have contributed the capital, and they are the men who should be protected; and if, by chance, the Government should fix a price below the cost of production, this section offers protection to the farmer inasmuch as he can then seek other markets if he so chooses. Gentlemen, I thank you. Mr. Young of North Dakota. Mr. Chairman, Mr. Kelley, who has handled farmlands and who, of course, has been a farmer himself for many years, and who was at one time a Member of Congress, will speak at this time. The Chairman. I have had the pleasure of serving with Mr. Kelley in Congress, and I am sure the committee will be very glad to hear from him. STATEMENT OF HOIT. JOHN E. KEILEY, OF PIERRE, S. DAK. The Chairman. Mr. Kelley, I think the committee is fairly familiar with the operations of boards of trade and grain exchanges and the practices of those institutions, and I think we are more or less familiar with the elevator situation and also the transportation situation. I think what the committee desires to know of you and of the gentle- men present is, first, whether or not you have considered the bill pending before the committee — House bill 4630? Second, whether or not the citizens whom you represent are willing to confer these large powers upon the President of the United States, and third, whether or not you indorse this biU in its general principles. I think that is about what the committee wants. Does that state it pretty accurately, gentlemen of the committee ? Mr. 'Young of North Dakota. I think that states what the com- mittee wants, but I think we ought to bear this in mind: All of this proposition comes from the top down, and all of the legislation and everything has been framed without consulting the farmers first. The Chairman. Exactly. Mr. Young of North Dakota. Now, then,, the farmers have come in, and I think we ought to give them a little latitude to say or at least to emphasize the things that they want the most. The Chairman. Yes; I believe that is a fair statement of the atti- tude of the committee. FOOD PEODUCTION, CONSERVATION, AND DISTKIBUTION, 417 Mr. Kelley. Mr. Chairman and gentlemen of the committee, I will try to cover the ground indicated by the chairman, and also try to give you, perhaps, a little new information along the lines of the operations of boards of trade and chambers of commerce; perhaps something that has not often been given. I will say to the chairman and members of the committee that we have examined the bill; that I have examined it myself as well as I could since I have been in the city, and I can say unqualifiedly, not only for myself but for the other members of the committee, all of whom I have consulted upon this proposition, that we are heartily in favor of the bill, as we understand it; that we are in favor of the fixing of prices by the National Government at this time and during the crisis of this war; that we are in favor of it because we want to assist the Government in every way possible during this crisis, and for the further reason that we are not afraid to trust the Gov- ' ernment of the United States to do justice by the farmer when the Government takes into consideration all the questions pertaining to the production of grain, as we believe it will; that we are not afraid to trust this committee, even if this committee were to have the administration of these matters instead of somebody else, for the simple reason that we know that we have always submitted, and have always been obUged to submit, to price-fixing by somebody. It is perhaps apparent to everybody that there never has been a time in the history of the world when the farmer was able to set a price on the things he produced. The question now arises. Who does set the price on what the farmer produces ? The boards of trade, the chambers of commerce of the United States, and the grain speculative interests of the United States absolutely put the price on everything the farmer produces, as absolutely as you put a hat on your head, and I thmk I have the documentary evidence to prove it. For many years I have made a study of this proposition, in the handling, in the marketing, in the exporting of grain, as to price fixing. I think I am competent to answer most of the questions per- taining to the subject under consideration. That is one great reason why we are not afraid of the Government of the United States estab- lishing any price that will do an injustice to the agricultmal interests of this country. , ,rxr ^ i ^i. We are, accordingly, in faVor of this bill. We want not only the producer protected, but we want the consumer protected. But I want to say now, gentlemen of the committee, that we are not here primarily on this occasion to secure some temporary relief or any temporary makeshift. I am here, and I believe every other member of the committee is here, for the purpose of securing redress ol long- existmg grievances; something that has gone way back; something, gentlemen of the committee, upon which had we been enabled to obtain a hearing from you years and years ago would never Have been permitted to exist. . . iu • I have used harsh terms somethnes m my references to the gram speculative interests of the United States. I have referred to them as pirates, as plunderers, as freebooters, and I am willmg to admit that if my vocabulary contained any other terms that would more 104176—17 ^27 418 rOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. fittingly describe them, I would have used them. But within two weeks I have been surpassed in anything I have ever said of them, when I read the speeches dehvered in the Senate of the United States and I find the honorable Senators referring to those men not only as pirates and freebooters but demanding that they be hanged to lamp-posts. A distinguished Senator from the State of Wyoming, I beheve, within two weeks made the statement that the consuming public of the United States would never get justice until those men were hung up to lamp-posts. Another distinguished Senator said the people of the United States would not obtain justice until they were wearing stripes and were behind the bars. Those are the men who have been estabhshing the price which the farmer receives for the things he produces. Do you think with the experiences we have had under those conditions we are afraid to trust even this committee to enact any measure of legislation which it will enact for the disposition of our crops, or the Government of the United States? No; we are not. We are in favor of the biU. I have paid some attention to the bill and I have talked with every member of the committee present here, and we are all in favor of the bUl. Price-fixing! Those men have absolutely fixed the price of everything produced on the farm. I have made the statement openly that in the fall of 1915 on the sohtary point of price-fixing alone they have taken from the farmers of the United States 1340,000,000. No man has ever yet chaEenge'd the correctness of those figures, and, gentlemen of the committee; I take the position to-day that no man of standing and integrity ever will come before any inteUigent audience and question the truthfulness of the figures given in this document. It has not been done yet and it never will be done, because the figures are founded on facts. How do they do it ? Before the farmer thrashes, the price is usually fair. That is to cause him to thrash and to get on the market in order to get a good price. He is owing everybody. Fifty-six per cent of the farmers of the State of South Dakota and 53 per cent of the farmers of Illiaois are tenants at will. They are owing everybodj? and they have got to have money to pay their debts. The price then is usually fair and he is in a hurry to get his grain on the market. He gets a machine to thrash his grain, and then his creditors, who have carried him, perhaps, for groceries and for other things, want their money, and they get after him and he puts it on the market, and then these fellows meet him, oftentimes with empty cars and empty elevators, and yet the price will go down. I have in one of these documents a case where the manager of a farmers' elevator at Gowry, Iowa, had just such an experience as this. He filled up his elevator with old oats in 1915, and before he got it out of the elevator oats dropped 20 cents a bushel. He wrote in and asked what the trouble was, and they said that oats had gone down. One of the supposed farm journals, a journal published in the interest of the Board of Trade of Chicago, told him that oats were too high; that shorts had to cover, and consequently a drop was necessary. Mr. Cnairman, I ask the privilege of extending these documents in the record. The Chairman. Without objection it wUl be so ordered. POOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 419 Mr. Kelley. I will arrange these articles as I wish them to go in. I prepared these documents myself from the best obtainable market reports furnished by the Board of Trade of Chicago. That is why they do not question them, and -I find that in 1915, when the farmers of the State of South Dakota got their thrashing done and put the grain on the market oats were bringing 24 and 25 cents a bushel. A reference to this document will show that at that very time the ulti- mate consumer in Liverpool was paying from 73 to 75 cents a bushel. The question is who got the 50 cents between the price paid the pro- ducer of those oats in the State of South Dakota or the State of North Dakota or Montana or Minnesota and the price paid by the ultimate consumer in Liverpool. This document shows who got it and where it went. During that fall the grain gamblers in the different market exchanges of the United States took an average of from 20 to 23 cents a bushel on oats, or from 86 to 92 per cent of the price which the far- mer received at the local market. It seems unbelievable, does it not t You will find in one of these documents also that on' the proposition of wheat, the farmer received at the local market in the agricultural Northwest a price ranging from 78 to 95 cents a bushel. You will find by referrmg to the price paid by the ultimate consiuner ia Liver- pool that they paid a very much higher price. After deducting from the Liverpool price every known possible cost of handling between either Chicago or Duluth and Liverpool, the grain gambler of Chicago, Duluth, or Minneapolis had a clear toll or a clear profit of 34 cents a bushel; or, in other words, he took 41 per cent of the price the farmer got for the wheat at the local station. He took on com 56 per cent of the price the farmer received at the local station . This was for 1 9 1 5 . My records go back five years . Of course, that was a little larger steal than occurred in any other year, for the simple fact that when the prices were lower preceding war times, had they taken the same toll from the farmer that they took dm-ing war times, they would have left him but little if anything. Now, here is an article giving a review and a siunmary of the condition of the markets of the United States for 1916, and if you gentlemen believe that the farmers' conditions was aU rosy during that time you are mistaken. You will find that even then a toll ranging as high as 31 cents a bushel on wheat was taken. My quotations only go to the time of the commandeering and the purchasing of grain by the British Government, because I could not obtain foreign quotations after that. You will find that they took, on com, in December last, a toll over and above every possible cost of handling of 37 cents a bushel, at one time. You will find that when corn sold in Liverpool for the highest price it had reached m 50 years, the American farmer received 74 cents a bushel. TJe price paid in Liverpool, as I remember it, and as it is given m this document, was $1.86 a bushel, and the farmer received accordmgly only 41 per cent of the price paid by the ultimate consumer. These are the conditions that we are up against, and that is why we are here; and not for the purpose primardy of askmg for some temporary relief. We are here to assist you m every way con- ceivable to tide the Government over the turbulent times that now confront us; but I say that while we are domg this, we do want to direct your attention to the mighty evils that exist and so tar as i know have always existed. 420 POOD PBODUCTION, OONSEEVATION, AND DISTKIBUTION, We ask that the farmers of the United States be given some con- sideration, and that the increase of tenantry that is going on at a •wonderful pace may be stopped. The farmers are becoming dis- possessed of their lands, and the past 10 years show an increase of tenant farmers in the United States of 16 per cent. Now, I say that the condition of many of the tenants in South Dakota, North Da- kota, and other northwestern States is absolutely pitiable. I ask you gentlemen to stop and consider for a moment the condition of the farmer in the fall of 1915. How could he pay his debts with oats selling at 24 or 25 cents per bushel; corn selling at 45 to 50 cents per bushel, wheat from 78 to 85 cents per bushel, and barley 37 to 40 cents, with prices of everything he had to buy advancing? , Mr. McKiNLEY. Owing to the shortness of the time, should we not keep them down to a discussion of the biU ? Mr. Kelley. Gentlemen, I am mindful of the time, and I am going to close in a very few minutes, because I want to hear the other gentlemen. I want to say this, Mr. Chairman, that whUe I am not going to take up very much time, I could not teU it all in 24 hours if I were to undertake to teU it all. But I am not going to try to do that now, but if it is possible for this committee to extend the time, I would like for you to do it, so that you can hear the other gentlemen at greater length. They are, several of them, actual farm- ers who tiU the soil, and I hope they can be heard at some length. The Chairman. If it is the will of the committee, we can run on to half past 12 o'clock, and then take a recess until 2 o'clock. Mr. McKiNLEY. I move that we do that. The Chairman. If there is no objection, we wiU run until half past 12 o'clock and then meet again at 2 o'clock this afternoon. Mr. Kelley. Thank you very much, Mr. Chairman. I wiU take but a very Mttle more time. The Chairman. It is understood that the hearings close this after- noon. Mr. Kelley. I want to say to the chairman and members of the committee that I thank you very much. I understand that you actually opened the hearings in order to accommodate this committee that was sent down by the farmers of the Northwest, and we appre- ciate your action greatly. I shall close in a few minutes, but I want to call your attention to a few other things. We have 48 agricul- tural colleges in the Uiiited States, and every one of those colleges is engaged in teaching the farmers how to increase production, but I want to say to you that in my entire experience I have never known a man from an agricultural college to say a single word to the farmer as to marketing the things that he has produced. Who ever heard of a man from an agricultural college doing that ? Mr. McLaughlin. We have appropriated in the bill for last year about $1,750,000 to the Bureau of Markets. Mr. Kelley. Then, I am going to ask these farmers here if they ever heard of it. Did you ever hear anybody say anything to you about marketing your products ? Mr. McLaughlin. Do you mean from the colleges ? Mr. Kelley. Yes, I mean from the agricultural colleges. Has any farmer present heard of it, or any member of the committee ? Mr. Wilson. Do you mean from the department ? FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION. 421 Mr. Kelley. I will say this: I wish to give credit to one distin- guished gentleman from the department who said something about marketing grain, because I want to give credit wherever it is due. I did hear the Assistant Secretary of Agriculture make a fine address as to the marketing of farm products and it was in the interest of the genuine farmers. I will say that, and I will make one exception to the statement that I made a minute ago, and that is Dr. Ladd, the president of the Agricultural College of North Dakota, but aside from that, I have never known of anything being done along those lines. Consequently, I say that we need something to protect ourselves against the practices of the grain speculating interests beyond what we now have and I beheve that to that end we need government- owned and controlled elevators — elevators built by the Government of the United States, the same as they are now building in Canada and have been for many years — the same as those that have been built for the men who produce whisky. Now, if I am wrong in this, will some member of the committee put me right on this subject? Am I right or wrong when I say that public storage warehouses have been erected for the accommodation of the men who produce whisky in the United States ? I admit that it is somewhat vague in my own mind. Mr. McKiNLEY. Where do you get that idea ? Is it because they have bonded warehouses ? Mr. Kelley. Yes, sir. Mr. McKiNLEY. They belong to the distillers. Mr. Kelley. Thus the record may stand corrected. That is an impression that has gone abroad. It was reported that they be- longed to the distillers, but that they were under the operation and control of the Government of the United States. They are under the operation and control of the Government of the United States, as I understand it. Mr. Wason. So are the railroads. Mr. Kelley. Yes, they are. The raikoads are semipublic prop- erty and admitted to be so. The Government should build elevators for the protection of the grain growers of the country. It it was never brought forcibly to the attention of the people of the United States before, I believe it has been at this time, that no matter what ■you claim for the other great industries of this country, agriculture still stands as the greatest industry of them all. We find that when the English commissioners were here recently, they said they needed men that they needed munitions, that they needed assistance of various kinds, but that they needed food more than anything else. Now, in conclusion, I want to caU your attention to this lact, because the farmer has got to take chances m the production ol his crop against many things. He must take chances agamst hot winds, agamst hail, against drought, against black rust, that caused 50 per cint damage to the crop last year, against premature frost and agamst many other adverse climatic conditions. He must take those chances. There is a chance, however, that he may escape those thmgs, but as sure as God reigns beyond the eternal stars there is no escape from the dutches oF the^Grain Trust. They have got him, and he has never been able to get away from them. The question that I want to leave hi your mind is tlis: Will you enact some legislation to protect 422 FOOD PRODUCTION, CONSBEVATION, AND DISTEIBUTION. the farmers from tke ravages and wholesale robbery practiced against them by the grain speculative interests of the United States ? Now, I want to ask you gentlemen of the committee this question: Do you beheve that the robberies going on now, causing the Senators at the other end of the Capitol to characterize those men as thieves, pirates, and robbers, and declaring that they ought to be punished, one Senator saying they should be hanged from lamp-posts — do you beheve that these men only began the practice of robbery since the war ? Mr. McKiNLEY. We never read anything that the Senators say. Mr. Jacoway. Do the tenants and farmers in those Northwestern States mortgage their crops to secure the landlord for rent ? Mr. Kellet. Sometimes they do. Mr, Jacoway. Are the landlords' hens superior to aU other liens ? Mr. Kelley. No, sir; except for the payment of debts that con- tributed to the production of the crop, such as the furnishing of seed, but it is not a superior lien just for the rental of the land. Mr. Jacoway. How can the Government protect him when he has mortgaged his crop to secure the rent due his landlord ? Mr. Kelley. Do you mean how can the Government protect him ? Mr. Jacoway. Yes. Mr. Kelley. My idea is that the Government Ought to protect him against the depression of the price of the thing that he sells. The Government should give him protection against the manipu- lators of the market. That is what I had reference to. Mr. McKiNLBY. Is it customary to have a division of the grain raised. Is that customary rent in the Northwest ? Mr. Kelley. Quite frequently; yes, sir. Mr. McKinley. Is it not true that most of those severe rental laws are down South'where they try to protect the Negro ? Mr. Kelley. I do not know anytjmig about those- affairs in the South. The Chaikman. Mr. Kelley, have you completed your general statement ? Mr. Kelley. Yes, sir. The Chairman. Mr. Thompson, have you any questions? Mr. Thompson. Mr. KeUey, you denounced the grain speculative interests, and I think all of us agree with you on that. Now, in a few words, what remedy wo\ild you propose ? Mr. Kelley. I would propose the establishment of Government elevators whereby the gram could be stored and cash drawn against the warehouse receipts so that the men who are owing debts can draw their money and prevent that grain from going on the market and flooding the market. That would be one part of the remedy, and the most essential, I beheve. Mr. OvEKMYEE. You are famihar with the warehouse act that was passed last year, are you not ? Mr. Kelley. I read that bill and studied it for the pmpose of seeing what was in it, and to see whether or not it justified us in demanding new legislation, but I think there is nothing in it to prevent gambling and depression of the market. In the firat place, *[ find it simply conforms to all State legislation, whether by State, by chamber of commerce, or board of trade, and to storage regulations. It does POOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 423 not interfere with them at aU. That bill simply gave the prestige of tne United btates to the arrangements already existing. Mr. Haugen. Has any elevator quahfied under that law _ Mr. Kelley (interposing). I have not gotten around to make that mquiry yet. The Chaieman. I will say here that the rules and regulations for that act have not yet been promulgated, or that is my recollection. Mr. Hatjgen. I take it from your remarks that you are against these speculators ? Mr. Kelley. I imagine I would be so considered. Mr. Haugen. Would you be in favor of a law imposing punish- ment for violations of the law ? Mr. KJELLEY. Yes, sir; I think they deserve some punishment, actually I do, if anybody ever did deserve it for the commission of the crime of robbery. However, I think that that would not be the remedy. Mr. Haugen. You think that it would be better to leave it for the Government to fix the price rather than to pimish the criminal for his violation of the law ? Mr. Kelley. I would have a penalty imposed, of course, but during a crises of this sort, I am in favor of action for the benefit of the whole country— for the benefit of the consumer as well as for the producer, because the chances are that under existing conditions the farmer wiU fare better during the next year or two than the consumer. Mr. Haugen. But what will we do with the speculators ? Mr. Kelley. The Senators thought they ought to be hanged to lampposts. Mj. Haugen. You would send them to jail for violating the law? M. Kelley. Yes, sir; certainly. Mr. Haugen. And would fine them ? Mr. Kelley. I certainly would. Mr. Haugen. You say that you are willing to have the Govern- ment fix the price. Now, I think it is an assured fact that Mr. Hoover is to be the food dictator, and I take it that he is as good a man for the position as can be found in the country. He has had experience and is a most excellent man, but my understanding ia that Mr. Hoover's idea is that no one should make a dollar of profit out of this war. He has declared himself in favor of fixing the price of flour at $6 per barrel, which would make the price of wheat about 88 cents per bushel to the farmer. We have reason to believe that that price would be fixed. Now, do you think that that would be absolutely satisfactory ? Mr. Kelley. I can say, in reply to that, that the committee had an interview with Mr. Hoover last night, and, while I understand that Mr. Hoover has made the statement that you allege, nevertheless I think it is possible that when Mr. Hoover made that statement he was not familiar with the cost of producing grain and that he made that statement without obtaining the actual facts in the case. The committee discussed the proposition to a considerable extent, and after our interview with Mr. Hoover we have come to the conclusion that Mr. Hoover is a fair man and a man of abihty and that he will not fix an unfair minimum price for the farmer. We are sure that when he does fix the price, with the consent and cooperation of the administration, it will be a just and equitable price. 424 FOOD PBODUCTION, CONSEBVATION, Ali^D DISTErBUTION. Mr. Haugen. Then, it is ako alleged that the Beef Trust will sit at the table and assist in fixing prices. Do you think that that will be absolutely satisfactory to the farmer ? Mr. Kelley. As I said before, I am not afraid to trust this com- mittee or the Government of the United States Mr. Haugen (interposing). But it is alleged that the Beef Trust will sit at the table. They will take the services of those who volun*- teer free of charge, or without pay, and of course their services would be accepted. Mr. Hoover would not accept the services of anyone who was paid, and I understand that the Beef Trust and a number of those gentlemen you have described so eloquently have offered their services, and of course it is fair to assume that they will sit at the table and assist in the fixing of prices. Now, I understood you to say that the prices that have been fixed by those gentlemen heretofore have not been satisfactory. Mr. Kelley. No, sir. Mr. Haugen. According to the reports, they will fix the prices now. Mr. Kelley. I would hesitate to believe that the President or the administration during the pendency of this war would do that. I beheve they will be absolutely free from partisanship if they never were before. I beheve that this committee is free froi5a partisanship now, or just as free as it is possible for human beings to be. Mr. McKinley. This is a high-class committee. Mr. Haugen. You say the administration Mr. Kelley (interposing). I am coming to your question. I can not entertain the proposition that the men who manipidate grain prices and the men who have manipulated the prices of live stock will be put in those positions. Do you think they will ? Mr. Haugen. I simply see the reports as they come, and I have no question but that they have offered their services and that their serv- ices have been accepted. Mr. Kelley. I can scarcely believe it. It may be true. I do not know, but I do not think that that class of men will be placed in control. Mr. Young of North Dakota. It would not be improper to consult with them at the time the prices are fixed. They must consult with all parties. Mr. Wilson. You do not consider that all men engaged in handling grain and food supplies are guilty of these evil practices ? Mr. Kelley. I am glad that you have asked that question, because I do not want to be misimderstood. As a matter of fact, I want to say to the conmiittee here and now that much of the information that I have given here was obtained from commission merchants, and men who have been doing business on the Board of Trade of Chicago. That is why I am wiuiout fear of any successful contradiction of my figures. I know they will not be successfully disputed. No ; there are many commission merchants who are, I believe, rendering fair service for the commissions they charge. There are many commission mer- chants who have nothing to do with this price fixing, or with the speculative grain buying interest, or the great storage-warehouse interests that manipulate the market. Mr. Wilson. These commission merchants FOOD PRODUCTION, CONSEBVATION, AND DISTEIBUTION. 425 Mr. Kelley (interposing). These commission merchants are in it some of them, but perhaps Mr. Drake will cover that. I do not wish to take any more of your time, because I am encroaching upon the time of these other gentlemen. The Chairman, thist one moment. The chair desires to enforce the rule we made, and we will allow Mr. Haugen to complete his ex- amination. Mr. Haugen. You have reference to evil practices ? Mr. Kelley. Yes, sir. Mr. Young of North Dakota. Mr. Kelley, when you say that you are in favor of this bill, I take it from what you said that you might favor sonie amendments. For instance, in the case of elevator ca- pacity, this bill provides that the Government may requisition eleva- tor space or terminal elevators. Mr. Kelley. Yes, sir. Mr. Young of North Dakota. But it does not provide for the build- ing of new elevators ? What I intended to ask was do you stand for this bill as it is without amendment? Mr. Kelley. I will say on that point, that I would very much E refer to see the bill amended so as to establish new elevators, or to uy old ones, but I would rather have it as it is than not to have it at all. Mr. Young of North Dakota. Now then, is it your judgment that there is a greater crop of wheat and other grains in the northwest this year than in ordinary years ? Mr. Kelley. Yes, sir; there is in North Dakota. I made some investigation, and I think there is quite an increase there. I would not say there is so much in South Dakota, which is not so much of a wheat-producing State. Mr. Young of North Dakota. If that is true, a greater elevator capacity will be required to handle the crop ? Mr. Kelley. Yes, sir. Mr. Young of North Dakota. So that, in order to facilitate car shipments and keep everything moving, it will be of great advantage to nave additional elevator capacity which the Government ought to own? Mr. Kelley. Yes, sir; certainly. I am free to say that I would like to see the bill amended so as to enable the Government to build at least some of those elevators, but, as I said before, if you wiU not do that, then we would prefer to have the Government to take over the present storage capacity. Mr. Young of North Dakota. Did you hear the testimony of Mr. Anderson upon what ought to be done to control the great grain exchanges ? Mr. Kelley. Yes, sir; and I agree with him absolutely. Mr. Wason. Do the railroads have any elevators out in your country ? Mr. Kelley. I do not think that they openly own any elevators, but they have or used to have, stock in them, or the officials of the raUroad companies often owned stock in the local elevators. That is what you had reference to, was it not— the local elevators ? Mr. Wason. Yes, sir. . Mr. Kelley. Officials of the railroads often own stock m the local elevators, or they used to. 426 FOOD PEODUOTION, CONSERVATION, AND DISTBIBTJTION, Mr. Wason. But they aire not controlled by the parent company or by the board of directors of the railroad company ? Mr. Kelley. I do not think so. Mr. McLaughlin. I would like to ask Mr. Kelley his opinion of one or two features of the biU. There is a section here against accu- mulating or hoarding food supplies, but it is provided that no accumu- lation or withholding by a farmer or the person who produces the foodstuff shall be in violation of this act. Mr. Kelley. Yes, sir; and I am heartily in favor of that for this reason: The farmer is so situated that it is impossible for him to be a hoarder of grain to the injury of the general public. Mr. McLaughlin. But there might be a combination of farmers covering a large section of the country, involving an immense supply of foodstuffs ? Mr. Kelley. Their financial condition absolutely prohibits such a consummation. Nearly 60 per cent of the farmers of the Northwest are tenant farmers, and the quicker they get their grain upon the market and pay their debts, the more their creditors are satisfied. Gentlemen, I do not think we are in any danger from that provision in the biU. There will be no undue holding of grain by the farmers. Mr. McLaughlin. Another thing: There is a provision here by which the President can fix a maximum price above which the food supphes shall not be sold, but that clause exempts farmers or persons who produce the goods. Now, do you think it is wise to have it so that in no case shall that section cover the farmer or include him ? Mr. Kelley. Well, yes; I am in favor of that for this reason; If you place a Umit on the maximum price that is possible for the specu- lator, you then by that act place a limit on the maximum price pos- sible for the farmer to obtain. He has to sell to somebody else all the time, and therefore the remedy for one covers the other. Mr. McLaughlin. Now, you permit hoarding, perhaps, in a section of the country from which the communities in that part of the country get their supply of foodstuffs. You permit that and you do not limit the price that can be charged. Might not the farmers accumulate large supplies and charge exorbitant prices to those who are absolutely dependent upon them? • Mr. Kelley. The best I can do with that question is to recall my previous answer. Knowing the condition of the farmers as I dp throughout the agricultural Northwest and the grain-produQinig country, they are absolutely not in a position to do anything of the kind. Mr. McLaughlin. But this applies to the entire country and to all food products. Mr. Kelley. Well, I am only speaking of grain. We are grain and corn producers in my section, and as to the production of other things I can not speak with the intelligence that you might wish. Mr. McLaughlin. Would you think it wise to qualify those sections in any way so as to permit the President in his discretion to require the farmers to dispose of their property or prevfent what he might think to be unreasonable hoarding ? Mr. Kelley. I do not think it is possible to have any iU effects from it, knowing the condition of the farmers as I do; being very well acquainted over seven States of the agricultural Northwest. I FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 427 have traveled and lectured in those States and I do not think it is possible for any ill effects to come from that provision of the biU; gentlemen. Mr. McLaughlin. Well, I simply wished to have your opinion. Mr. McKiNLEY. Mr. Kelley, the Government will provide probably a sum of $500,000,000 or perhaps more for the building of ships. Do you not beheve it would be to the benefit of the farmers of all the general West if the Government would perhaps provide, say, 50,000 grain cars for handhng grain ? Mr. Kellet. I do. Mr. Hutchinson. Mr. Kelley, I want to ask you one question. You made a statement a while ago about the large profits that were made in the shipping of Liverpool grain. Are you lamihar with the freight they are paying now compared with what they jiaid before the war ? Mr. KJELLET. Yes, sir; of course, not just now, since the com- mandeering by the British Government. Mr. Hutchinson. Well, before that. Mr. Kjelley. Yes, sir. Mr. HtrrcHiNSON. What was the price they were paying on grain ? Mr. KIelley. You will find it right here in these documents. The price prior to the breaking out of the war averaged about 3^ to 4^ cents a bushel. The price during the war averaged from 25 to 68 cents a bushel. Now, since you ask the question, I will call your attention to this fact: During the fall of 1916 — ^which information is contained in this article — it cost 24 cents a bushel more to carry from New York to Liverpool 56 pounds of com than it did 60 pounds of wheat. Mr. Hutchinson. That was imder the conditions of the war. Mr. Kelley, That simply came from the fact that the British Government had commandeered the buying of wheat and they had let the British shipowners have a free hand as to the price they wanted to charge for carrying com, and the price averaged 24 cents a bushel more for carrying 56 pounds of com than it did for carrying 60 pounds of wheat, and that came out of the pockets of the American com growers. That is about the time, as I pointed out a Uttle while ago, when the American com grower sold com for 74 cents a bushel, as I recall the figures now, and the ultimate consumer paid 11.86 a bushel. , 1 . ii, i Q Mr Hutchinson. Do you think we can pass a law to regulate tHat « Mr Kelley. No; except in this way, you have aheady passed a law authorizing the Government to build and operate ships tor the carrymg of American products to foreign countries. I believe, gentlemen, had that law been enacted in the former Congress it would have saved a great amount of this extortionate freight paid for carry- ing products from New York to Liverpool. Mi- Young of Texas. Mr. KeUey, you are speaking for the wheat industry of the Northwest. Have the farming people out m your country any uneasiness about getting a fine price tor their present crop of wheat if no legislation is enacted at this session « Mr. Kelley. If you will take the market quotations of yester- '^^^TouNG of Texas. I simply want to ask the question whether or not under the present war conditiors the farmers m your district are 428 FOOD PEODUCTiON, CONSERVATION, AND DISTBIBUTION. uneasy about getting a magnificent price for their products if Congress lets this thing absolutely alone ? Mr. Kelley. And let the speculator have his way about it, too? Mr. Young of Texas. No; I will get to that in a minute. Mr. Kelley. The chances are the farmer would get a pretty good price and come out better than the uhtmate consumer. Mr. Young of Texas. I agree with you that there is abuse along speculative lines, and this committee ought to legislate and stop that waste involved in the operations of the boards of trade and chambers of commerce, and I am willing to go as far as any man anywhere in doing that; and when I speak I am speaking for the great farming industry in my country. The trouble is in this machinery between the producer and the consumer. Mr. KJELLEY. Yes, sir. Mr. Young of Texas. Now to get back to another proposition: Two-thirds of the people of this country are consumers and less than one-third are actual producers on the farms. This legislation undertakes to create a Federal agency, a one-man agency, because Mr. Hoover is going to be named, who will have the autocratic power of fixing the prices, both minimum and maximum. On the floor of the House here there is a ratio of over two to one representing the consumers of this country instead of the producers of this country. Now, if we clothe one man with the power to fix these prices, whose sentiment is he going to represent, the producers or the consumers? Mr. EJELLEY. You wish me to answer that question ? Mr. Young of Texas. Yes, sir; I want you to answer it. Mr. Kelley. My answer to that question would be that whoever is the administrator of the food supply of the country will act under the general influence of the present administration, and I can not beheve that the present administration will permit any man to do an open injustice to either the producer or the consumer. Mr. Young of Texas. That goes back then to the President of the United States, and that man has on his shoulders more than a thou- sand men ought to be called on to have. He is Commander in Chief of the Army and he has all these war matters on his hands and he can not possibly give personal attention to this proposition, and some agent has got to do it, and that agent is Mr. Hoover. Now, he does not know anything about agricultural conditions. I am here to tell you that. His hfe work shows he does not know anything about it. He does not know what you gentlemen are up against on the farms. I am from an agricultural community and I know what they are up against, and I want to say to you that this man who has already been named in advance does not Imow that, and whose view- point is he going to have, the man who produces things or the man who consumes things ? Mr. Kelley. Well, I will answer that in this way, although I have in part answered it before : The conmiittee had an interview with Mr. Hoover last night. We had entertained the same idea that you have, that Mr. Hoover's life lines were thrown along different chan- nels and that he was not acquainted nor did he know the cost of pro- duction of a bushel of wheat, and the chances are that he does not know it now. That would be my guess. But we satisfled ourselves on this point, and I believe if I were to take any member of this com- POOD PBODUOTION, OONSEKVATION, AND DISTKIBUTION. 429 mittee or any gentlemen present in this room and put him in the attitude and in the position that Mr. Hoover is going to occupy, the first thing he would do would be to qualify himself to pass on those propositions; and we have satisfied ourselves, as a committee sent down here by a convention of farmers which met in the city of Fargo, N. Dak., that Mr. Hoover is a gentleman of intelligence, and we sat- isfied ourselves further that he has investigated tne whole proposi- tion of transportation and warehousing and the handling of grain on a large scale, and I for one, and the other gentlemen agree with me, beUeve he will do justice as near as it can be done both to the producer and the consumer. Mr. Young of Texas. Now, Mr. Hoover has been before this com- mittee and he has testified at length, and he underwent cross-exami- nation. They want this power given, but Mr. Hoover tells us that he will probably not exercise this power, but he wiU use his own judgment as to any particular crop as to which he will exercise the power. He will not exercise it as to perishable products. He wiU not exercise it as to many other products; but I want to say to you and to the gentlemen who represent the Northwest that he will exercise it as to your product, and that is grain; and while he does not go on record, if the world produces more grain than the world will consume, ho leaves you to bear the load; in other words, if you make over produc- tion. But there is only one conclusion that can be drawn from his testimony before this committee, and that is that the world is going to produce less wheat than the world needs, and he will exercise that power because imder the law of supply and demand it will sell at a nigh price. He will exercise the power in that instance. If you over- produce, the farmer loses. If you underproduce, he wiU exercise the power and hold down your price, because the consuming world needs the stuff, and that is the only conclusion you can draw from the testi- mony he has given here. Now, the question is, are you grain men ready to turn over to him that autocratic power, or had you rather stand and let us pass legislation that wiU control these intervening agencies from the consumer to the producer, and stand on the law of supply and demand under the conditions which now confront us 1 Mr. Kelley. On the proposition of the law of supply and demand, you would open a question there which you and I would discuss for two hours. The law of supply and demand has been elimmated and is not exercising an influence on the grain market as it should. It is a factor, but one which is absolutely ehminated at times. Now I wiU answer your question again: Mr. Hoover represented to us last night that in fixing a minimum price upon grain, the farmers interests should be consulted and a commission should be established where the producer would be well represented as well as the con- sumer. Just one more thought there, the purpose of Mr. Hoover, as we gaiaed from the interview with him, was not to cmch anybody but to eliminate the mighty profits taken by the gram speculative iaterests. If you can ehminate that Mr. Young of Texas (interposing). Do you not think that the sensi- ble proposition would be for this committee to legislate and ehminate this waste between the producer and the consumer rather than clothe some man with this autocratic power ? , . . ■, j Mr. Kelley. If you will legislate and put the boards ot trade and chambers of commerce out of commission, I am with you. We do 430 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. not need them at all, but we did not think we could get you to do that. Mr. Young of Texas. That is my proposition exactly. Mr. KJELLET. We had not dared to ask you to do that much now. Mr. Young of Texas. You are speaking for the farmers ? Mr. Kellet. Yes, sir. Mr. Young of Texas. And I think I am speaking for the farmers of my section. Mr. Hoover came before us, and when he was asked and the other experts were asked the question directly about fixing the prices on farmer's macliinery, his cultivators, his wagons, his har- ness, his clothing, his plow tools, and his labor, he said, "You ought not to go into that. You could not get together enough machinery to do it." Can you go back home and tell your farmers that they will not regulate the prices which the farmers have to pay for the things he has to use, for instance, paying $125 for a wagon which used to cost 165, and let the law of supply and demand control those things; but when the farmer for the first time is getting good prices for ms stuff during war times, they begin with the farmer and regu- late the prices of his stuff and not regmate the price of things which he has to buy ? Mr. KJELLEY. I will give a very brief answer because I am taldng up the time of other gentlemen, and I do not wish to do that.' My answer is that all the things you have enumerated there will be pre- sented to Mr. Hoover by the commission which he said last night would be estabhshed to consider the proposition. All the extra cost must be taken into consideration. The farmer can not produce wheat to-day as cheap as he produced it three or five years ago, and that must be considered. Mr. McLaughlin. So if the prices of all those things are taken into consideration, then they are practically fixed as far as the farmer's interests are concerned ? Mr. K!elley. Yes; the extra cost of machinery and the extra cost of labor and everything of that kind must be considered. For instance, binder twine has gone up 100 per cent or more, and whoever fixes the minimum price of farm products must take into considera- tion the extraordinary cost of production. Mr. Young of Texas. Do you beUeve that any such autocratic legislation as this would ever have been proposed if farm products were selling to-day at what they were seUing for before this war, and do you not conclude that there is only one reason for this legislation, and that is to hold down the price of farm products ? Mr. Kelley. No; I do not take that to be the prevaUing motive. If I did, I would not favor the legislation. I take it Congress is moved by a high sense of duty for the consideration of the corisiuner, perhaps to a much greater extent than consideration of the pro- ducer, and the purpose, as I take it, is to eliminate the gambler's profit. Mr. Young of Texas. I am with you on that point. Mr. Kelley. You realize, gentlemen, that the present price of grain represents over 100 per cent more than the farmer got. The farmer did not get enough last fall, and the consumer is paying too much now. That is the reason we favor this legislation. We bSieve the Government will do justice by us as producers, and we believe that this wiU eliminate the gambler's profit and save the consumer. POOD PKODUCTION, CONSERVATION, AND DISTEIBUTION. 431 Mr. Young of Texas. Let me interject a question right there. In 1914 this war was on. My section of the country produces mainly cotton. The climatic and soil conditions are such that necessarily that is our chief crop. Our foreign market takes about 65 per cent of that crop, which is shipped abroad under normal conditions. When this war started that foreign market was shot to pieces and we did not have any foreign market, and cotton, which cost the farmer more than 10 cents to produce, was selling at 5 and 6 cents a pound, way below the cost of production, and an appeal was made to this Government, that the farmers were being bankrupted, and the Government told us, "We can not hear that appeal; you have got an abnormal condition existing, and your farmer has got to stand the loss"; and we received no sympathy from any source in saving that crop which was being destroyed by reason of the war. Now war conditions -have caused an increase in the price of farm products so that it is now profitable to the farmers, and the consuming world is crying out against the farmers and they now say they want control and they want that control to be placed in the hands of a Govern- ment agent, and they want that agent to fix a price which will meet the consumers' demands. Now do you think the cotton farmers and your farmers will stand up and say that you are doing them just right, when everybody else is getting these magnificent war prices, that the farmer is the first man that the Government undertakes to put its hands on ? Mr. Kelley. We do not view it from that standpoint, and I will tell you why. ' We know the deal we got from the gamblers and the train speculative interests in the past, and we know what they will o to-aay. Mr. Young of Texas. I am speaking on the theory that we are going to wipe them out as far as we can by legislation. Mr. Kelley. If you will do that you wfll win the everlasting gratitude of the grain producers of the country, but let me add this, for your consideration and the consideration of the other gentlemen here, and then I hope I wiU not be detained any longer. If you will take the market reports for yesterday or the day before, you will find that September wheat is now nearly one dollar below cash prices to-day. Now what does that mean? That is the old game of the speculative interests getting ready for the fanners to put their grain on the market and then beat down the price. Gentlemen, I thank you. , , j • Mr Wilson. Mr. Kelley, do you think that these food and gram gamblers have injured the farmers more than they have the con- suinGrs ? Mr. Kelley. Up to this time, this year, they have injured both, and perhaps the consumer more than the farmer, if anything, ifie farmers have got but a very smaU percentage of the wheat in their hands which brought from 12.50 to $3 a bushel. It is now practi- cally out of the farmers' hands, and they perhaps injured the con- sumer to a greater extent during the last six months than the pro- ducer; but you must remember that the farmer is both a producer and a consumer. He produces wheat and puts it on the market and sells it, and then buys flour. In previous years they have wronged the farmer very much more than the consumer. The facts disclosed by these figures, which nobody wiU seriously contradict (referring to 432 FOOD PRODUCTION AND CONSERVATION. tables to be admitted to the record at the close of his remarks), show that it is wholesale robbery. They simply take his stuff below the cost of production, and the farmer has had no redress. Mr. Hutchinson. Mr. Kelley, you understand this is an emer- gency law ? Mr. Kelley. Yes, sir. Mr. Hutchinson. Would you be in favor of the Government fix- ing theprice in time of peace ? Mr. Kelley. No ; not continuously. Mr. Hutchinson. Why not? If gambling is a bad thing now, it is a bad thing then. Mr. Kelley. I was just going to reach that point. I stated at the outset of my remarks that we were not here primarily asking for this temporary measure at all. We are here trying to get relief From this continuous gambling which has always gone on, dealing in futures, selling phantom wheat, and everything of that kind. There is nothing in that which is of any benefit to the general consuming public and it ought to be prohibited by law. I will say to my friend that we do want such permanent^ legislation as will enable the farmer to escape the robberies that are practiced upon him by the grain speculative interests. Mr. McKiNLEY. Mr. Kelley, is it not a fact that the only practical way to do that would be for the Government to take charge of the purchasing and handling of the grain ? Mr. Kelley. As a temporary measure ? Mr. McKjnley. No; to cut out the speculator. Mr. Kelley. Indefinitely and continuously ? Mr. MoKinley. Yes. Mr. Kelley. I do not think that is necessary. That is perhaps a measure of paternalism or socialism, as you might choose to call it, which I hardly think is necessary. I think if you make it possible for these conditions to exist, that is aU we ask. Let us have a place under Government supervision where we can store our grain and not . play into the hands of the speculative interests. As it is now, mil- lions and millions of bushels go right on to the terminal markets just when the farmer is beginning to thrash, and they are met by a de- pressed market. The farmers must sell, and they get it at very much less than its value. Mr. McKiNLEY. In your previous remarks you have spoken of the fact that you have to have hedging. Now, hedging is nothing but speculating, and if you wipe out hedging where is your market ? Mr. Kelley. I have never admitted that myself. Mr. Anderson covered that point, in a measure, and he showed how that hedging is 4one. I do not call it hedging, but I call it protection. Mr. McKiNLEY. It is speculation Mr. Kelley (interposing). The miller now, when he buys grain, sells flour against it. He does that now since they have discontinued selling futures, that is sufficient protection and no hedging is needed. Mr. McKiNLEY. I am a farmer myself of a good deal of experience. If I have grain to sell and offer it to a miller or grain buyer, he imme- diately sells it to protect himself against loss. Mr. Kelley. You should cut out this dealing in futures or in phantom wheat. FOOD PRODUCTION AND CONSERVAOTION. 433 Mr. Haugen. If Congress should pass a law putting the food spectator out of business and making him leave the farmer alone ^°, . ^ -r^^* *^^* ^® better than to go to th6 method of price fixing « Mr. Kellbt. Now, will you do that? Mr. Haugen. I say if it could be done. Mr. Kellby. If you will do it, that would satisfy us, but we have always known that the only method Mr. Haugen. The chief purpose is to get rid of the speculator. Mr. Kelley. Yes, sir. Mr. Thompson. Did you ever hear of any man who had a scheme worked out to do away with the speculator ? Mr. Kelley. The only way I know of to do away with the specu- lator is to remove the conditions under which the speculator thrives. To remove those conditions the Government should build ware^ houses, but we do not ask something for nothing, and store grain at a reasonable price Mr. Thompson (interposing). You would have the Government l;o take over all of the activities between the producer and the con- sumer ? Mr. Kelley. I would have the Government control all terminals and make of them open market places in which to buy and sell grain, as a permanent proposition, in addition to other provisions of the bill. Mr. Thompson. That is what we are trying to do. Mr. Lee. We have about 20 minutes remaining. Organized Pbicb Manipulation by Speculative Interests. — [By Ex-Congressmaii John E. Kelley, Pierre, S. Dak.] The organized speculative grain interests of the United States are unquestion- ably among the most powerful of the many illegal combinations that prey upon the honest industry of this country. The influence exercised by these combinations con- trols cities, determines the policy of States, and reaches even to the National Oapitol at Washington. We shall not say that the 48 agricultural colleges of the various States are dominated by the grain exchanges — colleges that are generally supposed to ex- ist for the purpose of advancing the interests of the farmers, but certain is it that the records have not disclosed a single instance where a member of any of said colleges, either through their management of farm institutes, or otherwise from any public platform, have offered any advice to farmers along the line of adopting better methods m the marketing of grain. Yet the least business ability will enable one to understand that to practice increased production from year to year, according to the advice of the many professors of agronomy, without any attention being paid to the marketing of the things produced, is but to invite disaster and play into the hands of designing speculators. In connection with this phase of the question, it is but fair to say that Prof. Ladd, who has recently been appointed to the presidency of the North Dakota Agricultural College, is an exception, and under no circumstances does he come under this criticism. . The Assistant Secretary of Agriculture, Hon. Carl Vrooman, is also a brilhant excep- tion, and is unquestionably a true friend of the farmers. Mr. Vrooman recently, in a speech at Fargo, N. Dak., in pointing out the folly of increasing production without at the same time paying proper attention to marketing called attention to the fact during the season of 1913 that farmers of this country produced 700,000,000 bushels less com than was produced the previous year, but received for the crop $150,000,000 more. Consequently, it is but ordinary business sagacity for farmers to give as much attention to marketing as to production. 104176—17 28 434 FOOD PBGDucnour, consekvation, and distribution. PKOOP OF ENORMOUS LOSSES. The ioUowing tables compiled from authentic market reports, whose figures will not be seriously questioned, show the most stupendous robbery of the farmers during the first four months after the opening of the markets the past season, as to wheat and oats, that has ever been undertaken on this continent. It is indeed true that market manipulators, each and every season at marketing time during the rush of marketing of any crop, manipulate the markets so as to fix the price and put the price where they want it. Their plan usually is to put the price at such times about at the cost of production while they are getting control of the bulk of the crop, then raise prices so as to catch the consumer as well as the producer. The only reason, therefore, that robberies are greater this year than at other times is because, on account of the war, prices were so much higher, production cost left more for them to take. Oats. Farm price. Chicago. Liver- pool. Handling cost. Toll. Aug. 14 to. 30 .25 .26 .26 .25 .30 .31 SO. 40 .35 .36 .36 .35 .40 .41 JO. 73 .74 .74 .74 .74 .75 .75 SO. 16 .16 .17 .18 .25 .27 .28 SO. 17 Sept.4 .23 Oct. 30 .21 Nov. 6 .20 Nov.20 .14 Dec. 11 .8 Dec. 18 Wheat prices and the portion the gamblers tooh. Farm . price. Chicago. Liver- pool. Handling cost. $0.91 SI. 10 $1.72 SO. 29 .78 1.93 1.63 .33 .79 1 .94 1.63 .33 .79 .98 1.64 .35 .87 11.03 1.68 .35 .97 1.16 1.68 .35 1.03 1.22 1.77 .50 1.06 1.25 1.76 .50 1.09 1.28 1.92 .56 .95 1.14 1.83 .67 .90 1.09 1.68 .61 .93 1.12 1.65 .58 Toll. Aug. 14, No. 2 H. Sept. 10, No. 1 N Sept. 30, No. 1 N. Oct. 30, No.2H.. Nov. 27, No. 1 N Dec. 18, No. HW Jan. 8, No. HW.. Jan. 15, No. HW. Feb. 11, No. HW Mar. 4, No. HW.. Mar. 18, No. EW. Mar. 25, No. RW, 30.33 .37 .36 .31 .34 .17 .02 .01 .08 1 Duluth. The accompanying table illustrating the wheat prices discloses the following facts: That during the months of August, September, October, and November, when the great bulk of the wheat crop was sent to market and this rush caught all renters and many who were fajrm owners, the organized speculative grain interests beat down the price of wheat in this country untd the price in either Chicago or Duluth, as the case may be, after adding every known cost of handling between Chicago and Liver- pool, left a clear margin of profit to said interests, durmg all of the time of the four months named, of 34 cents per bushel or 38 per cent of the price the farmers got at the local station. The table further shows that during the months of January, February, and March, when the speculators and market raiders had gathered in their own hands the major' portion of the wheat crop of the country, the spread between the Chicago price and the Liverpool price shrunk until, with handling costs added to the Chicago price, the margin or toll taken on the basis of Liverpool markets was but 2i cente per bushel, or a trifle over 2 per cent. If wheat can now be handled on a margin of 2^ cents per bushel less Liverpool prices, with handling costs added, when it is in the hands of speculators, was there any justification for taking 34 cents per bushel during the time the farmers were marketing their crop? Where now is that bunch of cut-throat magazines, the Co-Operative Journal, Price Current of Chicago, the Manager and Farmer, and the Daily Price Record of Minne- FOOD PEODUCTION, CONSEKVATION, AND DISTEIBUTION. 435 apolig, who heaped abuse and villiflcation against this writer, because those robberies were pointed out by him during the time they were being enacted? The strongly intrenched p,nd highly organized speculative grain interests are no reapectors of personages, however, and with equal facility they take in the wheat grower at one time and the corn grower at another, very much the same as a pack of ravenous wolves leap upon an unsuspecting and defenseless wayfarer. Com prices from September to March. rann price. Chicago. Liver- pool. Handling cost. $0.60 $0.76 $1.17 $0.32 .49 .65 1.16 .36 .51 .60 1.26 .44 .51 .67 1.27 .36 .52 .68 1.43 .47 .47 .65 1.47 .55 .49 .65 1.46 .61 .50 .66 1.38 .61 Toll. Sept. 11, American mixed Oct. 9, American mixed .. Nov. 20, American mixed ' Dec. 24, American mixed , Jan. 15, American mixed . Feb. 19, American mixed. Mar. 11, American mixed. Mar. 18, American mixed . $0.09 .15 .22 .24 .28 .29 .21 -11 Farm price as given in this table is obtained by deducting 10 cents per bushel from the Chicago price. Of course, in some instances farmers will get a little more, or some closer to the Chicago price than 10 cents, those living nearest to that terminal and those living more remote, a price representing more than 10 cents off Chicago price. Handling cost, as given in the table, represents every known cost of handling per bushel between Chicago and Liverpool, including insurance, which was and is fur- nished by the Government. Cost, 1 per cent to British ports down to i and J per cent to nonbelligerent countries. It will be seen that the toll taken by the speculative interests during the fiist four months after the opening of the markets, when farmers were rushing their oats to market to obtain money with which to pay their debts, was 80 per cent of the price the farmers received for their oats at the local station. During all of this time very- heavy exportations of oats were made, averaging about 10,000,000 bushels weekly. It will also be seen that when the speculators got the bulk of the oats in their own hands they advanced the price till the spread between Chicago and Liverpool, after deducting handling costs, fell from 80 per cent, the toll taken when farmers were rushing the stuff to market, to about 19 per cent, when the oats got into speculative liftuds From the review of the tables on wheat and oats it is seen that the heavy marketing of these products occur during August, September, October, and November. Hence, during this time the heavy tolls were taken and the wide spread appears between Chicago and Liverpool prices. j ■ i •* But com is not fit to market until close to the 1st of December. Accordingly, it will be seen that the wide spreads between Chicago and Liverpool on corn whicH means heavy tolls, do not commence till close to the Ist of December— November 20— and continues on toward the middle of March. . , . ^, , 4. j From the 20th of November to the 11th of March, inclusive, the market raiders took from the corn growers a clear toll over all costs of handling, on the basis of Liver- pool prices, a sum equal to 50 per cent of the price the farmers received, on an average, at the local station for their corn. RAIDS ON BARLEY EQUALLY AS GREAT. Foreign markets do not give quotations on barley, so that the raids on that cer^l can not™e given with the same accuracy as on the others, f'^* *ll°^^«,^^Xu^$ attention to the markets at all will readily recall that the price of that product fared '^^'itl^teUeTed^Vafris within moderation to -y .that f least fheb^^^^^^^^ suffered a loss on account of arbitrarily depressed prices »* f J^^,? l?«ervativeesti- Fiffurine the total loss to the farmers of the country at the most conservative esn ma?r wheat oati barley, and corn, based on Liverpool quotations, excepting 'l^^aVXtlfffifn^^hrduring the four r,o..^J^^^^^l^lfit^^^ &7o5'^w?r3^^e'^raiTcCtoll^ 436 FOOD PEODUCTION^ CONSERVATION, AND DISTRIBUTION. during this time we have a loss of $120,000,000; corn, estimated sold 500,000,000 bushels, toll '25 cents, charged with 20 cents, $100,000,000; oats, estimated sold 500,000,000 bushels, toll 20 cents, charged with 18 cei^, $90,000,000; barley, esti- mated sold 150,000,000 bushels, toll 25 cents, charged with 20 cents, $30,000,000; total, $340,000,000. These estimates are purposely put very low and yet they run into figures of vast proportions. It will also be noted that we have allowed them commissions of 4 cents on wheat, 5 cents on corn, 2 cents on oats, and 5 cents on barley— amounts greater than they ever admit taking and considerably larger on some grains than they are taking at present time on the basis of Liverpool prices. Is it any wonder that tenant farmers are on the increase? How can farmers be expected to meet the ever-advancing cost of living, the ever-increasing wage rate, and sell oats for the sum of 25 or 26 cents per bushel? And the other crops men- tioned are not much better. Could crops always be depended upon to reach the full yield perhaps such a feat might be accomplished. But how was the corn crop this year? Nothing in South Dakota, and if the truth be told by visitors from Iowa it was but little better there. Last j^ear corn was excellent throughout the Northwest — that is 1914; but wheat was practically a failure, and so conditions will continue. The purpose of this article is to prove in a plain and simple manner that through organization, combination, and collusion on the part of the speculative grain interests the price of farm products is absolutely controlled by as conscienceless set of gamblers and market raiders as ever operated in this or any other country. In a future article the story will be told as to how the markets are manipulated and price fixing accomphshed. WHERE THE WEALTH GOES. All wealth comes from the ground or the waters of the ground. Accordingly the farmers take from the soil the great bulk of all wealth produced. Yet, take away from the farmers to-day the unearned portion in the value of their land and their personal property, which is the only part of their property they actually produced, and it would not begin to equal their indebtedness. Why is this the case? Because other and diverse parties, known as middlemen, have taken upon themselves the distribution of the wealth the land gives up in response to the efforts of the farmers. In other words, the farmers up to this time have been going it blindly — production and increased production — while the other fellow attended entirely to the marketing of what they produced. Consequently the wealth producer, the farmer, is too often left holding an empty bag, while the middleman, who attends to his marketing and who is a wealth gatherer, counts his accumulations by the millions and hundreds of millions. The figures published by this writer covering the marketing of the crop produced during 1915, commencing with August 14 and closing March 25, 1916, show that through the rats of the speculative grain interests in price fixing alone, on the basis of prices in Duluth or Chicago and in Liverpool, above all costs of handling, $340,000,000 were taken. During the first 100 days after the market opened that year the greedy market raiders took above 40 per cent of the price the farmers received at the local station for wheat, 80 per cent of the price received at the local station for oats, and 50 per cent of the price received at the Ibcal station for com, and barley was about the same as corn. No man has ever dared to come out in the open and contradict those figures. While this feast of the grain gamblers was going on practically all renters in the country, and many who were farm owners as well, were obliged to sell their grain below the cost of production. This condition is what breeds tenant farmers. Durji^ last season, after the speculators got the bulk of the grain in their own hands, the margin between Chicago and Liverpool closed until grain was then handled on a margin as small as 2 cents per bushel and even less. The following table will show that the market manipulators are still doing business at the old stand; that they have lost none of their cunning, but are enjoying the game of fleecing the farmers: POOD PRODUCTION, CONSEEVATION, AND DISTBIBXJTION. 437 Price of wheat for season of 1916. Farm price. Chicago. Liver- pool. Handling cost. Toll. Sept. 30, No. 3 H Oot. 14, No. 2 H. Oct. 21, No. 2 H. Oct. 28, No. 2 H. Nov. 18, No. 2 H Dec. 2, No. 2 H. . Dec. 9, No. 2 H.. Dec. 16, No. 2 H. Dec. 22, No. 2 H. Dec. 30, No. 1 H. $1.42 1.44 1.54 1.64 1.64 1.63 1.59 1.47 1.46 1.63 J1.59 1.61 1.71 1.81 1.81 1.80 1.76 1.64 1.63 1.80 $2.00 2.10 2.12 2.27 2.28 2.39 2.41 2.43 2.42 2.55 SO. JO. 05 .10 .04 .07 .10 .12 .17 .31 .31 .27 Com, wheat, oats, and barley are short this year, which added to the unprecedented demand makes prices high; but whether high or low the market raiders, though they never take a chance, take their full toll. Corn prices for this season — 1916. Farm price. Chicago. Liver- pool. Handling cost. ToU'. Oct 7, No. 5 . $0.71 .63 .74 .84 .80 .77 .67 .74 .72 $0.87 .89 .70 1.00 .96 .93 .83 .90 .90 $1.45 1.47 1.49 1.59 1.67 1.74 1.81 1.86 1.83 $0.36 .37 .27 .50 .50 .57 .61 .61 .72 $0.22' Oct. 14, No. 5 .21 Oct 21, No. 5 - .IS Nov. 4, No. 5 .0» Nov. 11, No. 6 .19 Nov 18, No. 5 .24 Dec. 2, No. 6 .37 .35 .23 A study of the tables on wheat and corn will disclose the fact that at the highest points of both the transportation of corn between Chicago and Liverpool costs 24 cents per bushel more than wheat. Note also how the toll of the grain gamblers increased as the world's price of com advanced. It will be seen that when corn reached $1.86 per bushel in Liverpool, the highest price reached in 50 years, the American corn grower received but 74 cents per bushel or less than 40 per cent of the price paid by the ultimate consumer. . Had not the servants of big busineBS defeated President Wilson's shipping bill m the preceding Congress, the English ship owners could not now rob the American com grower by charging 62 cents per bushel for carrying corn from New York to Liverpool — service performed before the war for ^ cents to B cents per bushel. The price of oats and barley has been manipulated to the advantage of the grain speculative interests to as great an extent as wheat and corn. Considering the propo- sition from any angle whatsoever and it places the people of the Northwest m an un- enviable position. No people not submerged in the despondency of ignorance, stu- pidity, an^ despair should submit to such outrages. Such admitted impotence on the part of a people claiming any measure of self-respect— much less claiming the right and the exercise of self-goveminent— must certainly be ignoble to contemplate, tor it is unnecessary to add that when farmers are robbed directly all others in the agricultural Northwest are robbed indirectly. ^+,„„ ;„ tv^ No mention has been made here of the tremendous losses through favontism in the grading of grain, the gambUng in phantom wheat, and the many other devices invented by the cuiSing of the gamblirs to separate the farmers from t^eir W-eamed cash We must have storagt elevators either State or nationally owned and operated, both within the State and at the terminal markets. Mr Young of North Dakota. Mr. Pendray, of Jamestown, N. Dak., a member of the State Senate and one of the leadmg farmers of hia section, desires to be heard. 438 FOOD PRODUCTION, CONSEEVATION, AND DISTRIBUTION-. STATEMENT OF MR. THOMAS PENDRAY, OF JAMESTOWN, N. DAK. Mr. Pendray. Mr. Chairman and gentlemen of the committee, my father moved to North Dakota in 1883 and took a homestead, andl am still hving and farming that homestead; but during that time, on different occasions, we got so hard up that I went back to the place we came from, in northern Michigan, and worked in the mines so as to help keep the bread basket full. While I do not know very much about marketing conditions, I know a little about the conditions where this stream of wheat begins. I know how hard the farmers work. There are none of them working under the 8-hour system, unless they work 8 hours before dinner and 8 hours afterwards. I win say that at this season of the year they are taking a httle leisure. Three of my neighbors, for instance, could not get enough help, and their wives have been driving the harrow in the fields, while they were driving the driUs. They are men who were farming 200 and 300 acres apiece, and they could not get help. In my own case, I had two yoimg men who were with me all winter but they concluded to enlist. In their place I got schoolboys, who did pretty weU for a while, but either myself or the foreman would have to be with them all the while to see that they were all right and would do their work properly, because in my country the work is nearly all done by five-horse teams, and when a man puts a five-horse team and plow or drill and a set of harness in another man's care, if the horses did not have much to do all winter, they are apt to be a httle bit frisky, and unless the man knows what to do with them, he is hable to have a runaway and mixup and there will be $1,000 pretty badly damaged. You see that is one element of risk that the actual farmer is always up against. I thought I ought to tell you a little bit about the price or cost of producmg wheat. Now, in the first place, we have to put in the seed. We harrow the ground ,first, and then put in the seed. The seed this year was worth more than $3 per bushel. The wheat that we put in the ground this year could have been sold for $3 a bushel and in my set of figures on the cost I have estimated the wheat or the seed wheat at $3 per bushel. The amount of seed that we put in the ground is from a bushel to a bushel and a half of wheat per acre. I have made up the list of it in this way : The seed is $3 per acre. Mr. Wilson. Per acte ? Mr. Pendray. Yes, sir. Mr. Wilson. I thought you put in a bushel and a half per acre ? Mr. Pendray. There are some who put it as low as one bushel per acre, but I have tried to keep on the conservative side. The plowing is $2 per acre. I have known a number of men who have been offered $2.50 per day to go out and plow, and I have known of some plowing to be done at that price, but I have put the plowing at $2 per acre. Harrowing twice, at 40 cents per acre each time, makes 80 cents per acre, and the 'drilling amounts to 60 cents per acre. That is the amoimt that is now in the groxmd. That is the price of the chip that we put on the table in this game, which is $4 per acre. Now, the probable cost from now on is, first, twine, 2 pounds per acre, at 20 cents per pound. We are not sure of that price, but I think that is a conservative estimate. The cutting and shocking will be 12 FOOD PKODUCTION, CONSERVATION, AND DISTKIBUTION. 439 per acre. I am figuring this on a 10-bushel crop, which is a httle below the average, but last year we got only 5 bushels per acre by weight. We got about 7 bushelsper acre by measure, but by weight only abou:t 5 bushels per acre. The next is the thrashing. Mr. Wilson. How much was the threshing per acre ? , Mr. Pbndeay. Threshing a 10-bushel crop, at 15 cents per bushel, which is also very low, will make up $1.50 per acre. The hauling is 1 cent per bushel per mile for 5 miles, making 50 cents per acre. The taxes I have placed at 32 cents and the insurance at 8 cents, making 40 cents per acre. The agricultural colleges teU us that when we take out a 10-bushel crop of wheat, we take about 40 cents per bushel in- f ertihzer. I do not know much about that. I am not a chemist, but a farmer, and I have to leave that to the agricultural colleges. That amounts to $4 per acre. Mr. Wilson. Would you call that the depreciation in the value of the land? Mr. Pendray. I presume it would come imder that head. Mr. Wilson. That amounts to $4 per acre. Mr. Pendray. Yes, sir. Mr. Haugen. What is the rental value of the land ? Mr. Pendray. The regular value of the land around there is $50 per acre. Mr. Haugen. I mean the rental value. Mr. Pendray. There is no land rented for cash there. It is always on-the-shares proposition. Mr. Haugen. That is one-half. Mr. Tendkay. There are different methods. The general propo- sition, though, is that the landowner furnishes the seed and takes half of the crop, and pays half of the thrashing bill, taking half of the crop at the machine. Mr. Wllson. Do you mean that the depreciation would be $4 per acre each year with a 10-bushel per acre crop ? i • ,i Mr. Tendray. That is the way the agricultural chemists talk to us. That may be wrong. . , , . .• . j^ ^i, Mr. Young of North Dakota. That is the lowest estimate of the colleges. ., i IX Mr. McKiNLEY. Did you have an opportunity to complete your statement? , , i. -j. j. * Mr Tendray. No, sir; I have not had an opportunity to get through my statement. Now, the interest on the investment m the land we have figured at $4 per acre. Mr. Hutchinson. And the land is worth $50 per acre < Mr. Pendray. Yes, sir. Mr. Hutchinson. And the interest is $4 per acre « ^ ..^ , ,Mr Pendray. We had to pay, until last faU, a high rate of mterest. I have never borrowed any money on real estate at less than 8 per cent interest, and on plain notes and chattels the mterest is generally from 8 to 12 per cent, or it was mitil the legi^l^J^J-.^ P^f ^^ .^ h^ .m^frnY^t ra.tfi to 10 VQV Cent. In addition to that. law lowering the contract rate to 10 per cent. In addition to mat this wheat i! not aU of contract grade. It does not very often come up to the requu-ements of No. 1 northern, and then, we have m a^H,. Zn to this the transportation charge to the termmal, which i cents per bushel addi- is 15 440 FOOD PRODUCTION, COWSEEVATION, AND DISTRIBUTION. Mr. Wilson. Is not that the same hauling that you have ac- counted for? Mr. Pendray. I have hauling from the farm to the elevator at the station. The convention at Fargo advises asking for a price of $2.50 per bushel for wheat at the terminals, but we are quite a long way from the terminals, and it will cost us more than an average of 15 cents to get it to the terminals, and most of it will be about 15 cents per bushel less than the No. 1 northern price. I have added those figures up, and they come to $19.20, as the cost of pro- duction. Then there is 15 cents off between the elevator and the price at the terminal, which would make it 15 cents per bushel more, or 30 cents per bushel less. That would be off to the farmer, so that it will really cost the farmer about $19.50 per acre with an average of 10 bushels per acre. Mr. Hutchinson. Have you figured the reduction of your land in that? Mr. Pendray. Yes, sir. Mr. Hutchinson. Then it wiU be only a question of a few years until you are entirely out of business ? , Mr. Pendray. The farmers have been that way right along. The farmers have been raising wheat at a loss. Mr. Hutchinson. I know that, when you grow only 10 bushels per acre. Mr. Pendray. The only way the farmer is hving is on his ability to further get in debt because of his land advancing in price. Mr. Hutchinson. And you are still taking off $4 per acre every year? Mr. Pendray. Yes, sir; we are still taking that much from the fertDityof the land according to the agricultural colleges. Mr. Wilson. You farmers do not take much stock in that depre- ciation of $4 per acre on the land, do you ? Mr. Pendray. Well, I will tell you. When the farmers hsten to these professors, they call it bunk, or, perhaps, they express them- selves stronger than that. Mr. MoKiNLBY. You make the point that it costs $1.95 per bushel to produce the wheat? Mr. Pendray. Yes, sir; we are trying to make the point that it costs approximately $1.95 per bushel. Now, take the difference between $1.95 and $2.50 per bushel that we are supposed to get, and we have to risk hail, frost, drought, heat, flood, black rust, the green bug, and several other things on that margin. I can not think of all the risks now; but they all come in, and we have to run that hazard. We have aU of the risk, and the only one of those things that we can insure against is hail. I think that my figures are conservative, and I have put them down at a lower figure than I could place them, or at a lower figure than the farmer could go out with his teams and work for other farmers at. Mr. Lee. You are figuring on the basis of 10 bushels per acre? Mr. Pendray. Yes, sir. Mr. Lee. Is that the average yield ? Mr. Pendray. I believe the average yield shows a Uttle bit highei than, that. Mr. McLaughlin. You include also the wages per day of the farmer ? FOOD PEODTJCTION, CONSERVATION, AND DISTBIBtJlTON. 441 Mr. Pendray. Well, as to the farmer himself, he does not figure his wages. The wages of the farmer go into these per acre costs, such as $2 per acre for plowing, 60 cents per acre for drilling, etc. His wages would be included in those figures. Mr. McLaughlin. But a part of the $1.95 per bushel is compensa- tion to the farmer for his work? Mr. Pendray. Yes, sir. Mr. McLaughlin. How much would that amount to per acre? Mr. Pendray. I have not figured that out accurately. I am not a mathematician, but I am just a plain farmer. Mr. Wilson. Do you figure the wear and tear on the machinery and horses ? Mr. Pendray. That would be partly covered in this labor cost. Mr. McKinley. You have really followed out what it cost you this year, and you have taken off 15 cents per bushel— — M. Pendray (interposing). I wanted to make those figures con- servative, and rather lower than they really are. Mr Wilson. Do you mean to teU the committee that it costs the farmer in North Dakota $1.95 per bushel to 'raise wheat? Mr. Pendray. It will this year, and more. We do not know what we will have to pay for our help to handle the crop from now on. Mr. Wilson. Do you know, or ca.n you estimate, how much it cost the farmer last year to raise a bushel of grain in North Dakota ? Mr. Pendray. Not offhand. Mr. Wilson. You know it did not cost $1.95 per bushel, do you not? Mr. Pendray. I know it did not cost $1.95 per bushel last year, because we did not have high-priced seed, or not as high as it is now, and we did not have to pay from $45 to $60 per month for help on the farm, and $30 per month for help ia the house. Mr. Young of North Dakota. But the yield was low. Mr. Pendray. Yes, sir; the yield was low. My wheat would clean out, at elevator weight, 5 bushels per acre, and the bulk of that sold for 70 cents per bushel. I sold some in the winter for as high as $1.30 per bushel, but that was the highest price at which I sold any of that crop until April. Mr. Wilson. How many bushels did you raise last year on your farm ? I mean the total number of bushels. Mr. Pendray. I do not remember exactly the number of acres, I have it in a book at home. Mr. Wilson. Well, state it approximately. Mr. Pendray. I had approximately 500 acres in wheat. Mr. Hutchinson. Do the farmers of your State sow the same wheat that you speak about here ? Mr. Pendray. No, sir. Mr. Hutchinson. They sow other wheat ? , w Mr. Pendray. Yes, sir. A great many of them buy wheat from Montana. , , , x i. * Mr. Hutchinson. I do not know how you would expect to get a crop this year if you sowed the same wheat. 4-. Pendray. In my own case, I sowed most of the same wheat because I had some macaroni wheat put m very early. It tested 56 pounds per bushel, and the germination was fair. The germmation was a little over 80 per cent. 442 FOO0 PRODUCTION, CONSERVATION, AND DISTRIBUTION, Mr. Hutchinson. If you had gone to work aad paid the $4 reduc- tion that you have taken out of the ground and had bought $4 worth of fertilizer and put it in the ground, you could have improved the ground and made a bigger crop, could you not? Mr. Pendbay. I have never tried that. Mr. Hutchinson. Why don't you try it? Mr. Pendray. No farmer there has the money to buy fertilizer. Mr. Lee. Have you read the biU we are considering ? Mr. Pendray. I read it as carefully as I could under the rather abnormal conditions under which I am situated here in Washington. Mr. Lee. Do you think it would be wise to pass this legislation ? Mr. Pendray. I think it would be; yes, sir. Mr. WiLSON. What do you think would be a fair price this year for wheat ? Mr. Pendray. If conditions remain as they are now, and prices do not go up, I think $2.50 per bushel at the terminals, which would mean approximately $2.25 per bushel for the farmer, would be a fair price. Mr. McLaughlin. Is the average yield of wheat in your State going up or down ? Mr. Pendray. I believe it is going down. Our State is compara- tively new, and yet there is a great deal of land that is raw prairie. Considerable of that land is being broken up every year. We break it up the first year and put it in flax. We can only raise flax one year Out of seven or eight years, and then it goes into wheat, corn, barley, oats, or some other crop. Mr. Hutchinson. Do you get better results from the virgin soil the first year \h.a.n after you crop it for two or three years ? Mr. Pendray. The first year is better than the third or fourth years. When the soddy nature is stiU in the land, the crops are not good, but after that, while perhaps the crops are not as good as the first crop would be, they are approximately the same. Mr. Haugen. I understood you to say that your wheat cleaned up 5 bushels per acre. Mr. Pendray. Yes, sir. Mr. Haugen. That is the yield you got last year ? Mr. Pendray. Yes, sir. Mr. Haugen. I take it that that was a pretty fair yield for North Dakota last year ? Mr. Pendray. There were a good many people who did not cut their wheat at all. Mr. Haugen. Much of it produced only 3 or 4 bushels per acre ? Mr. Pendray. Yes, sir. I had one quarter section that went 10 bushels per acre. Mr. McKiNLEY. I Hve down in Ilhnois, and real estate men come down there from up in your country to sell us land, and they teU us that it produces 30 bushels per acre. Mr. Pendray. As to these real estate men, you always want to be a httle careful about how you take their statements. Mr. Haugen. The yield goes up and down ? Mr. Pendray. Last year was an exceptionally poor year, the worst we have had for many years. Mr. Haugen. Would it not be fair to assume that it cost the tenants about $7 per acre to farm the land? FOOD PRODUCTION, CONSEKA'ATION, AND DISTRIBUTION. 443 Mr. Pendray. He can not farm it for $7 per acre. Mr. Haugen. According to your figures, it would be about S7 per acre. Now, eliminating the landowner, who furnishes the seed, pays for half of the twine, and pays half of the threshing bill— those are the general terms, are they not ? Mr. Pendray. Yes, sir; those are the general terms. Mr. Haugen. He buys haK the twine, pays haM of the threshing bill, and gets half of the crop. Those are the general terms ? Mr. Pendray. Yes, sir; those are the general terms. Mr. Haugen. Then, his expense would be about $7 per acre? Mr. Pendray. I did not figure that separately. Mr. Haugen. According to your figures, it would be $6.64 per acre. Mr. Pendray. I rent some land myself. Mr. Haugen. Now, then, if he raises, say, 10 bushels of wheat per acre, he gets 5 bushels ? Mr. Pendray. Yes, sir; he gets 5 bushels. Mr. Haugen. And out of that he feeds his horses ? Mr. Pendray. Out of that he feeds his horses, feeds his family, and provides for the education of his chUdren. Mr. Haugen. I do not think you could figure tliat in the cost. Mr. Young of North Dakota. Why not ? Mr. Haugen. The education of his children ? Mr. YouTSTG of North Dakota. They have got to five and keep up with the times. Mr. Pendray. When the children become educated they do not come back to the farm. Mr. Haugen. I do not think that is an expense connected with the growing of wheat. Thereupon the fcommittee took a recess until 2.30 o'clock p. m. after recess. The committee met pursuant to the taking of recess. Mr. Young of North Dakota. I would be glad if you would be good enough to call Mr. Drown, who lives in Cass County, N. Dak. He is an actual farmer and also a member of the State senate. The Chairman. Mr. Drown, we will be very glad to hear from you. STATEMENT OF HON. CHARLES E. DROWN, OF PAGE, CASS COTJNTY, N. DAK. Mr. Drown. Mr. Chairman and gentlemen of the comrnittee, I did not come for the purpose of makiug a speech, but just simply as a kind of a witness to corroborate the testimony delivered by other members who have come from my State. Mr. Haugen. Kindly state whom you represent. Do you repre- sent some organization ? . . , t^ -^ , ^ t Mr. Drown. I am a member of the Association ot Jliquity, but i do not especially represent that organization. I represent the peo- ple of my immediate district. ,. u 1J • Mr Haugen I understood that some convention was held m Fargo and they sent delegates here. I want to know what is the character of that convention. 444 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Drown. I was at that convention, but simply as a citizen — as one interested in the wheat business. Mr. Haugen. Is the membership of that convention made up of farmers ? Mr. Drown. Yes, sir; largely. Mr. Haugen. And they sent delegates here? Mr. Drown. Yes, sir. Mr. Haugen. And they testified here, representing that organi- zation ? Mr. Drown. Yes, sir. The delegates that were selected there were selected in mass meeting. A committee was appointed to name del- egates to appear before this body. Mr. Haugen. I just wanted the record to show the fact about it. The Chairman. Make your statement, and I think the committee will let you conclude your statement before asking any questions. Mr. Drown. Well, that is the way I came, to be here as a member of that committee, and for the piu"pose of showing the graia grower's side of the question. Now, we, as farmers — and I have been a farmer for a duration of time extending over a period of 34 years — ^have come to the conclu- sion that we are not in the most remunerative business in the world. We are not quite satisfied with the amount we get for our labor and for our investment. Now, I do not refer to the last year or two, be- cause the last few years, since the war broke out, have been abnormal years, and those men who had luck enough to have a good crop of wheat and a good grade of wheat since 1914 have done well enough, and there is no kick coming from them. But I refer to a period back of that, a condition which could take place again after the war. In that connection I might say that I heard a speech on the 19th day of January, 1915, by an honorable member of the Senate from our State, Senator Porter J. McCumber, in which he said that the farmer was the poorest paid wage earner in the world, and that he was going to work, as a representative, as a member of a great law- makmg body, imtil the farmers' condition was bettered; that he was going to do all in his power. In fact, he made this statement, that if it cost as much to produce a bushel of wheat, in time and money, labor, etc., as it did to produce a Stetson hat, that farmer should have as much for a bushel of wheat as the manufacturer received for a Stetson hat. That sounded pretty good to me. As a matter of fact, as was discussed here this morning, we beheve that there has been a price-making power that was not controlled by supply and demand. We beheve that the board of trade and the chamber of commerce have been fixing the price upon our products, upon our wheat, and what we desire is this : We are willing tnat there should be a price fixed upon our products, and personally I am wilUng that the board of trade shall do it, or I am wilMng that Con- gress shall do it, or I am wiUing that Mr. Hoover, the food conamis- sioner, shall do it; but I beheve, and I think it is only right, and I do not suppose there is a man in this body but what womd say the same, that is, if there is a price fixed by anybody, that the cost of pro- duction should be considered, and to the cost of production should be added a reasonable profit to the farmer to put the farmer on the same basis as every other business man. POOD PRODUCTIOX, CONSERVATION, AND DISTRIBUTION. 445 Now, that is what we ask. You heard Senator Pendray'a state- ment tnis morning in regard to the cost, in regard to the yield, and ? rices received, etc. I am in a little different location from Mr. 'endray. I am nearer the Red River Valley. I am in the north- west corner of Cass County, in a town by the name of Page. The soil condition is somewhat different; the amount of rainfall or mois- ture differs somewhat, and therefore I presume that in certain instances under certain conditions we get perhaps a little better, yield than they do farther west, where the soil is usually considered a little lighter and the rainfall not quite so great. In speaking of the business of raismg wheat, though, as a business, we can not take any one year. We have got to take the years as they have come for a period of years, and while I have no figures here, my memory is quite vivid in regard to different years. Now, for instance, last year I think I had in 400 acres, and I cut probably about 200 acres. I think the amount that we threshed was about 650 bushels. It cost us — I forget the number of days, but I think it cost us to thrash it, including about 1,400 bushels of rye and oats, I think the thrashing bill, which was done by the day, because they could not do it by the bushel, including the teams, and we boarded the men, was S350. So you see we really lost money "by cutting the crop, when you figure the expense of cutting, shocking, tying, etc., while the year before we had the best crop we ever had in the State of North Dakota — the 1915 crop— and the bulk of that crop was marketed at a figure from 90 cents to $1. I sold 2,500 "bushels and defrayed all expenses for 93 cents. We had a little the other day that we marketed for $3.27, but it was a very small amount compared with the amount we thrashed that year. Now, the seed proposition this year has been a very expensive thing, and in figurmg the cost of production under existing circum- stances, if the farmer should go ahead and put in a big crop, as we have done in the Northwest, and then get a failure this year hke we got last year, it would be very disastrous. It would put a great many men substantially out of business. They could not go and buy seed. There are lots of men this year who have bought their seed on time. Some men have planted defective wheat and put on a hushel and a half. There are lots of men who sold that wheat on the market who bought it at $2.50 and $3 a bushel. If men bought it early in the season, last March or the 1st of April, they got it a little cheaper before it advanced, but the season closed with wheat running at $3 a bushel for seed wheat. You can see that it is rather expensive to put in wheat at $3 a bushel, with all the other expenses. to. Lee. Have you carefuUy considered the biU H. R. 4630, which we are considering ? ., , , j j.- Mr. Drown. I have talked it over with some and also read portions Mr. Lee. Do you think we would be wise in passing this legisla- ^ Mr Drown. It certainly would be wise to pass certain features of it, and I think perhaps the most of it. It seems to me there are two elements or two features in this bill either one of .Y^i^h might pos- sibly have a tendency to produce the desired result. . For instance, you are talking about eliminating future speculating in food, for in- 446 FOOD PBODXJCnON, CONSERVATION, AND DISTBIBITTION. stance, wheat; you are talking about controlling the elevators, and the Government building elevators. Mr. Thompson. That is not in this bill. Mr. Drown. It is not in this bill ? Mr. Thompson. No. Mr. Drown. Well, it is contemplated, is it not ? Mr. Thompson. No; that was a suggestion of a gentleman this morning. That is not in the biU. Mr. Drown. Well, I beheve that if speculating in futures, the wheat gamblers, and the boards of trade could be put out of business possibly that might have a tendency to bring the relief that the farmers have been seeking. Mr. Thompson. Is there any other general statement that you wish to make ? Mr. Drown. No, sir. Mr. OvERMTER. What was the other feature of the bill you had in mind ? One was the ehmination of speculation. What was the other feature ? Mr. Drown. The fixing of prices of farm products; that is, as it appeals to me. Mr. OvERMYER. As it appeals to you ? Mr. Drown. Yes, sir. It seems to me that the fixing of prices of farm products would have a tendency to bring rehef , if they were fixed on a proper basis, on a basis based upon the cost of production, with a reasonable profit to the men engaged in that pursuit. Mr. Thompson. Are you through with your general statement? Mr. Drown. Yes, sir. Mr. Thompson. I presume there would be no disagreement any- where with the opinion that speculation ought to be eliminated and that profits to the middleman ought to be kept down to a minimum or cut out entirely if they could be; but you suggested the absolute doing away with the board of trade. Do you think that woudbe wise, to close it up absolutely ? Mr. Drown. Well, I may have referred to that in a broad sense, but I am not familiar enough with that business to speak in regard to it. Mr. Thompson. You would not want to say one way or the other ? Mr. Drown. No, sir; I would not. Mr. Thompson. You said a moment ago in your statement that so far as you were concerned you would be perfectly willing to have these speculators fix the price of grain. Mr. Drown. Provided it was fixed on a basis of cost of production with a reasonable profit. Mr. Thompson. Would you be willing to let them fix that profit? Mr. Drown. Not directly, but perhaps through the agency of the Government. I was referring to some governmental agency. Mr. Thompson. You are in agreement with this bill? Mr. Drown. Yes, sir. Mr. Thompson. And you think it would be a wise thing to pass it? Mr. Drown. Yes, sir. Mr. Haugen. In what respect would a fixed price help the farmer ? Mr. Drown. In a great many respects. Mr. Haugen. I am speaking now of the minimum price. FOOD PBODXJOTION, CONSEEVATION, AND DISTBIBUTION. 447 Mr. Drown. I can not say under present conditions, but sometimes a farmer iii considering the situation considers present conditions in connection with the past. Now, there have been times when we have got a very low price for our wheat, you might say it was a starvation price. For instance, in 1893 I sold wheat for 35 cents a bushel. Mr. Haugen. I sold it for 11 cents or 18 cents in 1878. Mr. Drown. You have got me beat a little. Of course, we know that it can not be raised for that, and during the past three years the farmers of the Northwest have been trading dollars and paying boot, and the boot that they pay has been the increase in their real estate holdings. Mr. Haugen. I agree with you that there can be no harm in fixing a minimum price, provided it carries with it the guaranty that it is fixed high enough to protect the value. Mr. Drown. That is ri^ht. Mr. Young of North Dakota. Now, you mentioned the fact that you were glad to notice in this bill something that indicated that the Government was going to have something to do with making the storage public, or opening up elevators to the public ? Mr. Drown. Yes, sir. Mr. Young of North Dakota. And taking over the elevators, and especially terminal elevators. Mr. Drown. Yes, sir. Mr. Young of North Dakota. Is it your opinion that if the Govern- ment, or whoever assiunes to speed up the car service and transporta- tion this fall, is it your opinion that whoever attempts to do that on the part of the Government can do it very much more rapidly if they also have at their disposal the storage in the grain elevators ? Mr. Drown. Yes, su-; it is. Mr. Young of North Dakota. So that in that sense it would be a great help to those who have grain to sell ? Mr. Drown. Yes, sir. The Government, by so doing, could give great protection to the producer. Mr. Wason. Who owns the elevators up in your vicinity ? Mr. Drown. There are different corporations doing business there, and up until a few years ago they were most ah owned by corpora- tions, different ones, in the Twin Cities. Mr. Wason. I do not mean the individual owners, but I mean who controls them ? For instance, I happened to be out in your country along in 1890 for a week. I went up through the rye and came down through the wheat fields about the 1st of August. The buyers were then up there, and it was currently reported on the train and at the hotels where I stopped that those elevators were controlled by the flour mills at Minneapolis. ^ u , Mr. Drown. What we call the old-line elevators were controlled by corporations. Mr. Wason. Does the railroad control them ? , i, -i Mr Drown In some cases there is no doubt but what the rail- roads have a great interest in the elevators. Now, whether some of the stockholders in some of the raih-oad companies had stock m the elevators, that is a supposition, for the reason that whenever a farmer went to put in an elevator he always had a fight with the railroad company He had to fight first for a site. If a farmer wanted a 448 FOOD PRODUCTIOSr, OONSBRVATIOHr, AND DISTBIBUTION". loading platfonn he had to fight to get it, and it seems that the rail- road ojEcials instead of benefiting the farmer are playing into the hands of the other fellow, which leads us to believe that they are in collusion. Mr. Wason. Who do you mean by "the other fellow"- — the millers ? Mr. Drown. Yes, sir; the elevator people. Mr. Wason. Does that condition exist now ? Mr. Drown. Not so much as it used to, but it does to a certain extent. Mr. Anderson. Mr. Drown, is there a lack of elevator facilities in North Dakota now ? Mr. Drown. That depends on conditions. The elevator facilities are so closely connected with shipping facilities that that is very hard to answer. For instance, if there are plenty of cars to move that wheat we can put it through one elevator, but if we can not get the cars we will have all the elevators in town plugged up in a little while. In the State legislature this winter there was a bill introduced something like this, and also to more fully bring out the features that this other gentleman was inquiring into. You take the farm elevator, which we have in Page, N. Dak., and while we have an elevator just below it, an old line elevator, known as a Cornwall elevator, the farm elevator gets most of the wheat. If we have a crop of wheat like we had in 1915, which was the best crop we ever raised in North Dakota, and the railroad company did not supply the cars, for whatever reason, in that case this elevator would be plugged up. Now, what is the result? There is no other way for the farmer but to drive over to the other elevator. Then when this elevator gets filled up they are able to get the cars. We passed a law compelling the raQroad company to furnish cars in proportion to the amouht of wheat that these elevators received on their daily reseipts. If the farm elevators received twice the wheat that the other elevator got daily, they would be entitled to two cars while the other elevator would only get one. That was to bring relief to the men who were trying to buy wheat fairly and squarely from the farmer and also to prevent the railroad company from pro- tecting the other men by refusing or failing to furnish us with cars, for any cause whatsoever, Mr. Anderson. What proportion, if you know, of the crop is brought to the elevators on the line of the railroad, as compared with the amount that is kept on the farm ? Mr. Drown. Well, where the lard is located within a reasonable hauling distance it is gererally hauled at thrashing time to the ele- vator, and I will tell j'ou why: It is very expensive to haul this grain and put it into a grarary. When it has already been loaded in the wagon a^^ d then shoved out again ar d hauled away, you take chances on conditions that might arise, er d there is an uncertainty about handling it afterwards. If it is within a reasonable hp.ulirg distance so that we can get sufficient teams to get it away, it is considered amorg farmers quite advisable to at least haid it to the elevator at the time of thrashing. FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. 449 Mr. Anderson. Now, the usual practice in your State is to haul the grain on the line of the raUroad rather than store it in the farm granary? Mr. Drown. Yes; where it is within* a reasonable distance. One of my farms is 8 miles from the elevator, and therefore I have pre- pared a granary room and stored aU my grain there; I do not haul a bushel of it to the elevator because I can not afford to do it at that time. After my plowing is done I haul it, perhaps after it has frozen up. Mr. Anderson. If most of the farmers in North Dakota followed your plan and provided grain storage on the farms, a good deal of the difficulty that you have experienced would be obviated ? Mr. Drown. Well, but there is another feature, my dear man Mr. Anderson. That is not my question. Mr. Drown. Repeat your question. It is quite involved. Mr. Anderson. I say, if the farmers of North Dako'ta provide elevator facilities on their own farms so that they can haul wheat and market it when the price is good and the market is ripe, you would get away from most of the difficulties that you now have ? Mr. Drown. Now many times this particular wheat in question is mortgaged, perhaps to a banker .or to the machinery dealer, or in some instances, to the grocery man, and they really own the wheat. When financial matters take such a turn that the man who holds the m.ortgage wants that money, the wheat goes to the elevator to be sold. Therefore the farmer would not have very much chance to hold that wheat until the market was ripe; that is until very recently, because it takes very nearly' a whole year to get the right market. There has been a time when wheat went up very rapidly if there was any market for it. But a man on a farm has not much chance to get in touch with the market. He just hears that the other day wheat went up so much and that it has just gone down. Mr. Anderson. Most of this grain that goes into the elevator is hauled right out again, is it not? It is not stored by the farmer holding the receipt ? Mr. Drown. ISiot the average farmer. Mr. Anderson. Most of it is sold immediately from the elevator to the thrashing men ? Mr. Drown. Yes; that is, within a period of from 30 to 60 days. It has been customary in my State since 1883, since I have been m business there, for business men— and my friend, Mr. Young, wiU tell you the same— to mature a paper the 1st of October. m. Anderson. The fact that your credits ordinarily run to the 1st of October compels the farmers to dispose of their gram practically as soon as it is harvested ? Mr. Drown. Yes, sir. . , ^ j. o Mr. Anderson. So that the credit feature is a very large factor < Mr. Drown. It is a very large factor. Mr. Anderson. In the difficulties you have out there i Mr. Drown. Yes, sir. ^ -, , Mr. Anderson. Now, you spoke about speculation I ^^a^® been tndng to develop definitions of speculation. I would like tn know what you mean when you say speculation. 104176—17 29 450 FOOD PEODTJCTION, OONSERVATIOir, AND DISTEIBUTION. Mr. Drown. Well, there are different kinds of speculation. There is a certain kind of speculation where a man will buy something that he believes is cheap and take his chance on seUing it tor a higher price. There is another kind of speculation which is more adapted to the wheat trade where a man or a set or combination of men will be able to control the market by selling something that is not the real article, where the market is tilted up and down by these sellers. That is another kind of speculation. Mr. Anderson. If we are going to prohibit speculation, we have got to have a pretty accurate idea of what speculation is. Mr. Drown. Yes, sir. Suppose we say that if a man speculates he must buy the real article and sell it again and have it delivered ? Mr. Anderson. That would be the ordinary practice of the ele- vator and the miU, hedging against the purchases that it makes or for future manufacture or for future delivery. Would you be in favor of prohibiting hedging transactions ? Mr. Drown. WeU, you see, I do not feel competent to express myself or make any statement in regard to that, because there are men who understand it so much better than I do and differ on it that I would not l^ke to commit myself. But the idea is this: Mr. Anderson showed you how that thing could be handled Mr. Anderson. I was not here this morning and I have no dis- position to question you on anything you do not want to go into. Mr. Drown. I am a farmer and have been for 34 years. Mr. McKiNLEY. Do you not believe that the only way to get rid of the speculator and tne hedger is for the Government to take care of the wheat and buy it ? Mr. Drown. I beheve that is one of the most feasible plans. Mr. McKiNLEY. That is all. Mr. Young of North Dakota. Mr. F. A. Bennett is here from Montana, representing 12,000 farmers of the American Equity Society, and he would like to be heard. STATEMENT OF MR. F. A. BENNETT, OF GREAT FALLS, MONT., SECRETARY-TREASURER OF THE MONTANA STATE UNION OF THE AMERICAN SOCIETY OF EQUITY. Mr. Bennett. Mr. Chairman and gentlemen of the committee, there is one point in this biU that interests us considerably, in Montana especially. It is on page 3, section 3, paragraph 19, under the heading "Financing." I was farming in Montana until three years ago, and on account of the marketing conditions there I, with a good many others, became interested in trying to see if we could not change the conditions. I started to organize the farmers, and the first work that we did was to ship grain to the Equity Cooperative Exchange at St. Paul. Immediately we changed the price at the elevators on an average of from 8 to 12 cents a bushel. Then we commenced building elevators, and there is where, our troubles began. We found that the same people who control the marketing practically control the financing of the buying of this grain. When we had to go and borrow money to finance the buying of the grain, we had to go to the men who were interested along the POOD PKODUCTION, CONSERVATION, AND DISTEIBUHON. 451 same line with the grain gamblers of Minneapolis, as tbey have been called here this morning. We continue to have that same condition, especially last fall when the car shortage came on. We had arranged through the Equity Cooperative Exchange of St. Paul to finance a great number of our cooperative elevators, but when the car shortage came on and the elevators became filled with farmers' grain, it took such a large amount of money that the exchange was not able to finance it. Now, to get this grain members of the Minneapolis Chamber of Commerce had offered to do the financing without notes or any special guaranty, only that they should receive a portion of the grain. They had to do that to get the grain. Just as soon as this condition came on, when our elevators were filled with grain and the exchange was not able to finance it, then we had to fall back on the chamber of commerce and the commission men. And right then they made our people agree to ship 100 per cent of the grain to their institutions. That was last fall. Prior to that time, when the raihoad faciUties were not the same as they were last fall, our people got from 75 per cent to 90 per cent of the grain through their own elevators. That was bought on a margin of 2 or 3 cents a bushel, because they were competing for the grain. Last fall, when we could not do that, the margin rose to as much as 12 cents, and the other day they brought it up to 16 cents. The condition has not changed much. The elevators are full and the railroads are not able to handle the grain yet. They have a kind of price-fixing committee there at Great Falls. We are following suit after the Chamber of Commerce of Minneapolis; that is, we seem to be. A great many branches seem to be moving out there to get ready for us. They suggested putting a margin of 30 cents a bushel on wheat a few days ago. Now, you can see the condition we are confronted with, without facihties for financing. Mr. Anderson brought up this morning what I thought was a splendid idea and I hope you will consider it, and that is an appro- priation of $100,000,000 or something hke that, to handle this fi,nancing of the buying of grain, because we are not so particular m the price-fixing as we are in an open direct marketing system. That is the greatest evil that exists in our country, the absolute control of our market. The conditions this year are worse than they were last year. Unless we can get some rehef from this combmation, as Brother KeUey expressed it— and I wUl not go mto it quite as severe as he did but I feel as he does about it— unless we can get some rehef from the Government to finance the buymg of gram, we are gomg to have an awful handicap. That is the worst evil we have *°m haveTeen taking up this question with Senator Walsh, and here is a letter written to Mm by our president m which he says : I am in receipt of your letter of May 2, inclosing a letter from the president of the ^trlrfZ^Z u^the tatTe'^tf InSg^o^ cooperative grain bu^ng with the mMmmmmmz further you may do in the matter, we are Yours, very sincerely. 452 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION, We received from Senator Walsh a letter saying: I am inclosing herewith copy of a communication from the president of the Federal Reserve Board, in reply to a letter addressed by me to him touching the matters referred to in your late letter to me. Will you have the kindness to write me again about the matter, after having read the letter of Mr. Harding? Now, we took this matter up with Mr. Harding and we were referred to the Federal reserve bank at Minneapolis, and they in turn referred us to the local bank which has a membership in the Federal reserve bank. This bank has a capital of $200,000; that is the bank at Great Falls; and they wrote us a letter saying: Referring to our conversation with regard to a line of credit to cover the handling of grain during the 1917 buying season, and also your statement that it might require as much as 11,000,000 to handle same, I beg to advise that it would be out of the ques- tion for us to handle this for you, as this would be fully half of our deposits. Note that, from a member of a Federal reserve bank, and we were asking for money on the collateral that the Federal Reserve Board requires : We have tried in every Way possible to assist the farmers in increasing their acreage and feel that we have accomplished a great deal in this way. Again, at the present time, when considering a new line of credit, especially a large line like you propose, we feel that the Liberty Bond issue ia a factor and that we must meet our obligations along this line, so we are advertising extensively and have taken many subscriptions from among our stockholders for the bonds. Now, that is as much consideration as we get in trying to get lined up to take care of our marketing. You gentlemen all know that the great source of help in Europe has been through the cooperative mstitutions. Take Russia, for instance. The main support there has been through cooperative institutions. The same applies to other countries. We have a large organization, as has aheady been mentioned. We have to hne up to handle our members' products. We do not only handle the product of the farm — that is, the product as a marketing proposition — but we handle the product right through to the con- sumer in our State. We are interested in both the producer and con- sumer — ^just as much in the consumer as we are in the producer. If you will provide the means whereby we can have an open honest market so that we are not hindered by combinations, we are not afraid of the price at all; we are not organized to control prices, but we are orgamzed to get our products to the consumer without any unnecessary expense or waste. That is what our organization stands for. Now, you have a provision in the bill entitled "Financing." I like that. I think this bill is fine, as the other gentlemen have said. But I just want to call your attention to that particular thing relative to our condition in Montana. We wUl have a large acreage this year. We have our own paper. We have a circulation of 14,000. We have boosted greater production. I want to say that this is rather con- trary to a farm organization propaganda, for the reason that here- tofore a greater production has meant a lower price usually. With all that taken into consideration, the fact is that we need greater production, and the Government is calling for it. Now, when we go out and ask these farmers for a greater production we also ask that you consider some way in which we may be able to market this in- creased production through a channel which does not increase the POOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 453 price to the consumer and make it unproiitable for the farmers of our country while mcreasing production liixmexs or I beheve that is all I have to say. Mr. Thompson. You have read this bill « Mr. Bennett. Yes, sir. Mr. Thompson. And you approve of it ? Mr. Bennett. Yes, sir. iT,^f J^^^^^*^^- .^"^ yo^ see any objection to fixing and guarantee- mg a mmimum price? Mr. Bennett. No; I do not see any objection to it. P.f •;q .^l^^'^-J'^- ^°Y. ^^^^ ^^y objection to authorizmg the Jr-resident, through himself or any agency that he might see fit to select, to require the sale of products where there is an attempted monopoly or collusion ? ^ Mr. Bennett. Yes, sir; I think that is proper, too. Air. Thompson. To the extent that the bill goes in these two par- ticulars, you think that is proper ? Mr. Bennett. Yes, sir. Mr. Haugen. You speak of financmg. Do you contend that the (government should furmsh the money to finance this proposition? Mr. Bennett. You understand we have a function for tliat pur- pose at the present time— the Federal Keserve Bank— but the Fed- eral Reserve Bank does not perform the function. Mr. Haugen. But the Federal Reserve Bank loans money to its member banks; it does not deal with the farmer direct. Mr. Bennett. Yes, sir. But if the member bank is controlled by the opposition and will put out a letter like the one that I have called your attention to, it shows very plainly that it does not intend to perform that function when it applies to farmers' cooperative marketing. Mr. Haugen. How can that be overcome ? Have you figured that out? It is probably owned by the opposition, is it not? Mr. Bennett. Yes; no doubt. Or influenced, maybe. It is neces- sary for the Government to enter into cases of this kind and see that the banks do perform their functions. That is what we are asking for. We believe that if you wiU take this gambling outfit off of the job — that is, if you wiU eliminate a condition that exists in Minne- apolis Chamber of Comrnerce, and the Board of- Trade of Chicago and Duluth — these institutions will perform their right functions; but just as long as that condition exists and there is an opportunity to control the market they are strong enough financially to control the financial institutions that we have to deal with. Mr. Haugen. I agree with you as to the gamblers; but all the witnesses seem to be getting away from that, and they get on to something else and talk about fixing prices. If I had my way about it, I would put the gambler out of brfsiness — I mean a certain kind of gambler — but I would not put the board of trade out of business. . I believe in honest speculation, but there are two kinds of specula- tion. The question is, do you want to get the other speculator out ? . Mr. Bennett. Yes; and if you do that you will eliminate this particular condition. Mr. Haugen. A law can be drawn to put them out of business. There is no question about that. Mr. Bennett. Yes, sir. 454 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBUTION. Mr. Haugen. There are a hundred ways of doing it. If that is what we want, why don't we confine ourselves to that one thing and get away with the evil practice of gambling? Do we agree on that proposition ? Mr. Bennett. Yes, sir; we do absolutely. Mr. Young of North Dakota. I understand you to say that your great farm organization out there, through its paper and in other ways, has boosted the proposition of greater acreage ? Mr. Bennett. Yes, sir. Mr. Young of North Dakota. And in your judgment there is a very much greater acreage this year than in former years ? ■Mr. Bennett. Yes, sir. Mr. Young of North Dakota. You have heard the other witnesses testify that the acreage is greater in North Dakota and in other sections of the West? Mr. Bennett. I presume it is. Mr. Young of North Dakota. Now, that being the case, do you think it would'be possible to market this crop with thfe present termi- nal storage facilities without very much greater congestion than was even last year? Mr. Bennett. Well, I would answer that by saying that under conditions as they exist today it would be impossible to market it without the same things entering into it as in the last year. A lack of interest in taking care of our shipments has profited the same com- bination that, to our mind, controls the mills and terminal elevators — the railroad companies. They enter into this and it is to their interest to hinder a proper delivery of this grain. Mr. Young of North Dakota. Those conditions will likely be aggra- vated by this bigger crop ? Mr. Bennett. Yes, sir. Mr. Young of North Dakota. I miderstood at least one of the wit- nesses, and perhaps aU of them, to say that it would be a great benefit to the grain growers and would be a great encouragement to them to put in a big crop next year, if during this crop year the Government could take over these elevators and handle them briskly and facilitate the movement of the crop, and also build additional terminal elevators to take care of this greater crop that is to be raised this year. Is that your idea ? Mr. Bennett. Yes, and I will say this: That unless some effort is made to ehminate that condition you can expect a decrease in the acreage in other years. In other words, unless the Government, after asking the farmers to increase their production, will not take care of the larger crop — that is, look after the proper distribution or market- ing of it — ^nbt exactly the marketing of it, but the channels through which it has to be marketed — ^unless they can get at that in a better way by Federal-owned terminal elevators, we beheve the farmers wiU not be encouraged to keep up an increased acreage in the furure. Mr. Young of North Dakota. Which do you think the farmers of your State would prefer, if they could have their choice about it ? If I represent the Government and come to you and say, "Mr. Ben- nett, we can give you a guaranteed price for your crop this year," or if I could say to you, "During this crop year you are going to have storage for all the grain that will be admitted, without any,monopo- POOD PRODUCTIOlSr, CONSERVATION, AND DISTBIBUTION, 455 listic tendencies or anything in the way of restraint upon your free storage of it, and plenty of storage," which would you take? Mr. Bennett. We would gladly take the storage or the handling of the crop through the proper channel of storage. You understand that so far as the production is concerned" we do not talk about that any more — we can produce. There is no question about the produc- tion. But the thing that we are concerned about is a proper facility through which to market our products without having the burden placed, on both the consumer and the producer. We believe, and statistics prove, that the difference between what the ultimate con- sumer pays for the farm product and what the farmer gets for it, by reason of the added expense after the farm product leaves the farm, is between 54 per cent and 56 per cent. That is a condition that we want to eliminate and we ask the Government to help eliminate that condition, growing out of the different channels through which the product goes — ^speculation, marketing, gambling, waste, etc. Mr. YoxiNG of North Dakota. Now, the understanding is that Uncle Sam wants a great big crop put in in 1918; that it wfll be just as necessary as it is now — this year ? Mr. Bennett. Yes, sir. Mr. Young of North Dakota. I understood you to say that the farmer will be more encouraged to put that crop in in 1918 if you can rid the grain exchanges of mis country of this injurious speculation and also give adequate storage facilities to the farmer at the terminals ? Mr. Bennett. Yes, sir. Mr. Young of North Dakota. Either by conscripting the present elevators or buUding additional elevators? Mr. Bennett. Yes, sir; that is exactly it.' You imderstand we are not thinking of just to-morrow or the day after to-morrow; we are thinking of the future all the time. We figure that this is a time when our Government is thinking of some of the conditions that exist that they never thought of before, and while you are thinking of this and while we are preparing to take care of this condition, we also want you to consider the future. Now, we are not wanting to make profit out of this war, but while we are thinking of these things we want you to think of the future of farming operations; and while at this time it is considered proper to eliminate the gambhng specu- lators, we think it is the best time to start in and stop it for all time. Mr. Young of North Dakota. You think that the " back-to-the- farm" movement can be inaugurated by making the farm more profitable, in other words? Mr. Bennett. Yes, sir; exactly. Mr. Anderson. I understood you to say, Mr. Bennett, m answer to a question asked by Mr. Haugen, that if you could elimmate specula- tion, that is all you would ask for. Did I understand you correctly in that? Mr. Bennett. No; I did not say that. Mr. Anderson. That is what I understood you to say. Mr. Bennett. Speculating and gambling and unnecessary waste in the handling of farm products. , , r. ^ t Mr. Anderson. Do you believe that there is an actual shortage ot terminal storage facilities ? ^ s j.-u ■ i.- Mr. Bennett. Well, under the present management ot the existing storage facilities, there is. 456 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Mr. Anderson. What do you mean by that ? Mr. Bennett. I mean that the present facUities are controlled by men who are interested in speculating on grain products. Mr. Anderson. Would you say that if you had a million bushels of wheat, you could not" store it in the terminal elevators at Minneapolis in your own name ? Mr. Bennett. Yes, sir; that is our experience. Mr. Anderson. We have a law in our State (Minnesota) that requires storage companies to furnish storage facihties for whoever presents himself and asks for them. Mr. Bennett. Yes, sir; but do you know that that law does not work? Mr. Anderson. Why not ? Mr. Bennett. Why not ? Mr. Anderson. Yes. Mr. Bennett. I can not answer that question. It seems to be that a combination there has too much influence with the State. Mr. Anderson. I have never seen a single authenticated case of any man who has actually presented for storage at a terminal ele- vator in Minneapohs any quantity of wheat and was refused storage; and if he was, he had an action for damages under our State law, which is a very severe one. Mr. Bennett. I wiU cite another instance. Do you know that the mills of Minneapohs wiU not buy grain of the farmers ? Mr. Anderson. I think, possibly, that is true. Mr. Bennett. Why would it not be just as true that they would not store grain, either ? Mr. Anderson. Because there is nothing in the law which compels a miUer to accept grain from anybody. A mill is not a pubhc insti- tution. A storage elevator is. A storage elevator must take grain from whoever offers it, as long as there is any to take. Mr. Bennett. But our experience has been that they have always been filled up; that their capacity is taken up. Mr. Anderson. That is the point I am trying to get out. I am trying to get your opinion as to whether or not there is an actual terminal facihty shortage. Mr. Bennett. Yes, sir; from our experience, from the fact that they refused storage on account of their space being taken up, and it naturally leads us to conclude that that is the condition. Mr. Anderson. That would not necessarily be the result of any combination, would it ? Mr. Bennett. Now, I can not say as to that. Anyway, our opinion is that there are conditions existing there which would make us beheve that there was a condition that would justify that belief. Mr. Young of North Dakota. They do not want your wheat ? Mr. Bennett. No ; unless it comes through a certain channel. Mr. Anderson. I gather the intimation from your statement that you thought the Federal Reserve Bank at Minneapolis was con- trolled by gamblers who control the wheat market. Did I get your impression correctly about that ? Mr. Bennett. That the Federal Reserve Bank of Minneapohs was controlled ? Mr. Anderson. Yes. FOOD PKO0UCTION, CONSERVATION, AND DISTEIBUTION. 457 Mr. Bennett. No. I said that it appeared that the channels through which we should expect to get our financial support are con- trolled more or less by the same interest. Mr. Anderson. Take a bank of $200,000 capital. Of course a line of credit of a million dollars woidd be a very large Une of credit for a bank of that capital and one which could not finance Mr. Bennett. As an individual. Mr. ANDERSON'. As an individual bank, of course; unless it was in some way backed by the Federal reserve bank or some other insti- tution of large capacity. Mr. Bennett. Yes, sir. Mr. Anderson. So that it gets right back to the Federal Keserve Bank at MinneapoHs. Have you anyway of knowing whether the Federal Reserve Bank at Minneapolis refuses to assist your bank out there in financing the transaction that you have in mind ? Mr. Bennett. Let me get that. We do not ask that from the bank as a bank but through the Federal Reserve System, which is provided for. In the bank's letter it does not mention the Federal reserve proposition at aU; it talks about its depbsits. Mr. Haugen. a bank with $200,000 capital would be limited to $20,000, would it not? Mr. Bennett. It certainly would not, under the Federal Reserve System. Mr. Anderson. Mr. Bennett, you, do not mean to say that a national bank could take the note of your association for a million dollars — a bank of $200,000 capital — and discount it at the Federal reserve bank ? Mr. Bennett. No. sir; I have not said that. I said that we had the collateral that the Federal reserve bank asks for; that is, individual notes, corporation notes, bills of lading, and all those things that pertain to the necessary collateral to handle that kind of business, collateral provided for under the Federal reserve act. Mr. Anderson. I am not asking these questions in any antagonistic spirit. Mr. Bennett. No; that is aU right. Mr. Anderson. I am trying to find whether there is a real injury in this case, and if so, what can be done to remedy it and who is responsible for it. Mr. Bennett. Well, it would appear that our conditions are con- trolled by the chamber of commerce interests of Minneapolis. Mr. Anderson. Do you mean by that that your Ijank is controlled by the chamber of commerce interests from Minneapolis ? Mr. Bennett. I can not say that. Mr. Andeeson. Let us get right down to. brass tacks. Mr. Bennett. Well, I say this: That I do know that the same interests that we have to contend with in the handling of our gram, that the same influence is with the banks. It seems to be a joint arrangement. Our cooperative institutions are doing business on a basis of patronage dividends; 8 per cent is paid on capital stock, balance of profit is paid to the patrons on the basis of their patronage. Now, the chamber of commerce iaterests of MinneapoHs and different financial mstitutions of the various towns are workmg together against our institution. They seem to work hand m hand. 458 FOOD PEODtJCTION, OONSEEVATION', AND DISTRIBUTION. Mr. Andersost. Do you include in that statement the Federal Reserve Bank at Minneapolis ? Mr. Bennett. Now, as to the Federal Reserve Bank of Minne- apolis, I think that they have helped the Equity Cooperative Ex- change, have they not, Mr. Anderson ? Mr. YoiTNG of North Dakota. I do not think Mr. Anderson is here. That is Mr. Anderson who spoke this morning. Mr. Bennett. Do you know, Mr. Kelley? Haye you been able to get any money through the Federal reserve bank? Mr. Kelley. As an institution, as to the organization, I could not say. Mr. Bennett. I have here the statement from the Federal Reserve Bank at Minneapolis in which they say: Your iavor of the 12th inquiring as to how you might get Federal reserve money for financing the grain business in Montana is at hand, and in reply you are informed that we are confined in the rediscotmt of paper to such as comes to us from and indorsed by member banks. I am inclosing herein a copy of the law, and if you have been advised by the Federal Reserve Board at Washingtom that you are eligible to get such money direct, I should be very glad indeed to have a copy of such letter. Member banks furnish us with aJl our capital and all our surplus. It is quite right and proper that individuals, firms, and corporations establish their credit with a member bank first, and then their paper if eligible can be rediscounted by such mem- ber bank with us. . Mr. Anderson. So that in order to finance this transaction you would have to finance it through your local bank ? Mr. Bennett. Yes, sir; according to this letter. Mr. Anderson. What effort, if any, has been made to take advan- tage of the formation under the farm-loan act of farm-loan organiza- tions or associations, joint stock companies, etc. ? Mr. Bennett. We have taken advantage of forming local cooper- ative national loan associations. We have taken advantage of that, but that does not enter into the buying of grain. That is just for first mortgage on farm land. We have taken advantage of that. • Mr. Anderson. You spoke some time ago about the margin involved in financing this crop. You said something about it was 2 or 3 cents and sometimes as nigh as 12 cents? Mr. Bennett. Yes, sir. Mr. Anderson. You would naturally expect that the margin would be higher on $3 grain than on $1 grain? Mr. Bennett. Well, yes; you would naturally expect that. But, mind you, up until the time that we were able to market our own grain the margin ran anywhere around 8 to 12 cents, and in some cases more. Wten we put in our own elevators then the margia went down to 2 or 3 cents — ^not over 3 cents — ^wherever we came in competition with them. Mr. Anderson. But 2 or 3 cents is a fair margin on the basis of dollar wheat ? Mr. Bennett. It wa,s not worked on that basis prior to our ele- vators Mr. Anderson. That is not the question I asked you. I said, 2 or 3 cents is a fair margin on the basis of dollar wheat ? Mr. Bennett. Yes, sir. Mr. Anderson. Would that mean that if 4 cents is a reasonable margin on $2 wheat that 6 cents is a fair margin on $3 wheat ? FOOD PRODUCTION, CONSERVATION, AND DISTEIBUTION. 459 Mr. Bennett. The margin when I left home was about 16 cents. Mr. Anderson. That does not answer the question. Mr. Bennett. I did not get it just exactly. Mr. Anderson. I asked you whether the margin would increase with the price of the wheat. In other words, if 2 cents a bushel is a fair margm on dollar wheat, would the margin increase by the same proportion ? That is, 4 cents on $2 wheat and 6 cents on $3 wheat ? Mr. Bennett. Well, that depends on the volume of business that you are doing. Under ordinary normal circumstances when we have been able to market our grain through our own institutions, we can easily market it at from 3 to 5 cents margin, but when we are not able to ship that grain out and we are compelled to carry an elevator full of gram, paying interest on the money that we have invested in that grain, and the msurance on that grain, then it makes it a pretty expensive proposition. Now, you know that it all depends on the conditions. Mr. Anderson. Yes; and I would like to get back to the question I asked you a moment ago. Are we to understand that you are claiming here that the bank to which you have referred, at Great Falls, is controlled by the gambling interests at Minneapolis ? Mr. Bennett. No, sir; but I said it appears to us that their in- terests are on the same order ; that is, that other institutions can do business through those institutions without any trouble, but when we go there to do business on the same basis, we are turned down. We know that the other institutions are doing business through this institution and getting its credit just the same as we are asking for. Mr. Anderson. Do you know of any concern or group of people who are getting credit of a nulHon dollars through this bank or any bank of a similar capital ? Mr. Bennett. I do not know. Now, you understand they do not give us any consideration at all, and they talk about something that was foreign to the question when they talk about loaning their de- posits as a Federal reserve bank. Either they do not imderstand the banking business or they think we do not know what we are talking about. Mr. Anderson. I am frank to say that I do not know very much about the banking business, but I do not see myself how they could make this loan. Mr. Bennett. That is not the question. I will say to you that they would not loan us $100,000. That has been our experience, that they will not take any part of it at all. Mr. Anderson. Well, that is getting down to brass tacks. Mr. Bennett. None of them will take our paper— that is, so that we can handle it at all. Mr. Anderson. That is all. , , • . xi, Mr. McKinlet. Do I understand that you would wipe out the boards of trade ? t s ■ u ■ Mr Bennett. Either wipe them out or put them on a tair basis, because I consider they are not performing a function that is of any benefit to the oommimity or the people. , , , ^, , Mr. McKiNLET. If you wipe out the board of trade or the exchange, how do you fix the value on crops ? 460 FOOD PBODUCTIOlir, CONSERVATION, AND DISTRIBUTION. Mr. Bennett. We never did get a value fixed, only what they fixed. They fixed it themselves and we do not propose that they shall do it any more. That is what we want to ehminate. Mr. Young of North Dakota. You have never asked them to exactly do away with the marketing entirely ? Mr. Bennett. It is necessary to have a marketing fimction, but they have not performed a function that is of any benefit to the con- suming orjproducing people. Mr. McETiNLET. How would you make your market if you wiped them out ? ^ Mr. Bennett. They wiU go through the natural function and iaot be controlled or hindered. Mr. McKiNLEY. Who would buy ? Mr. Bennett. The same people who buy to-day. They would have to buy through a different condition. It would be a fair, open conapetition in the market. Mr. McKiNLEY. It has been stated before the committee that there are enough terminal elevators, provided there were ships to clear the elevators. What do you know about that ? Mr. Bennett. Well, I am not in a position to say as to that, but I know that we have not been able to get storage conditions so as to be able to take care of the grain. Now, as to what the trouble is, I know this: One of the great troubles is the railroad facUities. Of course that enters into it. Carloads of grain have stood on side- tracks in Montana last year as much as 20 or 30 days. I do not know what is the reason for that, but we know that to be an absolute fact. Of course, you people are not entering into the transportation end of it, but that is one feature that enters into our work out there. Of course, terminal facilities would ehminate a good deal of our trouble. Mr. McKiNLEY. What does it cost to buUd an elevator holding 100,000 bushels of grain ? Mr. Bennett. Last year we were able to build a 30,000-bushel elevator for about $7,000. This year the same elevator will cost around $11,000. It is based on so much per thousand bushels for the cost of the building. Mr. McKiNLEY. That would be about 35 cents a bushel? Mr. Bennett. Yes; just about. Mr. McEjnlby. The raUroads claim that they have, not the cars to move the product with. The Government is now spending several hundred million dollars in buildingships. Fifty thousand cars could be built for about $75,000,000. Do you think it would be a good idea for the Government to build 50,000 cars and rent them to the railroads ? Mr. Bennett. Now, I can not see any benefit in that as long as they have cars filled with grain setting around on the sidetracks. Mr. McKjnley. You would have that many more cars. Mr. Bennett. We would have that many more, but it looks to me Hke storage facilities, storage elevators, would be of much more importance than cars, on that basis. Mr. McKiNLEY. Do you not beHeve that reaUy the only feasible plan is for the Government to buy the grain ? Mr. Bennett. Well, that is a pretty hard question to answer. At the present time and under present conditions I think it would be FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 461 advisable, but I do not think it would be a function that the Govem- mant ought to perform under normal circimistances. Mx. Hutchinson. I heard the gentleman say that the cars stood on the sidetracks 25 or 30 days. Did you ever make any inquiry as to why they stood there ? Mr. Bennett. We had our railroad commission investigate it, and Mr. Hall, chairman of our Montana Railroad Commission, reported that the reason for that was the lack of proper management on the part of the raUroad and their inability to secure help enough for the reason that tihey did not pay enough wages. We believe that Gov- ernment ownership of the railroads would improve that condition. Mr. Hutchinson. Then it was not the fault of any board of trade or anything like that ? Mr. Bennett. Oh, no; not those cars standing on the sidetrack. Allow me to correct that by saying that we noticed that the people who are interested in milling — at least some of the people who are interested in the miUing industry in Minneapolis — are also inter- ested in the Great Northern Railroad Co. Mr. Hutchinson. Do you think there is any arrangement or col- lusion between the millers of Minneapohs and the railroad company to hold up the grain there ? Mr. Bennett. Well, there could be, of course; it would mean a profit both to the miQers and to the railroad company. Mr. Hutchinson. You are a grain grower, are you not ? Mr. Bennett. Yes, sir. Mr. Hutchinson. Are you in a position to get that evidence ? Mr. Bennett. No, sir; I am not. Mr. Hutchinson. You are not ? Mr. Bennett. No, sir. I think that they have been trying to get that evidence for some time. Mr. Young of Texas. Is your section of the country chiefly a wheat- producing section ? j • • • 4. Mr. Bennett. Yes, sir; Montana is a new territory, and it is just being developed, and their principal product is wheat. Mr. Young of Texas. This legislation is general legislation and it does not mention any crops specifically, but the authority that is supposed to be given here covers all crops in general. Mr. Bennett. Yes, sir. Mr Young of Texas. Do you think your farmers are reasonably satisfied with the prospect of prices they are going to obtain for wheat this fall— leaving out this legislation now? Mr. Bennett. Well, now x- ^ j -.i, ^u Mr. Young of Texas. Do you think they wdl be satisfied witJi tHe prices they will get this fall ? ,,.,,• ^1 + Mr Bennett. If you leave out the legislation they are not. Mr. Young of Texas. Do not your farmers thmk they wiU get a better price this fall than ever before in the history of their industry ? Mr. Bennett. They have not thought so nauch about that. Une of our great troubles, as I have stated, is marketing facihties. ihat is one of the things they are mterested m. Mr. Young of Texas. I am asking a du:ect question now. Mr. Bennett. Yes, sir. 462 POOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. Mr. Young of Texas. Do you not believe that the prospects are now that the wheat grower m your State will get a better price for his crop this fall than he ever got before in the history of the country ? Mr. Bennett. We will certainly expect it. Mr. Young of Texas. Do you not believe it ? Do you not believe that? Mr. Bennett. I know some of them do. Mr. Young of Texas. Do you not beUeve it ? Mr. Bennett. I hardly think so. I want to tell you that if Mr. Young of Texas. I am asking you a direct question now. Mr. Bennett. Yes, sir. Mr. Young of Texas. We have heard your explanation. Do jou not beheve it — ^leaving out any legislation at all—do you not beheve that the world shortage and the food situation, with war on — do you not beUeve that the farmer is going to get a better price for his wheat this fall than he ever did before in the history of the coimtry ? That is just a plain question without any explanation needed. Mr. Bennett. I want to qualify that. You understand that we have a great consmning class in Montana, too. Now, I believe in the consumers just as much as I do iu the producers. Mr. Young of Texas. We will get to that later. I want to take up my line of questions now. Mr. Bennett. I want to state — ^I should hke to have the matter clear. Mr. Young of Texas. We will get to the consumers in a moment. Mr. Bennett. I want to say here that if I thought we were here for the purpose of getting more for the grain than we get, that our influence here would be for the purpose of getting the farmers a greater price for their grain than they are getting at the present time, other than those to be gained by the elimination of the gambling, speculating, and unnecessary expense that now prevails, I would not be here. Mr. Young of Texas. You would not be here ? Mr. Bennett. No, sir. Mr. Young of Texas. Do you not believe and do you not know that under conditions as they have heretofore existed that people have been driven from the farms not only in jovr territory, but in every part of the United States by reason of the fact that they have not been able to make a reasonable profit on the products of the farm that they grow? Mr. Bennett. Yes. Mr. Young of Texas. Wait a minute now. Let me pursue my line of questions. That is true in my section of the country. Mr. Bennett. It is true all over. Mr. Young of Texas. The farmer is like any other man. When he can make more money at something else he will quit farming, and the result of our present conditions is that the farmers have . not been farming because they have been able to make better wages by going into some other line of business. All right. Now, the reason of that is they have not been able to get the price for the products they grow, and are going into some other line of business, and there- fore farms have been abandoned. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 463 Now, with war conditions on, with the manufacturer getting the price he fixes on his stuff, with no effort to control his charging what he pleases the farmer for his equipment, for his harness and imple- ments, with which he must cultivate his farm, and no effort in this biU to fix the price of manufactured products, do you say that the farmers in your section of the country, when they know that the world has got to have wheat — and it is wheat that the law is aimed at — ■ when the world has got to have the wheat, they come in and get in- terested in the farmers and ask some Federal agent to fix prices for the wheat produced by the farmer — do your farmers stand for that ? Mr. BenniItt. You are absolutely right. I appreciate your posi- tion. Yet, my position in this matter is this, that if this committee wiU take the gambler and speculator Mr. Young of Texas. I am with them on that. Let me put this question Mr. Bennett. The waste we have in our method of marketing — then we can afford to put up wheat — — Mr. Young of Texas. But you gentlemen come in here and say, in general terms, that you approve this bill. I represent an agricultural constituency and I am a farmer myself and everything I have is tied up in my farm, and aU my Mnfolk and all they have is tied up there and all my friends' interests are tied up in farms — I speak from the bottom of my heart on this proposition — I know under our present system that the trouble has been — ^it has not been that the farmer has been getting too much, because he has been driven out of business — but the trouble has been with our system of distribution between the farmer and the consumer. Mr. Bennett. Certainly. Mr. Young of Texas. Now, this bill has some conditions m it that try to control these vampires that exist between the farmer and the consumer. With that I am in hearty sympathy. There is where the trouble is. Wipe out the trouble that exists between the farmer and the consumer, who are leeches of no service to the country— if they can be wiped out— I am with you; but when you come to this section of the bill that some governmental ^ent shall fix the price of the stuff I grow and the stuff that my kms- folk grow, and it does not undertake to fix the price of the stufl: i need to make the products of the farm, I say you are wrong. Your farmers stand for the fixing of their prices, but not on anything else. Mr. Bennett. That particular part of it, I thmk, is a little one- sided. Mr. Young of Texas. That is all there is to it. Mr Bennett. Yet I believe that the time is now where the general pubhc realizes more than it ever did before that right now is the time to adjust conditions you speak of. If the evils of marketmg were eliminated, these foUow. Our committee is here for the pur- pose of getting justice for our farmers, but not at the expense of the consumer, but by eliminating the parasites. Mr Young of Texas. You have a dangerous condition there. We have certain machinery between the farmer and the consumer i ake eggs, for instance. H you do not have cold storage, you destroy the egi industry. There is a legitimate piece of machmery between the farmer and the consumer. 464 FOOD PKODUCTIOKT, CONSERVATION, AND DISTKIBITTION. Mr. Bennett. We consider that a governmental function. Mr. Young of Texas. That is a public function. Mr. Bennett. Yes, sir. Mr. Young of Texas. Now, you are getting down to the individual farmer, where you undertake to control him by a price-fixingppopo- sition. I have sat here in every hearing we have had. Mr. Hoover is the man already named in advance of this law, and I cross-examined Mr. Hoover. We are giving him plenary powers under this bill. When this bill is put upon the statute books it is the finished product as far as this committee is concerned, and that power is vested, and there he is, the one man— you can talk about the President as much as you want, but you know and I know that the President has more than he can do now. The President will not have time to do this. Mr. Hoover will do that. He knows nothing about farming. In cross-examining Mr. Hoover he stated to this committee he wants this power, but it may not be necessary to exercise this power. I further cross-examined him as to perishable products, and there was only one conclusion to be drawn, and that is that it will not be exercised in that direction. It leaves the farmer to take the risk on these risky crops, where the power will not be exercised, but when you get down to the milk in the cocoanut, which is wheat — and you repre- sent a wheat country, and I do not — ^it is wheat that he is after, and he may or may not exercise that power. The only inference I can draw from it is if we make more wheat than the world consumes he will not exercise that power, because wheat then will sell below the price of production, and will leave to your farmers and my farmers the burden of bearing that loss. As conditions now exist, however, we wiU make less wheat than the world consumes. Our alMes must be fed. We must furnish wheat to them, and it is going to be a short crop. He will step in and exercise that power and fix the OTice of that wheat in the hands of your farmer and my farmer. He will not exercise it, of course, if there is an arer crop, but he will exercise it if there is an under prodttetion, as the present indications seem to indicate, because prices then will be too high. Do you want to vest that power in any such man ? Mr. Bennett. I believe in this Mr. Young of Texas. Just answer that question. Mr. Bennett. Yes, sir. Mr. Young of Texas. Would you vest that power in- that man? Mr. Bennett. Yes, sir; for this reason, that Mr. Hoover has got bratos enough to know that unless he makes it profitable for these people to grow grain at a profitable price, that they are not going to grow grain next year. He also knows that this Government must have wheat to win this war. Mr. Young of Texas. Now, let me set you right there. They have tried this same thing — thay have tried this minimum and maximum price fixing in Germany, and wherever it has been tried it has been a rank failure ; and yet they come in and, knowing that, testifying to that — and it has been a failure not only so far as the farmers are concerned, but a failure as far as the consuming class is concerned — yet they come in and ask us in this biU to do the same thing that has proven a failure in Germany and other countries where they have tried it. What has been the result? The result is that there is a FOOD PR0DX7CTI0K, CONSERVATION, AND DISTRIBUTION. 465 bitter fight between the consuming classes in the cities of Germany and the producmg classes there. It wiU bring about that bitter hght between our people, when neither is to blame for it, when the whole blame lies between the agents and consumers. The Chairman. The committee will be pleased to have the witness testify and aaswer questions, but we must get along. It is half past 4 now. We can not sit here all evening. I am worn out myself. Mr. Young of Texas. I am worn out, too, but when you come to fixing prices for the products raised by our people, I propose to stand up for our proposition. You wiU not §et any such power from me. The Chairman. Have you read section 13 of this bill? Mr. Bennett. Yes, sir. The Chairman. Will you turn to that, please, sir ? Mr. Bennett. Yes, sir. The Chairman. Beghming on page 16 — turn to page 17 — and read this language, beginning with line 3 : This section shall not apply or extend to any farmer or gardener, etc. Do you consider that language as fixing any maximum price or in imposing any price upon the farmers' products ? Mr. Young of North Dakota. I think it does and that will have to be changed a little. Mr.. Bennett. We believe the provisions of what is known as the Lever biU which will provide for a fund to assist in maintaining county agricultural agentsin all agricultural counties, would perform a greater function toward supplying food during this time when it is so greatly needed than is possible through any other agency, provided the county agents were allowed and encouraged by the Government to cooperate with the established cooperative associations who are marketing farm products. We are told that a better condition exists in this respect in Montana than any other State. This provided a splendid machine for production. We have estabhshed the Equity Cooperative Asso- ciation of Montana, our State or central association, with wholesale distributive agencies in every part of the State through which our cooperative elevators, warehouses, and stores work in cooperation with the State or central association through which- all cooperative business of the State is handled at the State or central association in cooperation with the Equity Cooperative Exchange of St. Paul, Minn. We have a branch office for the purpose of marketing the grain for aU of the elevators through these agencies. We are in position with the cooperation of the county agents through the splendid support of M. L. Wilson, leader of county agents, and State agricultural college to market the food products of Montana. But right here is the point that I want to make clear. With this splendid provision of the Lever bill which makes it possible for a great machine for production, and as I haye explained our estab- Eshed cooperative machinery for marketing. The very fimction that this machine is organized to perform is interfered with from every angle by those who never have had any interest in equitable production and distribution only in so far as it was profitable to them, regardless of the expense to the producer and the consumer or the amount expense waste, gambling, speculating. One of the greatest interferences is caused from the cqntrol of the finances that 104176—17 30 466 FOOD PRODUCTION, CONSEEVATION, AND DISTBIBUTION. are vitally necessary to cany out the function of marketing without the unnecessary expense and waste that to-day makes it improfitable to produce. We claim that if the Government and the States will encourage cooperation, the same as European countries have, to the extent that they will provide for the financing for marketing of farm products through cooperative institutions so that after the farmer after working with the county agent ' for greater production can market his crop through his own cooperation institution and not be compelled to market through the channels that have been robbing both the producer and consumer for years. We behave in the plans of the Lever bill relative to coimty agents. We believe in the county agent work, but imless the Government and the States will go a little further with the cooperative associations, as stated relative to finances, the results accomplished wUl be very expensive. STATEMENT OF CHAELES W. HOLMAN, MADISON, WIS., SECRETARY OF THE NATIONAL AGRICULTURAL ORGAN- IZATIONS SOCIETY AND THE NATIONAL CONFERENCE ON MARKETING AND FARM CREDITS. The Chairman. Now, let me say before you begin, I hope you will make your statement as brief as you can and I hope the members of the committee will examine the witnesses without arguing the ques- tions. We are trying to get the facts, and any argument will come in the committee later. Mr. HoLMAN. I will endeavor to follow out that suggestion and I am going to give you what I regard as a few fundamentsQ things. , Before doing so, I woidd like to ask permission to enter into th& records a very short resolution that was passed unanimously by the meeting of farmers at Fargo, which expresses the attitude of the farmers of the Northwest toward this question of price control. This, resolution goes on record for a guarantee of prices to the farmers. It specificaDy states that if the prices of farm products are fixed, the farmers desire that there shall also be a rigid Governmental fixing of the other great, big commodities, such as fuel, agricultural require- ments, clothing, boots and shoes, etc. (The resolution referred to is as follows:) I am speaking in behaM of the National Conference on Marketing and Farm Credits, which, at its last meeting in Chicago, had 2,00ft delegates, representing 120 farmers' organizations, with a possible representation, back in the fields, of 2,000,000 farmers. I also speak for the National Agricultural Organization Society, a service institution that, at the present time, caters to the business units of the farmers, that is, the cooperative societies. We now serve asso- ciations that have enrolled some 27,000 farmers throughout the country. We organize cooperatives, furnish information to them of a technical business and legal character, we carry on economic investigations, both in the United States and in Europe. During the term of the war we have had two men in Great Britain studying food production and the question of agricultural organization. So, what 1 have to say of a general character comes as the result of some investigation on the part of our organization. Mr. Lyman, who also represents our group, will speak specifically to some of the questions FOOD PBODUCTION, CONSERVATION, AND DISTEIBUTION. 467 that concern the farmers of Wisconsin and the Northwest. Mr. Lyman himself is a farmer. As we look at this bill, gentlemen, it contains larger powers than just the mere fixing of the prices of grain, and we feel that it should. The experience of some warring nations — and I now refer specifically to the United Kingdom — has proved that price control alone is not going to solve this question of getting sufficient food into the ground and getting it out of the ground to the consuming people. Primarily Great Britain had to fix a minimum price for farm labor. Great Britain had to pass an act requiring the compulsory tillage of the land. The last act provided that 10 per cent of the untiUed area in the hands of farmers up to the extent of 50 per cent of their area, wheresoever that land be available, must, in 1917, be planted to crops. Within the last few weeks, a cable interview with Lloyd George states that 20,000,000 tons of food above what they had in 1916 is the result of compulsory tillage. But, in order to make com- pulsory tiUage work, they found it necessary to fix and guarantee prices to the farmers. The prices which 'we have here, as quoted from a speech of the Eremier, in American terms, fixes prices of wheat at $1.77| per ushel for 1917; $1,621- per bushel for 1918 and 1919; $1.33 per bushel for 1921 and 1922— a graduated decline, providing for condi- tions to adjust themselves as they reach what they hope to be a normal period of trade again. On oats, these figures are $1.13 per bushel in 1917, $0.93f in 1918 and 1919, and $0.72 per bushel for the next three years. The guaranty on the potato crop for 1917 is $28 per English ton. That applies only for this year. Coming to the question of our getting the food iato the ground and getting it to the consumer, with the eUmiaation of waste, I want to cSl your attention to the fact that wheat is not alone the crop which demands governniental control of storage facilities. I spent the greater portion of my life in the South, and not over 100 mUes from the home of Congressman Young of Texas, and I am reasonably conversant with the conditions that apply to cotton. For years our farmers have been aware of the fact that the actual physical lack of storage facihties on this side of the ocean is one of the great defects in the handliiig of our crops. We have not got the sheds to cover the cotton, ^e great wastes which take place in the handling of this cotton from the farmers into the points of concentration are so enormous and are so well known that it is trite to speak of them. But I do want to call your attention to this fact, that the farmers of the South, just as the farmers of the Northwest, have been paralyzed every time they raised a high bumper crop. I am not quite sure which of these years I am going to refer to as the greater year, but it was in 1911 and 1912— one of those years— our crop was about 12,000,000 bales. The other year it was 15,000,000 bales. It is a fact that the 15,000,000-bale crop of cot- ton brought $150,000,000 less than the 12,000,000-bale crop. That condition brmgs up the deplorable character of organization of our people for the naming ^f prices with regard to cotton. Consequently, we favor pubUcly owned and controlled warehouses for cotton. Jiut storage alone will not suffice. Cotton farmers have no cooperative central selUng agencies. They are helpless in the matter ot sales. 468 FOOD PRODUCTION, CONSEEVATION,, AND DISTRIBUTION. They need guaranty of prices and protection from the sharks who prey upon their helplessness. Congressman Young referred to conditions in the South at the open- ing of the war. I happened to be in the South at that time making some investigations for the Federal Government. In my old home town of Sherman, Tex., cotton was selling at 6 J cents a pound, which according to conservative calculations, is from 4 to 5^ and even 6 cents under the average cost of production at the present time. Now, gentlemen, if we had had, at that time, the machinery that is provided in this biU, the crop of cotton which was grown in 1914 would have brought the farmers of our country a reasonable price and have enabled them to get rid of some bf their mortgages^and our people are still a great deal in debt — they are tied down under a financial and industrial situation which might be likened to an inverted industrial pyramid with the tenant farmer at the bottom. The conditions with reference to financing the cotton crop are analogous to financing a cfop of grain. When the first of October comes, the notes are called in and the tenant has to sell his cotton. We do not find that farmers can utilize the Federal Reserve System. At this same time when Mr. Young speaks of. Secretary McAdoo announced that he was placing $15,000,000 in the Dallas Reserve Bank. That news was spread oroadcast over the country. I know that the farmers did not get a dollar of that $15,000,000 which was put into the Dallas bank. Mr. Tom Caldwell, of Austin, Tex., at the present time a member of the Federal Farm Land Bank of Texas, complied with the -necessary requirements in the town of Austin, Tex. — ^Mr. Caldwell is a planter of some magnitude in that country — and he applied to every single bank in the town of Austin, Tex. He was refused credit at 6 per cent, wiiich the Federal Reserve System provides they should get this money at. He went to these banks . and was turned down. The banks of Texas used that money to ?rotect themselves, and there was no 6 per cent money available to 'exas farmers from the Federal Reserve System. Therefore, gentle- men, we argue that something must be done to make it possible for organizations like that of Mr.- Bennett's to apply to member banks; and even if such a bank does not have enough money to finance such an operation, we should be able to draw upon the Federal Reserve System and get the necessary money when we put up collateral. In order to get this food into the ground, I believe that section 3 of this bill should be made specific enough to enable the food con- troller to lend money to farmers' organizations of a cooperative character, and to groups that put up the necessary collateral. In the South and elsewhere the pooling of chattel mortga;ges through cooperative credit societies should be permitted as the basis of-com- munity credits, to enable the people to get enough money to increase their production. This matter of increasing farm production im- plies a great deal of increase of capital and outlay to the fanners of this country, who believe that they constitute the only class that is being asked to carry the risks of this war. They say that a guar- antee of prices is given to munition makers* yet England has de- clared that farm implements are food are munitions of war. There- fore they ask for a guarantee of prices for farm products. These prices should be high enough to bring a fair profit — ^but not a big FOOD PEODUOTION, CONSEBVATION, AND DISTBIBUTION. 469 profit. If the text of this bill does not make it mandatory upon the food controller to give the farmers a profitable guarantee, then our people urge that the wording be made so clear that the possible con- dition which Mr. Young of Texas fears can not occur m the future working out of this act. GenUemen, I am going to close in about two minutes now with ..just this thought, that section 3 provides for the financiag of pro- duction. We have got to have food. Yet only one-third of avail- able agricultural lands of America is under tillage. We are the only country in the world that has not provided for a logical, systematic and sound system for enabling deserving but poor persons, who want to get onto the land, to acquire farms and pay for them. Why should not section 3 be utilized to put iuto operation a comprehensive program of land settlement at the present time, and to provide for the settlement of returned soldiers and others after the war? We need more land in cultivation, and we need more farmers. Such thoughts as I have here touched upon briefly and imperfectly may be found amplified in the agricultural production program adopted by Great Britain and her colonies to meet war needs and after the war conditions. Some specific character with regard to prices will have to be taken up by Mr. Lyman, my colleague. Mr. Young of North Dakota. We have three other witnesses and I suggest that we put them on without cross-examination. If we take any time for cross-examination now, we can not get through this afternoon. The Chairman. That can not be done without unanimous consent. Mr. Young of North Dakota. These gentlemen have come from a great distance and they would like to be heard this afternoon. The Chairman. The gentleman from North Dakota asks unani- mous consent that there be no further cross-examination of the wit- nesses this afternoon. Mr. Young of North Dakota. I ask that they be allowed to finish and then, if there be time remaining, cross-examine them. The Chairman. Is there any objection? Mr. Hutchinson. I object. The Chairman. The gentleman from North Dakota asks unani- mous consent that the remaining witnesses be allowed to proceed to the conclusion of their statements and that they be not cross-examined until all the witnesses have completed their statements and then the questions may be asked. Without objection, that is so ordered. STATEMENT OF HERBERT E. GASON, EDITOR OF THE FARMERS' DAILY COURIER-NEWS AND ASSOCIATE EDITOR OF THE NONPARTISAN LEADER. Mr. Gason. I take it, gentlemen of the committee, that what you wish this afternoon is more or less expert testimony along prac- tical lines in which the men who are operating have had experience. Consequently, I shall take up very little of your time. 1 nierely wish to make a few remarks regarding something with which i was personally connected. 470 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Shortly after the conference that was held at St. Louis, in which oiiicers of the United States Government and representatives of agricultural departments of the different States and representatives of agricultural .colleges and of agricultural societies, such as Mr. Holman's and Mr. Lyman's society, were represented, these gentle- men went back to their different States and cities and issued an appeal to the farmers of the United States to put forth every effort to increase their production. Now, as has been pointed out by Mr. Bennett, the farmers' organiza- tions and the pubhc agents representing the farmers' organizations have not been lajdng a great deal of stress on increasing production because it has been their experience that the people who are urging increased production are not especially interested in securing for the farmer the price for his production he ought to receive. Our line of work is a different line of work. The Non-Partisan Leader, with which I am connected, is the official organ of the Farmers Non-Partisan League. Out in our country it has created considerable attention and I think it has been heard of in North Dakota and Minnesota. The function of that organ is political. The object of that organiza- tion is to seek means by which we can increase the profits of the far- mer — by which we can make farming a profitable industry, so that more people will come to the farms and tnat our farming States and farming communities wiU be more prosperous. We have been neglectmg these matters of making two blades of grass grow where one grew before to lay greater stress on the questions of better marketing and how to bring those things about. But we were called into conference in Fargo, with President Ladd, of the agricultural college, and Mr. Cooper, director of the experiment station at the college, and who is in charge of the work of the county agents. These two gentlemen had been to the conference at St. Louis and they had brought back a message for the farmers of the Northwest, and that message was concerning the dire need of the nation for greater pro- duction, and they appealed directly to the farmers' patriotism and they asked us to make that appeal. That was asking us to do a rather extraordinary thing — to change the course of action which we had been taking and to advocate a policy of increased production. It would require considerable inducement to cause us to do that thing, and that inducement was offered to us, .and it was simply this, that the country needed extra production and we ought to do it as a patriotic duty, and that is the basis upon which we did it. We made that appeal in the daily papers which we controlled and the Non-Partisan Leader, and we said, in making that appeal, that the farmers would be assured a fair price for his products — a price that would at least cover the cost of production. We made that assurance on something that amounted to a promise from the gentlemen who came back from St. Louis. They told us there were things they could not tell — things of very great import, regarding the international situation — that the country was in a more danger- ous and critical situation than was known, and every possible effort of every class in the country was necessary to strengthen the Nation in this crisis, and they told us also that the whole effort of the admin- istration and the whole effort of these influential men would be to see that the farmers were protected in this effort. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 471 I take it that the bill which is before this committee, and the position that the gentlemen are taking, is evidence of an intention to fulfill that implied promise. I think that is the case. The farmers, many of them, feel that some guaranty of prices is necessary, but they realize, as has been stated here to-day, that there are rather more important things. The very fact that this conference at St. Louis was called; the very fact that this appeal was made to the farmers; the very fact that we are preparing this bill for the conservation of the food supphes of the country, to stimulate production and regulate consumption — they are all evi- dences pointiag to one great momentous condition and that condi- tion is this, that the food production of the coimtry is not keeping pace with the food consumption; that it is to stimulate the food production that we are preparing this biU, and because the food production is short, I take it, is the reason this bill is prepared. It IS very plain evidence, is it not, that something is wrong in. our food raising and something is wrong in our system of production and distribution of food. Here is the situation: For several years the war has been going on and while the war has been going on the prices of food products have gone up and there is every indication they will continue to go up. Here is wheat, during the late winter and early spring, at probably the highest price that has been known in many years — the highest price that the present generation has known — and yet, in the face of that fact, it is true that the seeding of wheat iu the spring-wheat States without this appeal to the patriotism of the farmers would have been less than the average. There would have been an actual decrease in the seeding of wheat and an actual decrease in the seeding of many other products, and it is true,' in our State, owing to crop failure, that the production of all farm products would have been less than the average, because the farmers were in dire straits to get the seed and means to cultivate their crops. All of this is conclusive evidence of the fact that sorne- where we have been making a great mistake in the manner in which we have been handhng the production of our food, and yet our farmers are the most efficient, from the standpoint of fanri labor, and produce as much as they can be made to produce, from the standpoint of human labor. I behere we have the most efficient system of farming that the world knows, and that it can be estab- hshed that that is the case. I beheve that that is true. It appeals to us that the very essential thing is to find out what is the great difficulty in the food-distribution system. It. is on that basis that I would indorse this bill and beheve that it does proceed alono- right fines. We have had considerable argument here this afternoon, or there has been considerable very interesting discussion of who gets the money and who is the robber and what is speculation and whither speculation is a crime and various thmgs along that fine. It seems to me that all this interchange of views has brought out one thing very clearlv, and that is that there is no man m this room—no one who has at Teast expressed himself on the subject-who can teU what ought to be done to efiminate injustice and get efficiency and econom/in the sale and distribution o^ f««d products and get a fair price to the producer, a price that wiU not be excessive to the con- sumer. 472 FOOD PRODUCTION^ CONSEEVATION, AND DISTRIBUTION. This is evidence that we need to look into this matter. We need to go a little further, and it seems to me that there is no better way to do that than simply to open up this whole proposition of food distribution to the food administration officials of the Gorernment in these different channels, and enable them to inform themselves and inform the public and inform the country, and see where savings can be made, what is wrong, and then we will be in a position where we can do something greater even than stimulate production in the course of the war. We wiU be in a position where we can. move surely and rightly to elimiaate this criminal waste and fearful bim- gling that is actually starving the poor people of this country who are working at low wages, and is doubling the burden on the farmers of supplying people away from the farms and creating what is known as this back to the land propaganda and this great problem about what shall be done to increase farm production. As the distinguished man to whom we talked last night said, there is no panacea for our men back on the land, eixcept the plain simple proposition of making farming profitable, and it was exceedingly fleasant to hear Mr. Hoover make that statement, because there as been some doubt about his attitude on those questions. That is the view of most of our farmers, that the system of the boards of trade and the grain exchanges is entirely wrong. It is their belief that that is purely a pubHc function. It is their belief that it ought to be operated, not merely supervised and inspected by the Federal Government; that the grain exchanges should be public markets and rules should be formulated by the Federal Gov- ernment, and they should be under the strict control and supervision of the Federal Government, and it is the belief of most of the farmers that the Federal Government ought to build and own and operate storage warehouses and storage grain elevators, so that the farmers shall be protected in the marketiag of their production, and not only that, out in our State we are proposing something along a little differ- ent lines. We have been already discussing here largely the flow of the wheat to the eastern and foreign markets out of the Dakotas. We distribute a great deal of wheat in North Dakota and distribute it east and west, and it was our idea that the State of North Dakota ought to have something to do with this question of marketing and distribution of grain. It was our proposition that we should not go on taking $4.80 out of the soil every year and not putting anything back. We realize in that State that it is wrong to do that thing and the farmers would like to put fertilizer back in their soil, and would hke to keep up the fertiUty of the soil, but, again, we have a very inefficient and very uneconomical way of doing that. We ship all of the grain back to Minneapolis and it is milled there and the by- products are there and they feed cattle there, and if we buy any great quantity of foodstuffs we buy them at Minneapolis and pay the freight from Minneapohs back to our farms. Also in our State we favor a system of State ownership of certain facihties. We are for the principle of Government ownership and operation of facilities that are national in their character, and, personally, I beheve thor- oughly in this bm as a means of laying open the markets of the world, so we can solve the market problems, which are some of the most pressing problems, from our standpoint, and in the interests of the welfare of the United States, among other things. FOOD PEODUCTION, CONSERVATION, AND DISTEIBUTION. 473 The Chairman. We are very much obliged to you for vour very interesting statement. STATEMENT OF BENJAMIN DRAKE, OF MINNEAPOLIS, MINN. The Chairman. Can you conclude by 5 o'clock ? Mr. Drake. I think I can. The Chairman. I do not want to hurry you too much, but it is gettingrather late. Mr. Drake. Mr. Chairman and gentlemen of the committee, I shall boil down my remarks as far as possible, and mention only the main points which I have in mind. It was the wish of our delegation that I make a special reference to the matter of speculation grain exchanges, and conclude with a summary of the desires of the delegation. I shall endeavor to carry out that plan. Now, with reference to speculation or, as I would put it, manipula- tion of the prices in the grain markets and the grain exchanges of our coxmtry, as now carried on, I wish to direct your attention to this proposition, very briefly — in fact, I shall just mention dogmatically, and make a few dogmatic statements, because, if the committee will permit, I propose to offer a statement, if the committee will receive it in evidence, which deals at greater length with this subject of future trading and short selling. The future trading of the Chicago Board of Trade amounts annually to more than seventy billion bushels every year. The gross amount of wheat, which is practically the only grain which is dealt in, in future trades, received at the Chicago markets for years, is less than 50,000,000. In the Chicago market you have practically 3,000 bushels of wind sold and bought for every bushel of real grain. That is the situation in Chicago. In Minneapolis it is somewhat better. Minneapolis is known as a hedging market. Chicago is known as a speculative market pure and simple, or almost so. But the proofs which I shall ask permis- sion to introduce. in evidence wDI show that the future trading trans- actions of the Minneapohs Exchange amount annually to not less than six or eight biUion bushels per year. Now, what does that mean? In the first place, gentlemen, it means that to-day the members of the Chicago Board of Trade re- ceive annually, upon the commissions of their future trades alone, computing them at the lowest rate charged Mx. Anderson. What is that ? hi Mr. Drake. One-eighth cent per bushel is at least $75,000,000 er year, whereas the' maximum revenue for handling real grain „as never exceeded $2,000,000 or at least $2,500,000. In Min- neapohs the maximum revenue received from handling real gram has never exceeded $1,000,000 for the biggest crop year we ever had, and yet the expenses of the commission houses alone m that mar- ket, as admitted by the testimony of sworn witnesses before an m- vestigation had before the Minnesota Legislature m 1913— the ex- penses of the commission houses amounts to at least $1,500,000. Now, you see, there is no escape from the proposition at aU. As the business of grain marketing is carried on to-day gambhng is not 474 FOOD PEO0UCTION, CONSERVATION, AND DISTRIBUTION. an adjunct; it is the main proposition. There is where the revenues come from, and as proof of that fact I want to call your attention to the fact that to-day, since future trading has been efimintaed — ^and it has been eliminated — there is no, or practically no future trading or short selling in the Minneapolis Chamber of Commerce or the Chicago Board of Trade to-day. wnce future trading has been eliminated in those two exchanges, the exchanges are practically deserted. The members of the Minneapolis chamber go down to their pit and in 15 or 20 minutes they clean up all cash ousiness there is, and go out about their occupations. That is the situation to-day. Their occupation is gone, and the whole sy^stem is working out in very fine shape. Now, what I ask is that this manipulation — I will not argue with any gentleman about a definition of speculation — this manipulation which goes on and which forms practically the entire busmess of the grain exchanges of our country to-day, we ask that it be divorced and cut off from the business of legitimate dis- tribution. That is what we are here for to-day, largely. Does this future trading manipulate prices ? Does it ? If any one of you gentlemen will read the sworn testimony — the testimony of members of the MinneapoHs Chamber of Commerce, testifying under oath before the Minnesota Investigating Committee which I shall offer in evidence^ — ^if you will read the sworn testimony of the wit- nesses taken in lawsuits conducted in the State of Illinois, which I cite, you will know then that by the admissions of the grain exchange members themselves, they not only have the power to manipulate, but they do manipulate the prices received by the farmer for cash grain. Why, the president of the MinneapoHs Chamber of Commerce, Mr. F. B. Wells, who was president in 1913, admitted before the Minne- sota investigating committee that the speculators of the Chamber of Commerce of Minneapolis had the power to arbitrarily raise, or lower prices of cash grain at will, and the only Umitation which he placed upon it was they could not permanently hold it up or down after they had manipulated the market. There is no question about that proposition. I have only spoken about seven minutes. It is impossible to cover this proposition adequately in such time, but I think it is fairly well covered in the evidence which I shall offer. We, the farmers of the Northwest, beheve that the time has come to ehminate from our dis- tributive system this horrible incubus of future trading and short selling and price manipulation. The system has broken down; the grain exchanges prompted, no doubt, by some action on the part of the Federal Government, have actually done away with this future trading to-day, and what we shall insist upon, to the limit of our influence, gentlemen, is that this gambhng in grain be ehminated not merely as a war measure, but as a permanent govermnental pohcy. That is what we want, and we are not willing that you appeal to the farmers of the Northwest, to their sense of loyalty and duty and obHgation to the country in a time of stress, in war time, and that you merely eUminate this evil during the war and afterwards throw us back upon the mercy of these same speculators. We ask that this be adopted as a permanent policy, and one of the great virtues and benefits which we see in this FOOD PRODUCTION, CONSERVATION', AND DISTRIBUTION. 475 bill is that it gives the Government, or the commission appointed by the President, the power to continue the eUmination of future trading and short selHng. That is one of the reasons — one of the great reasons — that the farmers of the Northwest are wilhng to not only- stand for this legislation but even to support it; but we will be very much disappointed, we will be bitterly disappointed if, after future trading has been eliminated during the war, as it is now contem- plated, and as Mr. Hoover has practically assured us it will be, during the period of the war — we will be very much disappointed indeed if the system is afterwards again thrust back upon us. There are a few matters which have come up since I have been here this morning that I wiQ touch upon and then conclude. Some- ithing^has been said, and some issue has been raised, on the question of son depletion. I simply caU your attention to this fact. I see here in this room a man who has been prominent in Minnesota, the editor of perhaps the largest agricultural paper in that State for many years, a man who has made an investigation of this question, who assures me that the actual soil depletion from raising crops of wheat is at least $12 an acre, and not the $4 an acre that some of the Mem- bers quibbled about this morning. The average wheat production in Kansas to-day is approximately 9 bushels; North Dakota, 11 bush- els; South Dakota, 13 bushels ;. Montana — a new State with soil.un- depleted — goes up to 23 bushels; and Wyoming, a stUl newer State, with soil undepleted, 24 bushels per acre. It is only a question of time, if the soil depletion goes on, when Kansas will only be getting 7 bushels, and then 5 bushels, and then drop out altogether. That is what soU depletion amounts to. As to the ownership of elevators, somebody has asked a question as to Minneapolis. The big milling companies and certain big ter- minal elevator companies m Minneapolis own a great number of lines running out into the country. One owns over 300 line elevators extending out into the cotmtry. That is the way this MinneapoHs combination with its tentacles reaches out into the country and con- trols not only the terminal but the local trade. That is one of the methods. . . With reference to governmental operation or ownership of terminal elevators, we stand in this position: First, we ask the Government to take over, in this emergency, the terminal elevators— not necessarily the local elevators in the country, but the terminal elevators, and to operate those which already exist. We beUeve, further, that if the bUl does not empoM^er the commission with power to erect new ele- vators at terminal points, that it should be so amended that it will. The storage of grain is essentially a part of transportation. It is quite as necessary to have a place to put the grain after you get it to the terminal as it is to have facilities to get it into the terminal, and in MinneapoHs aU of these faciUties, you may say, with the exception of the Equity elevator— which has only a capacity of perhaps oOO,000 bushels— aU of the terminal facihties are in the hands of members ot the Minneapohs Chamber of Commerce, and those terminal facihties are not available to the pubhc. We have a law in effect this, that whenever a pubhc warehouseman has room, then he must accept grain for private storage, but they never have any room for anybody outside of members of the chamber of commerce. Gentlemen have 476 FOOD PRODUCTION, CONSEEVATION, AND DISTEIBUTION. asked for specific instances. Dozens and hundreds of times the Equity Cooperative Exchange has sought, for the members of the organization, storage of grain in Minneapohs, but they have not gotten it. We do not cite isolated examples. They all refuse, and as you see,, from the situation of the law, there is no remedy. The buraen of proof is on the men seeking storage to show there is room in the terminal elevators, and they can not do that. The Minnesota Legis- lature, or, at least, the lower house of the legislature, passed a unani- mous resolution asking the Federal Government to erect terminal warehouses at the seaboard export cities. That shows the sentiment of our people in reference to that. As to the ownership of terminal elevators by the railroads, some- body asked a question about that. The railroads do own terminal elevators at Imimeapolis and Chicago. The Great Northern owns such an elevator and in 1913 rented it for a nominal figure to some- body. The Soo is erecting to-day, or has just completed, the largest terminal elevator in Minneapolis. I am told that the Milwaukee Railroad to-day is erecting one of the largest terminal eleva,tors in Chicago, and expects to turn it over to Armour as soon as it is com- pleted. The railroads do own terminal elevators in Minneapolis and Chicago. Just upon what terms they rent them out I do not know. I am going to conclude in a minute, Mr. Chairman, with a statement of the attitude of the farmers upon this legislation. The farmer approves the fixing of a minimum price in this emergency, I take it, and for these reasons, the farmer, so far as he is concerned as a class, does not believe the fixing of a guaranteed price will help him, but the farmer is unable, and refuses to dissociate himself, as a class, from the entire country and from the welfare of the country. We, therefore, acquiesce in any action which you men and the Government of the United States may consider necessary. We gladly acquiesce, but we find a great sentiment among our people, along the lines expressed by Mr. Young of Texas, that it is not a proposition which will primarily benefit the farmer this year. That prices are going to be high enough anyway this year, is the general impression. To be fair, there is one way in which it will benefit the farmer, and benefit him very largely Generally. As has been stated here to-day, almost all credits in the Torthwest are so arranged that they mature about the 1st of October. I presume, without accurate statistics to guide me, that 95 per cent of the grain growers of the Northwest are obliged to market their grain, or a large portion of it, almost as soon as it is threshed. That is just the period that the grain gamblers have depressed prices for years. If a minimum price is guaranteed by the Government, as I understand, even the tenant farmer and the debt-laden farmer, who is obliged to sell as soon as his crop is harvested and threshed — and they comprise the great majority of the grain growers — even they will receive at least that minimum price guaranteed by the Government. They had this situation in Minnesota last year: There was no market for potatoes at the start of the season. Speculators went out and bought those potatoes for 18 cents a bushel in the ground. After- wards, potatoes in our State rose to as high as $3 and $3.50 per bushel. Hundreds of farmers sold practically their whole output for 18 to 25 cents a bushel. If we have a minimum price it will avoid that situation. So far as it does that it is excellent, but the FOOD PKODUOTION, CONSERVATION, AND DISTEIBUTION. 477 minimuinprice, we understand, is a war measure. We acquiesce in it gladly. We do not believe that it is practicable as permanent policy. We do not want it as a permanent policy, but what we do want is this: We want you gentlemen to use your influence to free the mar- kets, to open up the grain markets of this country, to make them open, competitive and free of access to all, and to relieve the pro- ducer of the extortions of the price manipulators and all those influences which, up to this time, have caused him for years, as statistics show, to market his grain for less than the actual price of growing it. Statistics will show that for the last ten years, prior to the war, the average price for value on the farm of wheat on December 1, has been about 74 cents throughout the United States. You can not raise it for that. Now, as Mr. Hoover said, the only way to increase production, and the only way in the end to get people back to the farm, is to make farming profitable. If you do not do that, you may stimulate production occasionally by some palliative measure, such as this proposes, but the only practical fundamental way is to clear the market places and remove these restrictions and extortions and to permit the law of supply and de- mand govern, and let the farmer get prices which will at least cover the cost of production and give him a sUght profit. To this end the market places should be opened up. To this end future trading should be euminated, and to this end provision should be made for adequate transportation facilities ana adequate storage facihties at the terminals. And here is another point with which I wish to conclude, by calling your attention to it. 1 1 believe,, gentlemen, and I most earnestly wish to urge upon this committee, in the propriety of attaching to this legislation, if enacted, an appropriation of at least $100,000,000. This is the situation: The gram exchange commission members have been' financing the farmers^ elevators in the past. I will not go into the history of that practice. That is the fact. The gram exchange members to-day are not making their expenses andT they are not going to make their expenses out of the business this year, because they are deprived of the revenue of future trading. That being the case, the farmers' elevators all over the Northwest, who are m the habit now of wiring in to their commission merchants and getting funds with which to carry on their business— these elevators wdl be disappointed. They must have money to buy the grain as it comes in at the local points, but in my judgment they wiU not be able to get it this year, because the commission merchants will not be m business; that is, in the sense he was before, and he wiU not have money, and the banks wiU not extend the credit. Now, m this emergency, where will the elevators get the money? if they do not get the money, the whole business of distribution is impeded, i can not see any way, except in isolated cases, where the local banks may provide the necessary funds, except for the Federal Government or the commission which you propose to empower m this legislation— that the commission should have power to finance these local ele- vators to the end that they may perform their legitimate function Now, if you will grant us these measures, gentlemen, we will gladly acquiesce In any mSiimmn price fixing legislation ^^ich you propose, but we do not expect, after the war, and after the partial reform 478 FOOD PKODITCTION, CONSEKVATION, AND DISTBIBUTION. already accomplished to be thrown back upon the same conditions which have produced the apathy and lack of production and unprofit- ableness in farming which have obtained in the past. I appreciate very much this opportunity of addressing you. Mr. Anderson. I should Hke to ask a question, if I may. The Chairman. Has the witness completed his statement ? Mr. Anderson. I would Hke to ask a question before Mr. Drake goes off the stand. The Chairman. By unanimous consent that is agreed to. Mr. Anderson. The impression seems to have been given by one gentleman who testified here that the questions I asked arose out of opposition to the views expressed, or to the bill itself. I want to say that any such impression is not justified. The testimony has been very complete here that the rehef which we expect to get by the establishing of a Federal Reserve System, and the Farm Loan Sys- tem and through antitrust acts and various other ways, has not been accomplished. I am anxious that this legislation accomphsh some real result. My questions were only asked with a view to getting the facts, in order to make this legislation as effective as possible. Is it your idea that speculation and manipulation can be eliminated by penal provisions ? Mx. Drake. I think that that would be a very unsatisfactory and inadequate way to approach the task. The Chairman. I did not catch your answer. Mr. Drake. I think it would be an inadequate and unsatisfactory way to approach the task. If I might reply a little more at length, my suggestion would be Government control or operation of the grain exchanges together with appropriate rules which would cover the future trading matters. Mr. Anderson. Your idea, I take it, then, is that the only satis- factory method of eliminating speculation is to take the profits out of speculation; that as long as you can make a profit in speculation they will take the chance of the penal provisions of the law. Mr. Drake. It is hard to destroy an evil when it pays 200 per cent profit, as some one has sta,ted. Mr. Anderson. Have you any definition of speculation or manip- ulation ? Mr. Drake. Yes ; but it will take me an hour to define it. [Laugh- ter.] Mr. Anderson. I think I can define it in less time than an hour. It seems to me quite essential, if you are going to get at speculation by penal provisions or manipUation, either, to define it in some way. Mr. Drake. May I make this suggestion, Mr. Anderson? Mr. Anderson. I will be very glad to have you make any sug- gestion you want to make. Mr. Drake. I realize that iny statements are dogmatic and un- supported to a large extent. I intended to offer for the record a statement which I have prepared with reference to the practices of future trading in grain exchanges, as a part of the record. The Chairman. How long a statement is it ? Mr. Drake. It is about two pages, and it gives my definition of manipulation and speculation. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 479 The Chairman. We will be rery glad to have that in the record. (The statement referred to is as follows:) Mr. Young of North Dakota. Is there anything else you desire to go into the record ? Mr. Drake. No, sir. Mr. Lee. You spoke of certain lawsuits conducted in Minnesota, during the progress of which certain trade secrets of these boards of trade had been admitted by the members of the boards. I want to ask if those cases have been carried to the Supreme Court of Minnesota. Mr. Drake. I referred to the legislative investigation in Minnesota. Mr, Lee. Aiid'not to lawsuits? Mr. Drake. No, sir. Mr. Lee. Where is that hearing ? Mr. Drake. I have it in full at my office at Minneapolis. The Chairman. Was not that testimony presented to the Kules Committee some few years ago by Mr. Manahan, and printed ? Mr. Drake. I presented excerpts myself. It is contained in House Report No. 424. Mr. Wason. The lawsuits were in Illinois. Mr. Drake. Yes, sir. Mr. Lee. Were those lawsuits carried to the Supreme Court of Illinois ? Mr. Drake. Yes, sir. Mr. Lee. Can you give me citations?. Mr. Drake. I will endeavor to look them up and furnish them. I have not them here. The Chairman. Is there any further question ? Mr. Hutchinson. I was very much interested in your description of future trading. I understand it now, and ask this for information. For instance, I buy 100,000 bushels of Chicago wheat for September delivery. Now, if a man is a reliable broker, he has to deliver that, has he not ? Mr. Young of North Dakota. Mr. Hutchinson is in the flour busi- ness. I will explain that so that you may know what he is speak- ing of. Mr. Drake. I take it he is bound to deliver it. Mr. Hutchinson. You can not get away from that, can you ? Mr. Drake;, No. Mr. Hutchinson. Now, you propose to break that up. Do you think this law will do it ? j. i • i r,- i, Mr. Drake. I can conceive of an enforcement of this law wJiich will do it. . T 1 ^■^ . 1 Mr Hutchinson. That is what the committee would hke to know. If you can tell me how a man can sell 100,000 bushels of wheat and not deliver it, if he is a reliable man, I would hke to know it. Mr. Drake. You understand, I was limited to some 15 or 20 min- utes. Now, it is utterly impc^ssible to , , , Mr. Hutchinson. But you should not make statements you can ^°M??^dIake. I can prove it, I conceive, by the citations which I offer for the record. That is my position. It is impossible to go into it thoroughly in the time that is allotted. 480 FOOD PRODUCTION, CONSERVATION, AND DISTEIBUTION. Mr. Hutchinson. All right, sir. Now, you spoke of another case of selling potatoes in Minnesota. Will this law prohibit a man sell- ing potatoes at 18 cents a bushel? Mx. Drake. This legislation that is under consideration here ? Mr. Hutchinson. Yes. Mr. Drake. My understanding is that it gives the President or a commission appointed by the President the power to .estabhsh minimum prices for farm products. Mr. Hutchinson. That is, guaranty prices ? Mr. Drake. To guarantee minimum prices. Assuming that is done, it is my understanding of the execution of the law that if any man has potatoes at the summer season of 1917 and in the fall season, he may offer those potatoes for sale and if there are no bidders who offer to buy at the price equivalent to the minimum prices established by the Government, then the Government will take them over and buy them at that price. Mr. Hutchinson. They pay the difference. Mr. Drake. Pay the difference; thereby guaranteeing and insur- ing to the producer not only at the start of the season, but all through the season, at least a certain minimum price. I conceive that to be a great advantage. Mr. Hutchinson. Suppose the minimum price is $1 a bushel for potatoes, and we have an enormous crop this year, and they are not worth over 25 cents a bushel. What position would that place the Government in ? Mr. Drake. In the position of holding the bag. As far as I understand the sentiment of the farmers to be, as a class, and con- sidering ourselves only as a class, we do not care for this minimum le^slation. Mr. Hutchinson. You do not care for it? Mr. Drake. As a class, but not as a member of a basic element of the population of the whole country. We beheve it to be for the benefit of the whole country, and a war necessity. Mr. Hutchinson. You spoke in your statement a while ago of the fact that you understood this is a war measure; that you wanted this continued on after this war, as to future trading, etc. ; that you want future trading cut out. Mr. Drake. I think you misunderstood my remarks or at least my intention. I said, or meant to say, that one reason that the farmers approved or acquiesced in this legislation was that, iu a way, it accomplished the very things for which they have been con- tending for many years, to wit, the elimiaation of future trading and short selling and price manipidation ; the insuring of at least a profitable price, a price profitable in some degree; the principle of control by the Government of terminal facilities, excluding elevators, and warehouses, and, for that reason, we approve the legislation or acquiesce in it, at least, and that after the war we thought that the Government ought to take over the control of grain exchanges, and, by proper rules and regulations either limit or entirely diminate undue future trading an,d short selling. Mr. Hutchinson. Have you got the rules of the Chicago Com- mercial Exchange ? Mr. Drake. I have never had the Chicago rules. FOOD PRODtrOTION, CONSERVATION, AND DISTBIBUTION. 481 Mr. Hutchinson. Have you got them for Minneapolis ? Mr. Drake. Yes, sir. Mr. Hutchinson. Will you not insert them in the record ? Mr. Drake. I can secure them and send them to the committee. I haven't them with me. The Chairman. Are they not also printed in the other document you spoke of ? Mr. Drake. I do not believe they are. Mr. Anderson. As to the question asked you by Mr. Hutchinson, of course, theoretically, and probably legally, a man selling 100,000 bushels of wheat is obliged to deliver them, but in the practices in vogue in connection with these transactions, through clearing asso- ciations, as a matter of fact, the percentage of deliveries on these contracts is very, very small, is it not ? Mr. Drake. That is the point exactly. In the exhibit which I propose to put in evidence, I show the testimony of at least 8 or 10 gram dealers in the Chicago market as to the settlement of margins and liquidations, and let me, for example, read just one: "Charles A. Ware, of the Ware Commission Co., of Chicago, tes- tified that his firm did a business of 600,000 bushels a day, and not more than 1 per cent resulted in actual deliveries. "C. D. French, another broker, testified that he had done a busi- ness of 100,000,000 bushels annually for 15 years, and only two or three times in his experience had any property been delivered to him." Now, it is true that, as I understand it — as Mr. Hutchinson sug- gests — that delivery can be enforced, but what is that between gamblers who want to speculate ? Delivery is not enforced. Mr. Hutchinson. That is the fault of the seller, is it not? Mr. Drake. I do not imderstand that it is the fault of the seller. Mr. Hutchinson. If he demands dehvery, he can get it ? Mr. Drake. As a matter of fact, neither of the parties mtends— there is no intention to deHver on the one hand nor to receive on the Mr. Hutchinson. What I am getting at is the rules of the ex- change. You say they are wrong and that they are gamblers. The rules of the exchange are aU right. If a man takes advantage of them that is a different proposition. If a man seUs wheat, he must furnish it. The Chairman. Are there any other questions « Mr. Haugen. Is not the trouble due, in the mampulation ot grades, to the fact that cats and dogs can be dehvered? Mr. Drake. Not entirely. Mr. Haugen. But very largely. Mr. Drake. Shall I go into that? ui • at- „ „^-.ii= » Mr. Haugen. How many grades are dehverable m Mmneapohs? Mr. Drake. Two. . Mr. Haugen. How many in Chicago | . , . . . Mr. Drake. I am not certain about that, but I thmk it is two— ""S^HAUGEN'^'can not state from memory the number, but it seems to be that 104176—17 31 482 FOOD PKODUCTION, CONSERVATION, AND DISTKIBUTION. Mr. Deake. I do not think there can be any great disparity be- tween Chicago and Minneapohs. Mr. Haugen. There was a big difference in the testimony we had before us. If there was a standardization of rules I think we would get along very well with futmres, Did I understand you to say that you were opposed to penahzing for manipulation ? Mr. Drake. Not at all. Mr. Haugen. I understood you to answer a question of Mr. Anderson by stating that you did not approve penahzing offenders. Mr. Drake. I said it was not the most satisiactory plan, to my mind, with which to meet the situation. Mr. Hatjgen. What is your plan ? Mr. Drake. My plan would, be for the Federal Government not only to take over and operate the grain exchanges on the theory they are Government functions The Chairman. And in addition to that you would penalize them for any refusal to obey the regulations and orders ? Mr. Drake. Exactly. Mr. Haugen. But in the end it amounts to penalties, does it not ? ^Ii. Drake. There must be a penalty, but that is not the primary purpose of my proposal. Mr. Haugen. You said there, was no need to pay any attention to prices this year, that prices would be high enough anyway. Now, if the plan is carried out, where all the alEes are to buy through one channel, would it not be in the power of the purchasing agent to fix prices up or down as he sees fit? Mr. Drake. I understand normally the aUies export about 22 per cent of our grain, and I should think anybody wno controlled the piu-chase of that amount of our crop would be able to practically fix the prices. Mr. Haugen. We expect to furnish about 800,000,000 bushels. We never grew more than a billion bushels. That is more than 23 per cent. Now, if they had the piu-chasing power of the surplus over 800,000,000 bushels, would it not be in the power of the pur- chasing agent to fix prices simply by straight poohng ? Mr. Drake. I think they would. Mr. Haugen. So, they would have it in their power to fix the prices to suit themselves, through that operation. Mr. Drake. I think largely so. Mr. Wason.. I did not quite understand my colleague's question about dehvering cats and dogs. Perhaps you know what he meant by that. I thought perhaps he meant Mr. Drake. Road wheat comes in as No. 1 or No. 2 northern. It is taken into the terminal elevator, which we call up there a grain "hospital," and there it is mixed, and what comes out is known in the trade as a "skin" grade or a "pelter"; that is, this wheat has just enough No. 1 or No. 2 grain in it to make it grade No. 1 or No. 2 under the State inspection. That car is deliverable upon a future contract. As a matter of fact, in the trade, it is worth from 1 to 3 and 5 cents less than the car of road grain, which originally entered the elevator. . That is admitted. The great terminal warehouse owner makes that difference, and not only that, but in Chicago — and Minneapohs, ■ too, as far as that is concerned — the great warehouse owners are not only custodians of other people's grain, but they are dealers in grain FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 483 themselves. That is, they sell it out. That gives them a position in the market such that no man can compete with them unless he, too, owns an elevator. That is particularly true of Chicago. It is bad enough in Minneapohs, but it is worse in Chicago-, as I understand it. Therefore it is absolutely essential, as I see it, that if the producer is to have a fair show, that some disinterested agency take over tha control and operation of the terminal elevators. There are other features connected with future trading. For example, it is the habit, in a considerable number of locations in our State, for farmers to listen to the siren song of the solicitors who want to make a profit for their employers and commissions in futures. The farmer has, let us say, 160 acres of wheat in the milk and he ^oes out and looks it over before breakfast and says, "I think I will have 25 bushels to the acre. I need some money. I guess I will sell now. I have 25 bushels to the acre, and 160 acres at 25 bushels wiU make 4,000 bushels. I can afford to seU for future delivery (this is, say, in July) 4,000 bushels for delivery in September." He does so, and wires on his commission merchant and the trade is made. Now, No. 1 or No. 2 only are deliverable on that order. A hail storm comes along or 110° of heat comes along or a drought comes along, and instead of getting No. 1 or No. 2 wheat, he gets No. 3 and No. 4. He can not deliver that on his contract. He is up against that condition. He lias to go out and buy wheat to meet his contract or else make some settlement through margins. In that way the grain exchanges shake down the farmers for hundreds of thousands of doUars eaqh year. They do not understand the game. That is the proposition. Mr. Hutchinson. Then this law would stop gambling by the farm^ ers, as well as others ? Mr. Drake. Yes, sir. The Chairman. Is there anything further ? Mr. Drake. Nothing from me. Mr. Young of North Dakota. All these gentlemen from the West, I think I can say, appreciate the courtesy of the chairman in setting aside this day for this hearing. The Chairman. In response to that, I want to say I do not think a more intelUgent body has appeared before this committee and pre- sented its case in a more lucid manner or more briefly. STATEMENT OF MR. CHARLES A. lYMAN, OF RHINEIANDER, WIS. Mr. Hutchinson. What is your position ? Mr. Lyman. I am a farmer and also an associate of Mr. Holman in the Conference on Marketing and Farm Credits and in the National Afflicultural Organization Society. My attitude in coming here is that of the farmer. At the same time, in looking at all these matters, involving the production of food, price fixing, etc., I have tried to have a detached feeling; that is, I take it that Members of Congress here, the President, and Mr. Hoover, and all of the rest, want to produce food . They want to wm this war, and I am going to take it up from that angle. We are after the food. We are after the successful prosecution of this war. Now in discussing the attitude of our farmers I want to say that they are patriotic. They put in their potatoes this year, paying as 484 FOOD PBODUCTION, CONSERVATION, AND DISTBIBUTION. high as $35 an acre for seed, because they thought we needed food in this country. We have seen potatoes up in my locality that sold at 8 cents a bushel. We have also seen them held over until spring and hauled out in the fields for fertihzer. We knew we were takmg a chance, but we had a feeling that something was going to be done in the matter of guaranteed prices this year; and some have thought that if they would raise potatoes in the potato-producing districts, that would help take the place of wheat somewhere else. I think that was the feeling of Mr. Hatton W. Sumners, a Representative of your body. The truck that is grown down in the South is going to take the place of wheat this summer. The gentlemen who have been on this delegation, of which I am a member, have taken up the wheat angle especially, but I feel that your conunittee should seriously consider the question of relief among the farmers in certain sections of the country this year. There may be actual loss and possibly distress. In France I am informed that the Government has set aside $38,000,000 to cover the spread between the prices at which they feel it necessary to sell bread to the people and the price of flour — $38,000,000 in the interest of the consumers. I merely wanted to suggest these things to you, because, while I indorse this bill, as have the other members of our delegation, I am not at all sure it has covered everything you may want to cover. Bear in mind this, gentlemen, that quite a number of the speakers to-day have brought up the question of an appropriation of $100,000,- 000 to take care of credits for financing of primary grain. I beheve that that ought to be done. I am inclined to think there ought to be some provision made also to take care of the truck producers and perhaps also the potato growers. Personally, I think the price of wheat wiU be high this year — the price that the farmer gets. But at the same time, I do not think that is any reason why we should not advocate a basic price. It is my behef that a basic price is in the interests of this Nation for the successful carrying on of the war, laecause, gentlemen, we are on very thin ice. We do not want bread riots, and we do not want food riots of any sort. In my judgment, imless there is abasic price or something that means the same thing, we are goings to see flour go sky high. We are going l^'^ have serious difiiculty. I want to see this Government plan for all these things wisely. I know it is going to do so, but I merely suggest you take up this matter of providing for certain sections of the country that have patriotically mcreased their food production, notably the truck growers and the potato growers in my State, who will be at a disadvantage because of this garden movement through- out this country — the impetus that has been given to the raising of vegetables in all the cities of the land. There is one other matter that I want to bring up at this time, and that is the introduction of three telegrams that have come to Mr. Bennett, who has testified, in regard to what, in the judgment of the farmers of Montana, shoiild be the guaranteed price for wheat. 1 will not stop to read them except to say that one telegram says that the farmers can not possibly sell wheat for under $2 and come out whole; that seed wheat costs $3, feed oats $1, hay $15, groceries are 50 per cent higher than ever, and that it the farmers do not get $2 this year they "plan to quit and join the parasites." FOOD PRODUCTION, CONSEBVAXION, AND DISTRIBUTION. 485 . Another telegram states that the farmers must have $2 wheat; that the farmers are up against a tough proposition, with machiaery high, fencing prices prohibitive, all costs of production tremendous, and that the Government must take sides with the useful people. The other one states that the minimum price of grain should be, for wheat, $2.25; flax, $3; barley, $1.50; oats, 70 cents; potatoes, $1; and that no maximum prices should be fixed on farm products unless maximum prices are fixed on machinery equipment, fiour, etc., first. I think that Mr. Hoover will find no better opportunity to get the viewpoint of this group iij Montana than through the introduction of these telegrams mto the record. The Chairslan. Without objection, they will be printed in the record. (See exhibits C, D, and E, p. 494.) Mr. Lyman. I want to say a word about the psychology of the farmer. I think I am in a position to testify as to that. I have farmed since I finished college at Wisconsin 13 years ago. I know what the young man is up against, and I know what the average fanner is up against, and besides that, I have been connected with farmers' organizations, the Equity and the Grange, and also with the N. A. O. S. The Chairman. What is that? Mr. Lyman. The National Agricultural Organization Society. Mr. Young of North Dakota. It is a kind of clearing house for all the farm organizations. Mr. Lyman. Last week Mr. Holman and I were with the North Dakota farmers — invited to attend that meeting and to come on here with them. Next week some of our group may be somewhere else, and we have, for the last two years, kept in very close touch with the farmers' business organizations. It seems to me that we should take into consideration the psychology of the situation in this country. In my judgment, nothing wLQ please the farmers more than the mtroduction into this bill of an official stamp of approval for agri- cultural cooperation. I think you gentlemen have been unpressed with the testimony that the farmers from North Dakota and other States have given here to-day— the unanimity of opmion expressed. I think you are aware that it is only through organization on the part of the farmers that delegations like this can come and express their views. Over in the foreign countries, gentlemen, it was easy— compara- tively easy— for certain governmental pohcies to be earned out, because, in the case of Germany, France, Great Britain Italy and other countries agriculture has been thoroughly organized, and there has been given to agricultural cooperation, for many years back, the stamp of official approval and recognition. . , , , The Chairman. Without interruptmg you, just what do you mean ( Mr Lyman. I mean that the Government has enacted legislation— sometimes permissive and sometimes promotive ^^gf ^ati°^-Ji^^^5,3 put into existence and into operation a complete plan of agricultural organization. It has been considered as a necessary thing to en- courage agriculture, to keep the farmers on the farms We Imow whatlas Len done in Ireland. Mr Holman ^^^f rayseK have been over there and have studied, under the direction of Sir Horace Plunk- 486 FOOD PBODTJCnON, CONSERVATION, AND DISTEIBUTION. ett and his associates and have traveled with the farmers' organizers, learning at first hand what has been done. Mr. Young of North Dakota. You are speaking now of cooperation' ? Mr. Lyman. Yes, sir; I believe that it would be a very wise thing to incorporate into this bill something of that character. There is just one other thing, and that is the question of discrim- ination on the part of certain large business interests in this country that have made it very difiicult for organized farmers to do, their business collectively, not only on the marketing side, but in the matter of purchases. Now, it should be recognized that the farmers are entitled to buy through collective associations those things which go into the manufacture of their food. The Office of Markets takes a clear stand in regard to this important matter and yet, because of the lack of adquate educational promotion from authoritative sources it has been difiicult and in many cases impossible for the farmers, even in associations properly organized under the laws of the respec- tive States to buy their agricultural requirements, such as coal, cement, lumber, salt, and other things. I know this of first hand, because I have helped a little in organizing Wisconsin farmers into what is called a central purchasing agency. It was our good fortune last year to bring the manager of that organization, Mr. H. E. Holmes, of Madison, Wis., to the Conference on Markets and Farm Credits and give him an opportimity to meet the chairman of the Federal Trade Commission. It is a great regret to us aU that we have lost Mr. Parry, because we believe that he had come to see the situation and was ready to act and act efl'ectively. The Chairman. Are there any questions that members of the committee desire to ask? Mr. Young of North Dakota. I have nothing to say excepting I am very glad aU these gentlemen came here to-day to testify. Mr. Wason. I second Mr. Young's remarks. Mr. Hutchinson. We have heard before the committee to-day the distressing fact of how Kansas is going down, and also the Dakotas, in growing grain. Don't you think it would be a good idea if the Government appropriated this $100,000,000 to invest it in some fertilizer and help them out ? Mr. Ltman. In my judgment the thing works automatically. We had, in our State, virgin soil and wore it out raising wheat, and went into dairying and diversified farming, and wheat has gone farther west and north. Mr. Hutchinson. The custom has been to go out there and take a tract of land and use up the soil and then migrate, has it not ? Mr. Lyman. There has been an opportunity in this country for farmers to profit by a large unearned increment — a raise in price of their lands — and they have taken advantage of that very laigely and have moved on and gone west, and now there is no more West; and, as you know, they are going back to the Eastern States in some cases. Mr. Hutchinson. I am a farmer, also; and by using two or three hundred pounds of fertilizer we grow from 35 to 40 bushels of wheat every year, unless there is some calamity; but on the average, why, we have no trouble in raising 35 or 40 bushels of wheat with two or three hundred pounds of fertilizer, and we leave the ground in better shape than when we started. FOOD PBODUCTION, CONSERVATTOK, AND piSTEIBUTrON. 487 Mr. Lyman. I know the gentleman is correct and I know every member of the northwestern delegation is an advocate of better farming. Their idea is that they know how to do these things, but they have not been able to get the credit to make it possible for them to get their fertihzer, their machinery, their silos, etc. They are going to take advantage of the "better farming" program just as fast as they can, but they think one of the best incentives in the mat- ter of increased production is the proper organization of the farmers on a business basis, that will enable them to buy these fertilizers in carload lots and at trade terms, just as other manufacturers secure their raw materials. ' Mr. Hutchinson. I think it is a very serious thing for people to come here and say we have taken $12 per acre from the ground. It will not be long before we wiU have no fertihty to the land. Mr. HoLMAN. Supplementing Mr. Lyman's remarks about the necessity of the Government encouraging what we call "agricultural cooperation" and other forms of bona fide cooperation, we want to call your attention to the fact that America has no economic substi- tute for what in England is known as the Cooperative Wholesale Society, which is the great purchasing medium for 9,000,000 English- men. We have in this country a hysteria following the declaration of war. We have no facilities in this country for hoarding of food products. The average householder can not store food products, and the average farmer can not store to the extent of hoarding. The Government in England recognized that cooperation was a fundamental in the welfare of the country, and so it subsidized or- ganization agencies, known as the various agricultural organization societies, similar to our organization, the N. A. O. S., which, in this country, however, is supported by popular contribution. Mr. Drown. In reference to the fertilizer you use — I understand you are a farmer ? Mr. Hutchinson. Yes, sir. Mr. Drown. You put on how much to the acre ? Mr. Hutchinson. Two to three hundred pounds per acre. Mr. Drown. What is that worth" per hundred ? , Mr. Hutchinson. Twenty-five dollars a ton. That is $L25 per hundred pounds. Mr. Drown. That would be three or four dollars an acre ? Mr. Hutchinson. Yes. Mr. Drown. How much would you raise if you farmed for a period of five years without putting anything on it ? Mr. Hutchinson. I do not think we would raise anythmg. The Chairman. Gentlemen of the committee, I think aU of us have profited by the very splendid statements made by the gentle- men from the Northwest. As far as I am concerned, and as long as I am chairman of this committee, if you contmue, Mr Young, to bring down this character of men, these doors are always open *^Mj"biLLON. I would hke, personally, to supplement some of these remarks, and I would hke to know if I could have 15 minutes time at some subsequent time ? ,. • • j? ^i. The Chairman. I think it is the consensus of opmion of the mem- bers of the committee that we should not spend any more time on 488 FOOD PRODUCTION, CONSEKVATION, AND DISTRIBUTION. this particular hearing to-day. The committee will stand recessed imtil Thursday morning at 10 o'clock, when we wUl go iato executive session on this bill. The Chairman. Gentlemen, I submit for the record the following letter from Mr. Herbert C. Hoover: Washington, May 17, 1917. Hon. AsBURY F. Levbb, House of Representatives, Washington. Deak Mr. Lever: I may summarize the information which I placed in your hands regarding the food situation as follows: So far as we can see now, our allies will require an import of between 800,000,000 and 1,000,000,000 bushels of cereals during the harvest year 1917-18. With the present outlook, and without any adequate food administration the United States and Canada should be able to supply from 550,000,000 to 600,000,000 bushels of this grain. It is possible that if we increase the total shipping afloat or overcome the submarine some 100,000,000 to 200,000,000 bushels of this deficiency could be made up by im- ports from other portions of the world, depending on their harvest results. Of more certain importance, however, is that by the elimination of waste in its broad national and personal aspects, by economy m every direction on the part of ovuBelves and Canada, we might increase our exportable balance by from 100,000,000 to 150,000,000 bushels of grain, without asking our people to do other than to eat plenty, but wisely and with economy. The net result is that if we do nothing our allies will probably receive but 60 per cent of their necessities, which is too small a supply for us to hope that they will be able to preserve among their peoples public health, tranquillity, and resolution in the war. On the other hand, we can, if we will, provide them with 80 per cent of their necessi- ties, which, while it will still result in a privation loaf for them, should be sufficient to maintain our common cause. In order to accomplish this, we must ask for self-sacrifice and willingness on the part of our people to bend to such necessities as we must face, and while I beUeve that we can accomplish these results by the cooperation of the producing and distributing forces in this country, in order to make absolutely sure that such cooperation is not undermined by failure of the minority, complete and ample powers must be given to the President. On the other hand, if we were to allow the demands of our allies to run riot in our food supply and were not in position to cooperate with them to regulate the quantity of grain they transport from this country and the manner of their acquiring it, we shall have uncontrolled speculation and a level of prices in this country which wiU dis- turb the whole fabric of living and social order and will correspondingly- diminish our national efficiency in the other problems we have to face. Therefore, in order to stimulate the producer and to protect the consumer the President must have in these particulars also large powers to enable us to put into effect the predominant spirit of cooperation which exists in this country. Yours, faithfully, Herbert Hoover. (The committee thereupon adjourned.) FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 489 Exhibit A. RESOLUTIONS OF GRAIN GROWERS CONFERENCE. Your committee begs leave to report as follows: That the conference called at Fargo, May 23, 1917, for the purpose of discussing governmental control of food prices, hereby goes on record for the following principles: 1. We believe that the present war emergency and the world-wide shortage neces- sitates that our Federal Government shall take upon itself larger powers in order to encourage greater food production and to control the sale and distribution of food products. We believe that such action would be in the interests of producers and consumers. 2 . We favor a rigid governmental guaranty to the farmers of profitable prices for staple farm products. Such guaranties are necessary for farmers to know how to reorganize their ' farming operations and to secure an increased production. Such reorgani- zation incurs extra outlays of capital and extra expenses for labor and other essen- tial factors. In the event that the Government should see fit to fix the prices of food products that farmers shall obtain, we also favor a rigid governmental control of the pric?es of other commodities than food, such as fuel, clothing, and agricultural requirements necessary or incident to the manufacturing and the mobilization of farm products. We believe that the prinicpal factor in determining the prices of farm products to farmers should be the avers^e cost of producing such products. 3. We earnestly suggest that in line with the course of other warring nations the Government shall immediately prepare itself to seize and operate wherever and when- ever necessary all transportation agencies and terminal elevators and warehouses. 4. We hereby empower the committee which has been designated to represent us at Washington to systematize and present all necessary data and to ascertain the the wishes of this conference and of other grain-growing interests, as to what is con- sidered by the farmers to be a fair price guaranty on the standard grades of grain. 5. This conference also takes the opportunity to express its loyalty to the President and the Government of the United States, and to state the desire of farmers' organiza- tions of the Northwest represented here to cooperate in the working out of this most important policy of food-production control. 6. Your committee after careful consideration of such facts and data as it has avail- able, is of the opinion that the prices guaranteed by the Government for our 1917 crop of wheat shall be $2.50 per bushel for No. 1 Northern wheat, at northwestern terminals, and we believe that the delegation to be sent to Washington to represent this conference, shall use every legitimate method to establish this price. Benjamin Drake, Minneapolis, Minn. Frank L. McVey, Grand Forks, N. Dak. (By Ohas. W. Holman, Jr.). Magnus Johnson, Kimball, Minn. H. R. Wood, Deering, N. Dak. P. A. SuHUMSKiE, Lisbon, N. Dak. Chas. E. Drown, Page, N. Dak. The following resolution was then proposed from the floor of the conference, and unanimously adopted: _ , , , i.-i.-i j * „„ „ 7. Resolved further, That future trading m farm products be prohibited, not as a temporary war measure but as a permanent governmental policy. Exhibit B. PORTION OF ADDRESS OF BENJAMIN DRAKE UPON FUTURE TRAD- ING AT GREAT CONVENTION OF FARMERS, ST. PAUL, MINN. FUTURE TRADING DErlNBD. The terms "future trading" and "short selling," broadly speaking, mean the s^ne thing S term may in turn cover two general practices winch should be specified in order to secure accuracy of thought and des^nation. 490 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. HEDGING. The so-called practice of hedging ia one variety of future trading. It is the kind of future trading which is constantly harped upon and unduly emphasized by the defenders of short selling in order to distract attention from the other kinds of future trading which can not be defended at all. Hedging is best understood by the familiar illustration of a man hedging a bet. Having a bet on one side, he also bets on the other side, and thus guards himself against loss, whatever the result. Keeping in mind the general idea of hedging a bet, two illustrations wUl suffice to show examples of a hedge as used to-day in the grain exchanges. A Minneapolis miller has an order for 10,000 barrels of flour to be delivered next May at a certain price. That price is based upon the present price of wheat. The miller does not know what the price will be next May. He does not wish to invest capital in wheat and store it until May. Neither does he wish to assume the risk of wheat going up or down between the present time and the date of delivery. If he had many such contracts, a rise of 25 cents per bushel might mean great loss and even financial ruin. Therefore at the time of accepting the order for 10,000 barrels of flour he goes into the market and buys 50,000 bushels of wheat for delivery in May. In this way he has hedged his sale of flour, whether the market goes up or down. The payment of the small 'margin re- quired protects him against loss from fluctuation in price. ANOTHER EXAMPLE. Another typical instance of hedging is to sell actual grain for futiure delivery by aloeal country elevator. The elevator may be full of grain, but owing to railroad congestion or other causes, it may be impossible to get the grain to the terminal inside of 30 days. During this time wheat may fall 20 cents per bushel. The directors of the local elevator do not wish to bear this risk. They therefore direct their manager to wire some commission house at the terminal to sell 25,000 bushels of wheat for future delivery. When this is done, the elevator has only to make delivery within the time specified and it is protected against loss from a falling market. In other words, the elevator has hedged its own purchase of grain in the same way in which the miller has hedged his sale of flour. Some persons see grave _ objections in the practice of hedging. It is pointed out with truth that practically no other commodities except grain and grain products can be protected by the hedging practices. The manufacturers of all other products are obliged to bear the, risk of price fluctuation. MTiy, then, should the handlers of grain and grain products enjoy the singular insurance against risk in market fluctua- tion? The answer is that in theory at l^ast it enables all parties to do business upon a closer margin. The miller, it is claimed, can make a closer price on his flour. The local elevator can pay a better price for the grain, because the profit of each can not be wiped out by price fluctuat'on. • Moreover, it is also true that hedging differs from all other forms of future trading in this respect: It is based upon a commodity either actually in existence or con- tracted for in a bona fide sense. In my own opinion, as terminal marketing is now conducted, hedging is a practical necessity. It is a necessity, because unlicensed speculation as now carried on causes sharp and constant fluctuation in market price. In other words, it is short selling itself which causes the market variations which make hedging a present necessity. SENATOR CUMMINS QUOTED. Senator Cummins, in his argument on the cotton futures bill, quoted in the Con- gressional Record for September 3, 1913, sums up this argument admirably when he says: "It is said — and this is one of the arguments most frequently used — that short sales ought to.be permitted because they tend to steady the market and tend to pre- vent extreme fluctuations in the price of commodities. I have read a great deal of argument submitted to sustain this contention. I can not at this time enter upon an analysis of the subject as I would like to do. I can only record my own opinion that instead of steadying the market short sales disturb the market. Instead of preventing extreme fluctuations they excite extreme fluctuations. Those who defend the prac- tice always forget that when short sales are used to steady prices — ^and I admit there are times when they are so employed— they are employed to steady prices which the practice itself has disturbed." But whatever may be the merits or demerits of hedging, as used imder the present system, it is certain that the practice can not be preserved unless it can be separated from the other forms of future trading. If it can not be separated from the other vicious FOOD PEODTJCTION, CONSERVATION, AND DISTOIBtTTION. 491 forms of future trading which lend themselves to price manipulation and exploitation ol the producer, then hedging must inevitably go. The pubUc, when it learns facts, the stupendous volume and controlling influence of sheer gambling transactions will eradicate the whole system of future trading unless hedging can be separated from the not of gambhng transactions which to-day raises and lowers the price of grain at will of the gamblers. WHOLESALE GAMBLING. The volume of hedging, as compared with the total volume of future transactions of the grain exchanges of Chicago and Minneapolis, is comparatively insignificant If all;the grain entering the Minneapolis terminal in an entire year were hedged once' it would amount to less than 300,000,000 bushels. If it were hedged three times it would still amount to less than a billion bushels. As a matter of fact the evidence at hand indicates that the total future transactions on the floor of the chamber of com- merce aggregate not less than 10,000,000,000 bushels. The future transactions, which are not the result of hedging and which probably aggregate more than 9,000,000,000 bushels a year in Minneapolis alone, are purely speculative or gambling transactions. These are the transactions which make possible price manipulation, and which the public to-day seems determined to wipe out. This second variety of future trading is more easily described than defined. It differs from hedging, because there is no actual interest to protect or hedge. Ordi- narily there is neither actual delivery of the grain, nor any intention to deliver. The speculator or gambler buys or sells grain for future delivery on the chance of a favorable change in the market before the time specified for the delivery. Settlement of these transactions is commonly, almost invariably, effected by payment of the difference in price , called margins, instead of actual transfer of the gram . The specu- lator, therefore, merely makes a bet on what the future price of grain is going to be. He has no actual interest to protect, unlike the man who hedges. EFFECT UPON CASH WHEAT. To what extent is this purely speculative variety of future trading carried on? And what is its effect, if any, upon the price of cash wheat? Let us answer these questions one at a time. One of the dramatic features of the recent grain-exchange hearing before the Rules Committee of Congress was the testi- mony of Samuel Hallet Greeley. For 28 years Mr. Greeley had been a member of the Chicago Board of Trade. He had sold his membership only 10 days before the hearing in order to be able to testify without fear of punishment. Mr. Greeley said that at the lowest estimate the future transactions of the Chicago Board of Trade amounted to 300 times the entire volume of wheat handled in a year. In other words, for every bushel of real wheat handled 300 bushels of phantom grain were bought and sold. On a single day, Mr. Greeley says, he has seen 25 Chicago firms buy and sell 5,000,000 bushels of grain apiece for future delivery. He styled himself an "insignificant" trader, but said that on many a day he had bought or sold a million bushels of grain and thought nothing of it. When it is remembered that recent average yearly receipts of wheat at Chicago do not exceed 50,000,000 bushels at the most, the sale of over 17,000,000,000, bushels for future delivery becomes simply appalling. Mr. Greeley says that individual firms of Chicago lease private wires to the Pacific coast at an annual rental of more than $100,000 per year, so stupendous and so profit- able is this system of organized gambling and exploitation. He tells us that at times single firms of Chicago work as many as 20 clerks and bookkeepers night and day, simply to jot down and enter in their books of account the enormous volumes of these future trades. GREELEY TOO CONSERVATIVE. The only trouble with Mr. Greeley appears to be that he is altogether too conserva- tive in his figures and statements. He has understated the facts. Willet M. Hayes, formerly Assi'stant Secretary of Agriculture, says that the future trading of the Chicago Board of Trade amounts to at least 90,000,000,000 bushels annually, which makes Mr. Greeley's figures of seventeen billions pale to insignificance. In January, 1913, the Assistant Secretary of Agriculture pubUshed an article m the American Academy of PoKtical and Social Science, entitled "Functions and Needs ol Our Great Markets. He says upon page 253: , . , ,. . . , . ,, ~, . "There is evidence that the really large speculative dealing is in wheat on the Chi- cago mai^ket. Estimates made some years ago indicate that 90,000,000,000 bushels of grain sales were made annually in Chicago." 492 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. Again he says, upon page 250: "It is perfectly clear, however, that in the large the outside speculators and the producers and consumers amoag them lose money to a class of men who do not really pretend either to produce, to transport, or to manufacture; and they also pay the ex- penses of running an expensive speculative machine. "A very rough estimate places the money received from the people by exchanges and their bucket-shop appendages in America alone at upward of $200,000,000 annually. On the face of it, tms seems a high price to pay for fluidity and acceleration to the market and for the opportunity of hedging." Mr. Hayes further states in this article that the speculative public loses annually at least- $30,000,000 "through dealing with speculators with business connections with your (cotton) exchanges, or who assume to have such connection." According to Mr. Hayes's estimate, the annual losses of the public through the speculative features of grain and cotton exchanges would build a Panama Canal every second year. It would build 40,000 miles of macadamized roads over gumbo prairies every year. It would cover the entire proposed increase of governmental expenditures for pre- paredness for the coming year. And these figures do not take into consideration at all the losses which producers themselves sustain through manipulation and depression of prices of the commodities which they grow. WHEN ROGUES FALL OUT. Nor is it necessary to rely entirely upon the testimony of Mr. Greeley nor the investigations of Mr. Hayes in order to determine the volume of gambling transactions upon the Chicago Board of Trade. Sworn testimony and admissions of the members themselves are available to establish these facts. Some years ago the Chicago Board of Trade prosecuted Christie Odell and others as bucket shoppers. The substance of some of the testimony in those cases as taken from the appeal record is as follows: Charles A. Weare, of the Weare Commission Co., testified that his firm did a business of 600,000 bushels a day and that not more than 1 per cent resulted in actual deliveries. C. D. French, broker, testified that he had done a business of 100,000,000 bushels annually for 15 years and that only two or three times in all his experience had he had any property delivered to him. He fixed the total of the deliveries at about 200,000 bushels, or one two-hundred ths of 1 per cent of his business. Ex-Gov. James E. Boyd, of Nebraska, testified that he had been a commission merchant and dealer on the Chicago Board of Trade, and that actual deliveries were not one-half of 1 per cent of his business. Austin W. Wright, one the heaviest specu- lators on the floor of the Chicago Board of Trade, testified that he had been a speculator for over 30 years and a member of the board of trade for 20 years and that in all that time he had never but three or tour times paid for any grain. Since 1892 he was positive that he had not received or delivered any of the actual commodity. The following question and answer was put to Mr. Wright: "Q. What is the difference, if there is any, between speculation on the board of trade and speculation off the board? — A. There is no difference. Locality can not affect the character of the transaction." Walter Comstock was another interesting witness in the lawsuit. He was a member of Schwartz, Dupee & Co., the largest or second largest speculative house in the United States at the time when he testified that in the previous year Ms firm had dealt in from 2,000,000 to 3,000,000 bushels a day, and that in the previous December there were delivered to his firm only about 100,000 bushels of all kinds of grain. His testimony showed that not more than one-fifth of 1 per cent of the enormous business of his firm resulted in actual deliveries. The remaining 99f per cent represented deals settled through the clearing house of the board of trade. Judge Thompson heard the O'Dell case, and in his decision declared: "The evidence convincingly shows that the larger part of the transactions in grain and other produce on the complainant's exchange are merely gambling transactions conducted by some of its members in violation of the law of the State of Illinois against bucket shops." * * * The bucket shops are the offspring of the Chicago Board of Trade and kindred organizations, to which they still look for sustenance and life, and they can only be effectually suppresjed by striking at the root of the evil. When this species of gambling on the commercial and stock exchanges of the country ceases the bucket shops will disappear, and not before." It is unnecessary to comment upon this evidence. The propoters of the Louisiana lottery paid the State of Louisiana 140,000 for the privilege of running a gambling institution. The Chicago Board of Trade pays nothing; but the profits of its members from this source alone, computing them at the regular rates established by its own rules, would be not less than $75,000,000 per year. POOD PBODUCTION, CONSERVATION, AND DISTBIBTJTION. 493 GAMBLING AT MINNEAPOLIS. At'Minneapolis the evidence is not so clear as to the actual volume of future transac- tions.-- It is no doubt less than that of the Chicago market. At the grain investiga- tion of 1913, conducted by the Minnesota Legislature, the members of the chamber of cOTamerce refused to show their books disclosing the volume and details of tfieir future trading. However, the volume of this future trading appears indirectly. It was shown at this investigation that within the chamber of commerce is the corpora- tion known as the clearing-house association. This association had only 37 members out of a total of more than 300. Its sole business was to clear the future trades of its own members. For this service it received one-half cent per $1,000 of future transac- tions cleared. This was the sole source of revenue. Out of this revenue the associa-. tion had paid its yearly expenses of $24,000, declared dividends and accumulated a large surplus. The revenue to the clearing-house association for clearing $1,000,000 in future trades would be only $5. Computing simply the amount of future transac- tions necessary to maintain the yearly expenses of the clearing house and ignoring wholly the dividends paid the surplus accumulated and the admitted fact that the clearing house acted for only a part of the entire membership, it appears that the future transactions passing through the clearing house amount each year to approxi- mately $5,000,000,000. From all the facts and evidence it is quite clear that the entire volume of future transactions must equal at least 10,000,000,000 bushels per year. This estimate is apparently borne out by the testimony of F. G. Holbrook, a Minneapolis pit trader. He testified that on an average his future transactions amounted to 67,000 bushels per day, and that he seldom, if ever, delivered any real wheat to a purchaser. It is evident that approximately 90 per cent of the commission revenues of the members of the Chicago Board of Trade, taken as a whole, and three- fourths of the commission revenues of the members of the chamber of commerce are at present derived from future trading. In the case of (hicago the revenues derived from future trading must amount to approximately $75,000,000 a year, and in the case of Minneapolis bet-ween five and eight million dollars per year. The revenue deri\-ed from handling consigned grain, figuring a single commission, has never exceeded $1,000,000 in Minneapolis, cr $2,000,000 at Chicago, in a single year. Gambling, therefore, is not merely an incident or adjunct. It is the main business of the modern grain exchange. ' Time does "not permit me to give the"facts in detail, but the evidence taken at the Minnesota invps^tigation shows conclusively that there never has been a year when the revenue of the commission houses of the Minneapolis chamber, taken as a whole and computing a single commission upon consigned grain entering the terminal, would be more than one-half of their admitted expenses. The major portion of these expenses and practically all revenues must be derived from future trading. VICTIMS rOKCED INTO BANKRUPTCY. Judging from the facts obtainable, the bulk of these future transactions come from men not engaged in the grain business at all. Carefully contrived market news is ticked off the ticker every minute. Sure tips are freely cuculated. The imagination of the sucker is aroused, his activity stimulated, and he takes a flier in wheat. He may be a lawyer, doctor, farmer, a minister of the gospel— all are welcome; the money of each is accepted. Bankruptcy and financial rum may follow, often does follow, but in any case, win or lose, the board of trade member makes his commission. Sopae members of the Minneapolis chamber maintain uptown offices for the accommodation of the indiscriminate betting public. Some maintain private wires at vast expense. It is a vast and highly developed system— a democratic system, where the money of the poor pensioner or defaulting bank clerk is just as welcome as that of the million- aire theoretically fitted to bear the risk of fluctuation. GRAIN RAISERS SUFFER. What effect do these stupendous gambling transactions have on the price of cash wheat? The answer is that within limits of many cents per bushel they absolutely determine and fix the price which the producer receives for li\'' f^m Gambling can not of course completely do away with the law of supply and demand. But within hmitstherefuturT dealings give speculators in wheat pit the power to raise or lower %£the prt?t1ys"the price of cash gi-ain is determined by the price of f utiire erain It is determined by what is called the "dominant" future, meamng the near- fsfdatei^thelu^e fix7d by speculators as the ^eliveiT date Jh d - May, September, December, and July. Just now the dominant future happens to 494 FOOD PBODUCTIOH', CONSEBVATION, AND DISTRIBUTION, be May, and tte price of cash, wheat is fixed by the May future. Theoretically, the price of cash wheat is the price of the dominant future less the cost of storage of the actual grain to the date of supposed delivery. Sometimes, under abnormal conditions the rule does not work out exactly. But for practical purposes the price of cash wheat is fixed by the price of the dominant future. If the future goes up, the price of cash grain follows. If the future goes down, so does the price of cash grain. This is ad- mitted by the members of the grain exchange themselves. At the recent hearing before the Bules Committee at Washington, John Stream,, a member of the Chicago elevator monopoly, which handles 90 per cent of the actual grain entering the Chicago market, testified as follows: "We would take the closing market of the future and calculate what was a fair price for cash grain." At the Minne- sota investigation B. S. Ireys, of Minneapolis, pit trader, testified, "The price of cash grain is made by the price of future. If the buyers' orders were more numerous and vigorous the price would immediately respond and go up." The testimony of W. A. Gregory, E. L. Welch, and F. A. Hallet was to the same effect. Welch admitted that large dealers in the great markets, by acting in concert, had the power to temporarily affect the price of cash grain in any direction which might suit their purposes. He admitted further that if the market were affected for only a few minutes trades of stupendous magnitude could be closed. F. A. Hallet, now president of the Minne- apolis chamber, testified, "at times I have seen the market advance half a cent on an order of 50,000 bushels; then I have seen it depressed in the same way." F. B. Wells, president of the Minneapolis chamber in 1913, testified in substance that speculators working coUusively and in secret could raise or lower the price of cash graiii at will. The only qualification which he imposed upon this admission was that speculators could not hold the price permanently at a given figure, although they have the power to alter it at will. The facts quoted above are not suimises. They are the admissions of grain-exchange members themselves. Under the present system as now carried on by the privately owned grain exchanges the price of farm products is made the football of speculators. The agency is simple and effective. The price of the future determines the price of cash grain. The price of the future in turn is fixed by the relative strength of a flood of fictitious sales and piuchases thrown on the market by speculators who know just what they want. If the speculators for their own purposes wish to lower the price of grain they throw on the market a fiood of selling orders, and the price is beaten down. If they wish to raise the price they throw on the market a flood of buying orders, and the price is boosted up. The speculators pull the lever, and results follow. On a sensitive market in the Minneapolis Chamber of Commerce, an offer of 50,000 bushels will sometimes depress the price of cash grain half a cent per bushel. What influence, then, does 9,000,000,000 bushels of option trades and phantom grain at Minneapolis and 90,000,000,000 at Chicago, judiciously dumped on the market in the course of a year — what influence does this unthinkable volume of future trading have upon the price of your grain, Mr. Farmer? Is it any wonder that you have sold your grain practically every year for the past 20 years for a figiire less than the actual cost of production? Exhibit C. Fairvibw, Mont., May 28, 1917. F. A. Bennette, New Ehhitt Hotel, Washington, D. C: Will you state that the maximum price of grain should be, wheat, two twenty-five; fiax, three; barley, one fifty; oats, seventy; potatoes, one. No maximum prices should be fixed on farm products unless maximum prices are fixed on machinery, equipment, flour, etc., first. Anderson Bros. & Co., Sioux Pass, Mont. Exhibit D. Sidney, Mont., May 28, 1917. F. A. Bbnnette, Care of Ebbitt Hotel, Washington, D. C: Seed wheat cost three dollars; feed oats one dollar; hay fifteen; groceries fifty per cent higher than ever. Can not possibly sell wheat for under two dollars and come out whole. If the farmers don't get two dollars this year we plan to quit and join the parasites. Feed. B. Jordan. POOD PEODUCTION, CONSERVATION, AND DISTRIBUTION. 495 Exhibit E. SiDNBT, Mont., May 28, 1917. F. A. Bennbtte, Care of New Ebbitt Hotel, Washington, D. C: Seed wheat costs three dollars sixteen cents; flax seed cost three dollars and fifty cents. Must have two-dollar wheat. Farmer up against tough proposition. Mar chinery high; fencing prices prohibit; cost of production tremendous. Produce carry- ing too large load of leeching middlemen. Government must take sides with useful people. Frank H. Korab. FOOD PRODUCTION, CONSERYATION, AND DISTRIBUTION. House of Representatives, Committee on Agricultuee, Monday, June 17, 1917. MEMORANDUM ON THE CONSTITUTIONALITY OF BILL H. B. 4630 ENTITLED "A BILL TO PROVIDE FURTHER FOR THE NATIONAL SECURITY AND DEFENSE BY ENCOURAGING AGRICULTURE AND REGULATING THE MARKETING AND DISTRIBUTION OF FOODS AND OTHER NECESSARIES OF LIFE." OUTLINE OF THE BILL. Sections 1, 3, and 4 lay the general legal basis for the bill; each of the sections numbered 5 to 16 deals specifically with one or more matters embraced in sections 3 and 4; sections 2 and 17 to 22 provide for definitions, rules of construction, adminis- trative details, the protection of employees, and the appropriation; and section 23 prescribes the period of the duration of the act. Section 1 provides that, by reason of the existence of a state of war, it is essential to the national security and defense, for the successful prosecution of the war, and for the support and maintenance of the Army and Navy, to assure an adequate, supply and equitable distribution and to facilitate the movement of foods, feeds, shoes, clothing, fuel, and other necessaries of Ufe, and articles required for their production, thereafter in the act called necessaries; to prevent, locally or generally, scarcity, monopolization, hoarding, injurious speculation, manipulations, and private controls affecting such supply, distribution, and movement, and to establish and maintain governmental control of necessaries during such war. Section 3 establishes a governmental control of necessaries and declares, in substance, that all processes, methods, and activities employed in connection with necessaries are affected with a public interest. Section 4 makes it unlawful for any person to commit or permit preventable waste or deterioration of any necessaries in or in connection with their manufacture or dis- tribution; to hoard any necessaries; to monopolize or attempt to monopolize, either locally or generally, any necessaries; to engage in any discriminatory and unfair, or any deceptive, practice or device in handling or dealing in or with any necessaries; to enter into any contract, arrangement, or conspiracy to restrict the supply or, except as permitted by law for preventing gluts and for effecting equitable apportionment of perishable products among markets, to restrict distribution, or to enhance the prices, of any necessaries; to exact excessive prices for any necessaries; or to aid or abet the doing of any act made unlawful by this section. Section 5 provides that when the President shall find it essential, in order to facilitate distribution or to carry out any other section of the act, he is authorized to establish standards for foods, feeds, and seeds, and, for the purpose of preventing deception, to subject the labeling of such commodities to regulation. Whenever a standard is established its use is compulsory unless the commodity be marked so as to indicate that it is ungraded or unclassified. Penalties are provided for willful violations. Section 6 provides that when the President shall find it essential to license the manufacture, storage, or distribution of any food, food material, or feed m order to pre- vent uneconomical manufacture or inequitable distribution thereof, no person shall, after a date specified in a public announcement of such finding, engage m or carry on a 104176—17 32 ^9'^ 498 FOOD PRODOCTION, CONSERVATION, AND DISTRIBUTION. business specified in such announcement without a license. The President is au- thorized to prescribe regulations governing the conduct of the business of licensees, including the making of reports by them and entry and inspection of their places of business by authorized agents of the President, and,when found necessary, to require licensees to dispose of hoarded stocks and to refrain from unfair practices and charges. Penalties are provided for knowingly carrying on any business for which a license is required, without such license, and for willful violations. Section 7 provides that when the President or his duly authorized agent finds that any food in storage, in transit, or held for sale is in such condition that unless promptly disposed of it will become unfit for food purposes, the person having the possession or control of such food may be required to dispose of it so as to preserve its food value, and also, when found necessary to prevent gluts or to effect equitable apportionment of perishable products among markets, the market movement or distribution of such products may be directed. Penalties are provided for willful violations. Section 8 provides that when the President shall find that it is essential in order to prevent the hoarding of necessaries, any person hoarding such necessaries may be required to offer them for sale and to sell them within a reasonable time if he finds a purchaser. Penalties are provided for willful violations. Section 9 authorizes the President, when he finds it essential in order to assure equitable distribution or to prevent hoarding, monopolization, exacting excessive prices, or injurious speculation, to procure necessaries, to store them, to dispose of them at cost, to requisition any such necessaries and storage space therefor from any person having them at his disposal in excess of his reasonable individual needs for a reasonable period, and to fix a reasonable price to be paid for the same, subject to review by the courts. Section 10 authorizes the President, when he finds it essential in order to assure an adequate and continuous supply of food or fuels, to requisition, take over, and operate any factory, mine, or plant m which food or fuel is or may be produced or mined, and to make just compensation therefor, subject to review by the courts. Section 11 authorizes the President, when he finds it essential in order to prevent imdue enhancement or fluctuation of prices, or injurious speculation, or unjust market manipulation, or unfair and misleading market quotations of prices, to prescribe r"gu- lations governing, or either wholly or partly to prohibit, operations, practices, or trans- actions on exchanges on which necessaries are dealt in, in order to eliminate such evil practices. Penalties are provided for willful violations. Section 12 authorizes the President, when he finds that an emergency exists requir- ing stimulation of production, to fix, from time to time, a reasonable, guaranteed price for any necessaries, in order to assure the producer a reasonable profit. The Govern- ment guarantees the receipt of the price by domestic producers who rely upon the guaranty and comply with the President's regulations. "Whenever the President shall find that the importation of necessaries produced outside of the United States seriously interferes or is likely seriously to interfere with the practical operation of the guaran- teed price plan , or materially enhances or is likely materially to enhance the liabilities of the United States under any price guaranty, there is levied a duty upon importa- tions of such necessaries at a rate to be ascertained and proclaimed by the President, which, when added to the value of the article at the time of entry, will be sufficient to bring its price up to the guaranteed price. In no case shall such rate be less than the rate fixed by existing tariffs. Section 13 authorizes the President, when he finds that an extreme emergency exists requiring such action in order to prevent or break comers or to prevent extor- tion, to fix, from time to time, the highest price at which it is reasonable to deal in any necessaries. In fixing such price, he is directed to consider the costs of produc- tion, manufacture, and distribution, and a reasonable profit thereon, and, so far as practicable, to safeguard the equities and bona fide investments of all legitimate interests concerned. It is made unlawful for any person to deal in necessaries at a price higher than that fixed and in force. Penalties are provided for willful violations. Section 14 provides that, when the President shall find that limitation, regulation, or prohibition of the use of foods, food materials, or feeds in the production of alcohol or of alcoholic and nonalcoholic beverages, or that reduction of the alcoholic content of any beverage, is essential in order to assure an adequate and continuous supply of food, he is authorized, from time to time, to prescribe the extent of the limitation, regulation, prohibition, or reduction so necessitated, and to give notice thereof. It is made unlawful to use any such foods, food materials, or feeds in such production except in accordance with such notice, or to produce any beverage having an alco- holic content in excess of that prescribed in the notice. Penalties are provided for willful violations. POOD PRODUCTION, CONSEBVATION, AND DISTEIBUTTON. 499 Section 15 provides that the President may prescribe the percentages of flour to be derived from wheat in milling in order to yield the maximum economical percentage of flour for human food, and the methods to be used, and to give notice thereof. It is made unlawful to manufacture such flour except in accordance with the notice. If found essential in order to prevent deception, labeling may be required plainly showing the percentage of flour derived from the wheat. Penalties are provided for willful violations. Section 16 provides that when the President shall ascertain that any specified mixture of wheat, wheat flour, or other wheat product with any other material of vegetable origin is wholesome and economically fit for food and that the right freely to produce the same is essential to conserve the food supply, such mixture, if marked so as to disclose the ingredients, shall not be subject to the mixed flour law of 1898, nor to any conflicting State or local law. Whenever the President shall find that the ■ maintenance of an adequate supply of foodstuffs necessitates such action and shall give public notice thereof, the manufacture and use of any mixture permitted by this section may be required, and it is made unlawful to manufacture any mixture of any wheat, wheat flour, or other wheat product, or any wheat, wheat flour, or other wheat product required for such mixture, except in accordance with the notice. Penalties are provided for willful violations. Section 23 provides that the act shall cease to be in effect when the national emer- gency resulting from the existing state of- war shall have passed, but not later than one year after the termination as ascertained by the President of the present war between the United States and Germany. Nothing in this section shall be construed to prevent the fulfillment of any price guaranty made pursuant to the act which shall be in force when the act ceases to be in effect. With respect to the products of lands cultivated by them, farmers, gardeners, and others are exempted from the hoarding and highest price limitation provisions of the bill. Any moneys received by the Government under sections 9, 10, or 12 may be used as a revolving fund for further carrying out the purposes of the particular section. CONSTITUTIONAL BASIS OF THE BILL. The bill is a war measwe. Its constitutionality rests primarily upon the following clauses of the Constitution of the United States, which will be hereafter referred to as the war clauses of the Constitution, or as the war powers of Congress: "The Congress shall have power * * * "To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water; "To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years; "To provide and maintain a Navy; "To make rules for the government and regulation of the land a^id naval forces; "To provide for calling forth the militia to execute the laws of the Union, suppress insurrections, and repel invasions; » » * ■, "To provide for organizing, arming, and disciplimng the mihtia, * • ; and "To make all laws which shall be necessary and proper for carrying mto execution the foregoing powers, and all other powers vested by this Constitution m the Govern- ment of the United States, or in any department or officer thereof. "Section 8, Article I, clauses 1, 11, 12, 13, 14, 15, 16, and 18. It is not herein contended that the power of Congress to legislate for war purposes is derived from any source other than the Constitution, or that the Consitution is sus- pended or abrogated during the existence of a state of war. "When Congress declares war, by that declaration it puts m force the laws of war, and the war powers of the Government, which are not to be exercised, under the Constitution, in time of peace, now come into full force, by wtue of the Constitution, and are to be exerted by the President and Congress. After the declaration of war, everv act done in carmng on the war, is an act done by virtue of the Constitution, whTch authorizes the ^r!o be commenced, Every measure °f Congress and eveij executive act performed by the President, intended and calculated to carry the war Ta suJcessfuUssue, are acts done under the ConstituUon, whether the act or the measure be for the raising of money to support armies, or a declaration of freedom to mUhek rInS and weaken the enemy; whether it be the organization of military tribumak to try traitors, or the destruction of their property by the advancing army, ^thZt due process of law, and the validity of such acts must be determined by the ^TvtTiS o'f ^S^:^ llng^wTrte ^t^^^e Constitution. 500 FOOD PBODUCTION, CONSERVATION, AND DISTRIBUTION. " The Constitution of the United States is a law for rulers and people, equally in war and in peace, and covers with the shield of its protection all classes of men, at all times, and under all circumstances." (Ex parte Milligan, 4 Wall., 2, 120.) CONSTRUCTION OF THE CONSTITUTION. The full extent of the powers granted by the Constitution is not to be found in a literal reading of its express terms. As said by the Supreme Court in Juilliard i;. Greenman (110 U. S., 421, 439): "A constitution, eatablishihg a frame of government, declaring fundamental prin- ciples, and creating a national sovereignty, and intended to endure for ages and to be adapted to the various crises of human affairs, is not to be interpreted with the strictness of a private contract. The Constitution of the United States, by apt words of designation or general description, marks the outlines of the powers granted to the national legislature, but it does not undertake, with the precision and detail of a by which they may be carried into execution." Any legislation which is appropriate and conducive to the execution of any or all code of laws, to enumerate the subdivisions of those powers, or to specify all the means of the expressly enumerated powers of Congress and which is not prohibited by, or inconsistent with the Constitution, is authorized by the Constitution. Undoubtedly this would be so even in the absence of the clause which confers upon •Congress power "to make all laws which shall be necessary and proper for carrying into execution" the expressly enumerated powers, but that clause incorporates the rule in the Constitution. The words "all laws which shall be necessary and proper" mean laws which are conducive or convenient and calculated to produce or appropriate to the end. Congress may exercise its judgment in the selection of means, and is not limited to those only which are indispensable 6r absolutely necessary, or without which the end could not be attained. These fundamental principles of constitutional construction were announced and applied in 1819 by Chief Justice Marshall, in a unanimous opinion in McCulIoch v. Maryland (4 Wheat., 316), in which it was said (p. 421): "But we think the sound construction of the Constitution must allow to the national legislature that discretion, with respect to the means by which the powers it confers are to be carried into execution, which will enable that body to perform the high duties assigned to it, in the manner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are constitutional." This opinion has been frequently followed and cited by the Supreme Court. It is to-day the flxed and settled law of the land. Even in the case in which the Supreme Court held unconstitutional an act of Congress making paper money of the United States legal tender, these principles were affirmatively approved. (Hepburn v. Griswold (first Legal Tender case), 8 Wall., 603, 617.) In Knox v. Lee (the second Legal Tender case), 12 Wall., 457, upholding the same statute, the court said (p. 539): "Even in Hepburn v. Griswold both the majority and minority of the court con- curred in acceptiiig the doctrines of j\IcCulloch v. Maryland as sound expositions of the Constitution, though disagreeing in their application. "With these rules of constitutional construction before us, settled at an early period in the history of the Government, hitherto universally accepted, and not even doubted, * we have a safe guide to a right decision of the questions before us." WAR POWERS NOT RESTRICTED BY STATE LINES. With the exception of the commerce clause, which is self-limiting, all of the enu- merated powers of Congress and those which properly arise by implication, operate directly throughout the United States without regard to State lines. "The Government of the United States, within the scope of its powers, operates upon every foot of territory under its jurisdiction. It legislates for the whole Nation and is not embarrassed by State lines." (Pensacola Telegraph Co. v. Western Union Telegraph Co., 6 Otto, 1, 10.) Congress, within its sphere, is supreme and may enforce and protect the operation or execution of its powers ag-ainst any interference or obstruction by any State or its inhabitants. The Constitution of the United States, article 6, clause 2, provides: "This Constitution and the laws of the United States which shall be made in pur- suance thereof, and all treaties made, or which shall be made, under the authority FOOD PEODUOTION, CONSERVATION, AND DISTIllBUTION. 501 of the United States, shall be the supreme law of the land, and the Judges In every State shall be bound thereby, anything in the Constitution or Istws of any State t6 the contrary notwithstanding." In Veazie Bank v. Fenno (8 Wall., 533, 549), upholding an act of Congress imposing a tax on the circulation of State banknotes, the court said: "Having thus, in the exercise of undisputed constitutional powers, undertaker to provide a currency for the whole country, it can not be questioned that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation. To this end, Congress has denied the quality of legal tender to foreign coins and has pro- vided by law against the imposition of counterfeit and base coin on the community. To the same end Congress may restrain, by suitable enactments, the circulation as money of any notes not issued under its own authority. Without this power, indeed, its attempts to secure a sound and uniform currency for the country must be futile."" EXTENT OP THE WAE POWERS. The Constitution expressly grants to the Congress the powers to declare war, to raise and support armies, to provide and maintain a Navy. These are the important war powers of Congress. The power to declare war, by necessary implication, includes the power to carry on the war. (Knox v. Lee, 12 Wall., 457, 546.) > i Both Hamilton and Madison appreciated the necessity for sweeping powers for these purposes, and in the Federalist, urged their adoption. Hamilton said: "The authorities essential to the common defense are these: To raise armies; to build and equip fleets; to prescribe rules for the government of both; to direct their operations; to provide for their support. These powers ought to exist without limita- tion, because it is impossible to foresee or define the extent and variety of national exigencies, or the correspondent extent and variety of the means which may be neces- sary to satisfy them. The circumstances that endanger the safety of nations are in- fimte, and for this reason no constitutional shackles can wisely be imposed on the power to which the care of it Is committed. This power ought to be coextensive with all the possible combinations of such circumstances; and ought to be under the direct tion of the same councils which are appointed to preside over the common defense. "This is one of those truths which, to a correct and unprejudiced mind, carries its own evidence along with it; and may be obscured, but can not be made plainer by argument or reasoning. It rests upon axioms as simple as they are universal; the means ought to be proportioned to the end; the persons, from whose agency the attain- ment of any end is expected, ought to possess the means by which it is to be attained. "Whether there ought to be a Federal Government intrusted with the care of the common defense, is a question in the first instance, open for discussion; but the moment it is decided in the affirmative, it will follow that that Go vernement. ought to be clothed with all the powers requisite to complete execution of its trust. And unless it can be shown that the circumstances which may affect the public safety are reducible within certain determinate limits; unless the contrary of this position can be fairly and rationally disputed, it must be admitted, as a necessary consequence, that there can be no limitation of that authority which is to provide for the defense and protection of the community, in any matter essential to its efficacy — that is, ia any matter essential to the formation, direction, or support of the national forces." (The Federalist No. 23, pp. 152, 153, edition of Central Law Journal Co., 1914.) Madison said: ■ • it, "Is the power of declaring war necessary? No man will answer this question m the negative. It would be superfiuous, therefore, to enter into a proof of the affirmative. The existing confederation establishes this power in the most ample form. "Is the power of raising armies and equipping fleets necessary? This is involved in the foregoing power. It is involved in the power of self-defense. "But was it necessary to give an indefinite power of raising troops, as well as pro- viding fleets; and of maintaining both in peace, as well as in war? "The answer to these questions has been too far anticipated m another place to admit an extensive discussion of them in this place. The answer indeed seems to be so obvious and conclusive as scarcely to justify such a discussion m any place. With, what color of propriety could the force necessary for defense be limited by those who can not limit the force of offense? If a Federal Constitution could chain the- ambition or set bounds to the exertions of all other nations then indeed might it prudently chain the discretion of its own government, and set bounds to the exertions *°'''HoTcoulcl7readiness for war in time of peace be safely prohibited, unless we- could prohibit, in like manner, the preparations f^d establishments of every hostile nation^ The means of security can only be regulated by the means and the danger 502 FOOD PEODXJCTION', CONSEBVATION, AND DISTBIBUTION. of attack, They will, in fact, be ever determined by these rules, and by no others. It is in vain to oppose constitutional barriers to the impulse of self-preservation." (The Federalist No. 41, pp. 275, 276, edition of Central Law Journal Co., 1914.) In Knox v. Lee (12 Wall., 457), the Supreme Court had under consideration the extent of the war powers, and said (p. 540): " It is not to be denied that acts may be adapted to the exercise of lawful power and appropriate to it, in seasons of exigency, which would be inappropriate at other times. ' ' It has been contended that Ex parte MilUgan (4 Wall., 2), is not in harmony with the foregoing views as to the extent of the war powers of Congress. In fact the decision in that case is not inconsistent with those views. Any expression therein to the con- trary is pure dictum. The only issue was the power and authority of the Executive. The question of the power of Congress to legislate for war purposes was not involved. This clearly appears from the argument of counsel and was recognized by the court. David Dudley Field, of counsel for MilUgan, said (p. 22): " It is not a question how far the legislative department of the Government can deal with the question of martial rule. ^'VTiatever has been done in these cases has been done by the executive department alone." The court said (p. 121): "It is not pretended that the commission" before which MilUgan was tried "was a court ordained and established by Congress." Four members of the court dissented from the dictum in the majority opinion as to the power of Congress, although concurring in its decision on the real issue involved as to the power and authority of the Executive, saying (p. 142) : "And we are unwilUng to give our assent by silence to expressions of opinion which seem to us calculated, though not intended, to cripple the constitutional powers of the Government and to augment the pubUc dangers in times of invasion and rebellion." CONSTITUTION-iLITY DEPENDENT ON THE FACTS. In determining the constitutionality of bill H. R. 4630 the first inquiry is-whether its provisions are appropriate and conducive to the exercise of the war powers of Congress. This is primarily a question of fact, and, in the first instance, must be determined by the legislature. However, the legislative determination is subject to review by the courts to ascertain whether or not the facts behind the legislation are sufficient to bring it within the doctrine of McCulloch v. Maryland. This is strik- ingly illustrated in the first and second Legal Tender cases. In Hepburn 1). Griswold (first Legal Tender case, 8 Wall., 603) five out of the eight judges held that the legal-tender statutes were not appropriate and conducive to the carrying out of the war powers or any other power enumerated in the Constitution, and therefore were not within the doctrine. In the following year, with a slight change in the personnel of the court, five out of nine judges, in Knox v. Lee (second Legal Tender case), held that the facts behind the statutes did bring them within the operation of this doctrine, and that the statutes were appropriate and conducive to the execution of the war powers of Congress. It is interesting, as an evidence of the evolution of the judicial mind, to note that in Juilliard v. Greenman (110 U. S., 421. the third Legal Tender case) the court, with only a single dissenting voice, held statutes making notes of the United States legal tender to be constitutional, on the ground that they were measures appropriate, conducive, and plainly adapted to the execution of the power of Congress, expressly granted, to borrow money on the credit of the I'nited States. The following cases further illustrate the extent to which the Supreme Court has gone in holding acts of Congress appropriate and conducive to the exercise of its expressly enumerated powers: In United States v. Fisher (2 Cr., 358), the Supreme Court held an act of Con- gress giving priority to debts due the United States over those of other creditors of insolvents or bankrupts conducive to the exercise of the power to pay the debts of the United States. In McCulloch v. Maryland (4 Wheat., 316), the court held that an act of Congress establishing a bank was plainly adapted to the exercise of its enumerated powers. In Stewart v. Kahn (11 Wall., 493), an act of Congress which had the effect of extending the period of the statutes of limitations prescribed by State law for civil and criminal proceedings was upheld by the Supreme Court of the United States on the ground that it was a necessary and proper exercise of the war power. In United States v. Gettysburg Electric Railway Co. (160 U. S., 668), the court held that an act providing for the condemnation of land to commemorate the Battle of Gettysburg was germane to or intimately connected with and appropriate to the exercise of the war powers of Congress. FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 503 A SURVEY OF THE GENERAL PACTS. The bill carries on its face a declaration by Congress in the first section that, by reason of the existence of a state of war, the things required or forbidden are essential to the national security and defense, for the successful prosecution of the war, and for the support and maintenance of the Army and Navy, and in the third section that processes, methods, and activities concerning necessaries are affected with a public interest. In this legislative declaration well founded? The United States has become a party to a war of unforeseeable duration and magni- tude with a formidable enemy of vast and indefinite ability and resources. Methods of warfare ha.ve been revolutionized, and now involve instrumentalities whose cost and destructive efteots tax and drain the financial and natural resources, not only of the countries engaged, but of the world, to an extent hitherto unknown. At least two- thirds of the world's population and more than one-half of its land area are in- volved . More than 25,000,000 men are now under arms, and battle lines encircle half of a continent. The Governments of the warring powers have already spent more than $60,000,000,000 in the prosecution of the "war. Oiir own Government has authorized the issuance of bonds for war purposes to the extent of S7,000,- 000,000. We now have over halt a million men in the military service, and provision has been made for adding more than 2,000,000 others. Military necessities have with- drawn millions of workmen from the fields of production, and wide, productive areas have been devastated by military operations. Submarines have destroyed millions of tons of shipping and supplies and have deflected conunerce from its wonted chan- nels. Preference movements of troops, war supplies, and munitions have partially monopolized transportation facilities, to the detrunent of other shipping. These and other sudden and extraordinary demands upon industry and commerce have caused a scarcity of labor and fertilizer in the great producing areas which, with contributing natural causes, have resulted in a subnormal food supply throughout the world. Great Britain and France have been unable, nothwithstanding supreme effort and drastic laws for the purpose, adequately to provide themselves with the necessities of life, and are making increasingly heavy drafts upon this country. We are now cooperating with these countries. The United States is the principal foreign source of their .sup- plies, and is under the obligation and necessity to meet their needs. The foregoing facts demonstrate that some control or regulation by Congress of pro- duction, conservation, and distribution of the necessaries of life is appropriate and conducive, even essential, to the support and maintenance of the Army and Navy, and to the successful prosecution of the war. The question then is, whether the particular means proposed in the bill are appropriate and conducive. This depends upon their nature and scope. DISCUSSION OP THE PACTS APPLICABLE TO THE VARIOUS SECTIONS OP THE BILL. The chief aims of the bill are to eUminate waste, to conserve the supply of human food, to stimulate production, to prevent hoarding, to restrain injurious speculation, to prevent corners and extortion, and to prevent deceptive practices and effect equi- ^"^The accompHshment of these aims is within the public poUcies of both our National and State governments. Many statutes with closely related objects in view have been enactid and have been Veld by the courl^ See the following decisions: Manufacturers' Light & Heat Co. v. Ott (215 Fed 940); ^unn . Ilhnois (94 U S 113)- Spring Valley Water Works v. Schottler (110 U. S., 347), Budd v. JNew XorK (143 US 517); Brass v. Stressor (153 U. S., 391); German AlUance Ins. Co i;. Kansas [233 U S" 389); Seven Cases v. United States (239 U. S., 510); Wilson v. New (U. S. ^"^?e Ihe^MH is^a waite\lL','L of the powers conferred by it can be employed until after the President shall find a specifically described condition or emergency wMch ustifies Its exercise. These powers are really designed to take care of acute situations which may arise during the progress ol the war , 1 t f„„j S^H^^nTofthTmi -By reason of the fact that there is.a subnormal supply of food g^'iTwtfS" d'iSfSfpW: "SSS'^.- .. bringing about p^p. .ad continuous increase in production. 504 POOD PRODUCTION, OONSEEVATION, AND DISTRIBUTION. Section 10. — It may be found that certain mines, factories, or plants are idle and that their owners are not able or willing to operate them; that some are engaged in pro- ducing foods or fuels when other foods or fuels are more desirable in the light of war needs; or that others are engaged in producing foods or fuels which are essential for ourselves and the countries with which we are cooperating, but are disposing of them in neutral countries. Obviously, in such cases, the exercise of the power to take over and operate is plainly adapted to stimulating production and to assuring an adequate and continuous supply of food or fuel for ourselves and the countries relying upon us for assistance. Section 7. — Experience has shown that blind market movements of perishable products have frequently resulted in congested terminals and disastrous losses. Some markets have been glutted while others were suffering from scarcity. The nature of these products often makes transfers from market to market impossible and, when such conditions arise, vast losses result from spoilage. Court and other oflScial records show that perishable products frequently have been withheld from sale to the point of decomposition, and at times edible products have been dumped or destroyed in order to maintain prices. Great losses are suffered from careless methods of manu- facture, packing, transportation, and handling. Even in jsimes of peace and plenty plenty waste is deplorable. In the face of war and a real necessity, waste becomes dangerous. Having declared waste unlawful, the bill provides for directing the dis- position of foods gomg out of condition and the market movement of perishable prod- ucts. If the prevention of food waste is a legitimate end, clearly the means proposed or coping with the problem are appropriate and plainly adapted. Sections 14, 15, and 16. — The substantial shortage in our wheat crops of last year and the estimated shortage for this year point to the possible necessity of resorting to certain expedients in order to increase the flour supply. The provisions of these sections would make it possible, if the emergency required, to increase the percentage of flour derived from wheat in order to bring about an increase in the amount of flour; to permit or require whdjesome mixtures of wheat, whe3.t flour, and other wheat products with other cereals or materials of vegetable origin, in order to increase the flour supply; and to restrict or prohibit the manufacture of alcohol, and alcoholic or other beverages, in order to conserve for food purposes the materials which enter into these articles. It has been asserted that in the case of alcohol 60 per cent of the food value of the food products entering into its production is lost. It has been esti- mated that from seventy to eighty million bushels of cereals could be saved for food purposes through the exercise of the power to curtail the use of foodstuffs in the manu- facture of alcohol and beverages. If this amount of grain were taken for human food, the distillers' and brewers' grains would be withdrawn from cattle feed and w;ouId have to be replaced. Surveys in the Department of Agriculture indicate that other protein substitutes can be supplied for the dairymen, without difficulty, through proper organization for the handling of the problem. If an emergency should require action along these lines, these powers are manifestly appropriate and plainly adapted to the conservation of the food supply. Whether they would be exercised would depend upon the emergency. Sections 6 and 8. — In times of alleged or real shortage there is a disposition amongst consumers, based upon the fear of actual nee4 or the apprehension of higher prices, to buy up and store quantities of necessaries in excess of their ordinary requirements. Such practices frequently result in spoilage and abnormally tend to increase prices. The fear or apprehension on the part of the consumer is commercialized, and inspires hoarding, by speculators, for the purpose of making unusual profits. There are indica- tions that hoarding is being practiced throughout the country by both consumers and speculators. If hoarding be not restrained by Congress, it is likely to result that, while there were sufficient necessaries in the country to supply all the needs of the Government and the people, the Government and many of the people could not get sufficient for their needs unless at excessive prices. Therefore hoarding is defined and declared to be unlawful, and machinery is provided for compelling the placing of hoarded necessaries on the market. Section 11. — In order to restrain injurious specidation the fexchanges on which necessaries are dealt in may, if the emergency requires, be subordinated to control by the President. While excahnges undoubtedly render many useful services to legitimate business, nevertheless it is a fact that at times some of them may be em- ployed for purely speculative purposes and they are susceptible to use for manipula- tion. The privilege of dealing on small margins through exchanges may enable market manipulators, u,pon the investment of relatively small capital, to depress or enhance prices as their interests may appear, without regard to the law of supply and demand. This privilege may be exercised against the producer and the consumer alternately. War conditions have a tendency to inflame cupidity and create imcer- FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 505 tain ties which breed destructive speculation. Unjustifiable price fluctuations may take place overnight. These demoralize and disturb legitimate business interests and the processes of production and distribution. The exchanges afford facilities for speculative trading in forward contracts for necessaries by citizens and aliens, which under readily conceivable circumstances might be inimical to the best interests of this country and seriously hamper the Government in provisioning its Armv and Navy. Section 13.— In case of extreme emergency, in order to prevent or break corners or to prevent extortion, the President is vested with power to fix the highest price at Which any necessaries shall be dealt in. This provision goes hand in hand with the guaranteed price to the producer, and is primarily for the protection of the Government and consumers generally. The mere existence of the power in the President should have a marked tendency to prevent hoarding, monopohzation, and other speculation, as it will be generally understood that it \vill be exercised if it becomes necessary to curb greed. . Experience demonstrates that in the excLtements and uncertainties of war local and general monopolies, manipulations, and other speculative schemes are unusually prevalent, tending to drive prices alternately to abnormally low or high levels. In the face of buch legislation it is thought that selfish men would not dare to commercialize war conditions to exploit the Government and the people. Section 6. — Licensing is recognized as a convenient and necessary means by which any business may be brought under direct supervision and control, and therefore has been proposed for the purpose, if the emergency requires, of eliminating waste, preventing hoarding, regulating rates and charges, conserving the food supply, pre- venting discriminatory and unfair practices, and procuring from time to time valuable information concerning supply and demand. Among other things, licensing affords a means through which to protect the producer in his business transactions with the classes of middlemen with whom he comes in contact, and thereby indirectly to encourage production. The preservation of foods through storage from season to season, especially in the case of perishables, is of the highest importance. However, the system itself in some instances has been abused and .employed by speculators for selfish purposes. Bringing these valuable and indispensable instrumentalities for food preservation under Federal supervision may become highly essential to their proper utilization. Section 5. — Should a guaranteed price to producers, or the highest price for dealing in any necessaries be fixed, uniform grades for such necessaries would be helpful as a basis for the application of the prices. In the regulation of exchanges it may become desirable to prescribe grades in order to promote commercial convenience and prevent fraud. Such grades might also be needed by the Government, in the large purchases which are essential for conducting the war. War, with its consequent high prices, brings about an increased tendency on the part of some dealers to misrepresent. The consumer is at a relative disadvantage in buying, and the distributor is enabled more easily to practice deception. Federal action would be necessary to bring about the general use of such uniform grades and proper labeKng in order to prevent deception. Section 9.— Supplementing the specific powers for carrjfing out the chief aims of the bill, a general power to purchase, requisition, store, and sell necessaries is vested in the iPresident. In extreme cases this power would be available to bring such products immediately under the ownership and control of the Government. In war times the Government should be in a position to procure needed supplies at reasonable prices for itself and for its people. . No government competent to declare and carry on war can afford to leave itself )r its people at the mercy of grasping interests in the matter of the prices for military supplies and the necessaries of life. Artificial enhancement of prices diminishes the purchasing power of the Government, and, hence, its ability to finance and sustain itself during the war. Such prices directly tend to lessen the ability of the prople to respond to taxation. They also tend to prevent the masses from obtaimng the proper amount of necessaries, inflame popular passions, bring about strikes, lockouts, a,nd boycotts and otherwise disturb the normal course of industry and trade, thus resulting in impaired efficiency for industrial and miUtary purposes. Undoubtedly, industrial efficiency is equally as necessary to the successful prosecution of the war as nuhtary efficiency. ARE- ANY LIMITATIONS OF THE CONSTITUTION VIOLATED? The second inquiry in determining the- constitutionaUty of H. R. 4630 is whether, in any respect, it is prohibited by or inconsistent with the Constitution. There is a strong belief that in the exercise of its war powers Congress is free from the necessity of observing any constitutional limitations as to personal guaranties which would obtain in times of peace. 506 FOOD PRODUCTION, CONSBKVATION, AND DISTKIBTJTION. It has been held, on the principle of the necessity for self-preservation, that the power to tax is not limited by the personal guaranties in the Constitution. In Billings V. U, S. (232 U. S., 261, 282), the Supreme Court said: "It is also settled beyond dispute that the Constitution is not self-destructive. In other words, that the powers which it confers on the one hand it does not imme- diately take away on the other; that is to say, that the authority to tax which is given in express terms is not limited or restricted by the subsequent provisions of the Constitution or the amendments thereto, especially by the due process clause of the fifth amendment. McCray v. U. S. (195 U. S., 27), and authorities there cited." If, in the opinion of the Suj)reme Court, it is necessary that the taxing power be free from constitutional limitations, surely that court, if occasion should arise, would not hesitate to hold that the war powers of Congress are fully as comprehensive as the power to tax, and as free from restriction. Mr. Justice Bradley, in his concurring opinion in the second legal tender case, Knox v. Lee (12 Wall., 457, 563), said: "It is absolutely essential to independent national existence that government should have a firm hold^ on the two great sovereign instrumentalities of the sword and the purse, and the right to wield them without restriction on occasions of national peril." In this connection, see also the opinion of the Supreme Court in the case of Miller V. United States (11 Wall., 268, 305). If the framers of the Constitution did not intend to make the war powers the most comprehensive conferred by that instrument, then why did they, in express terms, recognize the power of Congress, by appropriate legislation, to quarter troops in any house without the consent of the owner; and the power to suspend the great writ of liberty, the habeas corpus, without which all the personal liberty guaranties in the Constitution lose their efficacy? If, in the exercise of the war powers, soldiers may be thus quartered and the writ of habeas corpus suspended, it follows that the lesser property rights need not be observed. However, it is not necessary, in order to accomplish the aims of this bill, to invade any constitutional guaranty as to personal liberty or property rights. Even if those guaranties are limitations on the war powers, the bill as framed is not iu conflict with them. It is thought that the only objections which opponents could raise, in con- nection with the limitations in the Constitution, are the following: 1. That it deprives the person of property without due process of law and takes private property for public use without just compensation, contrary to the fifth amendment. 2. That it compels self-incrimination, contrary to the fifth amendment. 3. That it authorizes unreasonable searches and seizures, contrary to the fourth amendment. 4. That it provides for taking money out of the Treasury, otherwise than in conse- quence of appropriations made by law, contrary to article 1, section 9, clause 7. 5. That it provides for the expenditure of public funds for private purposes, con- trary to article 1, section 8, clause 1. 6. That it delegates legislative power to the Executive, contrary to article 1, section 1. DUE PEOCESS. The question whether property may be taken without due process of law arises in connection with section 6 of the bill, relating to fixing rates and charges and the dis- position of hoarded stocks of licenses; section 7, relating to the disposition of food to avoid spoilage and to the direction of market movements of perishable products; section 8, relating to the sale of hoarded necessaries; and section 13, relating to the fixing of the highest sale price of necessaries. This bill, in specific terms, in substance declares all processes, methods, and activi- ties concerning necessaries to be affected with a public interest. As previously shown in this brief, any business affected with a public interest is in a higher degree subject to governmental regulation and control than mere private enterprise. In every instance, save one, in which the above-mentioned sections authorize the President to take any action affecting the property rights of any person, the property involved must be in an unlawful status, or it must be an unlawful rate, charge, or practice. The only way in which the operation of the hoarding section may be said to have invaded property rights is that, when any person is found to have hoarded any neces- saries, he must, if ordered by the President, put them on the market. It is to be noted, however, that the section does not require any person to dispose of property which it is lawful for him- to possess; it merely requires him to expose for sale at reasonable prices property which is being held by him contrary to law. Practically the same rules apply to the disposition of property about to go out of condition under the spoil- FOOD PHODUCTION, CONSERVATION, AND DISTEIBTJTION. 507 age provision, which requires the person merely to dispose of the food so as to preserve its food value. The highest price section interferes with property rights only to the extent that it provides for a general limitation upon the price at which all persons may sell any necessaries, and merely prohibits the exercise of the privilege of sale at an unlawful price. This might curtail possible profits and result in actual loss to particular individuals. The power over rates and charges of licensees operates upon the same theory as the power of the Interstate Commerce Commission over railroads. The direction of market movement and distribution may take away from a person the privilege of selecting the market to which he may send perishable prod- ucts, and is just another instance in wliich private property rights must yield to the ■public interest. This power is sustainable, and the other powers are also sustainable, on the ground that all dealings in necessaries are specifically declared to be affected with a public interest, as being appropriate and conducive to the exercise of the war powers of Congress. The incidental interference with property rights involved in the exercise of these powers is mild, compared with the treatment of property held or handled in violation of other statutes. Section 6 of the Shei'man antitrust law of 1890 authorizes the forfeiture to the United States and the seizure and condemnation pi any property in the course of transpor- tation from one State to another or to a foreign country which is owned under any contract or combination or pursuant to any conspiracy, declarpd illegal by section 1 of that statute. Furthermore, under that -statute the dissolution of illegal combina tions frequently has been rpquirod and ihe offending members have been forced to dispose, as best they could, of shares of stock illegally held by them. On numerous occasions the constitutionality of this statute has been attacked and has been upheld bv the Supreme Court. Addyston Pipe & Steel Co. v. United States (175 U. S., 211); Standard Oil Co. v. United States (221 U. S., 79); United States v. American Tobacco Co. (221 U. S., 168); Northern Securities Co. v. United States (193 U. S., 197). Again, Congress has authorized the seizure and condemnation of goods imported in violation of the customs laws, and also of property employed in aiding or abetting the evasion of the payment of duty. Similar provisions are embodied in the internal- revenue statutes. Property shipped in interstate or foreign commerce contrary to the provisions of the food and drugs act of June 30, 1906, is also subjected to forfeiture, seizure, con- demnation, and sale, and the net proceeds from such sales go to the United States. In addition to forfeiture and condemnation of offending property, this statute pre- scribes personal punishment for violations. This statute has been upheld by the Supreme Court. Hipolito Egg Co. i>. United States (220 U. S., 45); Seven Cases v. United States (239 U. S., 510). The fact that the value of any property held by a particular person is affected or im- paired is a mere incident to the lawful exercise of a constitutional power and does not nifend the dup process clause of the Constitution. As stated by the Supreme Court of the United States in Knox v. Lee (12 "\^ all., 457 ool, the second legal- tender cn.?e I. ... '■Closely allied to the objection we have just been considering is the argunient pressed upon us that the legal-tender acts were prohibited by the spirit of the fifth amendment, which forbids taking private property for public use without just com- pensation or due process of law. That provision has always been understood as refer- ring only to a direct appropriation, and not to consequential injuries resultmg from the exercise of lawful power. It has never been supposed to have any bearmg upon, or to inhibit laws that indirectly work harm and loss to individuals. A new tariff, an embargo, a draft, or a war mav inevitably bring upon individuals great losses; may, indeed, render valuable property almost valueless. They mav destroy the worth of contracts; but whoever supposed that because of this a tariff could not be changed, o/ a nonintercourse act or an embargo be enacted, or a war be declared? See also Dent f. West Virginia (129 U. S., 114); Louisville & Nashville R. R. o. ^^Thele ^and other cases to like effect, authoritatively dispose of any question of due process of law which may arise out of the operation of any proj^sion of Jhe bilL As a matter of fact, there is no compulsory process provided by which any person can be in any respect, actually deprived of his property. By refusing to comply ^?haAy notice, order, regulation, or requirement made under the law any person Tav crelte a justiciabi; controversy with the Governmeat and have his daj. m court. No^order no ice, requirement, or regulation directed against any person is final or conclusive^ to cither the facts or the law. The accused may successfully defend upon a shoXg that the order, notice, requirement, or regulation wa^ not justified by the facts or was unauthorized or contrary to law. 508 FOOD PEODUCTION, CONSERVATION, AND DISTEIBUTION. EXEMPTION OF FARMERS. It may be argued that the exemption of farmers, gardeners, and others, with respect to products of lands cultivated by them, constitutes an unreasonable or arbitrary classification, and is therefore unconstitutional. There is, however, a differentiating equity in favor of such persons. Statutory precedent for such an exemption is found in section 6 of the Clayton amendment to the antitrust laws, and in many of the State statutes. Manifestly, the exemption is within the rule with respect to classification laid down in German Alliance Insurance Co. v. Kansas (233 U. S., 389), in which the court said (p. 418): "A. citation of cases is not necessarjr, nor for the geiieral principle, that a discrimina- tion is valid if not arbitrary, and arbitrary in the legislative sense — -that is, outside of that wide discretion which a legislature may exercise. A legislative classification may rest on narrow distinctions. Legislation is addressed to evils as they may appear, and even degrees of evil may determine its exercise." (Ozan Lumber Co. v. Union County Bank, 207, U. S., 251.) PROPERTY TAKEN FOR PUBLIC USE. Although in every case provision is made for just compensation when it is proposed to take private property, for the United States, it may be argued that such taking is not for a public use. It will not be denied that Congress has the power to authorize the taking of necessaries whenever needed for the Army and Navy or for the Govern- ment itself, upon the payment of just compensation. To that extent, the constitu- tionality of this bill can not be questioned. Nor will it be seriously contended that Congress may not provide for the taking of such necessaries and furnishing them to the Governments of countries with which we are or may be cooperating in the prosecution of the war, because their interests and ours in the successful prosecution of the war are common. The objection, if any, arises because property taken by the United States may be disposed of to private purchasers. The purposes for which the power of requisitioning necessaries may be exercised are to assure equitable distribution and to prevent hoarding, manipulation, the exaction of excessive prices, and injurious speculation. These are broad public purposes, principally aimed at the correction of practices elsewhere in the bill de- clared to be unlawful. As previously stated, the power granted in this section is purely supplementary for the accomplishment of the chief aims of the bill. Resale of such requisitioned supplies is not limited to a particular person or class of persons, and is merely incidental to the carrying out of the public purposes specified. Like- wise the requisitioning and governmental use or operation of factories, mines, and plants is authorized only for the broad public purpose of assuring an adequate and continuous supply of necessaries; and the later possible disposition of products to private purchasers is incidental and subordinate to the carrying out of the principal purposes for which the power is exercised. SELF-INCRIMINATION. The second objection, that the bill compels self-incrimination, contrary to the fifth amendment, might be made only under section 6 of the bill, which authorizes the President to require the submission of reports by licensees. The fifth amend- ment to the Constitution provides, in part, "nor shall (any person) be compelled in any criminal case to be a witness against himself." This conctitutional guaranty applies only to natural persons. Corporations, and their officers as such, may be compelled to furnish any information relating to the corporate business, whether self-incriminatory or not, which is required by Congress! Wilson V. United States (221 U. S., 361). The constitutional protection of natural persons against self-incrimination is not an absolute right, but a privilege which operates in favor of the person only when claimed by him at the time of an attempted deprivation or invasion thereof; other- wise it is waived. Brown ■y._Walker (161 U. S., 591, 597.) - As stated with reference' to the corresponding provision in the Massachusetts Constitution by the Supreme Judicial Court of Massachusetts in Commonwealth v. Farmers and Mechanics Bank (21 Pick. (Mass.), 542, 555): "The immunity given to all the citizens of the Commonwealth by which they are exempted from the obligation to criminate themselves is a privilege which each individual may claim for himself, or may waive, as he pleases. The act au- thorizes the commissioners to examine under oath all directors, officers, and agents of banks. It may be presumed that in most cases such officers and agents would FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. 509 prefer to waive their privilege and make a full disclosure of all the tacts within their knowledge, rather than lie under the suspicion, which their declining to answer would imply ; and in such case there is no reason why the commissioners, and through them the public, should not avail themselves of information which such answers voluntarily given would afford." Any natui'al person, notwithstanding the constitutional provision, may te com- pelled to give self-incriminating evidence, if there has 1; een granted to him immunity from prosecution, on account of such evidence, as Vroad as the constitutional pro- tection. Counselman v. Hitchcock (142 U. S., 547); Brown v. Walker (161 U. S., 591.1 Thus, in an attempt to secure the information desired, Congress may adopt either of two methods. If it supplant the constitutional barrier with respect to self-incrimi- nating evidence with an immunity as broad as the privilege which may be claimed by the person from whom the information is sought, such person may I e compelled to disclose the information, whether it is self-incriminating or not. On the other hand, if it let the ' arrier remain undistur' ed, the person may 1 e compelled to dis- close only information with respect to which he does not claim the privilege con- ferred ' y the Constitution to withhold self-incriminating evidence. In drafting section 6" the latter course was followed, because the real inconvenience to arise from the introduction of the immunity clause is that it would hamper the Department of Justice " y making the President the umvitting instrument for stopping prosecutions by the Department of Justice. Not only does the section under consideration contain no immunity clause, but it also contains no provision requiring any person to furnish self-incriminating evidence and penalizes only through regular criminal proceedings willful violation of the regulation under which such information may be requii-ed. The question for determination is whifther the section as framed, without any immunity clause, is in conflict with the constitutional provision regarding self- incrimination. Unless the language otherwise affirmatively require, the section should be construed with the implied exception, which exists by vii-tue of the Con- stitution, that no one shall be obliged to incriminate himself. Under the provision of the Massachusetts constitution similar to that of the United States Constitution the Massachusetts Supreme Judicial Court, upholding a statute, requiring the giving of information, which contained no immunity clause, said: "The specific objection is, that by the constitution, no person is bound to furnish evidence, which may render him liable to a criminal prosecution; but by the act all directors and other officers are liable to be put to interrogatories, which may thus oblige them to criminate theiuselves. "To this there are severalanswers. Fii'st, taking the constitution to be as sup- posed then it will be presumed that the provision was to be taken with the implied exception that no one shall be obliged to criminate himself." (Commonwealth v. Farmers and Mechanics Bank, 21 Pick. (Mass.), 542, 554.) ^ „ ■, The onlv form of compulsion directed against the person who may be called upon to make reports pursuant to this section is his liability to criminal punishment for willful violation of the regulation requiring such reports. He has full opportunity, when called upon to comply with the regulation, and, again, when prosected m the criminal courti for failure or refusal to give the information to claim and assert his constitutional privilege against giving self-incriminatmg evidence Furthermore it is is the duty o'f the court in which any such prosecution is t^'ouft to recognize the right if claimed by the person from whom the information was sought. This was alerted by the Supreme Court of the United States m.the following language: _ "sXe^it in the present case to say that a^ the Interstate Commerce Commission bv ne^^on in a circmt court of the United States, seeks, upon grounds distinctly set foU an oX toTompel appellees to answer particular questions and toproduce tain books raners etc , in their possession, it was open to each of them to contena ^ore that S that he wa. projected by the Constitution froiumafan^^^^^^^ the nupations nroDounded to him; or that he was not legally bound to produce tne bool^ mne^ etc o^ered to be produced; or that neither the questions propounded, reports, but only to such failures or refusals ^8 are mllful. _^ .,^^™'^ ,™Jth- 510 FOOD PEODUCTION, CONSEEVATIONy AND DISTRIBUTION. It means with "evil intent" or with "legal malice. " It is frequently understood a' simifying evil intent without justifiable excuse. (Bouvier, vol. 3, p. 3454.) In the statute upheld in the Massachusetts case above cited, the words "without justifiable cause" were used and it was held by the court in that case that to decline answering, when it is provided by the Constitution that the person shall not be held to answer, would plainly be a justifiable cause. Therefore, it would seem that proof that the information was self-incriminatory would be a complete defense to a charge of "willfully" violating the regulation requiring the submission of the reports. SEAnCHES AND SEIZURES. The third objection is that section 6 of the bill authorizes unreasonable searches and seizures, contrary to the fourth amendment to the Constitution, in that it pro- vides for entry and inspection by the President's duly authorized agents of the places of business of licensees. It is believed that the section in question does not authorize an unreasonable search and seizure within the meaning of the Constitution. It authorizes entries only by the President's duly authorized agents for the purposes of the section. It should be observed that it does not authorize entries into dwelling houses, but relates only to the places of business of licensees. It does not authorize any search of the person. There is no machinery provided for entry over the protest or resistance of any person. The only penalty is for willful violation of the regula- tion, or, under section 20 of the bill, for willfully obstructing or hindering the Presi- dent's duly authorized agents in the performance of their duties under the section. The question whether an entry under this section would constitute an unreasonable search and seizure would arise only in case the person had, in the place to which entry was. sought, information which, if obtained thi-ough such entry, would he self- incriminatory. It is believed that this question is settled by the fact that the sec- tion does not deprive the person of his right to prevent an entry of his place of busi- ness when such entry would lead to the disclosure of self-incriminatory information. If the entry be effected over his protest and claim of the protection of the constitu- tional guaranty, any self-incriminatory evidence obtained by such entry, upon timely objection, could not be used against him in any proceeding to subject him to punishment for a crime or to a penalty or forfeiture. Weeks v. United States (232 U. S., 383). In case he has protested against an entry, and has claimed the protection of the constitutional guaranty, and thereupon is brought to trial upon a charge of willfully violating the regulation, or willfully obstructing or hindering the President's duly authorized agents, he may plead his constitutional guaranty by way of defense to the charge. There is nothing in the section which deprives him of such a defense. These conclusions are supported by exactly the same line of reasoning herein- before used with respect to the self-incrimination clause of the Constitution. REVOLVING FUND. The fourth objection, that the bill pro\'ides for taking money out of the Treasury otherwise than in consequence of appropriations made by law, may arise in connec- tion with the revolving fund features of sections 9, 10, and 12, which provide that moneys received in carrying out the purposes of the respective sections may, in the discretion of the President, be used over and over in further carrying out those pur- poses, without being immediately deposited in the Treasury. Only balances not used as part of such revoh-ing funds are required to be covered into the Treasury. The original fund for carrying out these purposes is provided for in a direct appro- priation made by section 21 of this bill from moneys in the Treasury. It is apparent from this analysis of the section that the only moneys which may actually be taken from the Treasury are drawn in consequence of an appropriation made by law. The constitutional prohibition applies only to moneys which are actually in the Treasurv, and not to moneys, which remain under the control of the President. (Knote v. United States, 95 U. S., 149.) There is nothing novel in the application of the revolving fund principle in this bill, as there are statutory precedents for the practice. For example, see the act of March 4, 1913 (37 Stat., 828), relating to the Forest Service; the act of March 4, 1915 (38 Stat., 1145). relating to the Alaskan Bailway; the acts of February 21, 1911 (36 Stat., 926), and March 31, 1905 (33 Stat., 1032), relating to the United States Reclamation Service; and the act of July 1, 1898 (30 Stat., 604), relating to the United States Revenue Cutter Service. FOOD PKODtrCTIOK, CONSERVATION, AND DISTEIBUTION. 511 PUBLIC FUNDS FOR PRIVATE PURPOSES. The fifth objection, that the bill provides for the expenditure of public funds for private purposes, arises with reference to section 12, providing for a guaranteed price. The sole purpose of this section is the stimulation of production and the assurance of an adequate and continuous supply of necessaries during the war. It is national in its scope. It is not confined to any particular geographical area and is operative only when the President shall find that an emergency exists. Whatever benefit may accrue to the producer under its operation would be merely incidental to the carrying out of its declared purpose. The objectors may cite the cases arising out of the sugar boun- ties provisions of the act of October 1, 1890 (26 Stat., 567). The provisions of this bill are fundamentally different from those of the sugar bounties act. That act was in- tended to indemnify the growers of sugai- in the United States for actual or theoretical losses which they might have sustained by reason of the removal of the tariff duty upon the importation of sugar into this country, and was, in effect, a mere bounty or gratuity. The sugar bounties act was intended as permanent legislation and in no way related to any war or to the assurance of an adequate and continuous supply of sugar. Section 12 of this bill is directly related, and limited, to the emergency which may arise out of the progress of the war, and is directly connected with the assurance of an adequate and continuous supply of necessaries during the war. Its duration is expressly limited. Therefore, it is inseparably connected with providing for the common defense and promotion of the general welfare, and is clearly within the principles laid down by Story in his work on the Constitution, volume 1, section 978, in which, quoting Hamilton, he said: "It is, therefore, of necessity left to the discretion of the national legislature to pronounce upon the o jects which concern the general welfare, and for which, under that description, an appropriation of money is requisite and proper. And there seems no room for dou'.t that, whatever concerns the general interests of learning, of agri- culture, of manufactures, and of commerce, are within the sphere of the national councils, so far as regards an application of money. The only qualification of the generality of the phrase in question, which seems to be admissible, is this, that the O'ject to which an appropriation of money is to l.e made must Ve general and not local — its operation extending in fact, or by possibility, throughout the Union, and not being confined to a particular s§bt." The Supreme Court of the United States refused to pass upon the constitutionality of the sugar bounties provisions, but did authorize the payment of earned 1 ounties thereunder. (United States v. Realty Co., 163 U. S., 427.) DELEGATION OF LEGISLATIVE POWER. The sixth objection which may be made to the bill is, that it delegates legislative pow^r to the Executive. This may arise in connection with any of the regulatory sections from 5 to 16, inclusive. A discussion of this objection requires a clear under- standing of the legal theories upon which the bill is based. In the first place, the bill declares the legislation to be essential by reason of the existence of a state of war. Thereupon, specific acts and practices are denounced as unlawful. It also declares all processes, methods, and activities concerning necessaries to be affected with a public interest. In each of the regulatory sections it lays down a primary rule or standard to govern and guide the President. The President is confined withm the field ot action prescribed by Congress. The penalties apply and the machinery provided m the regulatory sections operates only after the President shall have found the existence of specifically described facts or emergencies and shall have promulgated a notice or regulation or made an order or requirement intended to effect the legislative will. In every case the offending party, even if found guilty of any of the acts or practices denounced as unlawful in section 4, may escape criminal j)unishment by compliance with the notice, regulation, order, or requirement. Having prescribed the rule of conduct for both thi Executive and the citizen, the bill confers upon the President' merely administrative functions. Congress does not authorize the President to create any cfime nor to apply or ^yithhold punishment for any crime. The crime and the punishment therefor are to be determined by facts, circumstances, and conditions described in the bill, as they respectively arise. , ,, „ /^ j. The bUl Ts dmwn s obviously within the rules laid down by the Supreme Court as BhoTO in the following quotation from United States v. Grimaud (220 U. S., 506. 617, 518). 512 FOOD PRODUCTION, CONSERVATION, AND DISTRIBUTION. "Thus it is uulawful to cliarge unreasonable rates or to discriminate between ship- pers, and the Interatite Commerce Commission has been given authority to make rea- sonable rates and to administer the law against discrimination. Interstate Comnierce' Commission v. Chicago, Rock Island, etc., Railroad (218 IT. S., 88). Congress pro- vided that after a given date only cars with drawbars of uniform height should be used in interstate commerce, and then constitutionally left to the commission the admin- istrative duty of fixing a uniform standard. St. Louis & Iron Mountain Railroad i;. Taylor (210 II. S., 281, 287). In Union Bridge Co. v. United States (204 U. S., 364); In re Kollock (165 U. S., 526); Butterfield v. Stranahan (192 U. S., 470), it appeared from the statutes involved that Congress had either expressly or by necessary impli- cation made it unlawful, if not criminal, to obstruct navigable streams; to sell un- branded oleomargarine; or to import unwholesome teas. With this unlawfulness as a predicate the executive officers were authorized to make rules and regulations appro- priate to the several matters covered by the various acts. A violation of these rules was then made an offense punishable as prescribed by Congress. But in making these regulations the officers did not legislate. They did not go outside of the cir- cle of that which the act itself had affirmatively required to be done, or treated as un- lawful if done. But confining themselves within the field covered by the statute they could adopt regulations of the nature they had thus been generally authorized to make, in order to administer the law and carry the statute in effect." See also Red "C" Oil Manufacturing Co. v. North Carolina Board of Agriculture (222 U. S., 380; Field v. Clark, 143 U. S., 649). BILL COULD HAVE BEEN BASED ON TAX POWER. While the bill is thus undoubtedly constitutional, as a direct exercise of war powers, it was not necessary, with respect to practically all of its provisions, to employ these powers. Repeatedly in the past. Congress, when it conceived that acts and prac- tices within State Uines were inimical to the public interests, has reached, regulated, or eliminated such acts and practices by laying prohibitory taxes upon them. This was done in the matter of the regulation of State-bank "-notes, act of July 13, 1888 (14 Stat., 148); oleomargarine colored in imitation of butter, act of August 2, 1888 (24 Stat., 209), as amended by the act of May 9, 1902 (32 Stat., 193); the antinarcotic act of December 17, 1914 (38 Stat., 785); the United States cotton-futures acts of August 18, 1914 (38 Stat., 693), and August 11*1918 (39 Stat., 478); and the phos- phorous-match act of April 9, 1912 (37 Stat., 8j7. Only two of these statutes have ever been challenged before the Unites States Supreme Court. The tax on the cir- culation of State-bank notes and that on oleomargarine were both upheld by the court as a valid exercise of the taxing power of Congress. Veazie Bank v. Penno (8 Wall., 533); Mcfray v. United States (195 U. S., 27). In this connection Quong Wing v. Kirkendall (223 U. S., 59) is illuminating as, to the possible uses of the taxing power for the accomplishment of purposed other than that of obtaining revenue. What Congress may do at any time indirectly through the taxing power, surely, in time of war to meet war emergencies, it may accomplish directly in the exercise of its war powers. In this the greatest crisis of this country, and of the world, can the legislative de- partment of the Government, directly charged with providing for the common defense and general welfare, including the support and maintenance of its Army and Navy, afford to leave the great issues of production, conservation, and distribution of the necessaries of life to unorganized action by State, municipal, and private agencies? Is it not clearly within the constitutional powers of Congress to subject them to orderly Federal control? Francis G. Cabtey, Solicitor; Chestee Morbill, Jno. M. Buens, Edmund B. Quigglb, - Assistants to the Solicitor, INDEX. '^SatioB!^.'':''^;."'':^.°^^"*^°^"^' ^'^'^' ^''d local organizations, recom- ^"'^ Agricultural Organizations Society: ^ National, work and purpose. ... -0= Statement through Secretary C. W. Holman ." ififiJfiQ Agricultural products, distribution, facilitation of toD-4t)9 Agriculture conference: Pacific coast, Berkeley, Cal., April 13, 1917 in St Louis, April 9-10, 1917, calling by secretary, andrepo'rt S-Tn Agriculture, cooperation, approval of National Government 48^ Agriculture Department: Assistance to Census Bureau go Connection \nth refrigeration association 970 Criticism by Mr. McSparran 5{q Criticism on placing on war footing ...........[..[[ 204 Power to investigate storage warehouses, recommendation 378-379 384 Power to investigate supply of stored products. . . '079 .A.griculture, Secretary: Aid from council of grain exchanges 255 Authority for control of markets, remarks ..[]]. 284 Authority for food control, emergency-appropriation recommendation 8 Authority over food supply, recommendation. .-. 6-7 Authority to control prices, discussion ' . ' 72, 77-77 ] 32 Power to control storage and distribution, discussion '. . . . '342 Statement on food supply 3-20 Agriculture — State departments, conference, April 9-10, 1917, and report 3-10 Stimulation 3 Alcohol: Distillation, waste of grain, note 504 Industrial, production in suppressed distilleries 202 Manufacture from straw, sawdust, potatoes, and sugar beets 31, 37 Alcoholic beverages: Prohibition of manufacture and distribution, statement by Dr. Ernest DaUey Smith 229-230 Prohibition of manufacture, discussion 308-309 Prohibition of use of grain, discussion 200-203 Relation to labor efficiency, discussion 208-209 Allies, purchases of grain: Effect on market and control 255-257, 260-261 Remarks by Mr. Jackson 262-263, 264, 265 American Federation of Organized Producers and Consumers, statement of president 139-157 American Feed Manufacturers' Association, statement of representative 398-400 American poultry associations, statement of representative 398-399 American Seed Trade Association, statement of Kirby W. White 230-235 Anderson Bros. & Co. , telegram on maximum price 494 Anderson , George W. , statement 376-391 Anderson, J. N. , statement as representative of Equity Cooperative Exchange. 403-416 Anderson, Representative: Questions on — Control of speculation 449^50 Elevator facilities in North Dakota 448 Food by-product from brewed grain 14 Grain marketing 478-481 Grain speculation 455-459 Malt consumption 32 Marketing wheat by farmers 449 104176—17 33 513 514 INDEX. Anderson, Representative — Continued. Page. Questions and remarks on — Determination of food supplies 71, 89, 91, 93 Fixing prices 17, 18-20, 23-26, 71, 107-109, 111, 112, 121, 125, 130 Questions and statement on veterinarians 62 Questions of — Frank A. Home on deliveries of storage goods 291 Mr. French on flour 318, 318 Mr. Piper on flour 298-301, 303-304 Questions on — Additional county agents and salaiies 54, 55 Corn flour and comstarcli 35 Domestic science work 59 Fixing food prices 190, 192, 198-202, 207-213, 221-223, 227, 386-387 Meat inspection 61, 62 Wheat flours 372 Remarks on constitutionality of bill 358, 333-335 Statement on sale of grain by farmers 122 Animal diseases, control for conserving meat food supply 5, 71, 75 Animal Industry Bureau: Appropriations asked for emergency work, statement of B. H. Rawls 61-32 Emergency plans, statement of B. H. Rawls 53-34 Anti-Saloon League proposal for grain conservation 309-312 Anti-Saloon League of America, statement of representative 200-203 Apples, storage, and sales, 1910-17 278-279 Appropriation: Emergency, for use of Secretary, recommendation by food conference 8 Necessity for financing grain market 477 Appropriations and objects, Animal Industry Bureau, statement of B. H. Rawls 81^62 Appropriations, State, for emergency funds 76 Arnold, J. A., relation to H. N. Pope and authorship of cotton price telegram. . 271 Association of State presidents, statement of president 139-157 Ballard, John, statement on May wheat trading 252-254 Bankruptcy, grain trading 493 Banks: ' Loans, refusal to farmers, statement 488 Refusal to finance cooperative marketing, remarks 453 Relation to control of grain trade 451^52, 455^59 Barberries, eradication for control of black rust of wheat 84-85 Barley: By-product from breweries, value and use as feed 398-400 Flour, keeping quality and use 317-318 Prices to farmers, depression caused by speculation 435 Beans, yields, prices, and cost of planting per acre 69, 70 Beef, price fixing 131, 135-138 Beer, manufacture in Germany, dilution methods ■ 31 Belgian Relief Commission methods of distributing supplies 329-338 Belgians, feeding, methods and number of people, etc 328-338 Bennett, F. A., statement as secretary of Montana Equity Society Union 450-488 Beriberi, polished rice as cause. ' 33, 34 Bill of Rights, safeguarding in legislation 352, 3S3 Board of Temperance of the Methodist Episcopal Church, statement of secre- tary 229-230 Boyd, ex-Gov. James E., statement on future grain trading 492 Boyles, Charles D . , statement on new rule permitting the loading of empty cars . 185 Boys' club work, funds needed 115, 117, 118 Brand, C. J.: f hief , Markets Office, statement 88-104 Statements on price fixing 23 Bread : Comparison of war bread with white bread 318 Com V. flour, for German army, keeping qualities 47^8 Mixed flour, quality 333, 335 Prices 134 Proportion of diet 33 INDEX. 515 Bread — Continued. Page. Samples and making 240-241 Substitution of dairy products and meat, price prohibition 35 Breadstufi, increase by milling change 7 Breadstuffs, control in Belgium, statement of Prof. Kellogg 367, 376 Breakfast foods, use, discussion ' 305 Breweries, by-products, use and value as feed !..".'!!!!!!.!.' 398-400 Brewers' grains, use as cattle feed 345 Brewers' materials, use in 1916, amounts and total value 31-32 British Government, control of shipping, statement 270 Brokers, testimony on future trading 492, 494 Bucket shops, litigation and testimony on grain gambling ' 492 Burns, John M., memorandum on constitutionality of H. R. 4630 497-512 Butter, storage and sales 1916-1917 279 Caffey, Francis G.: Memorandum on constitutionality of H. R. 4630 497-512 Solicitor of Department of Agriculture, statement 345-366 Calves: Rearing without milk, note 398 Young, marketing, relation to meat supply 103 Candler, Representative: Question on State and National cooperation on tick eradication 63 Questions on storage and prices 136, 137 Canning: Cans, supply, statement by Secretary 15-16 Equipments, use and value in South, cost 46 Cans, tin, shortage 76, 85 Car service, relation to food conservation 281 Car shortage: Relation to cooperative grain marketing 451 Relation to grain market, remarks '. 460 Carlin, Representative, statement introducing Mr. E. B. White of Virginia 104 Cars, freight; Control for grain movement 427 Distribution for moving grain, discussion 406-407 Cattle feed: Use of brewers' grains 345 Utilization of parts of garbage, and value 29 Cattle prices, relation of sellers and buyers, discussion 105, 107-108 Cattle raising, Virginia, location, depression by pending legislation 110-111 ■ Cattle shortage - 324 Census Bureau, food statistics collection, scope 92, 93 Cheese factories: Appropriation and work 61 Food supply, information collection. Markets Office 88 Cheese, whey, description 61 Chicago: Corn market ^^^ Exchange, action on May wheat, discussion '=d3 Profits on futures wheat trading 009 004 Children, Belgian, special feeding 332-334 .Cholera, hog, control : Appropriation asked for °| Importance to food supply -. •,-.-,•.:: ; "i'- Churches, Federal Council, resolutions recommending prohibition of "quor traffic 171-172 Civil Service Commission, supply of emergency workers 92 Clerks, department, wages -,•.--•■■■. ktt Clerks upon fixed salaries suffering from high prices ^-so Clubs, boys' and girls': nt; 117 no Extension work, funds asked il!3,ii^ii» Food production and canning. -. ° Coal, shipments, relation to food conservation oiriio'qRS ^rq Coal situation, discussion 381-382,388-389 Cold storage: „ 97fi_9q9 ■ Discussion by Frank A. Horne. ...-...-. - - 276 ^92 Food supply; information collection, difficulties 91, 94, 100 516 INDEX. Page. Cold-Btorage houses, reports obligatory, discussion , 326-327 College students, work on farms 65-66, 76 Colleges, Agricultural: And Experiment Stations Associations, officials, statements 65-80 Land-grant, conferences and reports 3-10 Work in national defense 65-68, 74-77 Community Marvel Millers Association, character, purpose, and petition 237 Competition, effect in grain trading 259 Comstock, Walter, statement on grain gambling 492 Confiscation, rights of Government, discussion 354-357, 361, 364, 366 Congress, war powers from Constitution 499 Constitution: Federal, construction 500 Provisions bearing on prohibition of intoxicants 309-312 Consumers : Consideration of, in fixing prices 380 Relation to food prices, discuesion 134-136, 137 Relation to marketing, remarks 462,-463, 464, 465 Cooperation, farmers ', relation of business interests 486 Cooperative extension work, war emergency, plan, details 117-118 Cooperative farmers ' need of money, loans under H. R. 4630 468 Cooperative marketing, difficulties in grain handling 450— i53 Com flour: Addition to wheat flour, effect on nutritive quality 339, 340, 344 Comparison with cornstarch 35 Mixing with wheat flour, note 241 Production and shipment 300-301 Corn prices : At farm, Chicago, and Liverpool, cost of handling, and toll 435, 437. Discussion 324 Fixing : 135,136 Corn shortage 324 Corn speculation, discussion with Mr. Cornelison 250-252 Com: Use and value for food, statement of Dr. R. A. Pearson 43, 44 Visible supply 324 Comehson, William T., statement on com speculation 250-252 Cotton: Loss of farmers on Pope telegram, estimates 272, 273 Price — Break on Pope telegram 272, 273 Collapse, 1914 128 In relation to production 467-468 Statement of Representative Young, Texas 276 Suggestion by Peter Radford 164 County agents: Aid to farmers in marketing, selection, etc 44-45 Assistants, number proposed for emergency work, statement by B. H. Rawls 55, 56 Distribution, Wisconsin ; 66, 67, 68 Emergency — Detaife from State agricultiu-al colleges, scope, etc 45 Number proposed , appropriation asked for, etc 56 Farm demonstration, nuinber of organized and unorganized counties 13-14 Lever biU provision, opinion of F. A. Bennett 466 Number, work, and salaries 113-118 Women, scope and value of work 43 Creameries: Food supply information collection by Markets Office 88 Work, statement of B . H. Rawls 60-61 Crop estimates, Department — accuracy 324 work 91 Crop statistics, superiority of United States over world 24 Crops: Recommendation by food conference 5 yield, relation to pnce 131 INDEX. ^1>J Cullinan.J. S.: p Onticism of oil dealer by Representative Youns, Texas 97R plan for fixing food prices f«R statement h^-om Cummins, Senator, statement on hedging. 490-491 Dairy cattle, redistribution, statement of B. H Rawls 57-61 Dairy production increase appropriation needed, statement'of B.' H ' Rawls ' ' 58 Defense boards. States, work " , or Defense, National, Council to assist President in emergency 78 Denmark buying of grain . remarks of Mr. Jackson .. 269 Dillon, Mr., request to be heard on grain marketing 487 Diet, vegetarian, value in food saving 7 Dinwiddie, Edwin C, statement 200-203 ■Diseases, plant, emergency funds ^ [.\......\.\\\] 84-85 Doak, W. N., statement for trainmen against speculation in food 270 Domestic science work, statement of B. H. Rawls 58-59 Doohttle, Representative: Question on corn meal and corn flour 44 Question on extension work ' X15 Question on food-production items ...\\\\\]\ 18 Question on saving on horse feed ..\\.. 54 Questions and remarks on estimation of food supplies 89, 95, ioi, 102 Questions and remarks on high prices 73, 74' 120 Questions and remarks on price fixing 80^135, 'l36| 362 Questions of Frank A. Home on cold storage '....' 276^ 277 Questions of Prank A. Home on storage ',. 278^ 280 Questions on control of foods 143-144, 157 Questions on effect of price fixing on cattle industry 57, 58 Questions on minimum and maximum prices 49, 50 Questions on price fixing i84-i87, 200, 285 Questions on prohibition of grain use for alcohol ; . 31, 32 Questions on wheat flours 375, 376 Drake, Benjamin: Address on futures trading 489 Statement on grain market manipulation, etc 473Hl:83 Drown, Charles E.: Questions on fertihzer 487 Statement 443^48 Dryers, portable, use in drjdng excess vegetables 86 Drying vegetables, practicabihty, value, methods, cost 27-29, 85, 101 Eberhart, Gov. Adolph 0., statement 391-397 Education, agricultural for farmers, discussion 205-207 Edwards, Sherman T., statement 397-400 Egg market, studies in Chicago by Iowa County agents 44-45 Eggs: Corner in 1916 — Discussion 288-289 Statement of Frank A. Home 284 price change in Washington, statement of Chairman Lever 288-289 storage and sales, 1916-1917 277-278 Eikenberry, E. C, statements on grain handling 244-250 Elevator "hospital," use ingrain mixing 482 Elevator men, bankruptcy, cause, statement 409 Elevator shortage, discussion and suggestions 406 Elevators: Control by Government — Discussion 410,421-422,425 During war '^89 Cost and increase of cost, remarks 460 Country, number and capacity 322 Federal-owned, discussion 454-5 Grain — . - Control by corporations, discussion. 447^4S Control by Government, discussion 445-448 Operation, refusal to farmers, etc - 405-406, 415 Grain supply, reports to department 88, 91, 92 518 INDEX. Elevators — Continued. Page. Need, facilities, etc 407-412 Ownership and relation to price making 475 Ownership by railroads 476 Storage, relation to public and control by law 456 Supply, reports obligatory, discussion 326-327 England: Food supply, statement of Dr. A. E. Taylor 37-40 Powers of Parliament, comparison to Congress 346-347 Equity, American Society of, statement through Montana secretary 450-466 Equity Association, statement of representative 443-448 Equity Cooperative Exchange: Operation 404 Statement of representative -• 403-416 Eqxiity Society, resolutions presented by Chairman Lever 308-309 Estimates, crop, department, accuracy 324 European countries, food-control methods, statement of Dr. A. E. Taylor 20-41 Everett, Guy V., letter on flours and milling 318-319 Exall, Henry, speech on "The agricultural life of the Nation depends on the conservation of the soil" 188-184 Experiment Stations and Agricultural Colleges Association, officials, state- ments 65-80 Expert business, grain trade, effect on prices 258 Exports: Flour, effect of H. R. 4125 on New York trade 301, 303 Grain — Control of shipments, statement of Mr. Jackson on necessity 269 Relation to prices, discussion 263-270 Extension work, cooperation by States, funds provided, discussion 113, 114, 117 Extension work for food production and conservation 113-118 Factories, operation by Government, discussion 504 Farm Credits and Marketing, Conference, statement through C. W. Holman. . 466-469 Farm demonstration work, need of increased appropriations 13 Farm home life, improvement, discussion 207 Farm labor: Conditions in Germany, statement of Dr. A. E. Taylor 39,40 Distribution, aid to farmers by Labor Department 12-13 In Germany, compulsory, wages, and methods of payment 47 Mobilization and utilization, report of food conference 6 Scarcity and increased cost 105, 112 Sources and need of efficiency 76-77 Supply and demand, statements of Secretary : 11-13,15 Supply by army draft, plan of Gov. Eberhart 392 See also Labor. Farm laborers, transfer to Army 77 Farm lands, destruction by bad cultural methods, acreage 183 Farm production, increase, relation of equipment and capital 468-469 Farm products: Information as to markets where needed 46-47 Market grades, establishment by Secretary 6 Prices, plan of Henry N. Pope 141-157 Prices, plan of Peter Bradford 163-171 Prices. See also Prices. Farm publications, indorsement of food-conference recommendations 10 Farm seed, price inflations, control by accurate information, cases cited 41-42 Farmer: Prices and profits in grain 260-261 Prospect for prices in 1917 462-463 Views of price fixing; statement of Represeiitative Young of Texas 286 Farmers' and Drovers' Journal, Chicago, citation on Government reports 99 Farmers' Association, National, membership 133 Farmers' cooperation, injury by large business interests 486 Farmers' Educational Cooperative Union of America, statement of president. 139-157 Farmers' Educational Cooperative Union of Texas, statement of president. . 139-157 Farmers, keeping on farm, discussion 485-486 Farmers' League, Nonpartisan, objects and appeal for production increase. . . 470^71 Farmers' losses by grain futures, note 483 Farmers' losses by grain gambling 493 INDEX. 519 Page. T'armers' organizations, cooperation in food-control work 11 Fai-mers' patriotism as shown by planting 488-484 Farmers; Protection by bill, discussion 416 Protection from speculation, appeal 421-422 Representation on food-control- committee, discussion 428-431 Responsibility for large food production 4-5 Tai-mers^ supplies, implements, etc. , prices, fixing ioS, ioe, io9, 112 Farmers' Union, membership 133 Farmers' Union Presidents Association, relation to H. N. Pope, and work 274 Farmers, wheat marketing, practices 449 Faiming: Lack of profit, effect on movement of population 462 Necessity for prices and profits 470-473 Public lands, plan of Gov. Eberhart 391-397 Tenant, changes and needs, discussion by Henry Exall 179-180 Farm-loan association, failure to provide for grain maxketing 458 Farms, abandonment, cause in low prices 462 Federal Council of Churches, resolution recommending prohibition of liquor traffic 171-172 Federal reserve bank, relation to grain mai'keting 456—458 Federal Reserve System, failure to provide for farmer 468 Federal Trade Commission, food-supply investigations, scope 89-90 Feed, cattle: Proportion in wheat, necessity 341 Use of brewers' grains 345 Feed Manufacturers' Association, American, statement of representative 398-400 Fertilizer: Scarcity 119, 124 Supply by Government, discussion 486^87 Field agents, additional, payment method, statement by B. H. Rawl 55, 5fi Fifth amendment, H. R. 4125, property rights, references to 352, 354, 359, 363 Financing, provision in H. R. 4630, commendation 452 Flour: Adulteration — Control by law 337-338 Statement of H. P. Piper 301 Age relations 298 Consumption, effect of high prices, note 303 Control of trade by Government, discussion 306-308 Digestibility, comparison of ordinary, with high percentage 316 Grades and milling methods 313-316 Increase methods in Germany 30, 32-33 Injury by insects - 315 Milling rate for home consumption, discussion 370 Milled at different percentages, keeping qualities, palatability, economy, etc ' 367-376 Mixed— . „ . . Internal-revenue tax ^^ ' > ^^^ Use in Belgium, quality of bread 33.^, 666 Mixing and adulteration, remarks - ^^40 Mixing and keeping, remarks -■ i^!^ ^^» Mixing, discussion -9y-dUi^ud Mixing in Germany 941 Nutritive value, comparison of grades ^^| Patent brands, losses by 87 per cent requirement. - ^^i Eighty-seven per cent, composition, and bread quality ^^», ^ao Ninety per cent, poor keeping quality on account of germ 66% d4i Percentage — 2q^ gQg Determination oQ-j'_oqa Extension, discussion ^^' °^ Price proposed by Mr. Hoover, discussion. - - - ■■^.Jf.^ Spoilage in shipment, remarks of H. P. Piper -----•--■ 297, 301 303 Wheat; stretching methods, statement of Dr. A. E. Taylor Jb Whole wheat, grinding at home, pala.tabihty, etc oo °' Flours: 33 Varieties, per cent of wheat -.---,•,•■; • 47-48 Wheat and mixed, only ones practicable for armies t'-^o 520 INDEX. Page, Food administration bill, recommendations by Herbert Hoover 400—101 Food and drugs act, constitutionality, discussion 354-355, 356, 358, 361 Food bills: H. J. Res. 75, discussion 3-235' H. R. 4125, discussion 237-401 H. R. 4630— Constitutionality, memorandum by Francis G. Caffey 497-51? Discussion of various features by Francis G. Caffey SOS-SI? Outline 497-499- Violations of Constitution, alleged, discussion by Francis G. Caffey. 505-512 Purpose 503 Food boards. National, State, and local, organization and cooperative work. . . 11 Food census, lack of and need for, statement of Dr. A. E. Taylor 1 23-25- Pood commission: Belgium, control of mills 368-369, 373 National, for fixing prices, suggestion : 133, 137 Food conference, committees and members ' 8-10 Food conservation: Extension work by States Relations Service 113-118 Studies, work of St. Louis and Berkeley, Cal., conferences 3-10 Work of Markets Office lOO Food: Control and disposition 3-20 Control and utilization, statement of Dr. A. E. Taylor 20-41 Control by Government, grain growers' conference, resolutions 489' Food control by Secretary, necessity for prompt legislation, statement by Dr. R. A. Pearson 51 Food control in Belgium, management, statement of Prof. Kellogg 367-376 Food control law, punishment for violation, discussion 423 Food control: Necessity 342, 369- Need of legislation 503 Objection of Robert M. French Food controller: Appointment, discussion 120-121, 132, 36? Power to lend to farmers, suggestion 468 Food dealers, licensing by Secretary 6 Food distribution: Need of regulation 123 Need of study and information 472 Food hoarding: Cause of high prices 72-73 Control by law, discussion 95, 96-97 Prevention 122, 123 Food investigations, work, George W. Anderson and others, difficulties 376-391 Food materials, use in beer and other beverages, amount and value 14 Food monopolies, restraint, plan of George W. Anderson 378-384 Food prices: Assurance to producers, statement by Dr. R. A. Pearson 51-52 Control, scope of bill 216 Fixing and control by Government, statement by Secretary 18-20 Fixing, discussion 119.-132 In Germany, statement of Dr. A. E. Taylor 21-23 Increase, causes, discussion 325-326 See also Prices. Food production and conservation, purpose of hearings 184 Food production and control, preparation of bills by Agriculture Department. - 11 Food production: Discussion by Charles A. Lyman 483-487 Extension work by States Relations Service 113-118 Increase necessity 3-20 Utilization of public lands, plan of Gov. Eberhart ■. 391-394 Food products: Distribution facilitation 3 Distribution work of Markets Office 100-101 Overproduction, statement by Dr. R. A. Pearson 51, 52 Stored, investigations, need 211-212 Transportation studies 29-30 INDEX. 521 Food , purchase by Government ^^^t ^ood regulations, German, and enforcement methods '.'.'.'.'.'.'.'.'.'.'.'.'.'.'. 38^9 Causes, discussion ,07 iqq 917 91s Relation to prices 1^7, Idd, 217-218 Resolutions of Pacific Coast Conference, April 'l3 ' im 10 ^ood situation, necessity for securing and distributing information 15 mlmSumf '"'' "^^ conservation, H. R. 4630, constitutionaiity, Food supply and demand, discussion. !.' ^^ok^ol Foodsupply: ^°~^° Conservation by Government, legality 504 Conservation, increase, and control, statement of Dr A E Tavlor St> Increase necessity ' ' oon Information, collection by Markets Office.! ' ss'q? inci Reports— °° a^ius Importance of correct statements 326-327 State laws ' o-. Survey, recommendations of food conference. 6-7 Food survey: Inauguration by Germany, difficulties and time required 23-24 Management, discussion ■. , 225-226 Methods, statement by Dr. R. A. Pearson ..!!!!!!!!!!. ' 42-i3 Necessity, scope, and methods, statement of Dr. R. A. Pearson. .. .... . 41-53 Organization plans 1 y Agriculture Secretary, statement of Dr. R. A. Pearson 49 Proposed, cooperation with Federal Trade Commission inquiry '. 42 Food surveys, Markets OfBce, statement by Mr. Brand, cost, etc 88-97, 103 Food transportation, Belgium, by relief commission, employees, etc 330^331 Food waste: Annual, statement by Secretary Houston 13-14 Control, aid 1 y women agents 13-14 In transportation, statement by Dr. A. E. Taylor ....'. 27-30 Food, world's reserve small 3 Food-price committee, representation of trusts, discussion 425 Foods: Breakfasts, home-grown, su'stitution for commercial 7 Separation of production and control items, statement by Secretary 17-19 Utilization necessity 3-20 Foodstuffs: Confiscation 1: y Government, recommendation 384, 386 Necessity for Government control in United States 40 Speculation, control, necessity 321-323, 325-328 Stored, determination, difficulties and suggestions 378-379 Supplying to Europe by United States 3 Fomteenth amendment, H. R. 4125, similarity to fifth amendment 359 France, food supply, statement of Dr. A. E. Taylor 37-38 Freight rates: Control by Government, discussion 427 Ocean, on wheat and corn, present and former 427 Freight shipments, control by Secretary 6, 7 French, Ro ert M., statement on flour grades and milling 312-319 Fruits, railroad transportation, reports to Markets Office 98-99 Future dealing, relation of produce markets 288 Future trading: Discussion 479^81 Relation to marketing, statements of Benjamin Drake 473-483 Stopping, demand and pro" a le effect 474^75, 477 Futures trading: Definition and kinds, Drake statement 489^94 Drake address 489^94 Gam' ling: Grain, discussion 491-494 Grain market, Chicago and Minneapolis 473 Grain, remarks in F. A. Bennett statement 451, 453, 454, 456 Losses of people in grain trade 492 522 INDEX. Oambling — Continued. Page. Minneapolis, statement 493 See also Speculation. Garbage, utilization of portions for cattle feed, methods 29 Gardens, use and value in food economy 7 Gason, HerVert E., statement as editor of farm periodicals on prices and pro- duction 469-173 Germ, wheat, cause of poor keeping quality of 90 per cent flour 341 Germany: Drying vegetables, methods, cost, and value 27-29 Farm la^ or, use of war prisoners, wages and payment methods. . .- 47 Food control and utilization, statement of Dr. A. E. Taylor 20-41 Food regulations and enforcement methods, statement of Dr. A. E. Taylor. 38-39 Food supply, statement of Dr. A. E. Taylor 36-39 Food waste, prevention methods 36-37 Grain supplies by way of Holland and Denmark 269 Invasion of United States by, possi' ility 129 Proportion of wheat to flour, law regulation, and practice 30, 32-33 Girls' club work, funds needed 115, 117, 118 Gluts in market, prevention, provisions of law 358-358, 385 Good Templars, National Grand Lodge, statement of representative 200-203 Government control, need in grain handling in war 475 Government ownership, need for national public utilities 472 Grade standards, fixing by Government, discussion 505 Graham flour, transportation problem 297 Grain Dealers' Association, National, request regarding proposed legislation in. 244 Grain, distillation, control by Government, discussion 504 Grain elevators, refusal to farmers , 405 Grain exchanges: Council, position in grain trading statement 255 Operation, suggestions. . . .'. 407 Grain Exporters' Association, indorsement of proposed legislation 282 Grain gambling, relation to central trade organizations 451, 453, 454, 456 Grain, Government control, discussion 432 Grain growers' conference, resolutions 489 Grain growers: Control by grain exchanges, practices 410, 415 Losses by gambling 493 Statement of representative '. 443-448 Statements of representatives 403-495 Grain, marketing early by necessity; remarks 478 Grain marketing early, remarks Grain marketing; Purchases by Government, remarks 460-461 Relations of storage and transportation 475-478 Grain markets, prices, withholding from public, objections 405 Grain mixing, limitation removal 14 Grain: Prices — Changes due to cooperative marketing 450, 451 Control by gamblers 490—494 Purchases by allies, control suggestions 280 Shipments abroad, relation to war 289 Sidetracked in cars, causes, statement by Dr. A. E. Taylor 30 Storage, regulation, need 322 Supplies reaching Germany 269 Supply, information collection by Markets Office 88-97 Trade- Control from trade centers, statement of F. A. Bennett 450-453 Losses by gambling 492 Profits 268 Statement of George Summerville Jackson 262-270 Traffic, discussion with Mr. Eikenberry 244r-250 Use in manufacture of liquor, prohibition, discussion 328 Use for intoxicating liquor, prohibition proposed 309-312 Use for manufacture of malt and beer, value of by-products for feed 399-100 Use for production of alcoholic beverages, prohibitive legislation, discus- sion 200^202 IN DUX, 523 Ctrains: . Page. Annual use for brewing, statement of Dr. A. E. Taylor 31-32 Brewers', use as cattle feed 345 Home grinding 8() Use for industrial alcohol, statement of Dr. A. E. Taylor 31-32 Use for lifjuors, starch, etc., prohibition in Germany 30,31 Granaries, grain supply, reports to Department 92 ■Grange, National: Membership 133 Statement of representative 203-229 ■Great Britain, price fixing, remarks 467 Oreeley, Samuel Hallet, testimony on extent of future trading in grain 491 •Gregory, W. A., testimony on grain trading 494 Grinding machines. See Mills. Crrocers' contracts, discussion ,. 296 ■Grocers' National Association, request as to labels, statement of Albert S. Kockwood 293 Hailett, F. A., testimony on grain futures trading 491 Haugen, Representative: Discussion of speculation with Mr. Pickell 257-258, 259, 260 Discussion with Mr. Ballard of May wheat trading 253-254 Question of Mr. French on flour 318 Question on — Domestic science 58 Potato price 50 Russian food supply •' 36 Questions and remarks on — Fixing prices 78, 79, 106, 107, 110, 123-125, 130-137 Futures trading 481 Questions and statement on — Need of labor 39^0 Price-control items 18-19, 20, 25 •Questions of — Determination of food supply - ; 90i 92-96, 101 Frank A. Home on prices and competition , 283 Frank A. Home on storage. 291 Mr. Cornelison on speculation 251 Mr. Jackson on grain trade and exports 263-265, 268-269 Mr. Little on flour mixing 237, 239 Mr. Piper on flour one Mr. Rockwell on tin supply - 295 Questions on— Control of speculation - - - ^^^ Cooperative work on tick eradication iAoIi^t Cost of growing wheat tttta?. Cultivation of public lands tn en Dairy by-products 443-444 Equity Association 114 lie Extension work ^^^' ^^° fS^g fo?rpricesV.::: : : "i9W93,'l99,"205,'266,'2l6,'213-217,'224^25,"233-235 fS ^rices'foVfami p;oducts;.;.V.:; ■i40,'l48;i5i,"l54,'l56, 159, 168; 169' 173 Flour 25 26 Food buyers 2„2 376 Foodstuffs - - - • c'7 CO Government cattle on Government lands 453 "454 457 Grain marketing ' 24gl249 Grain trade • ,•""■"' \ 4fi_d7 Information ^y Agriculture Department experts *o-^' Minimum prices on food staples 407-410 Gperation of grain market ■ v -•;.••• ; ca Regular and emergency county agents, and estimates ^ob Rental value of land g^ Saving on stock feeding. 524 INDEX. Haugen, Representative — Continued. • Page. Questions — Continued. Seed appropriation 82, 87 Surplus corn 43-44 Work of veterinarians 62, 63 Statement on food conference report 4 Statements on — Employees of Animal Industry Bureau, and a,ppropriations 59 Guarding purse strings BO* Need of additional county agents on farms 55- Hay, prices, fixing 13S Hays, Willett M. , estimate of futures grain trading 491-492 Hedges, grain market, management and practices 407-410 Hedging: BjBCUMion with Mr. Comelison 250-252 Examples of practice 490-491 Necessity to protect small dealers 251, 258 Volume of trade compared with gambling trades 491 Heflin, Representative: Question and statement on use of German prisoners as farm laborers 40 Question on — Emergency county agents 55 German food regulations 3S Questions and remarkson fixing prices 109, 126, 181, 133, 137 Questions on — Determination of food supply 91, 92, 100 Dynamiting lands in France : 38 Feed from brewery by-products 398-400 Fixing food prices 189-190, 221-223, 226-227 Fixing of prices for farm products 140, 146-148, 156, 160 Food survey methods 42 Mixed flours 376 Ownership of live stock 57 Hoarding food: Cause of high prices 72-73 Control by law, discussion 95, 96-97 Control proposal, remarks 268 Prevention, provision, penalties, etc 122, 123, 352, 353-359, 366 Hoarding foodstuffs, exemption of producers, discussion 426-427 Hoarding, restraint by Government, legality 504 Hog cholera, eradication, appropriation asked for 61 Hogan, Mr. , explanation of apple-bushel measure 278 Hogs, price, suggestion by Peter Bradford 165 Holland, buying of grain, remarks of Mr. Jackson 269 Holman, Charles W. : Remarks on agricultural cooperation 487 Statement for National Agricultural Organization 466-469 Home economy, methods for conserving food products 7-8 Home Ufe, improvement, discussion ■. 207 Hoover, Herbert C. : Experience, career, and character, discussion 120-121, 130 Fitness for food dictator, discussion 428-430 Letter on food situation 488 Letter to Asbury F. Lever recommending provisions for food administration bill 400-101 Home, Frank A.: Proposal to amend H. R. 4125 279 Statement on food refrigeration, etc 276-292 Horse feeding, saving methods 54 "Hospital" elevator. See Elevator. Housewife, ability to mix flours, notes 300, 304 Houston, Secretary, statement on food supply .* 3-20 Humphreys, Mr.: Question on — Price increases by pending bill 53 Price guaranty to producers or consumers 52 Questions on minimum and maximum prices 51 INDEX. 525 Hutchinson, Representative: Pag». Question on extension work 117 Questions and remarks on — Determination of food supply 91, 97, 103, 104 Fixing prices 124, 126, 135, 138, 324 Future trading ' Grain marketing ....'..'. 483, 486^87 Questions of Mr. Piper on flour 301, 304^306 Questions on — Feed from brewery by-products 400 Fixing prices !!!!!. 432 Fixing prices for farm products 143, 145, 157, 173 Flour 333, 334_ 344] 36I Land depreciation by wheat crop 440, 442 Ocean freight rates on grain 427 Protection of farmer by bill H. R. 2630 416 Railroad delay of grain shipments 461 State meat inspection 62 Tick eradication work 63 Wheat flours 372-373 Wheat market for millers 415 Ice, shipments, relation to food conservation 281 Implements: Farm, fixed prices, discussion 154, 168, 189 Farmers', price fixing 79, 105, 106, 109, 112, 126-127, 137 Income tax, recommendation of Equity Society 309 Independent Order of Rechabites, statement of representative 200-203 Industrial alcohol, production, use of suppressed distilleries 202 Industrial Congress, Texas, statement of representative 175-200 Industrial plants, operation by Government, discussion 504 Insects, eggs in wheat and effect on flour 315 Ireys, B. S., testimony on grain prices 494 Italy, food supply, statement of Dr. A. E'. Taylor 37-40 Jackson, George Summerville, statement on grain buying and exports 262-270 Jacoway, Representative: Question on — Difference between minimum and maximum prices 53 Food loss in transportation 24 Questions and remarks on estimation of food supplies 91, 92, 94-98, 101 Questions and statement on Iowa potatoes 45, 49 Questions of Frank A. Home on— Price fixing 287 Storage 280 Watered stock 292 Questions on — Constitutionality of bill 356, 363, 365, 366 Enforcement of German food regulations 38 Fixing prices for farm products 144-145, 148, 156-157, 162 Flour 335, 337, 343 Food supply of belligerent countries Vott German milling 32^33 Germany's food supply co Sun-drying of potatoes °^ Tenant systems in Northwest hcAii Remarks on importance of transportation practices "iol ■Jordan, Fred B., telegram on prices and profits 494 Kelley, Hon. John E.: aoo ^qq Plan for control of speculation discussion *f^^ ^« Sta*ement ^" ^^' ■^^^femen/^""'''' ^^'^'^''^ Work°incoiitroi of breadstuffs in Belgium and northern France ^^"^'Ht Jforab, Frank H., telegram on wheat costs and prices ■iwo 526 INDEX. Page. Labels, petition of National Wholesale Grocers' Association 293-294 Labor: Farm — Scarcity and increased cost 105, 112 Shortage and control studies, statements of Secretary 11-13, 15 Sources and need of efficiency 76-77" Supply by draft system, discussion 392 Utilization of army ineligibles, recommendation 6 Price, increase needed ■. . , 135 Prices, fixing by board, discussion i 168 Labor problem: Burden of farmers 77 Of farmer 119 Laborers, prohibition of alcoholic beverages, discussion 208-209, 210-211 Lands, public, farming by Government, plan of Gov. Eberhart 391-397 Laws, State, food-supply reports 91 Leather, scarcity. 131 Lee, Representative: Question on — Food transportation 29 Graham flour 33 Questions on — Extension work 114 Fixing prices for farm products 161-171 Fixing prices 442, 445 Grain-trade lawsuits 479 Questions and remarks on — Fixing prices 131 Food conserV^ation 70, 71, 101 Legal-tender statutes, relation to war powers, discussion 350 Legality of provisions of bill H. R. 4125, discussion by Solicitor 345-366 Lesher, Representative: Question on condition of Belgium 335 Questions and remarks on fixing prices 125, 127, 130, 325, 328 Questions on — Fixing food prices 190, 199, 200, 205 Wheat prices 154-156, 173 Lever, Chairman: Discussion of— Central control of foods and necessities 215-216, 219, 383-385 Grain speculation with Mr. Ballard 254, 259-262 Milling wheat for home consumption , 370 Personnel of pricerfixing board 232 Speculation with Mr. Comelison 251-252 Hearings on food-control bill H. R. 4630 403-495 Question of — Dr. Taylor on stay in Germany 27 Question on — Assistance to onion growers from Markets Bureau 151 Corn bread 43 Emergency seeds 15, 16 Food conservation 39 Food shipment diversion 40 Food waste 27 France's food supply 37 Minimum and maximum prices 48, 49, 50, 51 Produce exchanges 45- Tick eradication. , 62 Questions and remarks on — Extension work 66-67, 116 National security and defense 3, 13-64 Questions and statements 479' Questions of — Frank A. Home on price quotations and price fixing 288-291 Frank A. Home on storage 281 INDEX. 527 Lever, Chairman— Continued. Pa„g Questions of — Continued. Mr. Ballard on May wheat trading o^^jjcla Mr. Enkenberry on grain traffic OAdJtlToSi Mr. French on flour ^44-247, 250 MJ;KtttonflorrH5'"'^^P°'^*^ V;.-265:266:268:269.270 Mr.pgfonfloT".^.^.'^."^. ■''■■'^'^^'^fk^ Questions on— 60b-i0ii Agricultural organization .j,_ Confiscation of property 9n 9 '91 q "oqi qoo Drying potatoes ::;;;;;: ^^^-2^^'231j386 Emergency special agents 5fi Feed from brewery by-products . . ogo Fixing food prices...... ■■".■.■.■.'. ".l l ■.: "m," 224," 383-38& Klours m European countries oco Food survey ...\ .[.'.'.".]] 42 44 45 Food transportation " ' ' 09' 30 Grain marketing ' ',^0 Grain milling ] 04 Investigations of stored products !!!!!] 212 Price fixing power in bill H. R. 4630 ^ . .\ .\[\ .[.V. . . .\ . 414 465 Rural county agents \[ 13-14 Time and cost of operation of food bill 226 Remarks on — Fixing prices. IO4, 106, 120-123, 134 Food conservation 75 Food shortage 81 82 343 Food supply and investigations .....'. ' 218 Reports of food supplies ; _ /' 94 Statement on — Press stories from witnesses 202 Purpose of bill 414 Purpose of hearings 184, 204, 215, 413, 416 Scope of food bill 216 Washington fluctuation of egg prices 289' Statements on — Expenditure methods and items 60, 61, 62 Power to confiscate seed business 231-233, 235 Power to investigate supply of stored products 379 Separation of production and control items 17, 18, 20 Work of Agricultural Committee 227-228 Licenses: Manufacture and distribution of necessaries, provision, discussion 352- 353, 363-364 Trade, proposal for market control 284 Licensing food dealers, discussion by Francis G. Caffey 505 Liquor traffic : Prohibition — As a war measure, necessity, statement by Dr. Ernest Dailey Smith. . 229-230 by Federal Government, resolutions offered by Federal Council of Churches 171-172 Suppression, plan of Edwin C. Dinwiddle 200-203 Little, T. Freeman, statement on milling and mill machinery 237 Live stock; Depletion, Belgium 335 Disease suppression, statement of B. H. Rawls 61 Feeding, economical systems, advice to farmers, statements of B. H. Rawls 54-56 Industry, statement of B. H. Rawls 56-64 Marketing undeveloped animals, causes 396-397 Lloyd George, British premier, cable statement on prices 467 Lucey, Capt. J. F., Belgian Relief Commission, statement 328-336 Lyman, Charles A., statement on grain marketing 483^87 528 INDEX. Fsige. Macaroni, flour required for making : 314 Machinery: Farm, cooperative control, recommendation 7 Milling, changes to promote increase in flour supply, discussion with L. Freeman Little 237-243 Malt, uses and reconsumption 32 Market: Grain — Control as an evil, statement of F. A. Bennett 451 Control by speculation 494 Operation, practices 407-410, 415 Relation to production of grain 452 Potato in Minnesota, 1916, prices 476-477 Market News, work of Markets Office, results 98-99 Marketing and Farm Credits Conference, statement through C. W. Holman . . . 466-469 Marketing: Aid to farmers by county agents 44^5 Cooperative, Montana organization, remarks 465-466 Experts, stationing in various States 45, 46-47 Government relations, discussion 472 Grain — Delay in standing cars and cause of it 460-461 Prices, farmers' and consumers', comparison, discussion 418-420 Parcels post and express, work of Markets Office , 101 Price fixing, necessity for means 460 Markets Bureau: Appropriation 150, 420 Assistance to onion growers, note 151 Control by Government, legality 504 Grain, withholding prices from public, criticism 405 Minneapolis and Chicago difference in character of wheat trading 473 Primary, need of regulation to control manipulation. 322 Storage capacity 322 Martin, Representative, question on extension work 114 Maximum price: Fixing by Goyemment, discussion 506 Relation to trade, remarks 280 Wheat suggestions 494 McCann, Mr.: Question on flour contents 34 Statements on vegetable driers 28-29 McKinley, Representative: Question on — Cost of wheat production 440-441 Grain exporters 262 Literature to county agents 55 Wheat control by Government 450 Questions and remarks on — Estimation oi food supply 96 Fixing prices 124, 134-136 Questions of^ Frank A. Home on price control 290 Frank A. Home on price fixing 284-285 Mr. Ballard on May wheat trading 244, 252-253 Mr. Eikenberry on grain traffic 244 Mr. Little on flour mixing notes 239, 242 Mr. Pickell on H. R 4125 257 Questions on — Bonded warehouses 421 Fixing food prices 387-390 Fixing prices for farm products 142, 144-145 Flour 343 Government control of grain. .' 432 Price fixing and speculation 459-460 Price-fixing power 414 Tenant systems in Northwest .'. 422 Wheat trading 239, 242 INDEX. 529 McLaughlin, Representative: Page. Questions and remarks on — Estimation of food supplies 88-92 96-100 Extension work 114-117 Fixing prices .■;.';:.■:;;:;; "72;77-79;ii6, m, 124 Food conservation 68,70,86,87 beed distribution 82 83 Questions and statement on farm labor in Germany ' '47 Questions of — Frank A. Home on storage 287-288 Mr. Eikenberry on grain traffic ..\.\...... 244 250 Mr. French on keeping of flours . . 317-318 Mr. Piper on flour '.'.'.'.'.'.'.'.'.'.'.'.' 305-306, 308 Mr. Kockwood on contracts 296 Questions on — Belgian relief work 321-335 Cost of wheat prsduction 430-441 Dairy by-products 60 Dairy-production work 5g Fixing prices 430 German laws regulating wheat milling 30 German price fixing 23 24 , Grain distillation '31 Hoarding foodstuff by farmers 426-427 Increased production and prices 53 Patent flour 33 Russian food supply 36 Use of German soldiers as farm laborers 40, 41 Remarks on constitutionality of bill 353, 355 Statement on — Beriberi 34 Temporary en>ployees 55 McSparran, John A., statement 203-229 Meal, corn, use methods, lack of information 44 Meals, varieties, mixing difficulties 35 Meat food conserving 71, 75 Meat inspection, appropriation 61 Meat supply conservation, relation of marketing young calves 103 Meat supply, increase methods, recommendations 5 Michigan, appropriation for emergency 76 Mill products, adulteration, discussion 207 Millers, inability to meet demand 73 Millers National Federation, statement by attorney Phelps 336-344 Millers, wheat markets, discussion 415 Milligan case, reference to 356 Milliken, Gov. Carl E., statement 171-172 Milling business, injury by bill 361-362 Milling: Flour- Discussion of processes 302-306 Grades and methods of production 313-316 Higher, per cent of flour increase. 34 Laws and customs, various countries 30, 32-33 Methods for increase of flour per bushel of wheat 238 Wheat— • Control by Government, discussion 504 Method change for increase to breadstuff 7, 14 Mills: Flour, adjustment to produce 90 per cent flour, Belgium 331-332, 333 Food supply, information, collection, Markets Oflace 88 Household, for grains and breakfast cereals - 86 Minneapolis, relation to raib-oads shipping gram 461 Mines, operation by Government, discussion 504 Minimum price: ._„ Grain, remarks : 47fi_477 ' Relation to marketing ■* ' '^LL Relation to trade, remarks ^'»" 104176—17 34 530 INDEX. Minimum price — Continued. Page. Suggestion 485 Fixing by Government, discussion 503 Minneapolis Chamber of Commerce, restrictions and operation 404-405, 410, 415 Minneapolis: Gambling 493 Grain futures, amounts and kinds 491 Profits on futures trading 473 Storage refusal to cooperators 475-647 "WTieat market 323 Minnesota, grain gambling, investigation by legislature 493 Money control, relation to cooperative grain marketing 450-452 Monopolies: Control of grain trade, remarks 450-453, 455-459 When unlawful 354, 357 Montana: Cooperative marketing, statement of F. A. Bennett '. 465-466 State Union of American Society of Equity, secretary-treasurer, state- ment 450-466 Wheat growing, development 461 Wheat price, fanners' views 484-485 Morrill, Chester, memorandum on constitutionality of H. R. 4630 497-512 Munition makers' profits, taxing 1"25 Munitions, prices, fixing by board, discussion 173, 190 National Grand Lodge of Good Templars, statement of representative 200-203 National Grange, statement of representative 203-229 National Inter-Chm-ch Temperance Federation, statement of representative . . 200-203 National Temperance Society, statement of representative. 200-203 Navy beans, advantages, comparison with other foods 69, 70 New Jersey law on food-supply reports 91 News, market, reports by Markets Office, results '. 98-99 Oats: Prices at farm, Chicago, and Liverpool, cost of handling and toll 434 Seed- Testing and treatment for smut, importance 71 Shortage in South 83 Visible supply 325 Odellj Frank G., affidavit on Pope telegram on cotton price 272-273 Ohio, work in national defense 74r-78 Onion crop handling, results of Market News work 98 Onion industry, assistance from Markets Bureau 151 Onions, speculation, methods 381 Overmyer, Representative: Question and statement on hoarding potatoes 50 Question of Mr. Eikenberry on wheat price 247 Question on flour 334 Questions of Mr. Little on flour 240 Questions on — Constitutionality of bill 357, 358 Fixing food prices 188, 206-207, 226, 231 Practices of grain exchanges .' 415 Pacific coast food conference, April 13, 1917, resolutions sent to Secretary 10 Packers' position in regard to selling meats 108 Packing plants, food supply information, collection by Markets Ofiice 88, 90 Parcels post marketing, work of Markets Office 101 Patent process, effect on separation of flour in milling 306 Pearson, Dr. R. A., statement on the food situation 41-52 Penalties, violation of H. R. 41-25 351, 355, 360, 365 Pendray, Thomas, statement 438-443 Perishables : Carriers, need for suitable cars 102 Disposition and transportation, provisions 356-359 Price fixing 135 Transportation, reports by railroads to Markets Office 88-89, 98-99 INDEX. 531 Page. Phelps, Francis M., attorney for Miller's National Federation, statement 336-344 Pickell, J. Ralph, statement on grain trading and aid to Government 254-262 Pinchot, Gifford, statement on fixing prices , 119-132 Piper, H. P., statement on produce trade under food control 296-312 " Pit ' ' speculation, criticism and suggestions 406-407 Plant diseases, emergency funds 84^85 Pope^H. N.: Criticism by Representative Young of Texas 271-276 ^lention 132 Statement 139-157 Telegram on minimum cotton price, modification and denial 274, 275, 276 Potatoes: Drjang, methods, machinery, cost, etc 27-29 Growing cost, increase 119-120 Minimum price fixing, statement of Dr. R. A. Pearson 49-50 Price fixed for 1917 in Great Britain 467 Price, fixing, discussion 130 Price — And cost of planting per acre 68-69 Minnesota markets, 1916 476^77 Production and value, Wisconsin 68 Seed cost per acre, note 484 Speculation, on Maine 380-381 Surplus, disposal studies and experiments 45-46 Waste utilization by drying in Germany 27-29 Poultry Association, American, statement of representative : 398-399 Poultry feed, production from by-products of breweries, value 398 Preme, description and other name 61 President: Authority in war emergency, discussion 78 Power to — Prohibit use of grains in manufacture of hquors 342, 343 Regulate food use, etc., discussion 342, 343 Specific powers granted by H. R. 4630, discussion 505 Price, grain, farmers' view 484-485 Price making, public function, opinion of H. E. Gason 472 Price manipulation, organized, paper by Hon. John E. Kelley 433-437 Price minimum, effect on crops, remarks 271 Price quotations, relation to actual sales, remarks 288 Price-fixing: Committee at Great Falls, Mont 451 ESect, remarks ^^° German failure of, remarks of Representative Young 464 Need of basic price ■ _*84 Powers and practices AROAfi Relation to marketing and farm profits iso Resolutions of grain growers ;cc Jen Statement of C. W. Holman for farmers llltfr Prices and profits, statements *'^^' '^^^ Basic versus minimum, discussion ^■'^^Acy British, quotations as fixed by law, 1917-1919 . .... - ^^l Change by increase of flour percentage per bushel of wheat aroJlr^ Crop, prospects for 1917, remarks. 4bz-4os Fixmg — 283 And competition, remarks ^^^ By President, purpose 68-72 Discussion ■- — — Y\9-nB, 215-225, 227, 259', 323-325, 378-387, 422^24, 445-447 Farm products — 1 4i _i =S7 Plan of Henry N. Pope 186 Plan of J. S. Cullinan 232 Plan of Kirby B. White 163-171 Plan of Peter Bradford - ■ - 199-200 Foodstuffs in Germany, failure of method '-"^ 532 INDEX. Prices — Continued. Page. Fixing — Continued . Maximum and minimum, statement of Dr. A. E. Taylor 20-41 Maximum, diecusBion 505 National, not State problem 72, 77 Provision, discussion by Solicitor 359-365 War emergency, not permanent policy 80, 87 Flour- Effect on consumption 303 Statement of Guy V. Everett 318-319 Food products — Control by Government 7 Need of publicity ._ 7 Grain markets, withholding, criticism 405 High, causes discussion 72-74, 325-326 Manipulation by speculators , 214, 218-219 Maximum and minimum — Discussion 280, 285-287 Recommendation 309 Statement of Dr. R. A. Pearson 48-51 Minimum, guaranty by Government, discussion 503 Guarantee to farmers, remarks 466, 467 Guarantee with appeal for increase of farm production, discussion 470-472 Wheats Discussion 442 In Chicago, discussion 262-270 1917, remarks 482 Primost, description, and other name 61 Producers and Consumers, American Federation, membership, convention, etc . 132 Producers, considerations in fixing prices 147- 156, 159-160, 164, 165, 189, 193, 196, 205-206, 210-211, 220-221, 224, 226-228 Production, farm, appeal for increase and answer of farmers. 470 Prohibition, use of grain in making liquor, discussion 328 Proteins, balanced, food value 33-34 Quiggle, Edmund B., memorandum on constitutionality of H. R. 4630 497-512 Radford, Peter: Credentials, questions, discussion, etc 173-175, 190-191 Criticism by Representative Young of Texas 276 Statement 157-171, 172-175 Railroads: Control oE elevators, discussion 447-448 Government ownership — Advantage hoped for ., 461 Discussion 389-390 Grain, relation to mills of Minneapolis 461 Ownership of elevators at Mumeapolis 476 Reports on transportation of perishable crops 88-89, 98-99 Railway companies, car distribution, effect on prices, discussion 388, 391 Railways, food distribution, rates, etc., criticism 218, 219 Rawl, B. H., statement on Animal Industry Bureau, emergency plans 53-64 Rechabites, Independent Order, statement of representative 200-203 Requisition of goods, comparison to confiscation 352, 354-355, 360 Reserve Officers' Training Corps, depletion of students, agricultural colleges. . 65 Rockwood, Albert S., statement on groceries and labels 292-296 Rubey, Representative: , Questions and remarks on fixing prices 127, 130, 134, 137, 138, 323 Question and statement on — German food regulations 38 Seed for farmers 16, 17 Question of Frank A . Home on trading in stored goods. 291 Question on — Amount of grains used by brewers 32 Breadstuffs 370 Can supply \" "[[[][[..["[[. . i5^16, 294 Food transportation 29 INDEX. 533 Rubey, Representative — Continued. Paga, Questions of — Franlc A. Home on storage profits 282 Mr. Little on flour mixing 238, 240 Questions on fixing food prices 185-186 Statement and questions on use of meal or iloiu- in German Army 47-48 Statement on travel method of county agents 55 Russell, Dr. H. L., Agricultural College of Wisconsin, statement 65-74 Russia: Food supply, statement of Dr. A. E. Taylor 36 Position in war 74-75 Rust, black, of wheat, control measures 84-85 Rye flour: Character and use 314 Keeping quality and use 318 Sabath, Representative, statement 325-328 Sale, forced, constitutionality, discussion 352, 354-355, 364-366 Sawdust, utilization for alcohol manufacture in United States 31 Schenk, H. H., of Missouri, statement 132-138 School lands, farming, management and cost, suggestions 391-397 Schools, effect of emergency work of students 65, 67 Scott, Representative, statement ; 321-325 Secretary of Agriculture. See Agriculture. Seed business, control by Government, discussion 231-235 Seed distribution, method, for emergency supplies 83 Seed emergency appropriation, statement of Dr. Taylor 80-88 Seed potatoes, excessive cost 68, 120 Seed, selling to farmers to meet shortage conditions 83 Seed shortage, various sections 80-84 Seed supply, emergency, for farmers 15, 16-17 Seed Trade Association, American, statement of representative 230-235 Shoes, prices fixing, discussion 125, 127, 131, 137 Slocum, Grant, telegram asking for minimum prices 271 Smith, Dr. Ernest Dailey, statement -. 229-230 Soil conservation, importance, speech of president of Texas Industrial Con- gress ■'^^'i^t Soil, depletion by wheat growing n%Q_ioo Soil depletion, discussion by Henry Exall 179-18J Soybeans: Food value 70,81 Seed shortage '^^'^'^ Speculation : .„ Character, statements of witnesses ■*"'' ' ^"""DtTussion 428,431^37,446,446^47,44^50 Plan of Hon. John E. Kelley illllt Discussion 478 K^XrSioi; disciussi^:.-::: : : : : : : ■I43;i45:i55:i57;i69;i85:i98-i99 ^°° Disc^us^on 72, 73, 250-252, 254-262, 280-281, 347-350 EuSStTon,"impor-tai;ce; 122-127, 185-187, 321-323, 325-328 Opposition of trainmen - - - - -. - - „ . Grain market, testimony as to Chicago and Mmneapoks 4/4 Injurious, relation to production 406^07 Practices and suggestions gQ^ Prohibition recommended ^2i Protection from, need ; V. ■■"■"•■ " ri™v^ at^-jIM Relation to marketing, statement of Benjamin Drake 4^d-4»^ Relation to potato prices, 1916..... 504-505 Restraint by Government, discussion Restraint, plan of George W Anderson ^°2L254 Wheat, discussion with Mr. Ballard See also Gambling. 534 INDEX. Speculator: Page. Elimination, discussion 214 Power to fix food prices, discussion and suggestions 214 Price-fixing power, discussion 446 Spoilage, food, prevention, provisions, discussion by Solicitor 352, 353-359, 361 St. Louis, oats market 323 Standards, fixing by legislation, discussion 204-205 Starch, a dilutant of flour, poor food value 338, 339, 340 States, cooperation in extension and demonstration work 113, 114, 117 Stock feeding, saving methods, aid to farmers by county agents 54 Stockers, prices fixing 135-136 Storage: Cold. See Cold storage. Control by Government during war 309 Food products, need of facilities 211 Grain — Capacity of elevators and primary markets 322 Need of provision uncontrolled by monopoly 454-455 Need for wheat and cotton , 467 Problem in grain marketing 475-478 Shortage at terminals, discussion , . . . 455-456 Warehouses, investigation, recommendation 378-379, 384 Straw, utilization for alcohol manufacture in Germany 31 Stream, John, testimony on grain prices 494 Students, college, work on farms 65-66, 76 Suits against Government for recovery of prices of goods taken 360 Tariff rates, authority to President, discussion 359, 360 Tax on mixed flour 337, 344 Taylor, Dr. A. E.: Statement on — Food utilization •. 20^1 Minimum and maximiun prices 52-63 Statements on — German farm labor 47 Sun drying of potatoes 52 Taylor, Dr. Wm. A., Chief of Plant Industry Bureau, statement 80-88 Temperance Federation, National Inter-Church, statement of representative. 200-203 Temperance legislation in National Congress, promotion, Committee, state- ment of representative 200-203 Temperance Society, National, statement of representative 200-203 Tenant farming, changes and needs, discussion by Henry Exall 179-180 Tenant systems in Northwest, discussion 422 Terminal facilities: Improvement for market products 101 Ownership at Minneapolis ; 475 Texas Industrial Congress: Purpose and work 182-183, 191-192 Speech of president 177-183 Statement of representative ^ 175-200 Texas, statements of representatives of farmers' organization 139-175 Thompson, Dr. W. O., Ohio University, statement 74-80 Thompson, Judge, decision in grain gambling 492 Thompson, Representative: Question of — Frank A. Home on hoarding 278 Mr. Little, on flour 241, 242, 243 Mr. Rockwood on Wholesale Grocers ' Association 294 Questions and remarks on — Constitutionality of bill 345, 347, 356-360, 366 Fixing prices 121, 122, 125, 127, 131, 135, 323,324 Questions of — Frank A. Home on maximum and minimum prices 282, 283 Mr. Jackson on grain exports 263, 266 Mr. Piekell on grain trade 260-261 Mr. Piper on flour 302 INDEX. 535 Thompson, Represientative — Continued. Page. Questions on — Breadstuffs 37&-371, 398 Control of speculation 433 Fixing food prices 187-190, 203 Fixing prices for farm products 144-148 Grain marketing 453 Suppressing board of trade 446 Tick eradication, emergency appropriation asked, and work 61, 62-63 Tin, scarcity an^ use for tobacco containers, remarks 294, 295 Tobacco, containers, use of tin 295 Trade boards, function of market making, remarks 459-460 Trade Commission, Federal. See Federal Trade Commission. I'rade restriction contracts unlawful 357 Transportation: Control by — Government 358 Government during war 489 Facilities, relation to prices, discussion 388-390 Food products, statement of Dr. A. E. Taylor 29-30 Problem in grain marketing 475-476 Relation to — Grain prices - 266-269 Marketing grain, delays 460 May wheat trading, 1917 255 Tying up by small dealers 325 Use of freight cars, discussion 184-185 True, Dr. A. C, Director, States Relations Service, statement 113-118 Underfeeding, European conditions 26-27 Vegetable dryers, use by communities, cost, etc 27-29 Tegetables: ^ tn a -c Drying in United States, practicability and value, statement of 'Dr. A. J!/. Taylor 27-29 Drying, to supplement shortage of cans ' Tnl Virginia Council of Defense orgamzation 104 Vrooman, Carl, citation on pure flour 34U "Farm, amounts '^ Increase in organized industries t^^ War bonds, issue authorized 71 75 ■War duration, diacussion ..--...-..-- iiq 'no War emergency, extension work of States Relations bervice iia ^J-o War, European, population and territory involved o^^ War powers of Congress ^^^Extent 500-502 Restriction by States", "opinion of Francis G. Oaffey ;;;" o^i 1^9 Im'l'c^ War powers of United States Constitution, discussion 347-351, 359, 3bl, dbi War preparations by United States, survey War prisoners: . 40-41 Number employed on farms, and inefficiency . . - - - - ■ - ■ ■ - - - - ■ - ■ - "t"-*^ Use as farm fiiborersin United States, discussion and statement by Dr. A. E. ^^^ Taylor "Warehouses: . '309 Control by Government during war ^^ ^2 Grain supply reports to department. ^2^ Storage, control for distillers, discussion -. 326-327 Supply reports obligatory, discussion 28o "Warehousing, relation to speculation, note ^^g Warring powers, expenditures, amount "Wason, Representative: 33^6 Question of Mr. French on flour -:■--■--,; 33O Questions and remarks on Belgian relief work ^g- "2 Questions of Mr. Pickell on gram trading ^&». ^^«> 536 INDEX. Wason, Representative — Continued. Page. Questions on — ■ Control of elevators 425-426, 447-448 Grain lawsuits 47& Grain marketing 482 Waste: EUmination, educational work, States Relations Service 113-118 Liquor traffic 229-230 Natural resources, discussion by Henry Exall 178-179 Prevention provision 366 Wastes, crop, cause in lack of storage 467 Weare, Charles A., testimony on future trading in grain 492 Welch, E. L., testimony on grain futures trading 494 Wells, F. B.: Testimony as to manipulation of grain market 474 Testimony on price manipulation 494 Wels, Jacob, vice president Atlantic Export Co., statement '. . 345 Wheat: Black rust, control measures 84-85 Change of grinding methods, statement of Secretary 14 Conservation by use of com and rice , 7 Cost of growing and prices to farmers in North Dakota 438-443 Wheat crop, mortgaging by farmers, effect on time of marketing, etc 449 Wheat flour, "stretching" with other cereals, practices in European countries. . 367- 368, 370-376 Wheat: Future trading, hedging 490 Grades on Chicago and Minneapolis number, etc 481-182 Grinding at home for family use 86-87 Growing in North Dakota, cost, itemized 438 Loss to farmers by speculation 435-436 May — Options, remarks 263 Relation to cash market 493-494 Trading influences, discussion 255-257 Milling — Eighty-two per cent, admixtures, etc., use in Belgium, advantages. . 367-373 Percentages for breadstuffs, experiments by food commission in Belgium 1 367-369 Mixing in elevators, profits 482 Price — Fixing, discussion 126-127, 134-135, 136 Relation planting 471 Suggestion by Peter Bradford 165, 169-170 To farmers, outlook .' 427-428 Prices — As fixed in Great Britain 467 At farm, Chicago, and Liverpool, cost of handling and toll 434, 437 Forecast of Chas. A. Lyman 484 In 1893 447 Influences controlling 18 Relation of May to cash 494 Remarks 442 Production, cost, discussion 445 Proportion required for flour in Germany 30, 32-33 Quantity for barrel of flour, remarks 238, 239 Relation to price-fixing power under H. R. 4630 464 ■ Supply— And control in Belgium by relief commission 329-336 Increase methods, statement by Secretary 14 Visible supply 325 Yield in North Dakota, discussion 441—442 Wheeler, Benjamin Ide, food-conference resolutions sent to Secretary Houston. 10 White, E. B., statement on fixing prices for farmers 104-112 White, Kirby B.: Plan for fixing food prices 232' Statement 230-235 INPEX. 537 Wilson, Representative: Pago. Question of Mr. French on flour 318 Questions and remarks on — Belgian relief work 331, 335 Fixing prices 110,120,121,125,132-134 Questions of — Frank A. Home on exports of storage goods 291 Mr. Ballard on May wheat trading 252 Mr. Eikenberry on grain traffic 244-245, 246, 250 Mr. Jackson on grain trade and exports 264-265, 266, 267, 270 Mr. Pickell on grain purchases by allies 255-257, 258 Mr. Piper on flour 298, 300, 302-303 Mr. Rockwood on labels 295 Questions on — Cost of growing wheat 438-441 Elevator facilities, needs, etc 410-412 Fixing prices for farm products 140, 142, 144, 145, 148, 164 Food investigations 387, 391 Food shortage 327 Injury to farmers by speculators 431 "Wisconsin Agricultural College, students' emergency work 65-67 Women county agents, number, work, and salaries 115, 116, 118 "Women, food conservation work 76 Wright, Austin W. , statement on grain speculation 492 Young, Representative, of North Dakota: Question of Frank A. Home on storage 292 ition on — Assistant secretaries 18 Bread making in England - 34 Food production in France 38 Seed legislation 17 Self-interest of farmers in improved methods 55 Underfeeding in Europe - - - 26 Questions and remarks on — ■ Constitutionality of bill 348, 349, 354-356, 360, 361 Fixing prices 112, 120, 124, 132-134, 324, 328 Flour..:. 87,334 Seed distribution 82, 83 Questions of — Frank A. Home on storage and corners 283, 284 Mr. Eikenberry on grain speculation 249-250 Mr. Jackson on grain buying 262, 263, 269 Mr. Little on Millers' Association 243 Mr. Pickell on grain trading - - - ■ - 259 Mr. Piper on flour 301, 303, 304 Mr. Rockwood on flour and tin ^»^ Mr. Rockwood on National Grocers' meeting ^^^ Questions on — .„^ Control of grain elevators *^^ Corn flour qqq qq7 Cultivation of public lands - ?oq Fbdng prices for farm products 142-148, l&D-i&b, i/i Government control of elevators ||^ Grain marketing - - - -. ■^. ,,-, Increase of graia acreage and on marketing 410 Operation of grain market " Preme and primost ^.^^ Price fixing Q7Q_q7t; "Wheat flours -^'^ |^^ Remark Statement on — ^qo Grain growers' conference , „ Use of tin for tobacco shipment 638 INDEX. Young, Representative, of Texas: Page, Question and statement on — Food-control systems 3& Minimum and maximum prices 48-49, 50 Questions and remarks on — Constitutionality of I ill 347, 362 Fixing prices ■. 76, 79, 112, 114, 123 Food supply 70, 75, 103 Question of J?>ank A. Home — On flour price 292 On price fixing 285-287 Questions on — Control of food prices. 190, 193-197, 222-224 Fixing prices for farm products 141, 151-174 Food control in Germany. . 376 Grain prices 461-465 Price-fixing power 427-431 Remarks on cotton prices, 1914 127-12S> Statement on — Cotton-price manipulation in September, 1916 271-276 Elberta peaches in Texas 51-52 Farm help for special county agents 59 Price fixing by Mr. Hoover under H. R. 4630 464 Potato and cotton crops 45-4S o